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May 25, 2015 #100

May 25, 2015, Issue 100

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BE INFORMED, DO BUSINESS

Donald Tusk: Visa liberalisation is possible for Georgia in 2016 Pg. 5

GEORGIA

GEORGIA’S TOP TRADING PARTNERS: TURKEY, AZERBAIJAN AND CHINA

he value of Georgia’s exports and imports (External Merchandise Trade) experienced a slight downward trend in the first four months of 2015 in comparison to 2014.

Irakli Garibashvili: Political Decision on VISA Regime Liberalization with EU Has Been Made

Pg. 7

REASONS AND WAYS MAGTI OBJECTED TO 4G TECHNOLOGY INTRODUCTION

n mid 1990s you would attract attention in two cases: when driving a good foreign vehicle or keeping a cell phone. Pg. 5

SOCAR OPENS OFFICE IN GEORGIA’S BATUMI

zerbaijan’s state oil company SOCAR opened its office in Batumi, Georgia, said the company in a message May 18. Pg. 11

MEMORANDUM BETWEEN TBC BANK AND AS GEORGIA REGARDING DIRSI PROJECT

PASHA BANK - PLATINUM SPONSOR OF SPOTLIGHT 2015

n 24 May Radisson Blu Iveria hosted the year’s main marketing event - Spotlight 2015. PASHA Bank was the platinum sponsor of the event. Pg. 9

WHAT DOES THE RIGA SUMMIT FINAL DECLARATION SAY ON GEORGIA-EU FUTURE RELATIONS?

tionship with the European Union (EU). Summit participants acknowledge the European aspirations and European choice of the partners concerned, as stated in the Association Agreements,” states the declaration, released today. The leaders’ decision on visa liberalisation for Georgia was one of the most anticipated decisions, as the most tangible result of the EUGeorgia deal signed in June 2014 for Georgian citizens would be visa free travel to countries in the Schengen zone. Pg. 2

THE POINT THE GEL WILL STOP AT… All GEL-devaluating Factors have either Improved or Unchanged

ZAZA SOPROMADZE: IT WOULD BE GOOD IF OTHER COMPANIES ALSO FOLLOW NATAKHTARI FUND’S EXAMPLE

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veryone in Georgia universally acknowledges Natakhtari slogan - “Would You Like Natakhtari Lemonade?”

VEHICLE MARKET SURVEY

Pg. 8

Wilhelm Moltrer: Georgia is a True Regional Hub with a Fantastic Location Pg. 8

Mikheil Chkuaseli: Current Year is a Turning Point in Georgia’s Tea Production Lasha Papashvili: Government and National Bank must Cooperate

Pg. 13

Azim Sadikov: Floating Exchange Rate will Stabilize Georgian Lari

Pg. 4

Pg. 11

SALES OF NEW APARTMENTS FELL

Research

Pg. 2

Pg. 7

SHOULD GEORGIA CONSTRUCT HIGH-RISK HYDRO POWER PLANTS?! Pg. 5

According to the first quarter of 2015, there are 846 386 light vehicles registered in Georgia. Almost half of these cars are Sedan (38%). There are almost equal number of hatchback (16%) and off-road (so called Jeep, 15%) types of vehicles.

Pg. 4

Pg. 12

Currency

IS THE CRUDE OIL RALLY OVER? BY OLE HANSEN, HEAD OF COMMODITY STRATEGY, SAXO BANK

GLOBAL ECONOMIC RELEASES TO DRIVE THE FOREX MARKET

RETAIL MARKET FUNDAMENTALS

Pg. 8

GOVERNMENT NEWS

2 MAIN EVENTS ECONOMY MINISTRY DEVELOPS PENSION SYSTEM REFORMATION MODEL

GEORGIAN PM: POLITICAL DECISION ON VISA REGIME LIBERALIZATION WITH EU HAS BEEN MADE

political decision has been made on the visa free regime between Georgia and the European Union (EU), and only technical procedures need to be finished, said Georgia’s Prime Minister Irakli Garibashvili at the Eastern Partnership (EaP) Summit in Riga today. According to information shared by the Prime Minister’s press office, Garibashvili attended the Party of European Socialists (PES) forum together with European Union (EU) high officials, including EU High Representative for Foreign Affairs and Security Policy Federica Mogherini and the Prime Ministers of Sweden and Denmark. PM Garibashvili delivered a speech at the forum and talked about Georgia’s achievements, especially in the direction of visa liberalisation. “Everyone agrees that in the past two years Georgia has made significant progress, including in the direction of visa liberalisation. We have made a very important leap in just six months. Unfortunately the process should have started in 2010, at the time when Moldova started. Moldova has already reached visa liberalisation because they started this process earlier than us,” he said.

e has explained, that the document, prepared by his institution jointly with the experts of the World Bank, has been already discussed at the Interagency Commission and the next step is discussion at the Economic Council. “ The document will be submitted to the Parliament after the approval at the council”, - the minister has noted.

YEREVAN-BATUMI TRAIN WILL OPERATE DURING 2015 SUMMER TOURIST SEASON

high-speed passenger train will help tourists travel between Georgia and Armenia this summer. From June 15, a train will operate between Georgia’s Black Sea city Batumi and Yerevan, the capital of Armenia, for the duration of the 2015 summer season to carry tourists between the two countries. The train will have two rolling stocks and will travel daily.

EUROPEAN INVESTMENT BANK SUPPORTS GEORGIA’S AGRICULTURAL FOOD SECTOR

he European Investment Bank (EIB) is providing significant financial support to new agricultural projects in Georgia with the aim of stimulating the country’s agricultural sector. The EIB signed a Declaration of Intent with Georgia yesterday to set up a financing facility that will benefit Georgian small and mediumsized enterprises (SMEs) active in the wine industry and horticulture.

WORLD BANK ALLOCATES $120M FOR GEORGIA

he Georgian Government and the World Bank have signed two financial agreements on an IBRD loan of $120 million USD to develop the country’s private sector, raise competitiveness and foster inclusive growth. This financial contribution was designed to implement various measures within the ‘Programmatic Private Sector Competitiveness Development Policy Operation for Georgia’ and the ‘Software Development Policy of Inclusive Growth in Georgia’. Each project will be allocated $60 million USD.

EU WILL UNLOCK €2 BILLION INVESTMENTS IN GEORGIA, MOLDOVA AND UKRAINE

he European Union (EU) is expected to distribute new investments of more than €2 billion (5.3 billion GEL) for Small and Medium Enterprises (SMEs) in Georgia, Moldova and Ukraine. At the Eastern Partnership (EaP) Business Forum in Riga today, the European Commission launched the Deep and Comprehensive Free Trade Area (DCFTA) Facility for SMEs, which will provide some €200 million (530 million GEL) worth of grants from the EU budget over the next 10 years.

TBILISI MAYOR DECLARED IN TEHRAN ABOUT SIMPLIFICATION OF VISA REGIME WITH IRAN SOON

irect flights will be launched between Tbilisi and Tehran – David Narmania, Mayor of Tbilisi has declared during his visit to Tehran. Narmania held a meeting with Mohammad Baqer Qalibap Mayor of Tehran. They have signed Sister Cities Agreement.

May 25, 2015 #100

caucasian business week

“It is interesting, why [Georgia’s] previous government did not start this process. Our Government started this process. Everyone agrees that the political decision has already been made and only technical procedures need to be finished. We hope that we will finish the procedures by the end of this year and our citizens will be able to travel visa free to Europe,” Georgian PM said. In addition, PES President Sergei Stanishev said Georgia should wait for a positive outcome from the EaP Summit. “I think there will be good news from the Summit for Georgia, because there is a strong political will to recommit Europeans engagement towards Georgia and the other countries which signed Association Agreement (AA). I also think that there is strong political understanding that the visa issue is very important for Georgia,” he said. “On behalf of the European Union just some technical issues need to be solved and there will be progress. And I think this shows the attitude and the support for the choice which has been made to have even stronger, closer cooperation between Georgia and EU,” he said. Agenda.ge

WHAT DOES THE RIGA SUMMIT FINAL DECLARATION SAY ON GEORGIA-EU FUTURE RELATIONS?

articipants of the Eastern Partnership (EaP) Summit in Riga have come to an agreement on the final text of the joint declaration after the several rounds of discussions between European leaders and their counterparts from EaP partner countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine). The main and final document of the meeting consists of 30 points and includes several important messages on how Georgia can develop its relationship with the European Union (EU). Summit participants acknowledge the European aspirations and European choice of the partners concerned, as stated in the Association Agreements,” states the declaration, released today. The leaders’ decision on visa liberalisation for Georgia was one of the most anticipated decisions, as the most tangible result of the EUGeorgia deal signed in June 2014 for Georgian citizens would be visa free travel to countries in the Schengen zone. VISA LIBERALISATION The declaration noted Summit participants “warmly welcome the progress made by Georgia and Ukraine respectively in the implementation of their Visa Liberalisation Action Plans (VLAP) as described in the latest Progress Reports by the European Commission”. “They look forward to completion by Ukraine and Georgia of the implementation of the 2nd phase of their Visa Liberalisation Action Plans once all benchmarks are fulfilled through the implementation of all required reforms, and welcome the Commission’s readiness to do its utmost to support Ukraine and Georgia in the implementation of their VLAPs and its intention to report on progress by Ukraine and Georgia respectively by

the end of 2015,” stated point 23 of the joint declaration under the Mobility and People to People section. “After all benchmarks are fulfilled and positively evaluated by the European Commission, the European Council will start law procedures to launch a visa free regime for the citizens of Georgia.” Experts on EU-Georgia integration assessed this wording as very positive for Georgia, as it offered a concrete deadline for the last evaluation by the European Commission. GEORGIA’S UNSOLVED TERRITORIAL CONFLICTS The declaration stated the EU strongly supported Georgia’s sovereignty and territorial integrity. “The acts against Ukraine and the events in Georgia since 2014 have shown that the fundamental principles of sovereignty and territorial integrity within internationally recognised borders cannot be taken for granted in the 21st century on the European continent.” The EU remains committed in its support to the territorial integrity, independence and sovereignty of all its partners,” stated point 5 of the declaration. “Recalling the need to fully implement the 12 August 2008 Ceasefire Agreement [with Russia], Summit participants reiterate their commitment to conflict resolution efforts in Georgia, including through the co-chairmanship of the Geneva International Discussions by the EU Special Representative for the South Caucasus and the crisis in Georgia and the full implementation of the mandate of the EU Monitoring Mission in Georgia. Participants stress the specific role of the OSCE, as an inclusive organisation, in conflict resolution in the region,” stated the declaration – the main document of the EaP meeting in Riga.

GEORGIA’S CONTRIBUTION TO EU MILITARY OPERATIONS Participants of the Riga Summit praised Georgia’s contribution to EU military and peacekeeping operations in the Central African Republic and Mali. “They commend the speedy entry into force of the Framework Participation Agreement with Georgia. They welcome the contribution by Ukraine to the EU-led Naval Military Operation (EUNAVFOR Atalanta), the contribution by Georgia to the EU Military Operation in Central African Republic (EUFORRCA) and by the Republic of Moldova to EU Training Mission in Mali (EUTM Mali), as well as further commitments by Georgia and the Republic of Moldova to contribute to EU Military Advisory Mission in Central African Republic (EUMAM RCA) and by Georgia to EUTM Mali,” the document read. The Riga Summit was chaired by the President of the European Council Donald Tusk who, together with the President of the European Commission Jean-Claude Juncker, who represented the EU. The event was hosted by the Prime Minister of Latvia. As well as the European perspectives of the six EaP countries, conflict resolution in the region was also high on the agenda, both in relation to the crisis in Ukraine and other unresolved conflicts in the region. The next Eastern Partnership Summit will be held in 2017. The event is likely to take place in Brussels, though alternative sites in Britain or Malta are possible as these two countries will hold the EU’s six-month rotating presidency that year. Agenda.ge

NATIONAL BANK TO LOSE FINANCIAL SUPERVISORY FUNCTION

he draft amendments which should be made to the Organic Law, envisages deprivation of regulations of financial sector, including banks, micro-financial organizations, security registrars, brokerage companies (besides insurance brokerages) and stock exchange to National Bank of Georgia (NBG).

