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Government’s New Regulation for Business

Amid belt-tightening,  the Georgian government is increasing  spending not for  social projects   but for the  introduction of  a new regulation for  business, namely  electronic marking system for  non-alcoholic beverages.

The authorities want this obligation, the business has been struggling  with for almost 5 years, to come into effect  in the  coming months. As they say, at this stage all expenses will be covered  by the Revenue Department. The government  does  not specify whether the business will have to pay all the costs in the near future, while the businessmen do not doubt that the events will develop under this scenario.

Finance Minister Nodar Khaduri  gives the example of the neighboring Armenia as the argument, where water, Coca Cola and other soft drinks are labeled. As for the financing of the project, the Minister notes  that the funds at this point will be paid by the Revenue Department and not from the  budget. When asked why the need for the introduction of electronic marking system arose, Finance Minister states  that it   is aimed  at controlling accuracy of the payment process as this sector’ has a  quite  serious potential.

Businessman Temur Chkonia calls the government’s decision absurd, paradoxical and offensive for business, saying that his company has already received the relevant documents from the Revenue Department. The document says that the government will fund the necessary technology for labeling, which in “Coca Cola Bottlers Georgia” case, will cost one million one hundred thousand lari. Accordingly, taking into account all the players in this business, this service will cost  GEL 10 million a year for the non-alcoholic beverages business. Moreover, the money will go not to the budget, but to the  foreign company’s account.

In his words,  the authorities  are expected to  impose these costs on  the business next year. However, in  Chkonia’s opinion,  not this aspect of the issue  is principle, but that in general, it’s a waste of  money and only the Swiss company will benefit from it. Temur  Chkonia believes  that if these regulations are  imposed on non-alcoholic beverage companies,  tomorrow other businesses may suffer the same. Therefore, he is not going to stop, and, as he says, will fight to the end against this absurd regulation.

Chkhonia believes such an approach is unacceptable as   the Revenue Service could spent  these funds for its services development or   staff bonuses. Now, neither the  employees will receive  bonuses nor services will be developed, but the Swiss company  will get rich. In his opinion,  in addition to these factors, this initiative evokes a feeling of instability in businesses. Recall that Iin order to establish highly secured track and trace system, GRS has announced a competition on “Integrated System of Movement and Registration of Products” on 10th November, 2011. Seven bids were submitted from the companies; the requirements of GRS were met by “SICPA Security Solutions SA”.

The agreement was concluded between Georgia Revenue Service and “SICPA Security Solutions SA”. The main purpose of Georgia Revenue Service was to establish electronic system as it allows controlling accuracy of the payment process; in addition, consumers are protected from using counterfeit goods.

The system offered by Swiss company allows marking the production by means of unique secured code which could be applied on excise stamps or directly on the production. The movement of the production through manufacturing line is controlled by the devices produced by the company; these devices provide identification and marking of production; quality control of applied stamps and activation of unique secured code through database.

The information collects and transfers via special device, automatically. It could be mentioned, that during the quality control process of applied stamps, in case of detecting defected stamp, product is pushed out from manufacturing line; this leads to significant simplification of calculating process of manufacturing defects, ensuring continuous production process.

The previous government sais that that implementing new marking system would give a possibility to apply paper-based label and on-product marking on excise and non-excise products; to establish Data Management System (DMS), to receive information about marking local or imported products in real time; to control/monitoring circulation of goods on consumer market and calculation/reduction of manufacturing defects in local enterprises.