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BUSINESS WEEK June 15, 2015 #103

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June 15, 2015, Issue 103

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BE INFORMED, DO BUSINESS

Prince Alwaleed Bin Talal Alsaud: We Promised the Prime Minister That We Will Be Back Pg. 2

GEORGIA CHINESE COMPANY INVESTS $290M IN GARDABANI THERMAL POWER PLANT

hinese company Pegasus EastWest has purchased a 230 MW Combined Cycle Thermal Power Plant (TPP) in Gardabani, Georgia’s Kvemo Kartli region for $290 million USD. Pg. 5

Günther Bächler: Switzerland is an ideal for many Georgians

PETER MACARA: “PUBLIC HEALTH AND HEALTH SYSTEM: NEW CHALLENGE FOR GEORGIA”

he Ministry of Healthcare is moving to European standards of management. “Global Alliance” is an international consulter company, which will assist the Ministry during the reorganization process. Pg. 5

TIGHTENED BREWERY REGULATIONS DAMAGE BOTH BUSINESS COMPANIES AND STATE BUDGET

ajor domestic breweries such as Natakhtari, Zedazeni and Castel urge the government and the Finance Ministry to remove the decision on a 50% growth in a beer Pg. 6 excise tax.

MEETINGS WITH FARMERS WERE HELD IN FRAMES OF AGRICULTURE SUPPORT PROJECT

n the Service Centers of Georgia’s United Melioration System, Tezi-Okami, Does Grakali and Saguramo-Mukhrani, informational meetings for farmers were held. Pg. 6

PRICES IN GEORGIA AND ITS NEIGHBORHOOD FOR THE TEN MOST NECESSARY PRODUCTS

eorgia, Armenia, Azerbaijan, Ukraine, Russia, and Belarus – all of these postsoviet countries have similar social tones. The only difference comes in pension payouts and salaries, but the product prices are almost identical to the ones in Georgia. Pg. 10

SWISS AMBASSADOR IN GEORGIA

Pg. 4

Pg. 5

ON THE VERGE OF TAKING A DECISION

Commercial Banks Request Strong Arguments for Depriving the National Bank of Supervisory Functions

n the near future the Georgian parliament will discuss the bill for separating the bank sector supervisory functions from the National Bank of Georgia (NBG). The bill has been developed by Tamaz Mechiauri, a head of the parliament’s finance and budget committee. Mr. Mechiauri expresses distrust toward the NBG President Giorgi Kadagidze and he as-

serts Kadagidze threatens the economic stability of Georgia. Part of specialists asserts Mechiauri’s initiative is a politically-motivated one and it has nothing common with the budget and financial recovery. Another part of the specialists assure this change will make the sector more transparent and the bank sector supervision will not be related to political preferences.

GEORGIA’S INVESTMENT INFLOWS IN 1Q14 FALL BY 34%

ccording to Geostat’s preliminary data of the 1st quarter of 2015, the volume of Foreign Direct Investments in the country decreased by 34% in comparison with the same period of 2014. Pg. 7

TAX ON DIVIDENDS TO REPLACE INCOMES TAX

Pg. 2

US PRIVATE INVESTMENT FIRM INVESTS $100M IN GEORGIA’S ENERGY SECTOR

Bruno Balvanera: Georgia Needs to Attract New Investments and Technologies Pg. 8

Eric Livny: NBG Discussions Represent Scapegoat Searching Pg. 8

Armaz Tavadze: Poverty in Georgia Will Exist Until State Officials Learn to Respect the Business Sector BitFury Group Developing Modern Technologies in Georgia

Pg. 8

Pg. 11

GOVERNMENT’S PLANS FOR DEVELOPING HIGHLAND REGIONS Pg. 5

GOVERNMENT NEWS

2 MAIN EVENTS PRESIDENT PARDONS 180 INMATES

SAUDI CROWN PRINCE VISITS GEORGIA

he President of Georgia Giorgi Margvelashvili has pardoned 226 people serving sentences in Georgia’s prisons. At a special press conference today, head of the Presidential Pardon Commission Zviad Koridze said 180 of the 226 pardoned inmates will walk free this afternoon.

GEORGIA OFFERS FINANCIAL AID TO NEPAL

eorgia is offering financial aid to Nepal to help the country recover after a devastating earthquake that claimed lives of more than 8,800 people and injured more than 23,000. A Government decree, which was signed by the Prime Minister of Georgia, stated Georgia would offer $50,000 USD (112,761 GEL) financial support to Nepal to help the country rebuild after the April disaster.

INTERNATIONAL HUMAN RIGHTS OFFICE REPORTS ON GEORGIA’S LAWMAKING PROCESS

he lawmaking process in Georgia should be more flexible, transparent and inclusive – this is one of several recommendations offered to Georgia by the Office for Democratic Institutions and Human Rights (ODIHR).

TBILISI SEES CYNICISM IN MOSCOW’S ANNUAL FOREIGN MINISTRY REPORT

he Russian Federation’s claims that Tbilisi’s refusal to stop calling Sokhumi and Tskinvali as “occupied regions”, as well as Georgia’s aspirations towards European and Euro-Atlantic integration are an obstruction towards normalising Russia-Georgia relations, have been slammed by Georgian officials.

GEORGIAN CONSULATE OPENS IN DENMARK

Georgian Consulate has opened in the Kingdom of Denmark to mark the strengthened partnership between the two countries. The Consulate is located in Horsens city in the Jutland region, and its Honorary Consul is Marianne Bols. A festive ceremony to mark the opening of the Consulate was attended by local government members, including the city’s Mayor Peter Sorensen, director of Horsens Business Council Torben Busk, as well as representatives of Danish Foreign Ministry, local business circles and Georgians living in Denmark.

RULE OF LAW INDEX: GEORGIA RANKS TOP IN REGION, 29TH IN WORLD

eorgia has topped the list of Eastern European and Central Asian states in a new study ranking countries on how the rule of law is experienced by citizens. Georgia gained a higher score than any other country in the Caucasus region and also higher than several European Union member states, including Italy, Romania, Greece, Croatia and Hungary in the2015 Rule of Law Index, which ranked the country after surveys were completed in more than 100 countries.

NATO OFFICIALS IN GEORGIA FOR STRATEGIC MILITARY PARTNERS CONFERENCE

eorgia’s capital city is hosting an international NATO conference where Alliance members and partner countries can share their perspective on strategic issues of common interest. Chiefs of Defence of NATO member countries, partner nations and experts are taking part in the annual NATO Strategic Military Partners Conference 2015 (SMPC). The two-day military forum, being held at Expo Georgia in Tbilisi, allowed representatives from NATO member and partner countries’ armed forces to discuss defence sector development and future challenges facing the Alliance and the world.

June 15, 2015 #103

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he crown prince of Saudi Arabia is looking forward to investing in Georgia. Crown Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud said this during a visit here. After meeting the prime minister, he said that he feels honored arriving in Georgia and discussing the economic situation. The prince said there is an opportunity to bring the two states closer and develop relations. Prime Minister Irakli Garibashvili said after meeting with the prince that Abdulaziz Al Saud plans to send a delegation to Georgia which will start working on specific projects to invest in. The prince arrived in Tbilisi on Wednesday by invitation of the prime minister. The same day, President Giorgi Margvelashvili granted him honorary citizenship of Georgia. The PM handed him a decree and a medal. “We discussed Georgia’s potential and we think we should strengthen relations,” the PM said, adding that they also discussed tourism. In the first four months of 2015, the trade turnover between Georgia and Saudi Arabia was USD 1.58 million. According to the most recent data from Forbes, the prince owns more than USD 22 billion. Georgia and Saudi Arabia established diplomatic relations in May, 1994. In February last year, Georgia opened an embassy in Riyadh, the Saudi capital.

“We promised the Prime Minister that we will be back,” said the Prince after meeting Prime Minister Irakli Garibashvili today. “Thanks to the PM, Georgia’s recognisibility in the world has increased; the country’s economic stability has strengthened; and we are looking forward to investing here.” The Prince and PM Garibashvili’s face-to-face meeting, which was not noted on the official agenda, lasted for about half an hour and the sides talked about Georgia’s tourism potential and economic perspectives. The sides also spoke about the relations between the two countries. Georgia-Saudi Arabia trade turnover was $3.6 million USD in the first four month of 2015. The Prince and the President briefly talked about Georgia’s history during their meeting today. Afterwards the Saudi Prince said: “I was very impressed with the meetings with the President and Prime Minister and I hope that we will further strengthen and deepen the relationship between Saudi Arabia and Georgia, as well as between my company and this great country.” Prince Al-Waleed Bin Talal bin Abdulaziz al Saud is the owner of the Kingdom Holding Company, an investment holding company based in Riyadh, Saudi Arabia. The Saudi royal came to Georgia for one day at PM Garibashvili’s invitation.

SIGNIFICANCE OF SAUDI PRINCE’S VISIT IN TBILISI AND INVESTMENT OPPORTUNITIES “We are looking forward to investing in Georgia,” says a senior member of the Saudi ruling family, who is one of the most influential businessmen of the Arab world. Saudi Arabian Prince Al-Waleed Bin Talal bin Abdulaziz al Saud paid an official visit to Tbilisi today, met Georgian leaders and learnt about the country’s investment potential.

PRESIDENT OF GEORGIA FOR GRANTES SAUDI ARABIA PRINCE WITH HONORARY CITIZENSHIP DURING HIS VISIT IN GEORGIA President of Georgia Giorgi Margvelashvili hosted Saudi Prince Al-Waleed Bin Talal bin Abdulaziz al Saud within his visit to Tbilisi. The prince visited Georgia for seeing the investment environment. The President of Georgia discussed the relations be-

tween Saudi Arabia and Georgia with Saudi Prince, also current situation in the region and the opportunities that Georgia gives in terms of Trans-regional cooperation development. The importance of the Association Agreement was highlighted after signing of which Georgia’s investment environment became more attractive. “We had a very productive and useful meeting with the President of Georgia after meeting with the Prime Minister. The President briefly told me about the Georgian history, also talked about the current economic situation of Georgia. I was greatly impressed by the meeting with the President and Prime Minister and hope that in the future we will strengthen and deepen the relations between Georgia and Saudi Arabia, and my company and this wonderful country,” – Saudi Prince stated after the meeting. The President of Georgia thanked Saudi Prince for the support to Georgian sovereignty and territorial integrity. Giorgi Margvelashvili granted to Saudi Prince AlWaleed Bin Talal bin Abdulaziz al Saud Honorary Citizenship of Georgia for which Saudi Prince thanked the Head of State. ABOUT PRINCE ALWALEED BIN TALAL ALSAUD High-profile investor Prince Alwaleed bin Talal owns a swath of stakes in private and public companies in the U.S., Europe and the Middle East, mostly through Kingdom Holding Co., 5% of which is listed on the Saudi Stock Exchange. Because of the small float, the lack of any analyst coverage and the relatively thin trading of Kingdom Holding, Forbes estimates Alwaleed’s net worth by calculating the value of the assets owned by Kingdom Holding rather than using its share price. Holdings include stakes in Twitter, Citigroup, hotel management companies Four Seasons Hotels & Resorts, Movenpick Hotels & Resorts and Fairmont Raffles Holding, as well as hotel real estate such as the swanky Hotel George V in Paris and a stake in the Savoy Hotel in London. Kingdom Holding announced in early February 2015 that it had sold most of its stake in News Corp in the first half of 2014. The Prince also owns extensive Saudi real estate and other assets outside of Kingdom Holding. In February 2015, Alwaleed launched Al Arab, an Arab-language TV news channel in Bahrain, which the government shut down less than 24 hours after the launch, reportedly due to a licensing problem. A spokesperson for the Prince didn’t reply to Forbes’ request for comment about the channel, but in late February the Financial Times reported that the Bahrain government had requested a permanent shutdown of Alarab. In 2013, Prince Alwaleed sued Forbes for libel in response to an article about him. Forbes stands by our position that the Prince does not have a valid claim; Forbes has delivered to the court a formal response to the complaint.