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May 25, 2015 #100

INFOGRAPHIC

caucasian business week

FOODPANDA’S THINGS YOU’RE DOING WRONG WHEN TRAVELLING ASIA

oodpanda (www.foodpanda.ge) collected some useful Asian food customs and their associated meanings to set things straight. So here is your essential guide to do’s and dont’s in some

countries in order to avoid any uncomfortable mistakes. Mistakes everyone is -inevitably- bound to make. Asian cuisines do share similarities, but as far as the dining etiquettes go, it is quite the opposite. For example, an empty plate

means different things to different cultures. In Japan, it’s important to finish your food in order to let the host know you’ve enjoyed the meal. In China, however, it is considered rude, and means that you weren’t fed enough.

INTERVIEW

4 HEADLINES CHINESE INVESTORS INTERESTED IN PURCHASING THERMAL POWER PLANT IN GEORGIA

caucasian business week

MIKHEIL CHKUASELI: CURRENT YEAR IS A TURNING POINT IN GEORGIA’S TEA PRODUCTION

ccording to the Ministry of Economy of Georgia, in the case of privatization of the facility part of the raised money - approximately $ 120 million - will go to cover the loan taken by the Georgian Oil and Gas Corporation (GOGC) for the construction of the power plant.

GEORGIAN MARKET WILL NOT FACE DEFICIT AFTER RESTRICTION OF IMPORTS OF TURKISH CHICKENS AND EGGS

estrictions introduced on imports of poultry meat and eggs from Turkey did not create the deficit in the local market. Local chicken meat producing companies announce. The National Food Agency imposed restrictions on imports of live poultry meat and eggs from Turkey a few days ago.

QUANTITY OF CATTLE AND POULTRY GROWS IN GEORGIA

ccording to official data of “Sakstat”, the live-stock of cattle has amounted to 1,431 million by the end of Q1, 2015, the figure exceeds by 4% to the same period of the previous year. At that, live-stock of cows has made up 661 thousand. Total live-tock of sheep and goat is grown by 1.2% comparing to the index of the previous year and the figure has reached 1,164 million.

“WISSOL GROUP” TO OPEN DUNKIN’DONUTS AND WENDY’S IN GORI

ikheil Chkuaseli, a director for GeoPlant, a manufacturer of Georgian tea Gurieli, says the year of 2015 will be a turning point in the tea production. Chkuaseli told the InterPressNews news agency, the meeting between the Prime Minister and businessmen discussed the tea production development issues and the Prime Minster pledged to provide a maximum support to this direction. “The meeting for discussing regional projects are vey important. We have conducted open

ADVERTISEMENT ON GEORGIA TO BE BROADCASTED ON CNN AND EURONEWS

ccording to Sakstat, cooper iron and concentrates have occupied the 1st position from the commodity groups through JanuaryApril, 2015. As of 4-month data, cooper iron of 86 million USD has been exported and the product ranks 1st with this index. Export of cooper iron masters 12% of the total export.

- Has the Government managed to present Georgia’s potential in terms of investing during the EBRD Forum? - Everything has been held at a very high level, but the weather. The EBRD Forum is a very important event for our country. The decision to

ccording to Sakstat, mineral water of 30,759 million USD has been exported on the foreign market from Georgia in January-April of this year. However, the index has been more by 36% through 4 months of the previous year and the rate has amounted to 48,14 million USD.

ntrepreneurs and non-commercial legal persons will be warned for the first time if they avoid to submit information to “Sakstat”, while a fine of 200 million should be imposed for the second time.

LAURA HACHAVA SELLS STAKE IN HOTEL SAKARTVELO TO PAY OVERDUE LOAN TO CARTU BANK

ccording to Laura Garchava, alienation of her share at hotel “Sakartvelo” is planned. Currently, she holds 73%-share in LLC “Sakartvelo”. Italian and German businessmen are interested in acquisition of the building.

cal company “PSP” Kakha Okriashvili said that business in Georgia has no a 100% guarantee of inviolability. Do you agree with this opinion? - I do not think my colleague had in mind any risks to business – in this sense, security is guaranteed by 1000%, another thing is that many officials in the government are unable to take rapid decisions – that is a real problem. - How can you explain the fact that the government fails to stabilize lari exchange rate ? Today I don’t see any preconditions for the lari restoration. The authorities must do everything to avoid fluctuations. This requires joint efforts of the government and the National Bank, but unfortunately it is not visible. I have repeatedly said this to representatives of both structures, but they still act inconsistently, and the negative effects of this are obvious.

An interview with the EBRD’s chief banker Irakli Mekvabishvili

hold it in Tbilisi was taken more than 2 years ago, this means that the world’s leading financial institutions pay great attention to Georgia. - Have you had any meetings at the Forum? - I met with the EBRD’s representatives in real estate, tourism, and agriculture, as we are working in these areas. I discussed the question of the expansion of our business, both in the hotel industry and in agriculture. Our company is now building a new hotel and extending the farm, the EBRD, which investments amounted to $ 20 million, is involved in these projects. - In your opinion, will the government take into account the EBRD’s recommendations? Such forums are held for this purpose, EBRD is one of the world’s largest financial institutions, and its opinion is always very important. - Your colleague, the founder of the pharmaceuti-

EBRD’S CHIEF BANKER EXPECTS THE FORUM TO BRING RESULTS AT THE END OF THE YEAR

MINERAL WATER EXPORTS DROPS BY ANNUAL 36%

SANCTIONS TO BE IMPOSED ON BUSINESS, IF THEY DO NOT SUBMIT INFORMATION TO “SAKSTAT”

Another component includes a rehabilitation of tea plantations and a reconstruction of the primary production and renovation. In 2015 we will rehabilitate 250 hectares of tea plantations, of which cleaning works have been already performed on 87 hectares, fertilizers have been added to receive high-quality harvest and considerably increase the output on a hectare. For comparison, before the project implementation, in previous years we could pick only 1.5 tons or 2 tons of tea on a hectare. This year we expect to pick 3.5 tons on a hectare, including 1.5 tons of high-quality tea leaves. In the coming years we expect the output will rise to 5-6 tons on a hectare. As to the primary production rehabilitation, we will carry out the works in 2015 and implement serious investments at the end of 2015 and in 2016 in the processing direction. We will import a special Japanese technology to produce Japanese-type green tea. Moreover, this year we will launch the white tea production and this will be a unique fact for Georgia, because so far Georgia has not manufactured the white tea. All the above-mentioned will enable us to increase the output”, Chkuaseli said and added besides the Guria Region, rehabilitation works will be carried out on 50 hectares of tea plantations in the Samegrelo Region too. ipn.ge

An interview with a businessman Lasha Papashvili

issol Group” will open Dunkin’Donuts and Wendy’s restaurant in the complex, locating nearby area of Gori highway. However, petrol station and supermarket “Smart” are placed in the complex by now.

COPPER REPLACED VEHICLES TO BE GEORGIA’S MAJOR EXPORTS ITEM

and frank discussions. We have stressed the tea is a main product for the Guria Region. All of us are proud Georgia is the cradle of winemaking and the country provides maximum efforts for Georgian wine popularization. At the same time, our country has got a 200 year history of tea production. Georgia was recorded in the five leading tea production countries in the Soviet Union. I believe the tea is one of the important products and we should provide maximum support to this field. The Government head agreed on this consideration too and partner businessmen have also expressed willingness to make the tea a brand product in Georgia. This will be very important and it will concern not only the Guria and Samegrelo Regions. We have got an unique opportunity to produce fruits tea, plants tea and we have involved Mtskheta-Mtianeti, Kakheti and Samtskhe-Javakheti Regions and I believe this will be a very vital direction for the whole country”, Chkuaseli said. As to the Guria Region, GeoPlant has been implementing one of the major projects there. The project consists of two components: 1) a construction of a new tea packing enterprise as part of the Produce I Georgia project. The enterprise will be built on 1300 square meters and will be equipped with the most modern technologies.

LASHA PAPASHVILI: GOVERNMENT AND NATIONAL BANK MUST COOPERATE

dvertisement on Georgia “This is Life” will be broadcasted in the leading TV-companies, - Georgian Tourism Administration has declared. Promotion campaign of Georgia is broadcasted from Mat 17, while from CNN – from May 18.

May 25, 2015 #100

- EBRD’s meetings were held in different countries in recent years - Poland, Turkey, England, what result has the Forum brought for these countries, and what should we expect? - First of all I would like to point out that the event of such a scale where half the world is presented has never been held in Georgia. It’s a very good way for Georgia to attract the investment in all real sectors of the economy. Specific contracts were signed in the framework of this event. The event was attended by those who wanted to work not only in Georgia but also in the region. The results of the annual meeting and Forum will be reflected in signing specific projects that will be carried out this year and next year. - While talking about the investment environment, we cannot ignore the risks. In this regard,

what is the attitude of potential investors? - The situation in the region is rather difficult and of course, large investors are cautious with regard to such a small country like ours. However, I want to tell you that our advantage is our institutions, business environment transparency, competitive advantage, we should offer investors simplicity in terms of performance, transparency of institutions, both public and private. This is our advantage over other countries and it attracts investors. We should attract them also in terms of liberalization of taxes. - EBRD issued GEL denominated bonds, was it risky? - I cannot say that it was risky. I think it was a very important step. Afterwards, bonds were issued by IFC and ADB and it will be continued. This is one of the tools to promote capital market, and we have done it for a capital market development. So here we do not see anything risky we have issued the bond for the second time in February for more long term. The bond issue is not planned until the end of the year, however, it will continue in the following years. - It was announced at the EBRD’s annual meeting that the bank starts supporting micro and small companies. What does it mean? Medium and small business support has been one

of the main pillars of EBRD strategy, but now it is changing qualitatively. For example, I can tell you that we’ll have a new product in the financial sector to promote women in business. For anyone who has interesting ideas, but do not have the opportunity to obtain financing, because the banks have serious requirements. Separate services will specifically promote the development of small and medium-sized businesses. An amount is not determined, but there no limit. If the project is interesting it can be financed either directly or through the bank. It will also provide preferential loans, we also participate in the capital. It applies not only to the banks, but companies as well. If there is any good project, EBRD will consider it always. - The exchange rate of the lari still remains a challenge. In your opinion, how to keep at least this rate? All I have spoken about is aimed at the preservation of the lari’s value and its appreciation. This event also serves to attract more and more tourists and investments into the country. This is the reality of today and everyone must do everything possible within their power to significantly improve the overall condition of the economy. Everyone has to do his job and talk less.

May 25, 2015 #100

ECONOMIX

caucasian business week

SHOULD GEORGIA CONSTRUCT HIGH-RISK HYDRO POWER PLANTS?!