US PRIVATE INVESTMENT FIRM INVESTS $100M IN GEORGIA’S ENERGY SECTOR

chulze Global an American private investment firm that manages several hundred million dollars of investments across various markets in Asia, Latin America and Africa, is the main investor of the HPPoriented Fund. An American private equity firm Schulze Global launched a 100 million USD “Caucasus Clean Energy Fund” in Georgia. The Fund’s main mission will be making equity investments into small and mediumsized hydropower plants in the country. The launching of the Fund comes at a time when the development of many small and medium-sized hydropower plants has been slower than expected. One of the main reasons behind the lag in the process is the lack of finances. Many developers in Georgia have insufficient equity available to proceed with attractive projects. Schulze Global allocated 100 million USD to address this problem. The company seeks to solve this issue through the “Caucasus Clean Energy Fund” making equity available to developers. The signing ceremony of the Fund took place Tbilisi Marriott Hotel on June 12th. Apart from the founder Schulze Global, the participants included Global Energy Efficiency and Renewable Energy Fund, The Development Bank of Austria OeEB, which will become two major institutional investors of the Fund; they will provide anchor commitments of $13m and $7m, respectively. The Fund will commence its actual investment activities in Georgia in the coming months. “Georgia has tremendous hydropower potential and, with the right strategy, could become a clean energy hub for the entire Caucasus region. Schulze Global looks forward to participating in Georgia’s growth

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through the Caucasus Clean Energy Fund,” Mr. Gabriel Shulze, the Founder and CEO of Schulze Global, stated. “Schulze Global’s approach seeks to achieve high financial returns while at the same time making sure that our investments are having a tangible positive impact. When measuring that impact, we look at various factors: improving the governance of the companies in which we are investing; creating local employment opportunities; having a positive social and environmental impact,” Mr. Schulze added. “We are delighted that the Fund decided to concentrate its attention on the small and medium HPP’s. Small and medium-sized HPP’s are the main focus of our Ministry as well, because they are central to the development of the Hydropower resources of the country. Small and medium-sized HPP’s are not only important for Georgia’s energy independence, but also the potential of exporting the electricity to other countries,

such as Turkey,” deputy energy minister of Georgia Ilia Eloshvili said. “I want to stress the importance of this occasion for U.S. – Georgia relations; for rounding out the economic dimension of our strategic partnership. Of course, this means jobs for Georgians but it also means contributing to a clean environment. It has implications for diversifying energy streams in the region at a time when free access to energy is of strategic importance. It is one more link in the network of the connections that are part of this New Silk Road that is taking shape across Eurasia,” the U.S. ambassador to Georgia Richard Norland added. Ministry of Energy and Ministry of Environment Protection of Georgia reps did not name any specific projects that the Schulze Global-funded Caucasus Clean Energy Fund will finance, however they stressed their readiness to co-operate with the Fund that will start operating in the near months.

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June 15, 2015 #103

PUBLICITY

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INTERVIEW caucasian business week

‘SWITZERLAND IS AN IDEAL FOR MANY GEORGIANS’

GEORGIA TAKING STEPS TO LIBERALISE PROFIT TAX

Georgia is flirting with the West and trying to come to terms with its big neighbour Russia while struggling with economic problems and territorial conflicts. The Swiss ambassador in Tbilisi – an envoy between the Georgians and the Russians – sees a fragile stability that must continue for democratisation and economic recovery to take hold. In 2009, after the armed conflict over the breakaway Georgian regions of Abkhazia and South Ossetia, Switzerland took care of Georgian diplomatic interests in Moscow and Russia’s in Tbilisi. GÜNTHER BÄCHLER, the Swiss ambassador in Georgia, meets once a week with the Russian Section (formerly the embassy) to discuss pending matters. He handles official correspondence between the two countries, addressing issues such as diplomatic protection, pension statements, Russian refugees imprisoned in Georgia and other questions that are normally dealt with directly between countries.

eorgia’s economic team is working on modifying the country’s profit tax rules, with the main goal to liberalise Georgia’s profit tax. This was one of the key areas that needed addressing by the Georgian Government, said Georgia’s business community.

EVEX MEDICAL CORPORATION HOLDS 95% STAKE IN FORMER LECHCOMBINAT

edical Corporation Evex”, subsidiary company of “Bank of Georgia Holding”, is holder of 95%-share of treating-diagnostic center “Deka”, while 5% is still owned by Lauara Garchava. However, “Evex” will become holder of this share later.

TELASI TO ISSUE DIVIDENDS STARTING JUNE 18

his is the first case in the existence of “TELASI”, when the company will pay dividends to the stakeholders. According to the shareholders’ decision, as of 2014, dividends of 8 802 000 GEL will be paid in cash. Dividends will be paid by transfer on the banking accounts submitted by the shareholders.

IMEDI L HOLDS 38% ON THE HEALTH INSURANCE MARKET, WHILE ALDAGI – 38% ON NONHEALTH INSURANCE MARKET

ccording to Georgian Insurance State Supervisory, As of Q1, 2015, Imedi L is the leader of health as well as whole insurance market in a line of attracted premiums, whereas insurance company Adagi ranks first with issued premiums. According to official data, insurance premiums attracted by Imedi L has made up 32 220 021 GEL in Q1, 2015.

GOVERNMENT WAITING FOR TWO FINAL PROPOSALS FOR ANAKLIA SEAPORT CONSTRUCTION

wo companies will submit final proposals on construction and operation of Anaklia Deep Water Sea Port, - state commission recognized applications of “Anaklia Development Consortium” and “Anaklia Industrial Eco-park and Port and Power China Consortium”.

TELIANI VALLEY NET PROFITS FALL BY 30%

ccording to the financial report of the group, net profit of “Teliani Valley” has made up 1,767 million GEL in 2014, however, the company had a net profit of more than 2,5 million GEL in 2013. Revenues gained from commodity realization is decreased by 4,18 million and the figure has totaled to 30,77 million GEL. However, the operating income has amounted to 4,32 million GEL.

- Russia signed economic and military accords with Abkhazia and South Ossetia in 2014 and 2015. What does that mean for Georgia? - A resolution to the conflict will depend heavily on the status. Because both regions are recognised as autonomous states by Russia but not by Georgia, the search for a solution will take longer. The two accords for strategic partnerships envisage close bonds for Abkhazia and South Ossetia with Russia. Unresolved conflicts always have a big impact on the affected countries, on their society and economy. We can say that this conflict is responsible for the fact that neither Georgia, Abkhazia nor South Ossetia can develop as societies [the way they could have] without it. - About half a million of the 3.7 million people in Georgia are internal refugees from these two regions. How does Georgian society cope with this refugee problem? - The refugee situation has caused few acute conflicts in Georgia, even though the expellees profit from social housing projects and sometimes even secure better housing than the local population. That is why with our housing projects, which have been funded by humanitarian aid from Switzerland, we have always taken care to have a social mix of expellees and deprived local population groups. Conflicts between this large number of expellees and the government are more common. Many of

productivity and self-sufficiency in agriculture. The Swiss Office for Development and Cooperation is active in this area. The focus of the Swiss cooperation is not just agriculture; we would like to create value chains in rural areas to contribute to economic growth. - In a Georgian newspaper interview, you voiced constructively critical views about Georgian politics, something unusual for an ambassador to do. Was that appreciated by the government in Tbilisi? - In Georgia it is not so unusual, because the country is very open to Western support, which entails friendly criticism as well. Through its protecting power mandate but also through the partnership between the governments, Switzerland has a certain special role in a positive sense. Switzerland is an ideal for many Georgians; the EU is a must. So when I am critical about things, it is usually in background discussions with various government representatives, with partners, and that is highly valued. We stand for democracy, human rights, the rule of law, the fight against corruption, and a free market economy. These areas are important if you want to deepen economic ties and increase investment and trade. Discrete diplomacy doesn’t always work; sometimes you have to be more explicit. - In the summer you are leaving your post in Tbilisi. How do you see the future for Georgia? - I have always been fundamentally optimistic about Georgia’s potential to develop, because it is a very lovable country with a lovable people in a difficult context, a difficult region, with many influencing factors from the North, the South, the East and the West. We will see whether it will develop successfully in the next ten years. What it needs are a European perspective and ideas for a new European security framework. I witnessed the end of the Cold War in 1989 and contributed to it actively in Berlin. I hope that, 25 years later, we are not going to experience another division of Europe. swissinfo.ch

An interview with the head of the parliamentary majority David Saganelidze

onstruction of Babillon Tower has halted in Batumi. According to the head of the government of Adjara Archil Khabadze, misunderstanding and conflict among the shareholders of the company has become a reason for stopping the construction of Babillon Tower.

MIA SERVICE AGENCY BUYS 2.424 MILLION GEL VEHICLES

T Motors” won tender, cost of 2 424 400 GEL. The company must provide Service Agency of Ministry of Internal Affairs with 50 pick ups in this price. The department should use these cars for operative-research activity.

TBC BANK REMAINS RETAIL DEPOSITS MARKET’S LEADER he bank’s share totals to 34% by June 1 (2014 – 33%, 2013 – 32%; 2012 – 35,2%). Portfolio of private individuals is defined by 2,336,3 billion GEL (01/06/14 – 1,648 billion), annual increase – 42%.

them, even those who came in the first wave of refugees in 1992, still do not have homes. They are still living in accommodation they moved into when they fled. - Georgia signed an Association and Free Trade agreement with the European Union last year and is seeking to join NATO – a development that can hardly be reassuring for Russia. - Georgia is a country that looks to the West, if we believe the opinion polls. My observations would confirm that tendency. A majority of Georgians feel European and want to be a part of Europe. At the moment there is a sense of being in a vacuum, as there is no stable security guarantee from either side. The example of Ukraine has made clear that it can be difficult to belong to no alliance and yet to have no internationally guaranteed neutrality to rely on. The Georgian government and population want to steer this Western course and profit from economic cooperation and security guarantees, but at the same time they want to nurture pragmatic relations with Russia. It is a balancing act that is understandable given [Georgia’s] geographical and geostrategic position. - Georgia is an agricultural country but has to import much of its foodstuffs. Why the low productivity? - It has partly to do with the post-independence collapse of the Soviet system, which was never replaced with a new system. Many workers lost their jobs at collective farms, they were privatised and the land distributed in parcels of one or two hectares, which resulted in small family businesses for subsistence farming. It was a solution to the social problems in rural areas but has not created a modern and efficient agricultural industry. It is only in the last few years that the government has addressed agricultural policy and is trying to overcome these deficits with a comprehensive strategy which even encompasses organic farming. It wants to try to combine strips of land into bigger enterprises of five to ten hectares and to promote cooperatives. The goal is to increase

DAVID SAGANELIDZE: NATIONAL BANK RECEIVES INFORMATION ON ACTIVITIES OF COMMERCIAL BANKS

BABYLON TOWER CONSTRUCTION STOPS IN BATUMI

June 15, 2015 #103

- Do you have any questions to the National Bank about the devaluation of the Georgian lari, and if you have suspicions about the involvement of

commercial banks in this process? - I have not heard that anyone expressed any suspicions to the commercial banks, many say that the government has no information on the activities of commercial banks. We do not know what they are doing and we are talking about this fact and not about any specific suspicions. - You said you had questions that caused outrage in the banking system. What kind of questions do you mean? - The National Bank has all the specific information about what is happening in the commercial banks, what transactions they carry out, what amounts of money are transferred. The government and parliament have no such information. It’s naturally that both the National Bank and commercial banks must be active and work together to stabilize the exchange rate of the national currency. - Georgia still remains a poor country. How to eradicate poverty? - All the economic potential of Georgia was designed for the Soviet Union - first of all, we are

talking about sales markets. The Soviet Union ceased to exist 25 years ago, too little time has passed after total destruction. How can we become a rich country in 25 years? All these years the country has been pillaged, stripped, there were wars, we’ve lost territories, etc. The situation was also unresolved inside the country. As a result, the country had unstable internal situation, unstable economy, and unstable economic growth. During the last 9 years local investors have been terrorized in the country, all assets fell into the hands of a small ruling group. All this greatly hindered the development of the economy. Today, we need to deal with all these problems in order to use the available resources wisely. We have a lot of resources, even though we have no oil and gas, but we should use maximally what we have. If we pursue the right economic policy and diversify our investment portfolio, we will go slowly in a way that will bring us together with a much more developed and stable countries.