TOP STORY

even a petite doubt Khertvisi may sink, this wall must be constructed”, Chitanava said.

reen Alternative and Green Fist nongovernmental organizations urge EBRD not to finance high-risk projects in Georgia. A Green Fist representative Khatia Maghlaperidze says EBRD is financing a construction of three HPPs in Georgia, namely, Dariali, Shuakhevi and Paravani HPPs. However, environmentalists have recently learned EBRD also plans to construct supposedly a 280 megawatt HPP on the river Nenskra in Chuberi near Khudoni HPP project zone. Thus, it is absolutely unacceptable to construct so many hydro power plants in such a small piece of space. Additional exploration works must be carried out. We do not object to making investments in Georgia, but projects must be reasonably planned and skillfully composed, Khatia Maghlaperidze said. As to the already financed projects – Paravani HPP, Shuakhevi HPP and Dariali HPP, Khatia Maghlaperidze says these projects should be also explored anew. Namely, Shuakhevi is located in the landslip zone, the Autonomous Republic of Achara, and the company has not provided geological exploration on how the HPP construction will affect the life of local residents. Paravani HPP has left only 10% of the water resources to the river, 90% has been redirected to the river Mtkvari. The effect of this decision is not known. It is also unclear whether the monument of Khertvisi will be flooded. The information is not publicized and the fate of Khertvisi is unclear. The river was to maintain 30-40% of the water resources in line with norms, she added. As to Dariali HPP, the Green Fist representative recalled on May 17, 2014 and August 22 the Dariali HPP Construction provoked a slip of Devdoraki Cliff and a total of ten persons died. Moreover, Dariali HPP has penetrated Kazbegi national Park territory and this objects to our legislation. Nor the available risks have not been explored, she said. “Implementation of these projects bear real threats for to human lives and ecosystem, because they have

not been explored and no corresponding conclusions have not prepared”, Khatia Maghlaperidze said. In this situation it is interesting what power system specialists think about construction of modern HPPs. Engineer Anzor Chitanava, a vice president for the Energy Academy, says high-risk projects must not be implemented and he partly agrees on the pathos of the rally participants. The projects must be planned with high qualifications, analysis and their outcomes must be foreseeable. Without these factors, expediency of construction of these assets becomes questionable and the government must not conclude similar agreements. As to the above-mentioned concrete assets, Anzor Chitanava makes detailed comments on them. PARAVANI HPP Paravani HPP is one of the best, efficiently planned assets and less harmful to the environment. There is no much water reservoir, but there is a headwork for taking water and nothing more. Then a derivation system comes and later it falls into the river again. A certain part of the river was directed to the tunnel and only a sanitary part remains in the river bed. It is interesting what volume is this sanitary part. If there are violations in this norm and the calculation is incorrect, then I object to this step, but there are international parameters and if this part meets the international parameters, there is nothing alarming, because the nature manages itself. This signifies, sometimes the river lacks for water in dry and draught period, when the water in the bed almost disappears. The nature makes this and this signifies we can also plan this”, Anzor Chitanava said and added if preventive measures will be carried out, Khertvisi will not be flooded. Khertvisi must remain untouched, he concluded. “According to my information, disputes arose because the wall was not made, I categorically demand that the wall be constructed, because no philosophy is required for the wall construction and it does not need much money, while this step will secure Khertvisi. It is our pride and interesting asset. If there is

SHUAKHEVI HPP In this case everything has been preliminarily programmed and settled, reasonably balanced and calculated, but if the population expresses protests because of damage, the project authors should take into account these protests and they should not disturb the local population with noise and dust. Local buildings must not be damaged and explosion must be carried out under international standards. “According to my information, similar drawbacks have emerged in relation to Shuakhevi construction and this is a result of improper and incorrect approaches”, Chitanava noted. DARIALI HPP Dariali HPP project has not been skillfully explored and planned. The project development required much professionalism. In due time even the Hydro Project Institute warned of expected hazards in Dariali, because the Dariali river itself is of very specific and complicated character that does not like external interferences and it may bring undesirable results”, Chitanava noted. “Today we witness manifest landslip and glaciations tendencies. These processes were foreseeable during the projection works. Therefore, the current scheme should have been rejected from the very beginning, because the current price is very expensive. It is misfortune, the project has sacrificed human lives. Therefore, I categorically demand for substantiating the project. Exploration issues should take more time and funds, that the construction”, he said. NENSKRA HPP Anzor Chitanava assures no other water storage and high cascades should be constructed above Khudoni HPP, while the Nenskra HPP project calls for constructing a high cascade in the center of the Svaneti Region, in an untouchable and exciting place. “I have not seen the feasibility studies and project, but I have got information that calls for constructing a 27 kilometer tunnel and constructing a 135 meter high cascade. This construction may be secure and steady, but when a water storage will be created on 3.5 square kilometers in the center of Svaneti at the height of 1300-1400 meters, where fully will be removed trees, this will result in a number of irreversible changes. Maybe, many persons do not like Communists, but in that period 33 competent and the world recognized organizations (Institute of Zavriev, Hydro Project, Energy Institute, Davitaia Institute and so on), jointly concluded that no water storage asset must be constructed above Khudoni HPP”, Anzor Chitanava said.

REASONS AND WAYS MAGTI OBJECTED TO 4G TECHNOLOGY INTRODUCTION Magticom Loses Subscribers, Geocell and Beeline Draw New Ones

n mid 1990s you would attract attention in two cases: when driving a good foreign vehicle or keeping a cell phone. Tariffs were unbearably expensive and cell phones were so huge in size, you could use it as a hammer or even a self-defence instrument, in necessary. However, at that time a cell phone was stressing your social status… Much time has passed since them. Today cell communications companies in Georgia serve over 5 million subscribers. The clients have also refined their preferences – they show restraint when taking a decision in favor of this or that operator. If they are discontent with some services or tariffs they are ported to other operator. Cell communications companies have to introduce new and new innovations. Heads of the companies and the field specialists carefully observe the statistics – which operators do the clients prefer, which of them have they abandoned and which of them have they chosen? According to the last report of the Georgian National Communications Commission (GNCC), in the first quarter of 2015 the number of Magti subscribers was declining every month, while the number of Geocell and Beeline subscribers was growing. Namely, Magti lost over 33 000 subscribers, while Geocell drew over 90 000 new users and Beeline attracted over 30 000 new ones. The situation was almost the same in 2014. The number of Magti subscribers were decreasing, while Beeline and Geocell were drawing new and new clients. These changes on the cell communications market

are, naturally, related to introduction of new services, including, 4G technologies. The 4G technologies could be introduced in 2010, but the market leader Magti was deliberately hindering an introduction of the innovation and the new technology’s appearance was rescheduled for 2015. Apparently, Magti was maintaining a leading position on the market through thwarting the introduction of 4G technologies. Prior to March 2015 cell operators were in unequal conditions. As reported, 4G internet was to be introduced far earlier, but Magti had got exclusive license rights for 4G internet connection supply, it acted in collusion with GNCC and the company hindered other operators to introduce 4G technologies. Magti obtained the license in 1990s, when the government concluded a losing agreement. This is not surprising, because everyone knows who was a Magti founder and what relations he had with the Shevardnadze’s government. Magti was lobbied even under the ruling of the United National Movement. Otherwise, the ruling party would not let violate the consumer rights. Briefly, Magti has made the country lose 5 years, while Armenia introduced the 4G internet in 2010. The 4G development would threaten Magti’s monopolistic position on the market. Magti was to apply to GNCC for modifying the frequency received many years ago and, after that, other companies would be also able to openly demand for developing the 4G internet technologies.

In the end, as a result of activity of nongovernmental organizations, legal amendments were adopted and the Magti monopoly was ceased. All cell operators were enabled to develop the 4G internet technologies. Since Mach 2015 the potential of Magti, Geocell and Beeline equaled and amid the Healthy competition, subscribers were enabled to make a choice. As a result, Magti has lost many subscribers. Other factors have also affected the ongoing redistribution on the cell communications market ratios. Magti’s competitor companies got motivated to make investments in 4G technologies and to expand the coverage zone. Previously, Geocell and Beeline used to offer only cheap tariff services, but now they are able to compete with Magti in terms of technologies too. In this respect, we should still expect market changes, because Beeline plans to make serious investments in the field. The fact Magti is losing subscribers may be explained by additional factor, namely, by the fact the company has ignored the consumer rights. We should recall in January 2015 Magti zeroed accounts to corporate subscribers without warning and later the company had to return money to the clients. Similar scandals make negative affect on the company reputation and lead the company to losing the clients. In this situation Magti will have to change the policy. The company cannot enjoy preferences any more and it remains in worse positions compared to Beeline and Geocell, because it operates with expensive tariffs on the market. bfm.ge

DONALD TUSK: VISA LIBERALISATION IS POSSIBLE FOR GEORGIA IN 2016

uropean Council President Donald Tusk thinks it is possible for Georgians to travel without visas to European Union (EU) countries in 2016. One day before the Easter Partnership (EaP) Summit is held in Riga, Tusk expressed hope in an exclusive interview with Radio Free Europe/ Radio Liberty that “both Ukrainian and Georgian citizens would enjoy visa free travel to the EU’s passport free Schengen zone as early as next year.” Everything depends on their effort and commitment. Of course, it is possible, but is not an official promise. We are in the middle of the process. But the progress in both countries, in Georgia and Ukraine, is really promising,” Tusk said. He added the EU’s next assessment of visa free travel for Ukrainians and Georgians could be conducted in November, and that “if the progress is as promising as it is today, I think that [visa frree travel to the Ethe2016 is quite possible.” While speaking about the potential of full EU membership for former Soviet republics – Georgia, Moldova and Ukraine - European Council President Tusk said these countries had the right to aspire to EU membership but that he will not deliver an “empty promise” about the prospects of such integration. In the interview he underlined that a partnership program was never a guarantee of EU membership, even in the future, but that Kiev, Tbilisi, and Chisinau “have their right to have a dream, also the European dream.” He emphasized that his role as European Council president was to manage these countries’ expectations in the coming years. “Our duty -- I feel it is also my personal responsibility -- is to deliver not an empty promise that it is possible tomorrow or the day after tomorrow, but the way to Europe,” he said. “I mean not membership in a predictable future, but to European standards, to our cultural and political community.” Meanwhile the European Commission published a report on Georgia’s implementation of its Visa Liberalisation Action Plan (VLAP) on May 9, stressing that Georgia’s “significant progress” reached in a short period of time “is broadly in line with the second-phase benchmarks.” In addition, on May 8 Georgia’s President, Prime Minister and Parliament Speaker addressed EU high officials with a joint statement, expressing their hope that Georgia would gain a visa free regime with the EU at the EaP Summit. A similar request was voiced by more than 400 civil society organisations from EaP countries one week ago. The Eastern Partnership Civil Society Forum (EaP CSF) statement read that visa free travel to the Schengen area, which citizens of Moldova had been enjoying since April 2014, was one of the most tangible EaP achievements and should be extended to Georgia and Ukraine - the countries who signed Association Agreements with the EU last year.

BUSINESS

caucasian business week

FOREIGN PHARMACEUTICAL COMPANIES TO LAUNCH OPERATION IN GEORGIA IN 2016

oreign pharmaceutical companies most likely will start operating in the Georgian market next year. “Commersant” was told by the Health Minister David Sergeenko that the quality control system should be introduced this year both in terms of clinical care and quality control of medicines. Sergeenko says that only then Georgia will be able to open its market, as it will be protected from substandard products

and the new players will have the opportunity to enter the market. It was announced about the entry of new pharmaceutical companies into the Georgian market as early as in May 2013. It later turned out that it came to the UK, German, Hungarian and Israeli pharmaceutical companies, however, specific brands were not disclosed. Some Georgian companies positively met the access of foreign pharmaceutical companies, some - negatively. Kakha Okriashvili, “PSP” founder, did not see the need for the entry of new companies into the market. According to him, the Georgian pharmaceutical companies operating on the market fully meet the market requirements. Drugstore chains “Aversi” and “PSP”, on the contrary, welcomed the access of new pharmaceutical companies in the market.

$40 MILLION TO GO TO KUTAISI HUALING FREE INDUSTRIAL ZONE UNTIL 2045

greement on establishment of FIZ (Free Industrial Zone) should be signed at 14.30 p. m. on Wednesday. The contract will be signed by Economy Minister George Kvirikashvili and Siaotsin Shao, director of GEORGIAN HUASHUN INTERNATION INDUSTIAL INVESTMENT GROUP, a member of “Hualing Group”. The ceremony should be held at the hotel “Hotels & Preference Hualing Tbilisi“. According to the agreement, Chinese company should invest 40 million USD in FIZ before 2045, at that 30 million must be invested before 2020. FIZ will be lunched by October 1.