June 15, 2015 #103

ECONOMIX

GOVERNMENT’S PLANS FOR DEVELOPING HIGHLAND REGIONS

he government has submitted a bill on socioeconomic and cultural development of Georgia’s highland regions to the Parliament, Prime Minister Irakli Gharibashvili told the government meeting on June 4. The bill aims at ceasing migration from highland regions and promoting the business development. Nino Kharadze is covering the issue. A special state commission has developed a bill of amendments to the law on socioeconomic and cultural development in highland regions. The previous law was adopted in 1999. Prime Minister Irakli Gharibashvili informed the government meeting the Regional Development and Infrastructure Ministry had completed working on the bill. The bill will be refined and improved in the parliament, the PM added. “I believe this is a very important issue, because the project calls for creating a system for setting social preferences to highland residents and promoting their business and economic activities. The project is also to draw additional money resources for developing infrastructure of settlements in highland regions. I believe this should be implemented in the near future, because families are leaving their places in highland regions, there is no living conditions there and we must start highland regions promotion projects as soon as possible”, Gharibashvili said. The bill covers all settlements that are located 1500 above the sea level. The Mtskheta-Mtianeti region’s vice governor Koba Arabuli, a member of the state commission, says the quality and level of problems in concrete zones will be taken into account, not the location elements. For the first time this law and the government explain the current situation in highland regions and outline highland zones as priority directions, Koba Ar-

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CHINESE COMPANY INVESTS $290M IN GARDABANI THERMAL POWER PLANT

abuli said. For the first time, the law determines the status of the indigenous population. “For the first time, the bill makes accent on not only social aspects, but an economic ground for saving the highland regions, including a promotion of business and entrepreneurship, cooperative activities, involvement of local population in those cooperatives and so on”, Arabuli noted. The bill also calls for revision of social support issues, increasing salary bonuses to teachers and medical staff, appointing additional allowances to families with children, exempting local residents from property and profits taxes for 10 years for business development. Economic expert Levan Kalandadze: “Similar methods for supporting indigenous residents and promoting their business activities are widely practiced in many countries, including in Italy, France, and Alps Zone. This signifies the Authorities prioritize to save the highland re-

gions’ culture and economic zone. At the same time, efficiency of these instruments depends on many factors, including the level of motivation of state structures for full-fledged and comprehensive implementation of the bill purposes”. “I do not expect this project will revive the highland regions and become very attractive for highland residents in a year or two. But I find two important moments in this initiative: the government develops a policy concerning the highland regions and this policy should develop and grow. Koba Arabuli, the Mtskheta-Mtianeti Region Governor: “It is important that only hypsometric parameters do not suffice for the status of a highland settlement, that is, a 1000 meter above the sea level. Unlike the existing law, the amended law will not include the list of villages either”. Bfm.ge

PETER MACARA: “PUBLIC HEALTH AND HEALTH SYSTEM: NEW CHALLENGE FOR GEORGIA” he Ministry of Healthcare is moving to European standards of management. “Global Alliance” is an international consulter company, which will assist the Ministry during the reorganization process. The member of the group Peter Macara, Professor of Budapest Semmelweis University, is an expert in healthcare policy. He was a main advisor of Ministry of Healthcare of Hungary and a regional advisor of WHO in Europe in the sphere of healthcare politics. He obtains a deep knowledge of healthcare systems of as well as Western and Eastern Europe. He is sharing with his perceptions on contemporary situation and perspectives of Public health and Healthcare system in Georgia. “In 1991 Georgia inherited an extensive and highly centralized Semashko system, with a san-epid network in the field of public health. In practice a relatively narrow, traditional definition of public health is still used in Georgia. The vast majority of public health services focus on activities associated with the prevention, control and surveillance of communicable diseases. Public health services are implemented through the state health programmes.. Traditional “functions” of the former san-epid system, such as vaccination, are still more advanced, while health promotion and intersectoral collaboration are less developed. The contemporary understanding of public health, used by the EU and WHO is much broader and complex, defining the concept as “the science and art of preventing disease, prolonging life and promoting health through the organized efforts of society”. This approach includes beyond monitoring and response to health hazards and emergencies, health protection, environmental, occupational, food safety, activities much less developed in Georgia, like health promotion, action to address social determinants and health inequity, non-communicable disease prevention, early detection of illness, ensuring sustainable organizational structures and financing, advocacy, communication and social mobilization for health and advancing public health research to inform policy and practice. Traditionally, public health was undertaken by doctors, feldshers and nurses, often wearing

caucasian business week

white coats and uniforms, offering information on the health consequences of different behaviours.This approach has never been particularly effective but it remains dominating in Georgia . A modern approach to public health requires individuals with a much wider range of skills in many different disciplines, as well as the ability to work with others in multiprofessional teams. What is already clear is that Georgian public health must take a broad perspective, putting into practice a commitment to promote health in all policies. Public health also plays an increasingly important role in guiding the actions of the healthcare sector, for example in ensuring that services are configuredin ways that reflect health needs, that they deliver effective and appropriate care, and that they respond to the legitimate expectations of the population A public health perspective on health care is important for several reasons. Individuals who need health care may not be aware that they do so. Public health professionals can help to ensure that health services are designed in ways that meet the needs of all groups of the population. The resources available to any health system are limited, this is also the case of Georgia. It may, for example, not be possible to recruit sufficient health professionals, especially where the need is for those with highly specialized skills. In some cases, pharmaceuticals may be in short supply. The management of the conflict between needs and possibilities can be done through a public health approach, where the number of people who need a particular intervention is quantified, the effectiveness of the intervention in achieving a given amount of health gain is determined, and the cost of providing the intervention is assessed. As the complexity of health care increases, in parallel with technological advances, a public health perspective can inform the design of services, achieving the linkages necessary to provide a seamless service for the patient who may require inputs from many different healthcare providers. It is not sufficient to design and implement health services; they must be monitored and evaluated continuously to ensure that they are achieving op-

timal health outcomes. Again, a public health perspective is necessary to determine whether these outcomes are being achieved and whether they are being achieved for the entire population. Timely and effective care can be a significant contributor to improved population health. The encounter between the patient and a health professional is more than simply a mechanism to reach a diagnosis or prescribe treatment. It is also a valuable opportunity to prevent disease and promote health. The potential of health care to improve population health cannot be taken as given, but depends on the availability of effective, affordable, and accessible health care for the entire population. The effectiveness of health care thus depends on population coverage, entitlements to services, accessibility,treatment adherence, and quality of care. The Third EU Health Programme (2014-2020) is the main instrument that the Commission uses to implement the EU Health Strategy. The overarching objectives include; • Promote health, prevent diseases and foster supportive environments for healthy lifestylesn taking into account the „health in all policies” principle; • Contribute to innovative, efficient and sustainible health systems; • Facilitate access to better and safer healthcare. This is in full accordance with the new health policy processes in Georgia and offers broad perspectives for cooperation.”

hinese company Pegasus EastWest has purchased a 230 MW Combined Cycle Thermal Power Plant (TPP) in Gardabani, Georgia’s Kvemo Kartli region for $290 million USD. Georgia’s Energy Minister and representatives from Pegasus EastWest signed an agreement in Georgia’s capital Tbilisi today outlining the deal. Pegasus EastWest is a Hong Kong-based international, privately-held entity that focuses on developing businesses in the world’s fastest growing emerging markets. “We have been talking about [privatising Gardabani thermal power plant] for a long time. We did this to strengthen the [national currency] Lari. The plant cost $230 million USD for state and now the country will get $290 million USD instead,” said Georgia’s Energy Minister Kakha Kaladze. Privatisation of Gardabani TPP was part of the idea of privatising state assets to help the country break free from the national currency crisis. Months ago Georgian authorities hinted about the possible sale of Governmental buildings and assets as a way to get more money into the economy. At the time Georgia’s Economy Minister estimated money from the sale of Governmental buildings would bring about $300-350 million USD into the Georgian economy. Construction of the Gardabani TPP started in January 2014. The project was jointly financed by the Partnership Fund (PF), a stateowned shareholding company and its daughter company Georgian Oil and Gas Corporation (GOGC). The TPP is expected to begin producing power in autumn 2015. Meanwhile, in the first three months of 2015, Foreign Direct Investments (FDIs) reduced in Georgia’s energy sector, noted the country’s National Statistics Office (Geostat). Minister Kaladze explained this had happened because of the Lari devaluation, which had caused “serious problems” for companies operating in the energy field. “The Lari devaluation mainly affected distribution companies. In fact, all companies that are represented in the market are operating at a loss. Some energy companies have recently applied to the Energy Regulatory Commission and asked to revise tariffs. The Commission will make a final decision in September,” Kaladze said. Despite the reduction of FDIs in Georgia’s energy sector, regionally FDIs increased in the Adjara region. In Q1 2015 FDIs in Adjara amounted to $76.4 million USD. In the same period of 2014 FDIs reached $54 million USD. Georgia’s energy sector generated 39.4 percent of the total amount of FDIs, followed by tourism (38.4 percent) and construction (19.2 percent). The largest investors to Adjara region were Turkey, Norway and Great Britain.

BUSINESS

caucasian business week

June 15, 2015 #103

CITRUS INDUSTRY MAY FACE PROBLEMS WITH SALES

TIGHTENED BREWERY REGULATIONS DAMAGE BOTH BUSINESS COMPANIES AND STATE BUDGET

ajor domestic breweries such as Natakhtari, Zedazeni and Castel urge the government and the Finance Ministry to remove the decision on a 50% growth in a beer excise tax. As reported, tightened regulations were enacted on March 1, 2015. The beer market leader companies unanimously assert the March-April sales shrank by 40% year on year. As a result, serious damage was inflicted to business companies and the beer industry, in whole. Castel director general Levan Zautashvili told IPress the company profits in March-April period fell by 20% because of tightened regulations and increased excise rate. “According to the Revenue Service, the MarchApril sales shrank by 40%-45%. Indeed, our revenues from the domestic market have decreased, but we have only partly compen-

sated the losses at the expense of exports. As a result, our profits have shrunk by about 20%, we are afraid the figure will worsen in the future”, Zautashvili said. The company does not plan to minimize the number of employees. Zutashvili urges the government to remove restrictions on drinking beer in yards. “The Government firmly defends its positions over excise issue and therefore, we have no optimistic expectations in this direction. The problems worsened because of the GEL exchange rate devaluation too and this factor has seriously affected the production. We mainly cooperate with European suppliers. We plan to ask the Prime Minister to remove restrictions on drinking beer in yards. The sales have fallen by 45%. As a result, both business companies and the state budget profits have slipped down”, the Castel director general said.

RESTRICTIONS ON DRINKING BEER IN YARDS MAY BE ABOLISHED

ajor domestic breweries such as Natakhtari, Zedazeni and Castel urge the government and the Finance Ministry to remove the decision on a 50% growth in a beer excise tax. As reported, tightened regulations were enacted on March 1, 2015. The beer market leader companies unanimously assert the March-April sales shrank by 40% year on year. As a result, serious damage was inflicted to business companies and the beer industry, in whole. Nikoloz Khundzakishvili, a director for corporate affairs of Natakhtari brewery, told IPress, at this stage the breweries expect the Government to remove restrictions on drinking beer in yards. Namely, the business ombudsman has developed concrete recommendations calling for removing restrictions on drinking beer in yards. Along with growth in excise rate, beer consumption restrictions have also shrunk beer sales, Khundzakishvili noted. “In whole the market volume has shrunk by about 40%. According to the March-April statistics, we rely on the revenue service information. I do not know whether they will change the deci-

sion. Nevertheless, we are waiting for the new decision. The Business Ombudsman’s Office supports us and they have developed recommendations for liberalizing the beer consumption in yards. Beer drinking season has started, in practice. If the restrictions remain in force, the sales contraction tendency will be continued. We do not ask for removing restrictions in public zones. We make focus on only yards. This decision was illogical and it aimed at frightening the consumers. This decision has decreased the sales by 40%. The business ombudsman has recommended to exclude beer from the list of alcoholic beverages”, he said. The brewery is very growing and successful sector in Georgia and domestic breweries were controlling a 97% market ratio. While the mentioned restrictions inflict damage to the sector in both short-term and long-term perspectives and this will make negative effect on other fields too, he added. As reported, major breweries carried out intense communication campaign “Don’t Increase Beer Price!” at the end of 2014 and at the beginning of 2015. The campaign aimed to postpone or abolish the excise tax.

long with viticulture, the citrus industry can also face the challenges of selling products this year that, despite the expected problems with sales, expects a good har-

vest. Otar Putkaradze, the head of the exporting company “Shalta 21”, says that 80% of the company’s exports account for Ukraine, and because of the difficult political and economic situation in the country, the demand for citrus fruits can be significantly reduced. According to him, in 2014 the company exported 4.3 thousand tons of citrus to Ukraine which is significantly less than in 2013, and in 2015 demand is likely to be even lower.

“In Ukraine, the purchasing power of the population has reduced sharply, so we are waiting for the sharp decline in sales,” - the businessman notes. Apart from Ukraine and Russia, Georgian citrus are exported to Armenia, Azerbaijan, Uzbekistan, and Belarus. Economic difficulties in Russia and Ukraine have created the problem for Georgian wine exports. According to forecasts for 2015, due to this a demand for grapes will decrease. It is expected that this in turn will lead to lower purchasing prices for grapes. In the past year the price of grapes rose sharply, as demand grew along with an increase in exports of Georgian wine to Russia.

INSURANCE SECTOR’S LOSSES IN 1Q14 MARK 3.3 MILLION GEL

ccording to State Supervisory Service of Insurance, the data might be insignificantly changed, as the information might be specified in several companies. It should be noted, that profit of insurance sector exceeded 3,4 million GEL in January-March, 2014. According to the consolidated data, insurance companies received net profit of 12,78 million GEL from non-life insurance. Net profit gained form life insurance has amounted to 3,7 million GEL. However, the profit form total insurance service has made up 16,5 million GEL. It should be noted, that the index is reduced comparing to the same period of the previous year. Net profit

received from insurance activity has been 18,7 million GEL. According to the data, the companies received loss of 10,5 thousand GEL from pension activities. To note, revenues from the investments have been 794,7 thousand GEL. Respectively, net loss of the sector, after the payment of expenditures and taxes, has totaled to 3,3 million GEL. To note, consolidated assets of 15 companies has amounted to 524,84 million GEL, while the liabilities – 430,1 million GEL. Assets have been 517,3 million GEL through January-March of the previous year, whereas the liabilities – 364,78 million GEL.