ARAB INVESTORS INTERESTED IN LIVESTOCK SECTOR OF GEORGIA

ccording to Otar Danelia, Minister of Agriculture of Georgia, investors from the United Arab Emirates is planning to make additional investments in Georgia. The Minister said before the Arab-Georgia Business Forum, which is attended by representatives of various business companies. In his words, Arab investors are interested in agriculture, the area for which they have a special

interest is a cattle-breeding. He also talked about additional investments planned in Georgia. Arab businessmen have already had a meeting with his deputy at which specific directions were discussed. Danelia explains that Arab investors have no interest in the agriculture programs launched by the government. Note: As per the National Statistics Office data, Arab investments totaled $ 14 million in 2014, that is 4.4 times less compared with 2013.

SALES OF NEW APARTMENTS FELL

ecently, sales of new apartments have decreased due to the difficult economic situation in the country. According to the developers, due to the devaluation of the national currency, people refrain from making major purchases, while banks refrain from lending. According to General Director of “Archi Group” Ilya Tsulaia, sales were down, but the situation is not catastrophic. “In general, in comparison with 2014 sales decreased by 30%, but basically it concerns luxury apartments - their sales were down by 70%, while the smaller and cheaper - by about 10%,” - he notes. In his words, this is due to three reasons. “First, banks are reluctant to grant mortgage loans, secondly buyers are afraid to borrow in dollars, because they have income in GEL. Third, there

is also a psychological factor - in a crisis people try to save money and wait for stabilization of the situation. In February - March the situation was very dramatic, but gradually buyers adapted to the new reality and started to buy apartments, but not as actively as before, “- he says. The Azerbaijani company AC - Georgia also speaks about a decline in sales. According to the head of marketing department of the company Keti Adeishvili, the devaluation of GEL seriously reduced interest in buying real estate. “In response to this situation, the company offers customers a new product - together with TBC Bank customers will be able to get a mortgage with a minimum initial contribution of 15%, not 20%, as it was before, and the period of repayment of the loan will be increased from 10 to 15 years, “- she says. In addition, the cost of apartments in houses built by the Azerbaijani company was set at 2 lari per 1 US dollar, while the company takes over the possible risks associated with the devaluation of the GEL. The developers say that the situation is complicated by the fact that due to the devaluation of the lari construction costs have also increased. “ The price in the US dollars remained the same, but the real price rose, as we use imported building materials, “ - they say.

May 25, 2015 #100

SMALL AND MEDIUM-SIZED BUSINESSES DEMAND TO ADOPT SPECIFIC LAWS

epresentatives of small and medium-sized businesses (SMBs) demand the development of legislation that will regulate the sector. Today these activities are not specifically regulated in Georgia, and according to the Association of Georgian Small and Medium Sized Enterprises (SME), it hinders development. “First the law should be developed and then business. Due to the lack of legislation, small businesses cannot get any help from the state or from international organizations,”- says the head of the Association George Kutateladze. According to him, the only law that regulated small and medium businesses was abolished in 2006. “We proposed to the government a number of options, for example, such as in Lithuania, but so far the Ministry of Economy did not show any interest in our initiative. Small and medium enterprises cannot develop without a differentiated approach and different rules than in relation to large businesses. As a minimum, Georgia must adopt European legislation in this field, “- he says. Cancelled in 2006 law defined the concept - in particular, business was considered small if no more than 20 people operated in it with an annual turnover of no more than GEL 500 000, mediumsized was business in which no more than 100 people were employed with turnover that doesn’t exceed GEL 15 million per year. Despite the fact that the law is canceled, the Statistics Service is still guided by established criteria for determining small and medium-sized businesses. Levan Silagava, President of the Bread Producers Association, speaks about the need for such legislation. “Small and medium-sized businesses should be separated from big. The state should develop strategies to support these activities. It should be

two different strategies, “- he says. The Parliamentary Committee on Sector Economy agrees with the view that small and mediumsized businesses are in need of support, but they do not see the need for a special law. According to the deputy head of the Committee Temur Maisuradze, businessmen are not particularly active in this area, accordingly, the project does not exist in reality. “Today, small and medium businesses are not actively represented in the country’s economy, and they need rapid development. We had several meetings with them at which a number of claims and views were expressed. I asked them to explain exactly what they need but they demanded to change laws. In private, they speak about the problem, but it is not expressed in practical activity, “- says the MP. Some experts consider it inappropriate to adopt a separate law on the small and medium-sized businesses. According to the expert Gigi Bedianashvili, the separation of small and medium business from large will not bring any good. “All business should have one field of activity. Creation of artificial preferences may lead to the fact that the medium-sized business will not want to grow and reach the level of large, as will lose certain privileges. We must, on the contrary, encourage companies as much as possible. In addition, it can lead to sources of corruption, “- he adds. Mikheil Machavariani , the MP from the oppositional National Movement, opposes a separate stimulation of small and medium-sized businesses. “If the government intends to help small and medium-sized businesses, it is quite possible under the existing legislation. The current single tax rates should be maintained both for small, medium-sized and large businesses. Another thing that is necessarily is to lower taxes in general, but at the same time they should remain the same for all types of business, “- the deputy believes.

“DUBI GROUP” INCREASES INVESTMENT PORTFOLIO BY 35% IN GEORGIA

am Edward, representative of Arabic company has declared TV-company Maestro, that the investment portfolio will be grown by 35% and the figure will amount to 250 million USD. The sum will be spent for development of their own banking and hotel business in Georgia. “Dubi Group” builds 5-star hotel at the place of former Imeli building. To note, 34-story building will include hotel, trade center of 500 square m and

several-story parking places. The hotel will also include presidential apartments. The hotel will be managed by the international brand “Millennium”. Investment of 100 million USD has been made in the hotel construction. To remind, “Dubi Group” also holds bank KSB. It should be noted, that investment of the United Arab Emirates has reached 700 million USD in Georgian economy. The information is released by Ministry of Economy, which hosts delegation of the United Arab Emirates.

PROFIT OF “GEORGIAN LEASING COMPANY” IS INCREASED BY 85%

ccording to annual report of the company, “Georgian Leasing Company” has received a profit of 757 690 GEL in 2014, whereas the index has been 408 493 GEL

in 2013. However, company’s assets are increased by 10,8 million GEL and the index has reached 42,5 million GEL. Liabilities are grown from 26,6 million GEL to 33,6 million GEL.

Bonds of “Georgian Leasing Company” are included in the listing of Georgian Stock Exchange. Bonds will be released on Georgian Stock Exchange and B category listing from October 30. To remind, Bank of Georgia’s subsidiary company “Georgian Leasing Company” has placed bonds of 10 million USD at the market by public offer in late September. Nominal value on per bond with 3-year maturity amounts to 1 000 USD. Bonds withdrawal date is September 22, 2017.

“AL RAVAHED HOLDING” INTERESTED IN INVESTING IN GEORGIA

rabian company “Al Ravahed Holding” got interested to make investments in Georgia. Representatives of the company are visiting Georgia jointly with Al Mansour, Economy Minister of the United Arab Emirates. According to Economy Ministry, “Al Ravahed

Holding” is interested to make investments in cereals, vegetables, nuts and dairy projects. Delegation of the United Arab Emirates has arrived in Tbilisi on Monday. Business forum is held within the frame of the visit. According to Ministry of Economy, the investors will see the enterprises and privatization objects at the place on Wednesday.

May 25, 2015 #100

ECONOMY

caucasian business week

THE POINT THE GEL WILL STOP AT… All GEL-devaluating Factors have either Improved or Unchanged

he GEL exchange rate against USD has dropped by about 35% since November 2014. The degree of growth in misbalance between the currency inflows and outflows is another issue, but no one refuses the misbalance has grown. It is interesting what is the situation with factors and parameters that have provoked the GEL devaluation process. First of all, we should name money transfers and exports, as one of the basic factors of foreign currency. Exports contraction started at the end of summer 2014. However, the difference between the year of 2014 and the first quarter of 2015 consists in the fact the last year’s contraction in exports was driven by a decline in re-exports, while this factor worsened by the deteriorated economic situation on the CIS markets that holds a significant ratio on Georgia’s exports market. In terms of currency inflows, it would not be expedient to make focus on re-exports (currency outflow was recorded, but not return). Thus, the decline in exports has resulted in downturn in currency inflows, while even if the imports grows, the misbalance increases between the outflow and inflow and this factor negatively affect the exchange rate. But in this case, the negative impact of the imports on the exchange rate decreases every month. Since January all months have recorded an intensified decline in imports. Georgia’s foreign trade turnover in January to April 2015 marked 3 billion USD, down 13% compared to the previous report. Therefore, the exports marked 689 million USD, down 26% and the imports constituted 2.3 billion USD (down 8%).

An 8% contraction in imports signifies the currency outflow has declined by 200 million USD and this factor will make positive affect on the GEL exchange rate. Moreover, the imports downturn pace is also very important due to months. Namely, in January imports dropped by 0.8%, in February by – 3.6%, in March - by 5%, in April – by 20%. This signifies a contraction in currency inflows has halted, while unchanged currency outflows are declining. This process is expected to cease the GEL devaluation. Balancing tendencies are being discerned in the tourism sector too. The last month of 2014 recorded a decline in tourists’ inflows, but the yearly report showed a little upturn. The first quarter of 2015 has also ended in decline in tourists inflows. At the same time, the downturn pace was also decreasing and the month of April recorded a little upturn. The month of May is also expected to record a growing tendency, because tourism zones are recording an upturn in visitors’ inflows. Moreover, Tbilisi has hosted EBRD’s annual meeting and business forum and several thousands of highranking officials have visited Georgia. Moreover, in summer Tbilisi will host Youth Olympic Games and the number of tourists’ inflows is expected to grow. In January to April 2015, according to the Georgian Interior Ministry, a total of 1 381 000 visitors arrived in Georgia, down 2% compared to the same period of 2014. As to the monthly report, it is manifest the downturn paces have shrunk. In January international visits dropped by 3%, in February declined by 2%, March shrank by 2%, while April recorded a 0.4% upturn.

GEORGIA’S TOP TRADING PARTNERS: TURKEY, AZERBAIJAN AND CHINA

he value of Georgia’s exports and imports (External Merchandise Trade) experienced a slight downward trend in the first four months of 2015 in comparison to 2014, claims preliminary data published by the National Statistics Office of Georgia (Geostat). In January-April 2015, external merchandise trade (excluding non-organised trade) in Georgia amounted to just over $3 billion USD; a 13 percent decreased year-on-year (y/y). In the same time exports equalled $689 million (26 percent lower), while the imports stood at $2.3 billion (8 percent lower). The Geostat preliminary data revealed a negative trade balance of $1.6 billion in January-April 2015 and its share in external trade turnover constituted 54 percent. GEORGIA’S TRADE WITH EU COUNTRIES In the first four months of 2015 Georgia’s external trade with EU countries amounted to $838 million; a drop of seven percent compared to the same time in 2014. Exports amounted to $206 million (6 percent higher), while imports amounted to $632 million (10 percent lower). The share of these countries in the external trade of Georgia amounted to 28 percent; 30 percent in exports and 27 percent in imports. In comparison, in 2104 these figures were 26, 21 and 28 percent respectively.