DEVELOPERS STILL DISSATISFIED WITH BANKERS

few months ago, the National Bank of Georgia (NBG) banned commercial banks to own non-core assets - construction, tourism, and other companies. After that, banks were quick to say that they have fulfilled this decision and abandoned these assets, however, “Commersant” reports it was formally. In particular, construction companies created by banks still continue to maintain contact with them, which is evident by their offers to clients. Accordingly, the development companies are still complaining about the banks. Besik Tkhelidze, the founder of “Atori” company, says that nothing has changed in this regard, and the new law was purely formal. “The bank should not possess, for example, a construction company, as it begins to compete with other developers, does not give them loans, while provides its own company with financial resources on highly concessional terms, respec-

tively, competition is broken. For example, “TBC Bank” categorically denies that it is a founder of construction company “Lisi Development”, but in fact the bank owns the company. Reissuance on someone’s name does not change the fact. The problem still exists. For example, “Bank of Georgia” offers much more favorable conditions for obtaining a mortgage to buy an apartment in a house built by its own company “M2”. This puts us at a disadvantage. As a result, everyone suffers - both buyers and developers. All except for the banks,”- he says. The fact that banks still are the actual owners of real estate companies is confirmed by “Adjara Development” company. According to Amiran Tsetskhladze, the company’s Director, the central bank’s decision has changed nothing in reality. “Specifically, our company is not affected by this situation, but it is obvious that real estate sector will not develop without competition,” - he explains.

MEETINGS WITH FARMERS WERE HELD IN FRAMES OF AGRICULTURE SUPPORT PROJECT

n the Service Centers of Georgia’s United Melioration System, Tezi-Okami, Does Grakali and Saguramo-Mukhrani, informational meetings for farmers were held. The workshops were held in frames of the

communication campaign for the Agriculture Support Project (ASP) of the International Fund for Agricultural Development (IFAD). The meeting informed farmers about effective management of soil and water resources. A repre-

sentative of the IFAD project Tamar Tsintsadze, and a Georgian University professor Irma Inashvili, were leading the meet. The discussion covered topics both regarding carried out infrastructural works within the framework of the project, as well as the efficiency of modern irrigation methods in raising productivity of the farmers. According to an expert, efficient implementation and usage of modern irrigation systems greatly benefits farmers in things like crop yield, minimizing damage from droughts, and protecting soil from erosion and rinsing. “Since 2010 Georgia’s Ministry of Agriculture and the International Fund for Agriculture Development (IFAD) have been carrying out the Agriculture Support Project (ASP). The project’s goals are to end infrastructural problems and support farmers’ economic growth. An important part of the project is the rehabilitation of irrigation systems and dealing with issues regarding ir-

rigation water in various regions across Georgia. This will greatly contribute in developing local agriculture,” – stated the representative for the IFAD project, Tamar Tsintsadze. Completed rehabilitation works are being hailed by farmers, and they also noted during the meeting that similar types of informational gatherings are of big interest to them since they get the opportunity to have all their questions fully answered. The international Fund for Agriculture Development (IFAD) is one of the most generous donors in the agriculture sector. It has been financing various projects in Georgia since 1998. The project covers the Inner Kartli, the MtskhetaMtianeti and the Samtskhe-Javakheti municipalities, where six irrigation systems have been repaired, namely the Lami-Misaktsieli, DoesGrakali, Loma-Turtskhi Karaghachi, Metekhi and Dzevera-Shurtuli.

June 15, 2015 #103

ECONOMY

ECONOMY MINISTER: VISA FACILITATION WILL PROMOTE ECONOMIC DEVELOPMENT

ccording to Economy Minister George Kvirikashvili, simplification of visa regulations will boost the number of tourists and economic development. The head of the economic department says that a number of restrictions existing until recently have been made to the visa law. “In particular, they approved a list of countries whose citizens will be eligible to stay within the territory of Georgia without a visa for a year. Until today, these countries were part of the list of countries whose citizens could stay in Georgia without a visa every 90 days for six months. Among these countries are developed and stable member states of the EU and the Schengen zonethe United States, Australia, Canada, Japan, a number of Arab countries, Japan, Israel, etc. In addition, the conditions are also simplified for citizens of countries that are not included in this list. In particular, if a citizen of this country has a valid visa to any of these countries with which

Georgia has visa-free regime, he will be able to stay in Georgia without a visa for 90 days every six months. For example, citizens of Iran and China, which have a Schengen visa, do not need to receive a Georgian visa and they will be able to freely stay in the country for 90 days every six months, “- the Minister notes. He notes that the procedure for obtaining visas was simplified for citizens of the countries that do not fall under any of the above categories – they will have the possibility of obtaining electronic visas. In the Minister’s words, the new procedures greatly simplify procedures for investors, including from those countries whose nationals can get to Georgia with visas from third countries. “If we are talking about investors and businessmen, the vast majority of them tend to have a visa to the developed countries, often go there, accordingly, the way to Georgia is open for them without any restrictions. While the system of electronic visas will make the system even more liberal, “- George Kvirikashvili beleives.

TAX ON DIVIDENDS TO REPLACE INCOMES TAX

he Georgian government intends to abolish the income tax and replace it with a tax on dividends. Currently several versions are under consideration and the so-called Estonian model is likely to be chosen. According to Deputy Finance Minister Lasha Khutsishvili, there is an opinion that the tax on dividends should be increased simultaneously with the abolition of income tax, but the government does not intend to follow this path. “Estonian model does not provide the abolition of income tax and growth of tax on dividend payments but the creation of another tax on their base to be levied on the distribution of profit. Essentially, this tax should not be associated with a tax on dividends, “- the official says. In his words, the increase in the tax on dividends includes a number of risks, because of which it was decided not to resort to such a measure. “In this case, no one pays attention to the fact that Georgia has double taxation agreements with 50 countries, in 10 of them dividends are not taxed. If we increase the tax on dividends, it turns out that all of the resulting profits, which will be withdrawn from Georgia, will remain outside the

tax system, as a result, the budget will lose a lot of revenue. The next step will be that established in Georgia companies will be re-registered abroad, where dividends are not taxed. The third step will be the emergence of problems in terms of income tax, which is directly linked to a tax on profits,”- Lasha Khutsishvili explains. According to the Deputy Minister, the new initiative cannot be implemented in a couple of weeks and it will take a lot of time, including the adoption of a number of new laws. “ The initiative needs a comprehensive analysis and calculation as it includes both positive and negative elements. For this reason the Ministry of Finance announced a tender for the preparation of the document, which will evaluate all possible consequences of the adoption of the law. In particular, we are talking about the impact on the economy not only in terms of filling the budget, but also the economy as a whole, in terms of the employment rate, the liquidity of companies, etc,”- says Lasha Khutsishvili. He adds that the tender has already been announced and the winner will be revealed in the coming weeks. The evaluation document will be ready in mid-September, after which it is decided in what time frame profits tax will be canceled. “The process will not be quick, because the Tax Code contains many regulations relating to income tax that must be revised. In addition, 50% of administrative procedures concern income tax. So, much has to be changed. Apart from the abolition of many current regulations, a lot of new must be adopted, “- Lasha Khutsishvili concludes.

IMF ADVISES GEORGIA TO REDUCE DOLLARIZATION AND MAINTAIN FLOATING EXCHANGE RATE

s permanent representative of the International Monetary Fund Mission to Georgia Azim Sadikov has declared, it is important to reduce dollarization and maintain a floating exchange rate. Sadikov has told reporters that the GEL has been depreciated because of two main factors: the dollar gaining value globally and external factors from neighboring states. “The situation in Russia, Ukraine, Armenia and

caucasian business week

Azerbaijan, their economic recession and depreciation of national currencies influenced Georgia’s exchange rate.”- Sadikov remarked. According to him, IMF welcomes the existence of a floating exchange rate in Georgia. “We would like to welcome the existence of Georgia’s floating exchange rate, as this makes it possible to absorb external shocks. Therefore, it is very important not to allow external factors to influence Georgia’s economic condition; though it is very hard to do in a country having such a high dollarization rate. If a country’s dollarization is moderate, people have little concern about the exchange rate and mainly focus on their income, which is in the local currency. Unfortunately, when people have assets in a foreign currency and their income - in local currency, it becomes very difficult to deal with in a heavily dollarized environment. That’s why it is impotent to reduce dollarization and maintain a floating exchange rate in the country,”- Azim Sadikov said.

GEORGIA’S INVESTMENT INFLOWS IN 1Q14 FALL BY 34%

ccording to Geostat’s preliminary data of the 1st quarter of 2015, the volume of Foreign Direct Investments in the country decreased by 34% in comparison with the same period of 2014. This year FDI only amounted to $ 175 million. During this period, the largest investor has been Azerbaijan which accounts for 34% of total investments, followed by Turkey’s 15%and Rus-

sia’s 13%. The largest sectors of the economy account for 97% of the raised investments. $146 million has been invested in transport and communications which is 83% of the total investment. The second is the construction sector with $24 million; the third is the mining industry with $18 million. According to the Georgian Statistics Service, in the first quarter of 2015 outflows from the banking sector amounted to $18 million.

REGIONAL DEVELOPMENTS SHRINK GEORGIAN WINES EXPORTS

or the past several months, exports of the Georgian wine to Russia and Ukraine have sharply reduced. Winemakers hope that the situation will improve with time, but the statistics are still showing its further deterioration. According to General Director of Shuhman Wines Nutsa Abramishvili, the fall in exports is seen due to the economic problems in the region. “The crisis, which was caused by the devaluation of the ruble in Russia and military operations in Ukraine, of course, hit the exporters, including winemakers. At the same time, we are increasing our exports to more sustainable and stable countries, which is a condition for market diversification. It is a correct policy both by the state and the individual companies “- she says. She also expressed hope that after a relative stabilization of the ruble, exports will begin to grow, which is of great importance for the economy of Georgia. “Last year, exports to Russia amounted to several million dollars, which was very important for the economy. As for Ukraine, we are dealing with a long-term problem, and now to predict anything is very difficult. Of course, it is necessary to master alternative markets, but it is very difficult to do in the short term, since the Georgian wine is not well-known globally, and it has to fight for its place in the market with brands that sell their wine dozens, if not hundreds of years “- says Nutsa Abramishvili. At the same time, in her words, if the Georgian

wine is able to establish itself among the world’s wines, it will be a great prospect for the wine, and not only. It will also promote the growth of awareness of the country and the growth of its international image, “- she adds. Zurab Ramazashvili, Director of Telavi Wine Cellar, also considers the main difficulty to be the situation on the Russian market. He believes that most likely the situation will not be resolved in the short term. “It is very difficult to correct anything in the short term. Demand in Russia is quite high, but because of the economic uncertainty, sales of wine fell, especially Georgian which is quite expensive. It is impossible to predict how events will unfold in the future.” “We certainly want to increase exports to Russia but this year it is likely impossible. In parallel, we are trying to step up sales in other countries – we are very interested in China, as well as the Baltic states, Poland, the United States. We started working in Japan and Korea,”- the businessman notes. He says, in 2015 the company has sold 4.5 million bottles of wine and this year sales decreased by 30%. According to the National Wine Agency, in January-May 2015 exports of wine decreased by 54% compared to the same period in 2014 mainly due to the decline in sales in Russia and Ukraine. In particular, exports to Russia decreased by 70%, to Ukraine – by 57%. Overall, in total 10 455 407 bottles of wine worth $ 30 151 030 have been exported to 31 countries in the first 5 months.

AZERBAIJAN, TURKEY AND RUSSIA EMERGE AS GEORGIA’S MAJOR INVESTORS IN 1Q15

zerbaijan was the biggest investor of Georgian in Q1, 2015. According to official data, direct investment of 59 million USD has been made in Georgia from neighboring countries through January-March, which is 34% of the total investments. However, investment volume made from Azerbaijan was 47 million USD in Q1, 2014. Top three of the biggest investor countries include: Turkey 27 million (15% of the total investments) and Russia 23 million (13%). However, Netherlands which ranked first in the same period of the previous year, now the country is on the 4th position. Investment of 22 million USD has been carried out from this country, which is 4 times less comparing to the same period of 2014.

The top five includes Denmark – with 21 million. This is the maximum of 9 quarters. Investment volume made from Denmark has not exceeded 4 million through a quarter. Direct investment of 19 million USD has been implemented from USD. To note, 14 million from Belize. It should be noted, that Belize is for the first time among the biggest investors. The investment volume made from the United Kingdom has amounted to 13 million USD. Investors, who are registered in Mauritius and Luxembourg have invested 12-12 million USD in Georgia as well. To remind, direct foreign investment of 175 million USD has been made in January-March in Georgia, which is less by 34% comparing to the same period of the rpeviosu year.