GEORGIA’S TRADE WITH CIS COUNTRIES The first four months of 2015 saw the external trade of Georgia with CIS countries total $897 million – a drop of 24 percent y/y. Exports stood at $250 million (51 percent lower), while imports equalled $647 million (3 percent lower). CIS countries’ share in the external trade of Georgia constituted 30 percent; 36 percent in exports and 28 percent in imports. In 2014 these figures were 34, 55 and 27 percent, respectively). In January-April 2015, CIS countries accounted for 24 percent of the overall trade deficit, while this figure was 10 percent in January-April 2014. GEORGIA’S TOP 10 TRADING PARTNERS In the first four months of 2015, Georgia’s top trading partners were Turkey ($476 million), Azerbaijan ($290million) and China ($248 million). The share of the country’s top 10 trading partners in the total external trade turnover of Georgia amounted to 67 percent. MAJOR COMMODITY GROUPS BY EXPORTS AND IMPORTS Copper ores and concentrates reclaimed first place in the list of top exported items, equalling $86 million or 12 percent of total exports. Exports of motor cars totalled $73 million and its share in total exports amounted to 11 percent in January-April 2015. Geostat revealed ferroalloys occupied third place in terms of top exported items. Exports of this commodity stood at $73 million and 11 percent of Georgia’s total exports. The top import commodity in January-April 2015 was petroleum and petroleum oils; imports of which amounted to $184 million and eight percent of total imports. Meanwhile petroleum gases and other gaseous commodities followed next in the list with $179 million, or eight percent of imports. Motor cars came third with $175 million, or eight percent of imports.

Money transfers represent a significant source for the GEL exchange rate stability. A huge volume of foreign currency is directed to Georgia in the form of money transfers every year. Problems in this direction appeared at the end of 2014 because of the Russian factor, where the Rubles devaluation seriously affected money transfers to Georgia. The last period has recorded neither upturn nor decline in money transfers. This signifies the factors have negatively affected the exchange rate, but the tendency is not deepened. Moreover, it is also important a high pace of

growth in USD exchange rate on the international market has halted and even a little contraction is recorded. Besides the mentioned external factors, there are no domestic negative impacts on the GEL. The money mass has not increased and no budget pressure is recorded on the GEL. Thus, these developments and tendencies do not give ground to expect the GEL exchange rate further deterioration. All negative factors have either weakened or unchanged. As a result, their negative impacts on GEL have, in practice, become neutralized.

GEORGIAN RAILWAY REVENUES DROP BY 40% IN 2014

he published report by the company notes, that revenues of “Georgia Railway” are increased by 31,7 million GEL up to 511,5 million GEL in 2014. However, the growth has been fixed in all operating segments. Namely, the Railway has received revenues of 451,78 million GEL from freight transit, the figure exceeds by 27 million GEL to the rate of 2013. The company has received revenue of 37,81 million GEL from freight wagon rental, the index exceeds by 3,5 million to the previous year’s rate. Revenues from travelers transit have amounted to 18,31 million GEL, which is annually grown by 270 thousand. As for other type of revenues, the figure is grown from 2,91 million to 3,66 million. Profit is significantly reduced despite the revenue growth. Namely, “Georgian Railway” has received the income of 39,28 million GEL in 2014

instead of 65,23 million, which has been fixed in 2013. It should be noted, that profit reduction of 33% has been fixed in 2013. As for the company’s assets, the figure has amounted to 2,968 million GEL through a year (2,885 million -2013). Total liabilities are increased as well and the figure has amounted to 1,41 billion GEL (1,32 million). It should be noted, that freight turnover is reduced by 8,2% to “Georgian Railway” in the previous year. However, the company has served freight of 16,7 million t in 2014, which is 5 years’ minimum (2011 - 19.9 million; 2012 - 20.1 million in 2013 - 18.2 million).

S&P MAINTAINS GEORGIA’S RATING, LOWERS 2015-2016 GROWTH FORECAST BY 2.3%

eorgian economy has a positive prospect in a long-term period – international rating agency Standard & Poor’s concludes, which approved Georgia’s sovereign credit rating “BB” level, forecast “stable”. As the press release of the Agency notes, Georgia’s economy has been grown by 6% in a year through the last 10 years, which confirms economic development stability. “According to our estimation, the economy has a good prospect of growth. In addition, direct foreign investments in the economy will be important as well, which has a positive impact on sovereign rating level. Low state debt and control on the public sector finances are the positive rating factors”, - the statement says.

The Agency also regards, that national currency devaluation against the US dollar will deteriorate the banking sector’s asset quality (60% of banking sector’s assets are denominated in foreign currency, while the majority of borrowers take the revenues in GEL) and reduces the crediting pace. As a result, the influential agency economic has reduced Georgia’s growth forecast index – experts of Standard & Poor’s expect economic growth of 2,3% within 2015-2016. In addition, the Agency expects that export from Georgia will be reduced by 20% in 2015. As for the different sources of foreign currency receive – remittances, great share accounts for Russia, Greece and Ukraine, will be reduced and it will be 1-2% of GDP, which is lower on the average index of the last 5 year (9% of GDP).

OPINION

QUOTES

RETAIL MARKET FUNDAMENTALS

“Floating Exchange Rate will Stabilize Georgian Lari”

AZIM SADIKOV Tbilisi Representative of the International Monetary Fund

According to the International Monetary Fund, a floating exchange rate of the national currency is the best monetary tool to shield the Georgian economy from the external challenges. “This will protect the real economy from external shocks. Once the floating exchange rate is introduced, the national currency will take the shocks upon itself. At the same time for such extremely dollarized economy such as Georgia, the devaluation of the national currency negatively affects the financial situation of the citizens who have income in GEL and loans in USD,”- says the IMF Resident Representative in Georgia Azim Sadikov. According to Sadikov, the Georgian national currency has a good prospect in general. “In the short term, the government must continue measures aimed at the de-dollarization in order for the currency risks to have less impact on the economy. The Georgian national currency has a good prospect, because in spite of the devaluation of the exchange rate against the dollar, confidence in the Lari is still high, as mass exchange of the Lari for foreign currency was not recorded and its purchasing power is maintained. Another positive factor is the low level of inflation. The flexibility of the national currency in the medium term will foster the economic development of Georgia,”Sadikov prognoses.

“Georgia is a True Regional Hub with a Fantastic Location”

WILHELM MOLTRER Vice President of the European Investment Bank

“Georgia has a fantastic location. In terms of geographic location Georgia is a true regional hub,” – European Investment Bank’s Vice President Wilhelm Moltrer spoke in this regard during with CBW. “Georgia’s location a priori makes it a regional hub. Georgia’s another advantage as Caucasian country is its economic aspiration toward the European market and its standards. Combination of Georgia’s location and its economic aspirations is definitely the key for foreign businesses to become interested in the country,” the EIP Vice President said. In regard with ease of doing business, Mr Moltrer noted that this aspect makes Georgia an attractive country for the foreign investors. Vice President of EIB pointed out the effectiveness of Public Service Halls throughout the country. He recalled that one of the first striking impressions of Georgia during his first visit to the country was the Public Service Hall in Batumi with its successful model of operating. “What is attractive for business? This is first and foremost a stable economic atmosphere the economic risks of which can be calculated. A functional state administration is another factor that plays into that picture. Tbilisi Public Service Hall is definitely an example of this functionability and reliability. Georgia is truly an effective and interesting place for foreign investors,” – European Investment Bank’s Vice President stated.

“There are no Cartel Deals on the Oil Market”

ZAAL IAKOBIDZE Executive of the oil company Senta

May 25, 2015 #100

caucasian business week

Me Iakobidze refutes the widespread belief in the Georgian society that major oil importers regulate prices by colluding through the cartel, in order for them to be consistently high. He told CBW that it would be wrong to incriminate the private sector in cartel-type transactions. “Based on the current situation, the difference between the cost and retail price of fuel is not very high. Accordingly, there is no basis for suspecting price collusions. Oil importers today get the lowest possible profit. As for Senta, we entered the market in 2015 with low prices. We are trying to keep prices lower than the major brand companies,”- the businessman explains. According to him, Senta maintains relatively low prices at the expense of the remaining reserves, but does not rule out that eventually the prices will be increasing. “At this point, the status quo is dictated by two factors - the international oil price and the exchange rate of the national currency,” - Zaal Iakobidze notes.

ith 7.8% of national GDP in 2013, retail trade is the largest economic sector in Georgia. Output has been increasing steadily since 2009, with average annual growth of 12.8%. Including wholesale trade, fuel and repairs, the entire trade sector accounts for 17.3% of national GDP, illustrating its importance to the economy of the country. Employment in the sector is 115,300 - around 11% of total employment in Georgia. With its 81% share, Tbilisi has a dominating position in the trade economy of Georgia. The sector accounts for around 27% of Tbilisi GDP. The average growth rate of the trade sector in Tbilisi was 20% during last three years. Adjara and Imereti are another large regions of trade with 5% and 4% of trade sector in Georgia respectively. Along with the development of the retail trade sector, annual per capita retail expenditure has been growing during last decade. Per capita retail spending has doubled from GEL 591 in 2005 to GEL 1,218 ( around USD 700) in 2011. In international comparison, this looks still very low, which is also reflected in its structure. The share of spending on food is very high (60% in 2013), but there is clear evidence that this is decreasing (65% in 2011).

Georgia Retail Market Overview SUPPLY Although the Georgian retail landscape is still dominated by traditional supply, modern shopping centre development is accelerating. During the last two years the total volume of shopping centre supply in Georgia grew by 28% approximately and currently amounts to 292,000 sqm. Growth has mainly been driven by developments in the capital, Tbilisi. After the opening of the country’s first large modern mall in 2012 (Tbilisi Mall), the next major scheme (East Point) will start operations at the beginning of next year. The total amount of retail space in the three main Georgian cities amounts to around 1.1 million sqm, out of which 80% is concentrated in Tbilisi, 11% and 9% in Batumi and Kutaisi respectively. It is worth mentioning that modern shopping centre supply hardly exists outside the capital Tbilisi. In addition, modern big box supply does not exist in Georgia. Despite the fact that during next two years supply of shopping centre space in Georgia will increase by 42% and 10% respectively, the country will still remain far behind the CEE average level of shopping centre supply.

OCCUPIER DEMAND The main occupiers of retail real estate in Georgia are fashion brands, supermarkets, fast food chains and consumer electronics. Banks and pharmaceutical companies occupy quite a significant share of retail space in comparison with European cities. Although Tbilisi is the most attractive city for international retail brands in Georgia, some of them have extension plans in other cities of the country, especially Batumi and Kutaisi. Modern fashion retail in Georgia is primarily operated by franchisers. The major representative on the market is Retail Group Georgia, part of SaudiArabian Fawaz Al Hokair, the official licensee of the Inditex Group in the Caucasus Region. They represent 35 international brands, such as Zara, Marks & Spencer, Gap, Banana Republic, Aldo etc. The company has expansion plans in Tbilisi. Another major player on Georgian fashion retail market is international corporation ICR, which represents European brands of clothing, footwear and accessories such as Ecco, Geox, Bata, Okaïdi & Obaïbi etc. as well as the My Home furniture store, food brands Brioche Dorée - chain of café-bakeries, and one of the Italian Pomodorissimo -pizzeriasteakhouse. Among fashion retailers should also mentioned Address LTD – representative of Celio, Tom Tailor, 123, Etam, Promod etc. and Debeni LTD – representative of LC Waikiki, Mango, Debenhams etc. After its first entry in 2012, Carrefour has opened two additional stores in Tbilisi and plans to open another five branches in the next two years. The recent entry of Spar should also be noted, which will operate up to 50 stores by the end of 2014. Furshet is increasing its chain up to seven branches by the end of this year. Together with international brand entries, Georgian supermarket chains – Fresco, Smart and 2 Steps have aggressive plans for future expansion in the next two years. Competition in the Georgian fast food market grows significantly, driven by the expansion plans of McDonalds, Wendy’s, Subway and recent entries of KFC, Dunkin’ Donuts, Coffee Bean and Domino’s Pizza. Other key retailers in Georgia include consumer electronics chains Elit Electronics, Metro Mart, Smiley and OK, Georgian banks, and pharmaceutical companies. Recent entrants (2012-2014)

May 25, 2015 #100

BANKING NEWS

caucasian business week

NBG PRESIDENT DOES NOT EXPECT FINANCE MINISTER - THE BANKING FURTHER DEPRECIATION OF GEL IN SUPERVISION DEPARTMENT MID-TERM PERIOD REMAINS UNDER CONTROL OF THE resident of the National Bank of Geor- value because of several significant factors. The gia Giorgi Kadagidze, does not expect most significant one is that the existing deprecia- CENTRAL BANK

the GEL to depreciate further in the mid-term period. Giorgi Kadagidze made this comment after holding a meeting with head of the Budget and Finance Committee Tamaz Mechiauri, together with Finance Minister Nodar Khaduri, Regional Development Minister Nodar Javakhishvili and business ombudsman Giorgi Gakharia. According to Kadagidze, the GEL has gained

tion influences the tax balance. As a result of this, import has been corrected and the GEL exchange rate is pressured no more. In Kadagidze’s words, additional factors are a tourist season and other economic measures. “The loss we experienced has passed and the GEL is gaining value. I do not expect a further depreciation in the mid-term period,”- Kadagidze notes.

NBG’S PROFITS SHRANK BY 5.6% IN 2014

rofit was reduced by 5,6% to National Bank of Georgia in the previous year. As of NBG’s report 2014, central bank’s profit has amounted to 114,646 million GEL through the year, while profit of 2013 has exceeded 121 million GEL. It should be noted, that total revenues of NBG has

been increased by 554 thousand and the figure has made up 115,58 million in the same period. Growth has been fixed in terms of assets – assets are grown by 433 million up to 6,336 million through a year. At that, 5,93 million is denominated in foreign currency, whereas 1,3 billion – in national currency.

IMF: CURRENT ECONOMIC ENVIRONMENT IN GEORGIA AND THE REGION IMPACTS THE BANKS NEGATIVELY

nternational Monetary Fund (IMF) has released a new review of the Caucasus and Central Asia on Tuesday and repeated the outlook made on April 15. According to it, Georgia expects economic growth of 2% instead of 5%, as it has been predicted in January. Experts of IMF regard, that Georgian economic growth will be accelerated in 2016. The reasons of economic growth hamper are as follows: economic drop in Russia, sharp reduction of remittances from Russia, export decline and low prices on the oil products. IMF estimates, that economic of oil importer countries is grown by 1,5%. However, drop of 1% is expected in Armenia, while 1,7% - in Kir-

gizstan and 3% - in Tajikistan. Economic has increased by 0,5% in Russia in 2015, 0,6% in Azerbaijan, 2% - in Kazakhstan, 9% - in Turkmenistan and 6,2% - in Uzbekistan. Experts of IMF consider, that current economic environment in the region negatively reflects on the banks, as financial systems are under the pressure of several sources. Currency rate increase will grow credit and payment risks. IMF notes in its own report on strengthening of the supervision of the banking sector and notes, as well, that it is necessary to strengthen the foundations of crisis management. The Fund notes, that conduction of structural reforms are vitally important for the region in an average-term period.

HUMAN RIGHTS COMMITTEE DID NOT APPROVE NBG’S REPORT 2014

embers of Human Rights Committee have not expressed harsh arguments of rejection on Friday session . Gedevan Popkhadze, chairman of the Committee did not agree to the global fundamental factors of causing crisis named by Vice President of NBG. However, he declared, that the mentioned reasons were objective and he revealed subjective approaches in Mestvirishvili’s statement. Popkhadze has focused attention on insufficient coordination between the government and NBG. He also noted, that political opponents are utilizing GEL rate for revenge and they do not care about the population. According to his estimation, inadequate rhetoric sustains negative expectations, which has an impact on the rate as well. He advised Archil Mestvirishvili to make selfcritic and declared, that NBG’s activities have not been the best despite the high estimations from the experts of international authoritative organi-

zations. Mestvirishvili has made a note linked to NBG’s mandate. He regards, that central bank is obligatory to stabilize prices and rate regime – floating. He regards, that NBG makes calculation of their activities for a long-term period, while estimation of ongoing processes is more relevant by the end of several months. Similar to this, when activities of NovemberDecember, 2014 is estimated by now. It has been noted, that the problems should be deepened, if NBG did that, which was offered in late 2014. Therefore, NBG has managed to defend the country within the frame of its mandate. According to him, pressure and blames on NBG is not strange and other countries are characterized with that. However, the processes will be arranged naturally alongside the growth of population’s financial education. George Kadagidze, president of NBG will represent Report 2014 at Finance and Budget Committee of parliament of Georgia on Monday of the next week.

BANK SECTOR’S PROFITS SHRINK BY ANNUAL 4.3%

anking sector has finished January-April with a profit of 114,778 million, while 4 months’ net profit has been 119,88 million GEL. The profit is reduced by 4,3% through a year. April’s profit totals to 13,4 million GEL (March – 39, 6 million; February – 46 million;

January – 15,8 million). To note, 17 banks have a profit with total volume of 112 million GEL. However, the profit of 17 banks has amounted to 112 million in the same period of the previous year (4 banks have a loss – 7,9 million). The consolidated index includes data of 20 banks. Therefore, 19 banks operate on the market at this time.

he legislative initiative that belongs to the MP Tamaz Mechiauri includes the formation of the Banking Supervision Department as an independent legal entity that will remain under control of the National Bank of Georgia”, - Minister of Finance Nodar Khaduri commented on the legislative initiative proposed by the Chairman of the Budget and Finance Committee Tamaz Mechiauri which envisages the separation of the Banking Supervision Department from the National Bank of Georgia (NBG). When asked whether it was discussed in Parliament at a meeting which was attended by Minister of Finance Nodar Khaduri, National Bank President George Kadagidze and the Budget and Finance Committee Chairman Tamaz Mechiauri, Khaduri noted that this issue had not been considered at the meeting.

“Parliament is a legislative body, there is experience, including in recent history, when banking supervision didn’t subordinate to the National Bank, but as far as I know, we are talking about an independent legal entity under control of the National Bank of Georgia “, - Khaduri explains.

TBC BANK’S RATIO IN RETAILS DEPOSITS PORTOFLIO TOTALS 34.3%

BC Bank’s share totals to 34,3% on the retail deposit market by May 1(2014 -33% -32% 2013; 2012 -35.2%). Private individuals’ deposits of 2,331 billion GEL are placed in the bank (01/04/15 –

2,24 billion), while the total portfolio (without banking deposits) amounts to 3,774 billion GEL (01/04/2015 – 3,57 billion). The bank is already represented with 2 brands (TBC and TBC Constanta) on the market in this year.

PASHA BANK - PLATINUM SPONSOR OF SPOTLIGHT 2015

n 24 May Radisson Blu Iveria hosted the year’s main marketing event - Spotlight 2015. PASHA Bank was the platinum sponsor of the event. Spotlight takes place since 2013 and it hosts Georgian marketers and other professionals who share their experiences with the public and colleagues. This year a new project - Spotlight Marketing Library initiated by PASHA Bank was presented to the guests. The project is supported by Tbilisi Mediathek and Spotlight. Marketing Library aims to create one comfortable space with the professional literature in Marketing, Branding, PR and other relating fields that will be available for everyone interested in these subjects. “Spotlight’s role in developing local business and encouraging professional growth is doubtless, that’s why PASHA Bank is the platinum sponsor of the event. Even more! Together with Tbilisi Mediathek and Spotlight we presented Marketing Library project. Since the professional literature is not easily available in our country, we were inspired to found Spotlight Marketing Library and challenge other companies to donate books.” – said Anano Korkia, Head of PR and Marketing at PASHA Bank. PASHA Bank is focused on long term business partnerships and thus it will continue cooperation with Spotlight in future.

EBRD TO FINANCE THE CONSTRUCTION OF NENKSRA HPP IN GEORGIA

he European Bank for Reconstruction and Development (EBRD) is teaming up with the Partnership Fund (PF) a Georgian state-owned shareholding company. EBRD will provide support for the Nenksra Hydro Power Plant (HPP) project earmarked for the upper Svaneti region. EBRD President Sir Suma Chakrabarti announced this at the EBRD 24th Annual Meeting in Tbilisi. EBRD is ready to take part in funding the Nenskra HPP, which will cost about $1 bil-

lion USD. “The hydropower sector is one of our priorities. We have made the decision to fund the Nenskra HPP project,”- said Chakrabarti. About $200 million USD is planned to be allocated for the Nenksra HPP project. The plant will be constructed on the Nenskra River in Upper Svaneti, a mountain region of Georgia. The HPP is expected to produce 1.2 billion kilowatts of electricity annually. The project is planned to be completed by 2019.

PUBLICITY

caucasian business week

May 25, 2015 #100

COMPANY NEWS

caucasian business week

ZAZA SOPROMADZE: IT WOULD BE GOOD IF OTHER COMPANIES ALSO FOLLOW NATAKHTARI FUND’S EXAMPLE

veryone in Georgia universally acknowledges Natakhtari slogan “Would You Like Natakhtari Lemonade?” as the best one, voiced by a child, making customer to feel confident about the product. It is worth to note that the Natakhtari Company did not present its product with a child’s voice accidentally; it really cares for the future generation. On Saturday, May 16, Company Natakhtari hosted representatives of the Social Services Agency of the Ministry of Labor, Health And Social Affairs and Association Our Home -Georgia, as well as pupils of Caritas Georgia’s small family type home. The purpose of this meeting was very important, a memorandum on cooperation was concluded between the Social Services Agency and Association Our Home Georgia. This document was signed by Revaz Barbakadze, CEO of the Association Our Home Georgia and Zaza Sopromadze, Deputy Minister of Health and Director of the Social Services Agency. The memorandum provides for mutual cooperation and supporting activities within the framework of Natakhtari Fund’s Project Take Care of Future. After signing a memorandum, guests met with beneficiaries employed at Natakhtari Factory. TORNIKE NIKOLAISHVILI, Marketing Director of Natakhtari Company: “I am delighted that with the Fund’s assistance 61 beneficiaries are employed in various companies. I would like to remind you that the goal of the project is to prepare children deprived of parental care for independent life and support the process of their integration in the society. Out of 61 adolescents, as I noted, three are working at technical unit of Natakhtari Factory. This is also symbolic

at certain extent, since these people take part in Natakhtari production. Also, we decided to employ more beneficiaries’ at the company, since we really care for the future generation and their employment.” MANANA OMARASHVILI, Head of the Psychology Service of the Association Our Home Georgia: “We meet frequently and I am glad of that because we always have to voice positive information. The children’s welfare was the main reason, which made Natakhtari to assume the responsibility and we can talk a lot about this. Credit is to be given to the Fund established by the Company, which has been doing many good things for years. And this is how Natakhtari is distinguished from the other companies, it really cares for the young generation and, at the same time, it is not one-time assistance. The Company undertakes social responsibility called preparation of adolescents and youth deprived of care for independent life. Our cooperation started in 2011 and since then we celebrated many successes. The recent biggest achievement was that 10 of our beneficiaries got enrolled in the best universities of the country. Natakhtari Fund also cares for employment of our children. We are very proud of that, since these young people will acquire vocation and have guaranteed peaceful future. 30 beneficiaries live in houses rented by Natakhtari Fund; they are being trained in school subjects and think of their future. As you know, internship and employment are very important and the Fund provides great assistance in this regard. Finally, our common goal is to empower children to become strong and independent, not to be afraid of their past and the most important thing is that they will be proud in the future of

their lives. Therefore, we would like to express our deep gratitude to Natakhtari Fund for its efforts, since it is not easy to find employment for 61 beneficiaries today.” ZAZA SOPROMADZE, Deputy Minister of Labor, Health and Social Affairs: - As you know, childcare is one of the major priorities of the Georgian Government. In this regard a special Coordination Council was established in the Government chaired by the Prime Minister and we would like to note that many interesting projects are being designed. The main implementer of these projects is our Agency itself and children deprived of care are the main focus. The thing is that when children leave the institution, being funded by the state, and start independent lives, they need the assistance of the type provided by Natakhtari Fund. We welcome their assistance and would like to thank them

for that, since dozens of employed children is a great result for one company and it is important to implement similar projects in all regions of Georgia not only in the capital. On behalf of the Government of Georgia and Social Services Agency of the Ministry of Labor Health and Social Affairs, I express my gratitude once again to the Fund and wish success in such an important endeavor. It will be vital that the other companies also follow Natakhtari’s example and make their contribution. GELA GOGIASHVILI, Beneficiary employed by Natakhtari Fund: - It has been a month and a half since I started working at Natakhtari. It was very difficult from the beginning, but I have good co-workers who helped me to get adapted to work. I earn enough to live on my own, I thank Natakhtari Fund for that!