INTERVIEW

caucasian business week

QUOTES

“Georgia Needs to Attract New Investments and Technologies”

BRUNO BALVANERA Director for Caucasus, Moldova and Belarus at EBRD “Recently European Bank for Reconstruction and Development (EBRD) has reduced economic growth forecast of Georgia from 5% to 2,3% in 2015. Russian ruble devaluation has been the main factor. Russia is the main player for the region and

as we know, export in Russia and remittances from Russia is reduced, which has been negatively reflected on the currencies of region countries. Besides that, economic growth forecast of Georgia is negative, as despite all efforts, dollarization is still very high in the country, while foreign interventions are small. I hope, that this is temporary. You have all ingredient for rapid increase. There is a need to attract necessary investments and new technologies”, - Bruno Balvanera regards. “If we review the ratings of international organizations, Georgia is the leader of the rating of easy doing business, competitiveness and corruption”, - Balvanera considers. “Georgia is blessed with fertile soil, good weather and water, but 50% of agriculture products are still imported. Georgia should bring technologies and agriculture land areas must be increased. Anther prospective sphere is tourism, - it is amazing country, but you must carry out more international campaign to attract additional people, we should include different segments, for instance: mountainous resorts, hikes, visiting of monasteries and sea resorts. The country should be able talk in English. If you want to develop the country, you must introduce new technologies”, - Bruno Balvanera declares.

“Georgia Has Unbelievable Potential”

MARCUS FELSNER Chairman of the German Economic Association in East Europe Germany is offering extra support to Georgia to help strengthen bilateral economic ties and improve the reputation and position of Georgian businesses in Germany. An initiative for German experts to offer special

trainings to Georgian managers was voiced today at a bilateral business event organised by the Georgian Embassy to Germany. The event aimed to introduce Georgia’s economic environment to German authorities and business community, so Georgia could attract more German investments. It is obvious that German companies’ interest towards Georgia has been increasing. However, we still need to support this number to increase further. For Germany, Georgia … is a country of unbelievable potential,” said chairman of the German Economic Association in East Europe Marcus Felsner. “Georgia’s economic structure unlike other countries in the region is in line with Germany’s economic structure with is strong small and mediumsized enterprises. That is why we are real fans of Georgia,” he added. Today’s event was attended by representatives of Germany’s Economy Ministry, the German Bundestag (parliament) and business community. The envoy from Germany’s Economy Ministry came up with idea to begin trainings of Georgian managers in Germany in the near future, for the purpose of strengthening relations between German and Georgian businesses. The professional development trainings will also help Georgian managers to better promote their businesses, products and services in German markets.

“Poverty in Georgia Will Exist Until State Officials Learn to Respect the Business Sector”

ARMAZ TAVADZE Founder of the insurance company ARDI “Poverty is not only a material category – it is also a mental category. Therefore, the economic measures are not enough to overcome it. Patriarch said in one of the sermons that the Georgian people have lost the habit of working hard and are accustomed to poverty. Unfortunately, laziness and poverty has become the way of life, which somehow needs to be stopped. The most popular and beloved hero of Georgian fairy tales of all

generations is an Idler, an ideal symbol of poverty and laziness,” –Tavadze comments on the widespread poverty of the country. “I think this is a serious problem, for the solution of which every Georgian authority has failed to do anything significant. Until there is an indifferent attitude toward the businessmen in the society, I can hardly imagine that the country will get out of poverty. The government must do everything to change the mentality of the society and its state officials. First and foremost, we have to defeat poverty in our minds. The same mentality prevents state employees to build a rich country. Mentality of the state officials is the most problematic factor, which hinders the development of the business sector. This problem has become traditional in our country. State officials and businessmen are opposing, hostile parties in Georgia. Of course, we are not talking about a direct aggression but mistrust has not been removed. I wish somebody explained clearly to state officials that businessmen are the chief figures participating in the country’s economic development. The government should cherish the people who can create and do business in the country. There is already a shortage of people engaged in business activity and until the state learns to respect businessmen, the eradication of poverty will remain an empty promise. Unfortunately, the government sees its role in the punitive functions.

June 15, 2015 #103

“NBG DISCUSSIONS REPRESENT SCAPEGOAT SEARCHING” The International School of Economics in Tbilisi (ISET) recently presented its study on the Business Confidence Index in Georgia in the second quarter of 2015. The figures indicating the different sectors’ predisposition toward the business environment in Georgia have become dire since last year, having gone down from 24,5 to 3,6. Most pessimistic sectors in terms of the business outlook of the country are the financial sector and the retail industry. In this regard, we had a chance to talk with MR. ERIC LIVNY who is the Director of ISET Policy Institute. As a foreign economist working closely with the Georgian data, Mr. Livny had some interesting points to raise about the current political discussions of the country. These include the policy of the National Bank and legislative regulations that limit Georgia’s development. Mr. Livny essentially believes that the on-going discussions on the NBG and Mr. Kadagidze are an example of blame putting and a “search for a scapegoat” in this turbulent economic environment. You can read the full interview below:

- You mentioned that lack of discussion between the business sector and the government is hindering Georgian economy’s recovery process. What do you mean, specifically? - The main issue is the unpredictable policy environment; it’s not only the reshuffling of ministers, it’s also the laws and the regulations. For example, take the excise law. The government “had to,” supposedly, under the EU Association Agreement, to harmonize the excise taxes on alcohol and tobacco. According to that same Association Agreement they could harmonize it within 3-5 years; sometimes even longer than that. Now if you do this harmonization within 5 years this, everybody can adjust – the consumers, as well as the producers. But the Georgian government imposed high excise taxes as of January 1, 2015; no discussion with the businessmen took place. No questions asked, no answers given. - Many experts also say there was no discussion regarding the new law on creating a new board that would oversee the NBG’s banking supervision process. - Well, that’s so new that there has been no chance to discuss it yet. I believe that this whole initiative is essentially a search for a scapegoat. - Do you think that implementation of this law would harm our banking sector? - The law itself is not a problem. You can take the whole department of the NBG that deals with banking supervision — which also incidentally employs many of my students — and rename it. By doing so, you just change the sign above the institution. It doesn’t matter that much. In different countries, they do it differently. In some countries, these institutions are under one sign, in other countries under three different signs. In the US, for instance, there are three different signs. In the UK there used to be two, now they united back to one. So you have all kinds of different examples; this doesn’t matter. What matters is that people, for political reasons, are trying to destabilize the institutional environment of Georgia. This is bad because today they destabilize that aspect of the environment; tomorrow, they will destabilize some other aspect of the environment. And if the Parliament indeed will be calling shots in who is running the banking supervision – that will be terrible. Because the supervisor should not be the Parliament or any political party, it should be independent. That’s most important. - Some politicians in Georgia blame solely Mr. Kadagidze in the national currency’s current 32% depreciation.

- Our currency is in excellent condition, first of all. Let’s imagine that our currency was still traded at 1,7 per dollar, as it was last year. We would have been terribly expensive with respect to the rest of the world. Nobody would want to buy Georgian products and imports would compete even more with our local production. So we would be losing our jobs. We would not be able to compete with imports, so we would have been in a disastrous situation with lots and lots of unemployed people. We would have people protesting in the streets “We want jobs!” - Do you think that the policy of the NBG was correct? - Absolutely, yes. They did not burn reserves; they acted in a very professional manner and the results show. So the current situation of blame putting is really just politicking and trying to gain political capital and show that there are others who are the bad guys and we are the good guys. - How does the politicians’ discussion on NBG influence the potential investors? Can this be one of the causes in the decline of investments? - This is absolutely harmful. I don’t want to go so far as establish a causal link between these discussions and the decline in foreign investment. However, they are clearly not helping. When you have such discussions going on that the Parliament might start controlling the banking supervision or the National Bank – it’s not good. You know, we have banks that are fully foreign-invested. All the large Georgian banks are foreign-invested. We don’t have a single large Georgia-owned bank. So, if the Banking Supervision Agency becomes less professional, more interventionist and politically-biased perhaps, this would lead to there being a “Bank of Friends” or a “Bank of Enemies.” This would be a major disaster for Georgia. In fact, Georgia had a recent history when Bidzina’s own bank was raided by the Saakashvili administration in 2012. So, we don’t want the history to repeat itself in that way.

ISET: BUSINESS CONFIDENCE IN GEORGIA AT AN ALL-TIME LOW

fter being steadily optimistic for most of 2014 and in the first quarter of 2015, Georgia’s business confidence dropped by 24.5 points to an all-time low level of 3.6 on a scale of [-100; 100] points. The survey, which included 168 firms, suggests that business confidence declined on all measures, across all sectors, and for all firm sizes. Moreover, it is reflected in business perceptions concerning both current performance and expectations concerning the future — ISET, international School of Economics in Tbilisi writes in its report. The sharp decline in business confidence appears to be related to the recent depreciation of the Georgian lari and the political wrangling that followed. The drop in business confidence comes after seven months during which Georgian consumer confidence has been steadily declining, affecting consumer demand and sales. While the retail sector was the first one to be affected by the slump in demand, second quarter data suggest that the Georgian financial sector is also starting to feel the heat.

Financial sector confidence dropped by a record 50.8 points (from 50.9 index points in the first quarter of 2015 to merely 0.1 points in the second quarter). ISET will hold a press conference tomorrow, June 9, regarding this issue; it will be led by Maya Grigolia, Senior Researcher at ISET-PI, who will present the results of the Georgian Business Confidence survey for the 2nd Quarter of 2015. About the Business Confidence Index (BCI): The BCI survey is a joint venture of the ISET Policy Institute and the International Chamber of CommerceGeorgia (ICC-Georgia). It is implemented on a quarterly basis since December 2013. Business confidence for Georgia is measured for seven key sectors: 1) services, 2) retail trade, 3) agriculture, 4) manufacturing industry, 5) financial service 6) construction and 7) other sectors. For each sector, business confidence is measured through a simple survey instrument targeted at top business executives. More than 150 Georgian businesses regularly take part in the survey. We would like to thank BIA for supporting outreach in the recent survey.

June 15, 2015 #103

BANK SECTOR

caucasian business week

ON THE VERGE OF TAKING A DECISION Commercial Banks Request Strong Arguments for Depriving the National Bank of Supervisory Functions

In the near future the Georgian parliament will discuss the bill for separating the bank sector supervisory functions from the National Bank of Georgia (NBG). The bill has been developed by Tamaz Mechiauri, a head of the parliament’s finance and budget committee. Mr. Mechiauri expresses distrust toward the NBG President Giorgi Kadagidze and he asserts Kadagidze threatens the economic stability of Georgia. Part of specialists asserts Mechiauri’s initiative is a politically-motivated one and it has nothing common with the budget and financial recovery. Another part of the specialists assure this change will make the sector more transparent and the bank sector supervision will not be related to political preferences.

How to Stop Political Speculations NATO KHAINDRAVA, a Cartu Bank deputy director general: “Separation of the supervisory functions from the NBG will put an end to mutual accusations the NBG and the Government are making against each other. Indeed, this is not a positive message to millions of clients, who stand behind these commercial banks, whose cooperation with commercial banks guarantee their stability. Therefore, the confidence in the bank sector must be significant. It is important that the supervisory functions be separated from the NBG, because the conflict of interests is manifest. The NBG function is to determine the monetary policy. The NBG’s access to the regulatory norms grows risks of use of these instruments without purpose. It is clear the structure has been politicized and the supervisory agency must be liberated from this burden to maximally ensure its independence. As reported, for many years the NBG has used the supervisory instrument without purpose. As a result, several commercial banks are facing problems with liquidity; depositors have withdrawn a significant volume of money. Without timely prevention measures, commercial banks were led to bankruptcy conditions. The financial supervision, as the financial sector’s regulatory body, should independently implement the activities. Moreover, this precedent existed several years ago and it was discussed without noise.

Optimal Variant should Be Chosen for Georgian Reality VUSAL VERDIYEV, a FINCA Bank Chief Executive Officer: “Georgia’s current monetary and supervisory policy should be highly appraised. It should be noted the level of support and supervision is quite impressive and Georgia is the region’s leader in this respect. It is difficult to say which model is better: co-existence of the financial supervision agency with the NBG or their separation. Both models work in the region and in the western countries. The main thing is that the specific reality of this or that country should be taken into account and the most optimal variant should be chosen for Georgia. The most important thing is that large-scale discussions should be held on the issue with the participation of all interested parties. The process must involve bankers and legislators, public figures. The issue is very delicate and complicated, but this does not signify the discussions should involve only macroeconomists and professional financiers. Structural organization is an important issue, but the more important thing is to determine the task, purpose and goal. The main question is: for What?! This question may seem to be a rhetorical one, but it is a real question.

The process must Be Transparent SHAHIN MAMMADOV, (ACCA Chief Executive Officer) PASHA Bank : “At this stage the discussion process must be transparent and we are sure the process will be genuinely transparent. Besides ordinary bank products and services, our group also plans to implement long-term investment projects in the Georgian market. We have chosen this market for the bank sector’s

stability and a high level of confidence. Georgia offers favorable environment for operation and we have got positive expectations.

All Commercial Banks Need Guarantees for Maximal Protection of Depositors and Investors LASHA KHOPERIA, a Capital Bank director general: “Commercial banks are actively involved in the bill discussion process and tight coordination will be maintained till the process completion. Under the supervision of the Association of Banks, we will take into account all remarks and initiatives and introduce a joint position at the next meeting. The main task has been determined and the details will be further outlined. All commercial banks need guarantees that the interests of depositors and investors will be protected. My positions will be based on this principle, because I represent a commercial bank. From the supervision point of view, other challenges may be relevant, while the legislator’s position may be based on other arguments. The decision must be taken by the legislators.

We should Be Sure the Changes will Bring Real Effects to Both the Bank Sector and the Whole Economy VAKHTANG BUTSKHRIKIDZE, a TBC Bank director general: “The issue should be thoroughly explored and we should determine whether the separation of supervisory functions from the NBG is strategically expedient in the long-term perspective. It is wonderful the bank sector representatives and the bill authors have met. Now we should continue the working process and broaden the format. We are ready to actively join the discussion process and request for involvement of foreign experts and international finance institutions in this process. The process must be maximally transparent; I repeat we should clearly know a final result we want to reach and whether these changes will be justified in the long-term perspective. Previously, the financial supervision body was independent for several years, later it merged with the National Bank. Since then the bank sector and the supervision agency are being developed. Consequently, we should be sure the changes will bring real effects to the bank sector and the whole economy.

Conservative Approaches will more Protect Depositors ARCHIL KONTSELIADZE, a VTB Bank director general: Strong arguments should be submitted for separating the supervisory functions from the NBG. At this stage, the necessity of these changes is not substantiated. The Financial Supervision system is a well-organized system and it works valuably. At the same time, in theory, the system may be further improved, but strong grounds and arguments are required for persuasion and the bill authors should also submit qualified arguments. I do not agree with the spread version on international experience as if in a major part of countries

the regulatory body is independent from the central bank and this factor ensures stability of their national currencies. The main sign of this system is a valuable and efficient operation. As to Georgia, its geopolitical situation makes any parallels with Europe useless, because we have got higher risks and therefore, stricter supervisory regulations are more justified; We should also remember there is no deposits insurance system in Georgia and conservative policy makes deposits more protected. As to the issue who will elect the board members, it is not important which body will put forward the candidacies - the president or the government. This depends on the state organization – if the country follows the parliamentary model, indeed, the parliament will bear the responsibility, but at this stage it is untimely to speak about staffing the board members.

The Idea is Acceptable if the Regulator’s Independence Quality Grows IRAKLI GILAURI, a Bank of Georgia director general:

“It is important to involve representatives of the finance sector, including, bankers in the process. Multilateral dialogue and consultations are necessary for taking valuable decisions. The idea of separation of the financial supervision agency from the NBG is acceptable if the quality of the regulator’s independence increases. At the same time, Bank of Georgia bankers have no remarks on efficiency of operation of the current regulator under the NBG. The bank’s deputy director general Murtaz Kikoria said the sector’s stability has been ensured under the constitutional mandate of the regulator body. “It is important that the parties show maximal involvement in the bill discussion process, but the prerogative belongs to the parliament and the government. Commercial banks should join the process within their competence, while beyond this competence a certain conflict of interest will arise. It is acceptable to improve the independence quality of the finance sector supervisory body. At the same time, I think there is no necessity for such improvement. I believe the regulatory norms should be just smoothed, because the capital requirement is the highest in the region and Europe.

LEVAN SURGULADZE, a chairman of the Caucasian Business Group’s supervisory board: “I back the idea of separating the finance market supervisory functions from the national bank. Moreover, I believe it was an erroneous decision when the finance sector supervision agency was united in the NBG in 2009. “The finance market regulatory structure must be strictly separated from the monetary policy determinant body and this consideration is proved by the world practice. If two these structures are united under the same management, then in certain cases, its manager will have to take conflict decisions”, Surguladze said. In 2008-2009 Levan Surguladze was member of the acting financial supervision board. He makes focus on necessity of introducing a new regulatory body with a higher independence level. It should be accountable before the Parliament, the body with the highest legitimacy. ZURAB GVASALIA, a president of the Association of Banks of Georgia, asserts supervisory functions must be deprived from the NBG to make the bank sector apolitical, so as the bank sector be free from undeserved accusations. The bill will deprive the NBG of the function of a political determinant, because the NBG is an independent political body in itself and in certain cases the NBG or the government may use various leverages. We should also take into account various circumstances, including, a change of executive and legislative powers that are elected for a period of 4 years, while the NBG President’s is elected for 7 years and so on.

PRICES

June 15, 2015 #103

caucasian business week

PRICES IN GEORGIA AND ITS NEIGHBORHOOD FOR THE TEN MOST NECESSARY PRODUCTS

eorgia, Armenia, Azerbaijan, Ukraine, Russia, and Belarus – all of these post-soviet countries have similar social tones. The only difference comes in pension payouts and salaries, but the product prices are almost identical to the ones in Georgia. The most sought-after products and their prices set side-by-side in these six countries reveal that some product prices have slight fluctuations and are cheaper or more expensive in Georgia. Potatoes, for example, are priced at an average 0.7-1 GEL, while in Russia the equivalent price is 1.30-1.60 GEL, with Ukraine having it at 1-1.5 GEL, the Belarus at 1-1.2 GEL, and Azerbaijan at 1.5-1.9 GEL. As for Armenia, 1kg of potatoes can be acquired for just 0.9-1.2 GEL. Another indemand product is milk, which is cheapest in Ukraine and Armenia from the six countries. 54 tetris can buy you a liter of farmer’s milk in Ukraine, whereas on the market you’ll find it for 1.1-1.2 GEL. Factory-produced milk could be priced upwards to 1.5 GEL. As mentioned above, milk is also quite cheap in Armenia, with farmer’s milk fluctuating between 45 and 48 tetris, which is negatively looked upon by the Ministry of Agriculture of Armenia. According to the local media, the ministry is planning to raise the buying prices in the near future, which will see the price grow to 57-60 tetris. As for factory-produced milk, which Tbilisi prices at 2.8-3 GEL, has a tag of 1.8-2 GEL in Armenia, 1.92-2.5 GEL in Russia, 3.30 GEL in Azerbaijan and 3.5 GEL in Belarus.

Another necessary product for homes is vegetable oil. A liter of refined sunflower oil in Ukraine costs an average of 2-2.2 GEL, with the price going up to 3-3.5 GEL in Georgia. The same amount of oil can be bought for 3.5-4 GEL in Azerbaijan, and for 4-4.2 GEL in Belarus. As for Russia, a liter of refined oil in Moscow costs an average of 4.35 GEL, and 3 GEL throughout the rest of the country. The prices on eggs are almost identical everywhere except for Belarus. A single egg costs an average of 20-22 tetris in Belarus, while in the remaining five countries, including Georgia, the price doesn’t go above 28-35 tetris. One of the most frequently used products in everyday routine is sugar, which has its highest price point in Moscow. A single kilogram of sugar costs approximately 2 GEL there, with Ukraine’s market having had an identical index a few months ago. Right now it ists at a 1.2-1.3 GEL index because of price fluctuations on the world market. Sugar prices have also decreased in Armenia and Azerbaijan. Similar to sugar, bread has also experienced a price climb in Russia, which is currently sittign at a 1.25 GEL mark, while other countries see the price between 70 and 90 tetris. Another important product, rice, has become more expensive in most countries. In Azerbaijan, 1 kg of white rice is approximately 4.38 GEL, in Armenia – approximately 3 GEL, in Georgia – 1.8-2 GEL, in Ukraine – approximately 2.1 GEL, and in Belarus 1kg of white rice is priced at 2.6 GEL on average. The cheapest rice is in Russia for 1.61.8 GEL.

Beef is the most expensive in Moscow, 1 kg is approximately 23 GEL, with the rest of Russia sitting at an average of 15 GEL price mark. In Azerbaijan, beef can be bought for 15 GEL, in Georgia

and Armenia for 11-12 GEL, and in Belarus and Ukraine for 8-8.5 GEL. Chicken meat is less expensive in Russia, which fluctuates from 3.2 to 4.9 GEL. Ukraine has it for 3-5.5 GEL, Be-

larus for 4.9 GEL at most, Azerbaijan for 5.4 and Armenia for 5.2. Georgia has the most expensive chicken meat is in Georgia, with one kilogram selling for 5.5 GEL and going up to 6 GEL.

COMPANY NEWS

June 15, 2015 #103

caucasian business week

FIVE-STAR LEO GRAND BATUMI HOTEL OPENS IN ADJARA

he $40 million USD Leo Grand Batumi hotel opened its doors today. Batumi, a vibrant city in Georgia’s Black Sea coast, is welcoming the summer tourist season with another five-star hotel. The hotel has 180 rooms, conference halls, restaurant, club, spa-centre, and world class service. The complex will employee 700 locals. Georgia’s Prime Minister Irakli Garibashvili at-

tended the opening ceremony of the Leo Grand Batumi Hotel and thanked the Turkish investor for the project. “This is the second five-star hotel we opened in Batumi,” Garibashvili said, adding several more were planned for this year. While in Batumi, the PM attended the opening of the construction of another hotel. The $50 million USD Orbi BeachTower with 1000 rooms will open its doors in October 2016.

ORBI GROUP STARTED CONSTRUCTION OF ORBI BEACH TOWER IN BATUMI

rime Minister Irakli Garibashvili , jointly with Vice-Premier Kakha Kaladze has laid the basement to the construction of new complex. According to the company, up to 1000 apartments will be placed in 39-story complex. The complex is 50 m far away from the sea. To note, 50 million USD will be invested in the construction of the complex. The building will include SPA-centre, casino and entrainment centre. Construction of the complex should be finished on October, 2016. According to the Premier, “Orbi Group” has already made an investment of 450 million GEL in Georgia”.

LUXOR TO INVEST 30 MILLION GEL IN MULTIFUNCTIONAL COMPLEX CONSTRUCTION IN TBILISI

ompany “Luxor” will invest 30 million GEL in the construction of multi-functional complex in Tbilisi. Land plot of 26 295 square m and buildings should be delivered to the company at 2 900 000 USD with direct sale. “Luxor” should cover privatization sum in 2 months and construct multi-functional complex within 48 months. The company should spent not less than 30 million GEL. It should be noted that

6 million GEL of this sum should be spent within first 24 months. To note, Achiko Chikvashvili, 100%- shareholder of company “Luxor” has submitted documentation to the Public Registry. According to the documentation, Ivliane Tsulaia and Irakli Kapianidze will become the stakeholders of the company. However, 25-25% of the company is alienated at a symbol sum. In addition, LLC “Luxsor” will change the name and the company will continue operation under the name of “Prime Arch”.

BITFURY GROUP DEVELOPING MODERN TECHNOLOGIES IN GEORGIA

Crypto Currency – Bitcoin’s New Processing Datacenter The Center will Open in Gldani

itFury Group company, a Bitcoin’s crypto-currency investment company, plans to construct a technological datacenter on 18.5 hectares in the Gldani District, Tbilisi. Under the Georgian Government’s resolution (May 25, 2015), the territory was handed over to the company at 1 GEL with the following investment obligations: the company must construct, equip and put into exploitation the datacenter for 8 months; To this end, the company will invest over 11.1 million USD and submit a 10% irremovable bank guarantee. The center must employ at least 20 persons. Efrem Urumashvili, a founder of the Nodia, Urumashvili and Partners advisory company, and a representative of BitFur company in Georgia, noted the construction works will start in mid June and end in 4-5 months instead of planned 8 months. The initial investments volume of 11 million USD will also increase several times, Urumashvili added. The world’s leading financial editions have dedicated articles to the construction of Bitcoin’s new major processing datacenter in Georgia. The Yahoo Finance had published the comments by BitFur executive director Valeri Vavilov, who noted the technological business will be enlarged after

a successful operation of the existing database. Georgia’s favorable investment environment promotes this process, as well as low energy tariffs and competitive labor market. The construction of a new large technological park in Georgia was also covered by the Business Wire influential edition and economic editions of the United Arab Emirates. Today the company owns two datacenters in Iceland and Georgia, Efrem Urumashvili said. “The new project calls for developing the technological zone and it will unite the global technological players. Georgia has got experience in developing the technological business. The project implemented jointly with the Co-Investment Fund for constructing a BitCoin datacenter in Gori has been functioning successfully. Therefore, the company has taken a decision on developing the business in Georgia. A construction of a large datacenter in Tbilisi is a huge step for formation of Georgia’s modern technological hub”, Efrem Urumashvili said. BitFur will be the first technological park leasing company that will process over 100 MW energy of the mega datacenter. This will simplify the process of transactions. This is the 3G system that is used for energy efficiency and it ensures high-level computer performance.