SOCAR OPENS OFFICE IN GEORGIA’S BATUMI

zerbaijan’s state oil company SOCAR opened its office in Batumi, Georgia, said the company in a message May 18. The building, built near the Batumi Port, will house the offices of SOCAR Energy Georgia, and its structures. The construction of the four-story building, designed for 150 people, kicked off in 2012. The building has work and technical rooms, a dining room for 24 people, a kitchen, and administrative rooms and a conference hall. The building’s architect is Rauf Khidirov. It was awarded the status of cultural heritage, and has a total area of 3,383.51 square meters.

MEMORANDUM BETWEEN TBC BANK AND AS GEORGIA REGARDING DIRSI PROJECT

partnership memorandum was signed between TBC Bank and “AS Georgia”, the daughter company to the international development holding “AS Group Investment”, regarding the “DIRSI” project. The memorandum was signed on May 18th 2015 and its new conditions make newly-built apartment complexes in Transcaucasia more accessible. In frames of the joint project, the consumer will have the ability to purchase an apartment in a completed “DIRSI” complex through TBC Bank’s mortgage rates and take advantage of accessible conditions, which include co-financing of just 15%, a long-term payment plan and a preferential interest rate. Several other advantageous offerings were facilitated by “AS Group Investment” for people looking into purchasing “DIRSI” flats in finished apartment complexes: A fixed currency exchange rate of 1 USD = 2.0

GEL in case of purchasing 2-room or 3-room flat; A gifted Nissan Sunny automobile to a consumer who purchases a 3-room flat till the end of July 2015. Additionally, 1 square meter’s price in the apartment complex “DIRSI” will start from $900. The international holding “AS Group Investment” has been successfully implementing government and private sector projects for a long time in both Georgia and Azerbaijan. This comes as a result of effective management, contemporary technical and production bases and systematically updated technologies, making “AS Group Investment” a trustworthy business partner in many countries around the globe. A multitude of contracts signed with leading brands of the construction sector are a testament to that. The memorandum signed today with TBC Bank is another proof that “AS Group Investment” effectively and timely executes all plans within the “DIRSI” project

During the opening of the building, which was attended by Georgia’s Prime Minister Irakli Garibashvili and the SOCAR President Rovnag Abdullayev, it was noted that the opening of SOCAR’s new office is an example of developing working cooperation and partnership between Georgia and Azerbaijan.

YENI RAKI’S FIVE EXCLUSIVE SUPPER RECEPTIONS IN TBILISI

fter London, Berlin, Sofia, Varna, Yeni Raki will host 5 exclusive supper receptions at Tbilisi’s most famous restaurants. Georgia’s five best restaurants of Funicular, Black Lion, Blue Mountains, Bread House and Tabla have been chosen because of their high-quality services. Jointly with Yeni Raki, the five exclusive supper events will be prepared by chief-cookers Marika Gubeladze and Vakho Babunashvili. Yeni Raki is a leading Turkish manufacturer of anise-flavoured alcoholic beverages. According to Impact Databank, Yeni Raki is the world’s leading anise-flavoured alcoholic beverage in terms of a retail price and the 17th most expensive alcoholic brand. Special dishes will be prepared for the five spe-

cial supper receptions accompanied by the taste of Raki. Yeni Raki’s five exclusive supper receptions will be held as part of the Unrush Your Works with the main message: Halt, Share, Enjoy Friendly Environment and Taste Raki. A total of 50 special guests have been selected for Yeni Raki’s 5 exclusive supper receptions. Rich culture heritage of Raki is an inseparable part of modern Turkish restaurants and entertainment centers. Yeni Raki, the most famous representative of this heritage, is a symbol of connection, love and friendship. Raki has got a 500 year traditional history. “We have explored the history of Raki. Later we received a history that has given a rise to strong anise-flavoured drinks we know today. We have discovered the history rich of impressive information”.

CURRENCY

IS THE CRUDE OIL RALLY OVER? BY OLE HANSEN, HEAD OF COMMODITY STRATEGY, SAXO BANK

he crude oil rally has probably run as far it could at this stage. The rally was driven by a spectacular increase in investment demand for crude, both through ETF’s and futures. While US production and inventory levels look set to be reduced over the coming months the continued increase in production from key OPEC members such as Saudi Arabia and Iraq has ensured that the global supply glut is very slow to be reduced. In the short term (next 3-6 months) I see an increased risk of a 10 dollar correction on the basis that fundamentals have failed to support the rally. US shale oil producers which have seen production costs collapse as the industry has become oversupplied with workers and equipment are gearing up for a resumption of production should the price of WTI crude approach 65 dollars (59 currently). Longer term much depends on the level of economic growth and demand. The sharp sell-off in crude oil since last August only seem to have improved demand in the US while many of the major EM countries have so far not seen any significant pick-up. Refineries have seen very profitable margins for several months now and as a result they have maintained a strong demand for crude oil, not least in the US. If however demand for products fail to pick up we will only have suc-

ceeded in moving oil from one tank (crude) to another (gasoline). Towards the end of the year WTI crude should recover back towards 65 USD but given the US shale industry’s ability to cut cost any recovery above this level will prove shortlived as shale production recovers unless a major geopolitical event erupts. As for Gold, it continues to be range bound and the recent attempt to break above resistance in 1225 to 1235 area have so far failed. A rally in stocks, bonds and the dollar today however have so far not triggered any major sell activity which could indicate some underlying strength. Hedge funds and money managers failed to see the latest move higher and as of last Tuesday held a netlong futures position close to the lowest level in 16 months. This level of light positioning has attracted some new buying but so far not enough to take it above resistance. The market seems to be slowly changing its focus from deflation towards the potential for emerging inflation and this combined with record low core bond yields will continue to provide gold with support. In the short term however the uncertainty related to if and when the US will make its first strike on interest rates should keep the investment appetite muted and ensure that the price will hang onto 1200 for a while longer before moving higher later in the year.

IMF SAYS BOJ, GOVERNMENT OVERLY OPTIMISTIC ON JAPAN’S ECONOMIC PROSPECTS

May 25, 2015 #100

caucasian business week

he International Monetary Fund warned the Bank of Japan will take longer than it expects to hit its inflation target even with more monetary easing, and said “bolder” structural reforms are required to shake off an entrenched deflationary mindset. In a statement after “Article 4” consultations with Japanese policymakers released on Friday, the IMF urged Prime Minister Shinzo Abe to speed up fiscal reform and not rely on “overly optimistic” estimates in fixing the country’s finances. The value of the yen on a real, effective basis has broadly stabilized after weakening somewhat during the second half of 2014, it said. “Without bolder structural reforms and credible fiscal consolidation, domestic demand could remain sluggish, and any further monetary easing could lead to overreliance on the depreciation of the yen,” the IMF said. Since deploying “quantitative and qualitative easing” (QQE) in April 2013 and expanding it in October last year, the BOJ has stood pat on policy on the view the economy will recover enough to nudge inflation to its 2 percent target. But inflation ground to a halt on falling oil costs and soft consumption, keeping alive expectations of more easing later this year. The IMF said that while there is not much slack left in the economy, lower energy costs and “deep entrenchment” of the deflationary mindset were keeping inflation subdued. Inflation expectations have been broadly flat at around 1 percent in recent months, suggesting the “regime shift” desired by the BOJ has not yet materialized, it said.

“The monetary transmission is weak so that even with further easing, reaching 2 percent inflation in a stable manner is likely to take longer than envisaged by the BOJ,” the IMF said. The comments contrast with the BOJ’s view that the flood of money it is pumping will spur inflation expectations and encourage households to boost spending. “INCOMPLETE” REFORMS Having pushed back the timing for hitting its price target last month, the BOJ now expects inflation to hit 2 percent by around September next year, a forecast analysts still see as too optimistic. Given the delay in lifting inflation, the BOJ must stand ready for further easing such as through steps like increasing asset buying, targeting assets with longer durations and cutting a 0.1 percent floor set on market rates, it said. The IMF warned that the biggest risks for Japan came from weak domestic demand and “incomplete” fiscal policy and growth strategies. Abe will release a fiscal consolidation plan next month with the goal of returning to a primary surplus in fiscal 2020 and then lowering the debt-GDP ratio, which is among the worst for advanced economies. The economic assumptions behind the government’s fiscal policy have been “overly optimistic” and risk hurting market trust in Japan’s resolve to fix its finances, the IMF said. “A concrete and credible medium-term plan would remove uncertainties about fiscal intentions, which could be hampering domestic demand, and help to respond to downside risks,” it said.

IMPORTANT RELEASES TO KEEP FOREX MARKET BUSY

ast week, lukewarm US monthly retail sales data and falling consumer sentiment raised concerns over the pace of economic recovery in the world’s largest economy and dispelled fears that the Federal Reserve would raise interest rates soon. Meanwhile, the Empire State Manufacturing Index showed improving manufacturing conditions but fell short of consensus estimates. The disappointing data flow continued exerting pressure on the US Dollar, which depreciated against most major currencies with the overall US Dollar Index (I.USDX) weakening for a fifth consecutive week. Going forward, this week’s RBA, BoE and FOMC monetary policy meeting minutes and BoJ monetary policy statement along-with other economic releases will dictate sentiment in the Forex market. From US economic calendar, housing market data accompanied with a regional manufacturing index and the minutes from the Federal Reserve’s last meeting are the key highlights and would determine this week’s direction for the US Dollar. Data from US housing market begins with the release of government reports on building permits and housing starts for the month of April, scheduled for release on Tuesday. Economists expect the building permits to hold steady above the 1.0 million mark and print 1.06 million units annualized rate. Meanwhile, housing starts are also expected to reclaim 1.0 million mark and show a reading of 1.02 million units. Also this week’s housing data features the release of existing home sales data, scheduled on Thursday. After reclaiming the 5.0 million units mark in March, existing home sales data for the month of April are expected to continue climbing higher and come-in at an annualized rate of 5.23 million units. The minutes from the Federal Reserve’s latest meeting in April is scheduled for release on Wednesday. On the back of recent weak economic data, the minutes might continue raising concerns over the pace of economic recovery. The minutes could also provide some clarity over the prospects of any near-term rate hike. Hence, market participants are expecting the minutes to be the main driver for this week’s US Dollar movement.