FIVE NEW INTERNATIONAL DESTINATIONS FROM ATLASGLOBAL AIRLINES:

PARIS, AMSTERDAM, DÜSSELDORF, COLOGNE, BISHKEK

fter presenting its new corporate identity with the slogan ‘A World Beyond Dreams’, Atlasglobal Airlines has launched ticket sales for no less than five new international routes, in line with its international growth objectives. Atlasglobal caused a stir in the aviation world with a recent overhaul of its corporate identity, and now the airline has launched ticket sales for no less than four new international flight destinations. Atlasglobal’s new destinations are the European cities of Paris, Amsterdam, Düsseldorf and Cologne, as well as the Kyrgyz capital of

Bishkek. Atlasglobal’s new routes will run from Istanbul Atatürk Airport, and details of the flights can be found below: Paris: Opening on 10 July, flights on this route will run every day of the week, leaving Istanbul at 13:25 and leaving Paris at 17:10. All-inclusive ticket prices on the Istanbul-Paris route start from €120 one-way. Amsterdam: Opening on 18 June, flights on this route will run every day of the week, leaving Istanbul at 10.00, and leaving Amsterdam at 13.30. All-inclusive ticket prices on the Tbilisi- Amsterdam route start from €134 one-way. Düsseldorf: Opening on 11 June, flights on this

route will run every day of the week, leaving Istanbul at 09.30, and leaving Düsseldorf at 12.50. All-inclusive ticket prices on the Tbilisi- Düsseldorf route start from €134 one-way. Cologne: Opening on 11 June, flights on this route will run leaving Istanbul at 13.25, and leaving Cologne at 17.20. All-inclusive ticket prices on the Tbilisi-Cologne route start from €122 oneway. Bishkek: Opening on 11 June, flights on this route will run five days a week (Tuesday, Wednesday, Friday, Saturday and Sunday), leaving Istanbul at 18.55, and leaving Bishkek at 04.10 to arrive in Istanbul at 06.55. All-inclusive ticket prices on theTbilisi- Bishkek route start at $184 one-way. From other domestic and international locations, the passengers can easily travel on to Atlasglobal’s new destinations with reasonable transfer times in Istanbul. Speaking of the launch of ticket sales on Atlasglobal’s new routes, the airline’s chairman Murat Ersoy said, “We previously announced that we would soon be establishing new international projects as part of our global project. We are continuing to expand our flight network from East to West. You cannot expect to achieve strategic success in the growth process simply by opening new routes; what is important is to ensure the continuity of the same high quality standards at all the points you serve. What is important for us is to provide our passengers with a comfortable flight experience from beginning to end. As the Flying Chef service that we launched last year on our London and Kuwait flights received such high levels of interest, we decided to offer this service on our Paris, Amsterdam, Düsseldorf, Cologne and Bishkek flights too.”

‘FLYING CHEF’ SERVICE Atlasglobal offers ‘Flying Chef’ service to routes of three hours or more in duration from Istanbul, including the Paris, Amsterdam, Düsseldorf, Cologne and Bishkek destinations. The chef prepares special daily dishes, adding a personal touch to both Turkish and international cuisine. The Chef personally prepares some signature dishes on board for both EkonomiPlus and Business Class passengers, such as the Chef’s dessert. NOT A ‘LOW COST’ AIRLINE AtlasGlobal offers its passengers high quality and comfort on board. With its high standards of service, which are superior to major European national carriers, AtlasGlobal provides its passengers, many privileges within the framework of the EkonomiPlus concept. AtlasGlobal offers passengers travelling in EkonomiPlus a comfortable journey in leather seats with 77 cm legroom. They also benefit from a 25-kilogram baggage allowance, a wide range of complimentary food, beverages and snacks and free seat allocation. EVEN MORE PRIVILEGES WITH BUSINESS CLASS AtlasGlobal passengers can also choose a real Business Class experience in order to enjoy additional benefits during their trip. Passengers in Business Class travel in wide seats which are designed purely for Business Class with 100 cm of legroom and benefit from a large range of hot meal and beverage offers, as well as special services including a 35-kilogram baggage allowance, priority baggage, priority check-in, use of the Lounge and VIP plane transfer at Istanbul Atatürk Airport. Tickets are available on Atlasglobal Georgia office on 26 Abashidze str. Tbilisi/Georgia, via authorized travel agencies and the airline’s web site www.atlasglb.com

ast week, busy economic calendar kept fueling Forex market liquidity, mainly dominated by the optimistic US labor market details, higher than expected EU CPI and mixed releases from UK PMIs. The USD witnessed considerable up-move on Friday when the NFP rallied to its highest levels since December and the Average Hourly Earnings gained the most since August 2013; however, slump in Factory Orders and weaker ISM NonManufacturing PMI, published during early week days, restricted the US Dollar Index (I.USDX) from registering positive weekly close. The Euro remained mostly on the downside even after witnessing eight month high CPI as Greece again failed to agree with its international creditors during cash-for-reform deal and bundled the IMF payment to be paid at the end of June. European leaders are more concerned about the Grexit now that the EU head, Jean-Claude Juncker, rebuked Greek PM on Sunday and said that the final agreement should be adopted before June 13-14. The JPY rallied to its 13 year lows against USD as contradicting monetary policies of BoJ and Fed kept weakening the Japanese currency while the GBP was a tad weaker against its US counterpart with a dent in Services PMI hurting the UK currency. With fewer economic releases scheduled during the current week, Forex market is less likely to witness volatility seen during recent times; however, US Retail Sales, PPI and Prelim UoM Consumer Sentiment, coupled with Chinese Industrial Production, Australian labor market details and RBNZ, could provide considerable market moves. Moreover, UK Trade Balance and Manufacturing Production and the Chinese Inflation details are also likely to offer meaningful information to determine near-term market trends. European economic calendar is empty during the week with focus mainly on the Wednesday’s an EU-Latin America summit when the Greece is said to present its own ideas faster to enable talks with international creditors. After witnessing pessimistic readings for Q1 2015 US GDP and Factory Orders for the month of May, market players are likely to concentrate more on the monthly details of US Retail Sales, scheduled for Thursday release, and the May PPI, scheduled for release on Friday, in order to determine the strength of US economy during Q2 2015. While the Retail Sales are expected to rally towards

CURRENCY caucasian business week

June 15, 2015 #103

HANDFUL ECONOMIC RELEASES TO RESTRICT BIG MOVES testing more than a year’s high by printing 1.1% number against previously reported 0.0% figure, the PPI is also likely to mark 11 month high with 0.4% gain as compared to -0.4% reading for the month of April. Moreover, the Preliminary reading of UoM Consumer Sentiment, also scheduled for Friday release, can show increased consumer confidence level to 91.3 as against the upwardly revised figure of 90.7 for the prior month. It should also be noted that the Core Retail Sales, scheduled to publish on Thursday as well, is also expected to re-test April 2014 levels and could help extend USD gains. Other than these top-notch readings, weekly jobless claims, scheduled for Thursday, is expected to remain near the previous reading of 276K by printing 277K number and couldn’t pose serious threat to current USD up-move unless there is drastic increase in the reading. Considering the recent uptick in official reading of US Consumer Confidence, it is more likely that the Retail Sales matches the forecast and support the weekend rally of the greenback. Also, a commensurate improvement by the UoM Consumer Sentiment, which is more likely, could provide added reason for the US Dollar to extend its upward trajectory. However, market players are less likely to base their positional trades on these readings as Fed meeting, scheduled for June 17, becomes important to forecast interest rate moves by the central banker and is a better help to determine medium-to-longer-term USD moves. Having witnessed weaker export numbers from China, during early Monday release, market players are likely to wait for the Chinese Inflation numbers, scheduled for Tuesday, and the Industrial Production, scheduled for release on Thursday, in order to foresee the moves of commodity currencies, mainly AUD, CAD and NZD. Moreover, monthly release of Australian labor market numbers, scheduled for Thursday, coupled with the NAB Business Confidence and the Westpac Consumer Sentiment, scheduled for release on Tuesday and Wednesday respectively, are also important numbers to clarify near-term AUD moves. Australian Labor market details, mainly Employment Change and the Unemployment Rate, are expected to support the RBA decision for not altering the monetary policy. While Unemployment Rate is expected to re-

main unchanged at 6.2%, the Employment Change is likely reversing its previous decline of -2.9K by printing 15.2K figure. Moreover, the recent strength in Business and Consumer Confidence indices can continue supporting the AUD up-move as the Business Confidence index may print the same 3 or the higher number while the Consumer Sentiment has rallied considerably in its previous reading, to 6.4% from -3.2%, and could extend the same during this print. Moreover, Chinese CPI rallied to five month high in its previous reading, supporting optimism for Australian economy as being the largest consumer of Australia; though, expectations for the month of May signal bit of weakness into the inflation reading to test 1.3% mark and could weaken the AUD if the actual number meet or falls below consensus. However, the Industrial Production reading is likely to test three month high by printing 6.0% expansion, beating previously reported 5.9%, and can provide a reason for the Australian currency to witness gains. Recent plunge in UK Services PMI trimmed GBP strength and a monthly release of Trade Balance, scheduled for Tuesday, coupled with Wednesday’s Industrial Production, could provide better help to foresee near-term moves of the UK currency. UK Trade Balance is likely revealing lesser deficit to 10.0B against the previously recorded 10.1B of defi-

cit while the Manufacturing Production is expected to grow with lesser pace, to 0.1% against 0.4% prior. Lesser than forecast Manufacturing PMI, released last week, may continue dragging the industrial production, extending the GBP decline in-turn. Moreover, the Trade Deficit is still running at higher levels and is less likely to help the GBP unless revealing considerable surplus. Although, monetary policy meeting by the Reserve Bank of New Zealand (RBNZ), scheduled for Wednesday, is less likely to result an alteration in its current monetary policy; however, the tone of the rate statement and the speech by RBNZ Governor becomes decisive to determine near-term NZD moves. Market consensus reveals the tone to be slightly bearish, giving room for rate cuts during the end of the year; however, failed to signal such announcement and/or becoming optimistic can fuel the NZD strength. BoC Governor is due for a speech about bi-annual Financial System Review Results, conducted by the central bank on Thursday. Should the results (and the speech) continue signaling threats of weaker crude prices, the CAD is likely liquidate its last week gains while an optimistic tone of the BoC Governor, considering recent improvement in economic details, could help extend the CAD up-move. Admiralmarkets.ge/analytics/ facebook.com/ adimralmarketsgeorgia/

June 15, 2015 #103

WORLD NEWS

caucasian business week

NEIGHBORHOOD

Azerbaijan’s state budget deficit to amount to 6% of GDP in 2015 – IMF

I OBAMA QUEST FOR FAST-TRACK TRADE BILL DEFEATED FOR NOW IN HOUSE

he House of Representatives on Friday delivered a blow to President Barack Obama’s signature goal of strengthening ties with Asia but could try again as soon as Tuesday to reverse defeat of a measure central to a Pacific Rim trade pact. In a dramatic vote, Obama’s own Democrats, as well as Republicans, rejected a program to give aid to workers who lose their jobs as a result of U.S. trade deals with other countries. The measure was soundly defeated in a 302-126 vote. That was quickly followed by the House’s narrow approval of a separate measure to give Obama “fast-track” authority to negotiate the Trans-Pacific Partnership trade deal. But the legislation is stuck in the House because of the defeat Obama and House Speaker John Boehner suffered on the first vote. A House Republican aide told reporters Republican leaders hope to try again Tuesday to pass the worker aid portion of the bill. That would allow the entire trade promotion authority (TPA) legislation to be signed into law by Obama, but its chances were unclear. White House spokesman Josh Earnest dismissed the failed vote as a “procedural snafu” and was confident Democrats would come around to support the measure. Republican Pete Sessions said Democrats would have to do some “soul-searching this weekend” to figure out the future of the worker support program, known as trade adjustment assistance (TAA.) “We’re going to pass TPA,” said Sessions, the head of the powerful House rules committee. “The question is going to be whether TAA is going to be in it.” The worker aid program drew heavy opposition from both parties, with 158 Republicans joining 144 Democrats in voting “no.” Trading partners such as Japan have urged the U.S. Congress to pass fast-track to help wrap up a Pacific Rim trade deal covering 40 percent of the world’s economy.

PERSONAL PLEA FALLS FLAT Obama had lobbied hard to win over skeptical Democrats and forged an unusual alliance with the Republicans who control Congress and made a last-ditch personal appeal to congressional Democrats to back his trade agenda on Friday. Hours before lawmakers were due to vote on legislation central to the trade accord, Obama arrived at Capitol Hill with Labor Secretary Thomas Perez for the culmination of an intense effort to build support among Democrats. Republican support was always weak for the worker aid part of the “fast-track” trade legislation and Democrats’ support eroded this week following an intensive lobbying campaign by U.S. organized labor leaders. The AFL-CIO, the country’s largest labor organization, argued that funding for the worker aid program, which runs out in September, would be insufficient. But it also rallied support for its cause by arguing that a vote against worker aid would be the perfect tactic for stopping fast track dead in its tracks. Fast-track authority would let lawmakers set negotiating objectives for trade deals, but restrict them to only a yes-or-no vote on the finished agreement. Many Democrats have worried that giving Obama fast-track authority to finish the TPP would result in job losses in their home districts just as the United States was making economic gains that have led to a brightening jobs picture nationally. Boehner, the top Republican, in consultation with House Democratic leader Nancy Pelosi, is expected to weigh next steps. For example, they could try to make some changes to the worker training program or schedule more one-on-one meetings with lawmakers to allay their concerns. The Senate, in a strong bipartisan vote, has already approved the package of trade measures, which includes a customs enforcement bill. That piece of the puzzle passed the House too.

GERMAN PROSECUTORS RAID DEUTSCHE BANK OFFICES

erman prosecutors have raided Deutsche Bank offices in Frankfurt in a search for evidence related to client securities transactions, as Germany’s largest lender struggles to break free of regulatory issues that contributed to an overhaul of its top leadership this week. A source familiar with the situation said Tuesday’s raid was tied to a tax rebate strategy by some of the bank’s clients known as “dividend stripping”, in which a stock is bought just before losing rights to a dividend, then sold, taking advantage of a now-closed legal loophole which allowed both the buyer and the seller to reclaim capital gains tax. Deutsche Bank confirmed the raid but declined to comment on what prompted it. A spokesman for the lender said no employees have been accused of wrongdoing in the case. Frankfurt prosecutors carried out “wide-ranging investigative measures,” a spokesman for the prosecutors’ office said, declining to give details of the target or cause of the probe. Deutsche Bank

shares were the biggest decliners in Germany’s Dax index of blue chip companies, falling 2.8 percent by 1200 GMT. The Dax fell 0.9 percent, while the STOXX Europe 600 banking index was down 0.8 percent. The lender, which on Sunday announced the surprise departure of co-chief executives Anshu Jain and Juergen Fitschen following a sharp drop in shareholder confidence, has been straining to maintain its reputation in face of a raft of legal and regulatory problems. Those problems have prompted billions of dollars in fines and settlements. Authorities have repeatedly raided its offices in recent years, in connection with investigations linked to the collapse of the Kirch media empire and a tax fraud case related to the trading of carbon dioxide emissions rights. A separate source familiar with the situation had said earlier on Tuesday that the latest investigation was related to German private bank Sal. Oppenheim, which Deutsche bought in 2010. The bank said the raid was not linked to Sal. Oppenheim.

n 2015, the deficit of the state budget of Azerbaijan will amount to 6 percent of GDP, the head of IMF (International Monetary Fund) mission on Azerbaijan Raja Almarzoqi said, the fund reported June 9. “A sharp and possibly sustained decline in GDP cannot be ruled out if oil prices fall further or the post-devaluation stress in the banking system is larger than anticipated,” he said. “Since late 2014, the Azerbaijani economy has been hit by the steep decline in oil prices, the strength of the US dollar, and the wave of currency depreciations in the region that led to a sizable devaluation of the manat in February,” Almarzoqi said. “The devaluation has improved the government’s balance sheet but raised financial vulnerability concerns.” The Central Bank of Azerbaijan (CBA) reserves have broadly stabilized since mid-April, covering now a still comfortable 7 months of imports (external buffers including the oil fund amount to about 35 month of import cover), according to him.

HSBC leaving Turkish market

urope’s biggest bank HSBC is leaving the banking market of Turkey, the bank’s Turkish office said in a message June 9. In the coming days, the bank will announce the exact date of its leaving. This decision by HSBC is due to the plan to reduce its staff, which will cover 50,000 employees of the bank worldwide. The staff reduction is carried out in an effort to improve the business profitability. HSBC announced the intention to sell its lossmaking offices in Turkey and Brazil. HSBC entered Turkey’s banking market in 1991. In 1999, HSBC acquired the Turkish Demirbank. At the moment, the bank has 298 branches in Turkey. HSBC is represented in 73 countries. The last four years, the British banks have been forced to pay additional annual tax, which depends on the amount of banks’ borrowings. As a result, over the past year, HSBC paid about $1 billion in taxes. It is expected that by late this year, HSBC will make a decision on moving its headquarters from London to Hong Kong. Turkey’s banking sector is one of the leading sectors of its economy. Some 49 banks operate in Turkey – 36 of them are commercial and 13 are investment banks.

Russia to Start Producing Cheap Whiskey

Russian liquor company will begin producing cheap whiskey in a bid to undersell foreign firms whose drinks have risen in price thanks to the devaluation of the ruble, the Kommersant newspaper reported Monday. Stoli whiskey will be cheaper than foreign analogues, with the retail price between 600 and 650 rubles ($10 to 11) per 0.75 liter. A 0.75 liter sized bottle of William Lawson’s, the cheapest available whiskey on the website of alcohol retailer WineStyle.ru, costs 990 rubles ($18). Praskoveiskoye whiskey, which is so far the first and so far only Russian whiskey on the market, costs 946 rubles ($17) per 0.7 liter, according to the website of spirits distributor alkolavka.ru. The price of imported alcohol rose significantly last year due to the sharp devaluation of the Russian currency. The ruble fell 40 percent to the U.S. dollar as Western sanctions over the Ukraine crisis and falling oil prices strangled investment. The rise in prices led to to a steep drop in imports of foreign alcohol. Whiskey imports in Russia decreased by approximately 34 percent between January and March, Kommersant reported, citing data from the Federal Customs Service.

WORLD NEWS

Lionel Messi is the most valuable player in the world and it’s not even close

ionel Messi of Barcelona FC in Spain’s La Liga is the most valuable soccer player in the world, according to the latest valuations released by Football-Observatory.com. Messi was determined to have a transfer value of $287.6-315.5 million (€255.3-280.9 million). That’s more than a $100 million greater than any other player in the world.

• • • • • • • • • •

Lionel Messi (Barcelona) — $287.8-316.6 million Eden Hazard (Chelsea) — $152.7-167.9 million Cristiano Ronaldo (Real Madrid) — $127.7-140.6 million Neymar (Barcelona) — $101.0-111.0 million Sergio Agüero (Manchester City) — $88.2-97.0 million Raheem Sterling (Liverpool) — $83.1-91.3 million Paul Pogba (Juventus) — $79.3-87.2 million Diego Costa (Chelsea) — $78.8-86.7 million Alexis Sánchez (Arsenal) — $76.4-84.1 million James Rodríguez (Real Madrid) — $70.5-77.6 million

OPEC producers to keep oil production high, price rally could wane – IEA

he OPEC cartel of the world’s 12 major oil producers is expected to keep production high to protect market share and meet increasing demand, according to the International Energy Agency (IEA). This puts this year’s 45 percent price rise at risk. Production by OPEC rose to 31.33 million barrels per day (bpd) in May, which is the highest since August 2012, and is expected to remain high in the coming months, the agency said Thursday in its monthlyreport. “Barring unforeseen outages, OPEC is likely to keep pumping at around 31 million bpd during the coming months as Middle East producers sustain higher rates to preserve market share and meet summer domestic demand,” it said.

World must wake up to China’s energy revolution

he pace of change in China’s energy policy means that the targets it has set for cutting greenhouse gases (GHGs) are likely to be achieved sooner than expected, according to a new study. As part of a joint China/US agreement last November on tackling climate change, China said its GHG emissions – the highest in the world – would peak in 2030 and subsequently decrease. It could now be five years ahead of schedule. The joint study by the London School of Economics (LSE) and the Grantham Research Institute on Climate Change and the Environment says that wholesale changes taking place in energy and industrial policy mean that China’s emissions are, in fact, likely to peak in 2025 – and fall sharply thereafter.

The 13 fastest-growing economies in the world

hina’s crazy growth has been one of the biggest stories over the past several decades. But the Chinese economy certainly isn’t the only one posting huge growth rates. We compiled a list of 13 countries with the highest projected compounded annual growth rate (CAGR) from 2014 through 2017 based on the forecasts from the World Bank’s Global Economic Prospects. Keep in mind that the fastest growing economies typically aren’t among the largest, most developed ones. In fact, most of these countries suffer from high income inequality, low levels of per capita gross domestic product, elevated political instability, and rampant corruption. 13. China 12. Rwanda 11. Tanzania 10.Mozambique 9. Bhutan 8. india 7. Papua New Guinea

6. Cote d’Ivoire 5. Uzbekistan 4. Burma 3. Congo 2. Turkmenistan 1. Ethiopia

CONSUL

caucasian business week

June 15, 2015 #103

CORPS OF HONORARY CONSULS OF GEORGIA ESTABLISHED; CONSUL CUNANAN FROM THE PHILIPPINES IS ELECTED FOUNDING DEAN

he Corps of Honorary Consuls of Georgia (CHCG) was established in Tbilisi by the country’s honorary consuls from all over the world, who flew to the capital to attend Georgia’s official Independence Day celebration on May 26 and to hold meetings with the Ministry of Foreign Affairs and other government agencies. The objective of the honorary consuls, who are appointed by the Ministry of Foreign Affairs, is to assist the Georgian government in the promotion and protection of its interests and the welfare of its citizens in their respective countries. The CHCG is the first organization of its kind in Georgian history and one of the newest consular corps in the world. In a series of extensive consultations and meetings, Consul (a.h.) Thelmo Cunanan Jr from the Philippines was unanimously elected by a quorum of honorary consuls as the CHCG’s first and founding dean. The group

included representatives from Denmark, Portugal, Cyprus, Slovakia, Iceland, Netherlands, and India. “I wish to thank my colleagues in the CHCG for electing me their first and founding dean. I am truly humbled by this great honor to lead my esteemed fellow honorary consuls at this special moment in Georgian foreign affairs. The CHCG will harness the strengths of its members to improve Georgia’s relations with the world,” said Consul Cunanan, addressing Foreign Ministry officials, which included Minister Tamar Beruchashvili. “We are a young organization and we will be reaching out to sister-corps in other countries for collaboration, starting with the Consular Corps of the Philippines and International Federation of Consular Corps and Associations (FICAC).” The creation of the CHCG comes at a very important time in Georgia’s history. In 2016, the country will celebrate the 25th anniversary of its formal diplomatic relations with many countries. In this regard, the CHCG

is planning to undertake several projects that will celebrate and promote its membercountries’ relations with Georgia. “Next year is a very auspicious event for Georgia and our own countries. In the spirit of friendship, we would like to give back to Georgia, to do something special for this country that we love,” said Consul (a.h.) Manuel Luis Marinho Da Silva of Portugal. “Our meeting in Georgia was very productive and resulted in the creation of the world’s newest Corps Consulaire. We will be strengthening this group and holding real and virtual meetings to prepare for next year,” added Consul (a.h.) Marianne Bols from Denmark. Consul Cunanan is currently travelling in the Caucasus and Western Europe to hold dialogues with stakeholders and partner- organizations, in preparation for the CHCG’s 2016 projects. ABOUT THE CONSUL (A.H.) consul thelmo cunanan 1Thelmo Cunanan Jr. has been Honorary Consul of Georgia in the Philippines since early 2011. He is a businessman, sportsman, television talkshow host, writer, amateur aviator, and philanthropist. He laid the groundwork for socio-cultural and economic relations between the two countries by founding the Philippines–Georgia Business and Friendship Association, Inc. in 2003 and was the first Filipino citizen to formally engage the Georgian government. Consul Cunanan has worked tirelessly to promote Georgia–Philippines relations and regularly gives radio and television interviews about the subject. He has written nu-

merous articles about Georgia and is often invited by colleges, universities, and organizations all over the Philippines to talk about the country’s culture and heritage. Consul Cunanan sits on the board of San Miguel Corporation (HK) and is the Chairman of the First Filipino Movement. He is a graduate of the Ateneo de Manila Grade School, High School, College, and Business School (MBA). Consul Cunanan is the Dean of the Corps of Honorary Consuls of Georgia. His father was the late Ambassador/Lieutenant General Thelmo Y. Cunanan. A graduate of the United States Military Academy at West Point, the latter was Chief of the Southern Command of the Armed Forces of the Philippines, Ambassador to the Kingdom of Cambodia, President and CEO of the Philippine National Oil Company, and Chairman of the Social Security System of the Republic of the Philippines. Thelmo Cunanan’s consular office is located in Baguio City. However, he maintains satellite offices, staff, and operations in Metro Manila and other parts of the Philippines.

June 15, 2015 #103

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

PUBLICITY

caucasian business week

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

June 15, 2015 #103