move back towards its 2% target by 2017. In March, UK CPI remained at 0% for second consecutive month and is expected to remain flat at 0% in April too. The upcoming release of UK retail sales data for the month of April is scheduled for release on Thursday. In the month of March the indicator registered a decline of 0.5% against the consensus estimate for a rise of 0.4%. Consumer spending, which remains supportive pillar of UK’s economic recovery, is expected to show improvement in April by posting a gain of 0.4% on a month-on-month basis. Meanwhile, the minutes from BoE’s latest policy meeting is unlikely to show any change in the number of MPC members showing willingness to raise benchmark interest rates. However, since BoE has already hinted towards normalizing the monetary policy somewhere in the middle of 2016, the minutes are unlikely to trigger any directional move for GBP pairs. From the Euro-zone, investors will be particularly focusing on the release of manufacturing and services PMI readings from Euro-zone’s two largest economies, Germany and France, the broader Euro-zone PMI for the month of May, scheduled for release on Thursday. The German manufacturing and services PMI figure are expected to show continuous expansion, but at a slightly slower pace. French manufacturing PMI is expected to remain in contraction territory while services PMI is expected to continue showing expansion. The overall Euro-zone PMI data is expected to show activity in both manufacturing and services sectors expanding at a slightly slower pace than recorded in the previous month. Meanwhile, analysts continue expecting Euro-zone inflation to remain subdued with April CPI, scheduled for release on Tuesday, expected to remain flat on a year-on-year basis. Other key economic release featuring this week’s Euro-zone economic calendar features the release of German ZEW economic sentiment and Ifo business climate for the month of May, scheduled for release on Tuesday and Friday respectively. Following a descent recovery in EURUSD from multi-year lows, near-term dips are likely to be bought into on the back of expected improvement in this week’s PMI figures,

Apart from the US housing market data and FOMC meeting minutes investors will confront the latest print on US headline inflation data, consumer price inflation (CPI), for the month of April, which is scheduled for release on Friday. After printing a modest rise of 0.2% for two consecutive months, in-line with consensus estimates, economists are expecting April reading to rise by 0.1% on a month-onmonth basis. Excluding the volatile food and energy prices, the Core CPI figure is expected to register a rise of 0.2%. Investors will also have glimpse of US manufacturing sector from this week’s Philly Fed Manufacturing Index May, which is scheduled for release on Thursday and is expected to show improving manufacturing conditions by printing 8.3 as compared to a reading of 7.5 for April. Market is likely to have already priced-in the recent dismal US economic data and also seems to have turned cautious on the US Dollar. Should the FOMC minutes also reflect additional risk to the US economic recovery, thus scaling back the prospects of an interest rate hike, it would in-turn pave way for extending the near-term corrective move for the US Dollar. From the UK, market participants will keep a close watch on the inflation and monthly retail sales data. This accompanied with the minutes from BoE’s latest monetary policy meeting is likely to infuse some volatility in GBP pairs. Last week BoE’s quarterly inflation report painted a more pessimistic picture of the UK economy as the central bank scaled back its growth forecasts in the years ahead. The central bank, however, said that it remains on track to normalize its monetary policy by raising interest rates in the middle of 2016 as it expected the annual inflation to

thus helping the pair to extend its near-term recovery. Elsewhere, this week’s BoJ’s monetary policy decision, scheduled to be announced on Friday is likely to prove a non-event for the Forex market. However, market player would be keen to see BoJ’s evaluation of the latest economic conditions following the release of GDP data for the first-quarter of 2015, which is scheduled for release on Tuesday. The Preliminary release of the first quarter economic growth is expected to match the final GDP print of 0.4% for Q4 of 2014. Divergence from the expected reading is likely to have an immediate effect on JPY pairs. Economic releases that could impact movement for AUD pairs includes the release of minutes from RBA’s monetary policy meeting held in May, when it decided to cut its benchmark interest rates and is scheduled on Tuesday. Also, being Australia’s largest trading partner, the flash version of HSBC’s Chinese manufacturing data for the month of May, scheduled for release on Thursday, will also be of importance for some meaningful movement in AUD pairs. The minutes would be looked for extending further support for AUD, which rose even after the RBA rate cut announcement but downplayed the likelihood of any further easing in the near-term. Meanwhile, the flash version of HSBC’s Chinese manufacturing data for the month of May will be closely watched to gauge the economic health of the world’s second-largest economy. The PMI data is expected to continue printing below 50 reading, indicating contraction in manufacturing activity. Improvement in the Chinese manufacturing activity or even a release that matches consensus forecast is likely to boost the near-term demand for AUD.

Admiralmarkets.ge/analytics/ facebook.com/adimralmarketsgeorgia/

May 25, 2015 #100

RESEARCH

VEHICLE MARKET ENERGY SECTOR - 2014 SURVEY

caucasian business week

ccording to the first quarter of 2015, there are 846 386 light vehicles registered in Georgia. Almost half of these cars are Sedan (38%). There are almost equal number of hatchback (16%) and off-road (so called Jeep, 15%) types of vehicles.

NEIGHBORHOOD

Russia’s Rejoining the G-7 Community is Unthinkable - Merkel

ussia must demonstrate willingness to act within the international law, before it can rejoin the G-7. German Chancellor Angela Merkel stressed this point in her address to Germany’s lower house of parliament, Bloomberg reports. In Merkel’s words, Russia’s current political stance is unacceptable for the European community. “Thinking in spheres of influence is something we can’t accept in Europe in the 21st century.” A return to the G-8 format is unimaginable while Russia continues to violate international law in Ukraine, the Chancellor stated. “The developments in Ukraine are the reason why we meet in Elmau as a group of seven, not eight,” reports BBC’s Russian service. According to Merkel, this group shares a common set of values, among which democracy and sovereignty of law are the highest. Hence, Russia’s actions in Ukraine are seen as unacceptable to G-7 members, which is currently comprised of the U.S., Japan, Germany, Canada, the U.K., France and Italy.

Kazakhstani Government’s 100 Steps to Become a Leader by 2050

arlier this month Kazakh President Nursultan Nazarbayev informed the public regarding his plan to outline 100 concrete steps to implement five institutional reforms in the country. The detailed document became publically available this week. The document represents Kazakhstan’s Singaporean plans of sorts, in order to establish the country among global leaders. The step-by-step plan of the Nation for implementation of five institutional reforms of President Nursultan Nazarbayev was published in the print media, Kazpravda.kz reports. Georgian vehicles is quite outdated – the majority of cars (67%) were manufactured before 1999. 1015-year old cars represent one fifth (22%) of vehicles in Georgia and 5-10-year old cars – only 7%. The rate of new cars (production year - 2010 and later) is 3%.

Dubai Named World’s Second Most Important Shopping Destination

bout 55.7 per cent of retailers in Dubai are international brands while the city attracted 45 new global brands last year. Dubai has been named the second most important international shopping destination globally for the fourth consecutive year, according to a report by real estate consultancy CBRE. About 55.7 per cent of retailers in Dubai are international brands while the city attracted 45 new global brands last year alone, CBRE’s 2015 edition of How Global is the Business of Retail report found. Some of the new brands that entered Dubai last year include Hollister, Cavalli Caffe and McQ Alexander McQueen.

U.K. Inflation Falls Below Zero for First Time Since 1960

ritain’s inflation rate fell below zero for the first time in more than half a century, as the drop in food and energy prices depressed the cost of living. Consumer prices declined 0.1 percent in April from a year earlier, the Office for National Statistics said in London on Tuesday. Economists had forecast the rate to be zero, according to the median of 35 estimates in a Bloomberg News survey. Core inflation slowed to 0.8 percent, the lowest since 2001. With inflation so far below the Bank of England’s 2 percent target, policy makers are under little immediate pressure to raise the key interest rate from a record-low 0.5 percent. Governor Mark Carney said last week that any period of falling prices will be temporary and an expected pickup in inflation at the end of the year means the next move in borrowing costs is likely to be an increase.

Alibaba Sued Over Azerbaijan Sees 5.5% Rise Alleged Counterfeits he owner of several of the world’s bestin Economy

n January-April in Azerbaijan the volume of GDP rose by 5.5% to 16.6 billion manats compared with the same period last year. Report was told in the State Statistical Committee of Azerbaijan. According to information, during this period 36.2% of GDP produced in the industry, 3.0% – agriculture, forestry and fishery products, 13.5% – construction, 10.7% – trade and repair of vehicles, 6.0 % – transport and farm barn, 2.8% – tourist accommodation and catering, 2.0% – information and communication services, 15.2% – social and other services. During the reporting period, net taxes on products and imports accounted for 10.6% of GDP.

As for car import, the dynamic of last 5 years shows that the increase in import rate was high. Until 2014, the number of cars increased by 22-23%

WORLD NEWS

Russia can encounter problems with gas supply via Turkish Stream

ussia can encounter problems with gas supply via the Turkish Stream, Sergey Pravosudov, director of the Russian National Energy Institute, told Trend. He recalled that Russia and the European countries have long-term contracts on gas supply, most of which are active until 2019, the year when the term of the contract for the transit of Russian gas through Ukraine expires. “The gas delivery points are indicated in these contracts,” the expert said. “They are not on the border between the EU and Turkey.” Earlier, Russian Energy Minister Alexander Novak and Gazprom head Alexey Miller said that Russia will stop gas transit to Europe through Ukraine from 2019. Afterwards, the gas will be supplied via the Turkish Stream to the border of Turkey with the EU. “If Russia refuses to continue supplying gas to Europe via a route through Ukraine after 2019, it will be violation of the contracts that expire later than those signed with several countries,” he said.

known luxury brands has filed a fresh lawsuit against Alibaba Group Holding Ltd. , the latest challenge to the Chinese e-commerce giant’s assertions that it fights the sale of counterfeit goods on its platforms. The lawsuit, filed Friday in federal court in Manhattan by Gucci, Balenciaga, Yves Saint Laurent and other brands owned by Paris-based Kering SA, indicates that the company is unsatisfied with Alibaba’s efforts to address the problem of counterfeiting of its brands. The suit alleges that Alibaba and its associated companies “knowingly encourage, assist, and profit from the sale of counterfeits on their online platforms,” according to a copy of the filing reviewed by The Wall Street Journal.

Saudi Arabia seems willing to tolerate low oil prices

audi Arabia seems willing to tolerate low oil prices now in the hope that they are higher in the long-run, Jason Tuvey, Middle East economist at British economic research and consulting company Capital Economics said in a report obtained by Trend. He believes that Saudi Arabia’s strong balance sheet means that it can afford to take a longerterm view of the oil market. “This helps to explain why oil minister, Ali alNaimi, has so far refused to bow to pressure from smaller OPEC members to cut oil output in order to shore up prices, Tuvey said. Al-Naimi and other Saudi policymakers have consistently argued that they are not willing to keep higher-cost oil producers in business.” He said that the Saudis clearly feel that, by pushing up oil prices now, they would simply encourage further development of unconventional sources of oil which would ultimately threaten the Kingdom’s long-term position in the oil market.

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May 25, 2015 #100

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy

TBILISI GUIDE

caucasian business week

7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge Embassy of the Slovak Republic Address: Chancery: 85 Irakli Abashidze St. Tbilisi, 0162 Georgia Consular Office: 38 Nino Chkheidze St. Tbilisi, 0102 Georgia Phone: 2 222 4437, 2 296 1913 e-mail: emb.tbilisi@mzv.sk

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi; Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89

Real Estate International Real Estate Company (IREC) Tbilisi. 9 P. Aslanidi St. Tel: +995 32 238 058 Mob: 599 95 76 71 Email: Info@irec.ge www.irec.ge

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition. Contact information: Email: info@gsservices.ge. Address: Shalva Dadiani 10

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

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Two luxurious residences for 464 apartments with amazing sea view. Shopping Center, Conference Hall, Cinema, Bowling Center, Trade and Dining areas are integrated within the project. Hotels and Residences have absolute infrastructure that integrates panoramic restaurants on the roof and inside the hotel, Casino, SPA, swimming pool, terraces, laundry, shopping mall, dining areas, Gym, cinema, bowling center, a la Carte Restaurants, playground for children, outdoor swimming pool, private beach with gold sand yacht club. The construction of the complex will be finished in 19 April, 2017 in compliance with all the European standards. 10% Adv Payment 36 MONTH INTERNAL CREDIT 25% Adv Payment 60 MONTH INTERNAL CREDIT

STARTING PRICE IS FROM 1425 $ Address: Mtsvane Street N1, Batumi Tel: +995 577 14 17 14 info@metrocity.ge www.facebook.com/MetroCity.GE

www.metrocity.ge

May 25, 2015 #100