Caucasian Business Week #105

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June 29, 2015 #105

June 29, 2015, Issue 105

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BE INFORMED, DO BUSINESS

HOW MUCH DOES A WEEKEND TRIP TO TBILISI COST?

GEORGIA MAJOR PART OF FOREIGN COMPANIES ABSTAINS FROM ISSUING INFORMATION ON FRANCHISING AGREEMENTS

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he association of Young Barristers has introduced the results of the monitoring of social responsibility, labor rights, foreign appellations, trademarks and legal status of Georgia-based companies.

Mamuka Khazaradze: Despite Regional Crisis We Maintain Positive Tendency

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STATE BUDGET WILL SHRINK BY ABOUT 140 MILLION GEL

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ccording to the Prime Minister of Georgia Irakli Garibashvili, the adjustment of the budget is a normal practice, and the government should have done it earlier, but better late than never.

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GLOBAL ALLIANCE PRESIDENT PRAISES GEORGIAN HEALTHCARE SECTOR RESEARCH RESULTS

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t the introduction of a research on Georgia’s use of healthcare services and expenditures (2014) at Expo-Georgia Dr. Jean-Elie Malkin, a president of Global Alliance international advisory company appraised Georgia’s recent achievements in the healthcare sector as a huge progress.

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FLOOD INFLUENCE ON GEORGIAN ECONOMY

he June 13 flood has left incurable wound on the heart of Georgian citizens. We have lost lives of our compatriots, many families remain unsheltered, motorways and infrastructure have been demolished, animals have

been drowned. Besides these losses, the flood has inflicted significant economic and environmental damage to our country. At this stage, it is difficult to precisely estimate the losses, but there are general economic aspects that will be definitely affected by the natural disaster.

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BSTDB CONCLUDES THE 17TH ANNUAL MEETING OF THE BOARD OF GOVERNORS

PMC RESEARCH CENTER: DIALOGUE OF EU INTEGRATION PROCESS FOR MOLDOVA AND GEORGIA

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MC Research Center (PMC RC), with the support of International Visegrad Fund hosts a two-day knowledge-sharing workshop to facilitate the effective management of the EU integration for Georgia and Moldova.

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GEORGIA SHOWS BEST REGIONAL INDICATORS IN TERMS OF INVESTMENT ATTRACTIVENESS

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eorgia has best indicators in the perspective of investment destination among neighboring countries BDO public accounting, tax and advisory company published survey research - International Business Compass 2015.

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Research

Kakha Kaladze: Decision was Taken on KhudoniHPP Construction

FLOOD INFLUENCE ON GEORGIAN ECONOMY

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Mikheil Chkuaseli: Government’s Communication and a Desire to be Aware of Everything is Very Healthy

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Keti Bochorishvili: New Directions in “Produce in Georgia” Program Pg. 8

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USE OF THE HEALTH INSURANCE SERVICE Health insurance, as one of the financial instrument of risk management, helps us to feel safe and in case of any health problems, simplify the process of handling unexpected expenses.

Oleg Osinovski: Georgia’s Efforts for Drawing Investments Prevail over Other Countries We have Worked in

Currency

STEEN’S CHRONICLE: THE MARGINAL COST OF EVERYTHING Steen Jakobsen, Chief Economist & CIO / Saxo Bank

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HOW DID THE LARI DEPRECIATION AFFECT THE CONSTRUCTION BUSINESS?

Buy apartments at “MetroCity” residences with internal credit

IRMA KAMADADZE The Head of MetroCity Sales Department

FEWER BUT IMPORTANT ECONOMICS MIGHT TRIGGER US DOLLAR RECOVERY

TBILISI IN TOP 20 CHEAPEST CITIES IN THE WORLD Pg. 6

2 MAIN EVENTS WHO: GEORGIA IMPROVES PUBLIC ACCESS TO HEALTH SYSTEM

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GOVERNMENT NEWS

EUROPEAN YOUTH OLYMPICS: PM EXAMINES OLYMPIC INFRASTRUCTURE

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eorgian citizens have better access to healthcare services than in previous years, said an emphatic Georgian Prime Minister while summing up the progress and achievements of the country’s healthcare system. Garibashvili spoke about the findings of a report of Georgia’s healthcare services operations and spending in 2014, compiled by the World Health Organisation (WHO), the World Bank and the US Agency for International Development at a special conference yesterday, and stressed people in Georgia no longer had to sell their cars to pay for basic medical treatment.

am confident that we will witness a great Olympic Games and it will be exciting for all of us”, says Georgian Prime Minister Irakli Garibashvili.

The Georgian official spent the day today examining the infrastructure for the 2015 European Youth Olympic Festival (EYOF), due to be held in Tbilisi next month.

Prime Minister Garibashvili spontaneously decided to visit the construction sites after meeting members of the Olympic organizing committee.

Garibashvili visited the Olympic village and was introduced to the new sporting facilities built for next month’s festival, such as an athletics hall, gymnastics arena, swimming pools and volleyball arena.

The Georgian PM stressed the significance of

LOCAL EXPERTS DEVELOP WAYS TO PREVENT FUTURE FLOODS IN TBILISI

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group of Georgian experts have come together to develop ways to repair severely damaged infrastructure and the flood-affected Vere River and its ravine in a bid to prevent future disasters in capital Tbilisi like the June 13 tragedy. The Georgian Interagency Commission, which consists of experts in geology, urban architecture, geo-construction, engineering and other specialties, offered concrete initiatives to Tbilisi Mayor David Narmania.

GEORGIAN GOVERNMENT APPOINTS NEW SPECIAL ADVISER

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he Government of Georgia has selected a new Special Adviser on Human Rights and Rule of Law. Michael O’Boyle was appointed to the role following an invitation from the Prime Minister of Georgia Irakli Garibashvili and a recommendation from the Council of Europe’s Secretary General, the Government’s press office said.

SENATE CONFIRMS NEW US AMBASSADOR TO GEORGIA

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he US Senate confirmed Ian Kelly as the next US Ambassador to Georgia at a session yesterday. Kelly will replace current Ambassador Richard Norland later this summer once his three-year term ends.

Ambassador Kelly and his wife Francesca plan to arrive in Tbilisi in September.

GEORGIA’S DEFENCE MINISTER VISITS BRUSSELS

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he Minister of Defence of Georgia has started a two-day official visit to the capital of Belgium, where she is meeting European Union (EU) high officials and attending her first NATO defence ministerial. Georgia’s Euro-Atlantic integration plans and the country’s participation in NATO missions are the main topics of the upcoming meetings Minister Tinatin Khidasheli is due to attend over the next two days.

GEORGIA SHOWS IMPROVEMENT IN FREEDOM HOUSE DEMOCRACY REPORT

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eorgia is one of only two countries to register improvements in the level of democracy in Eurasia in 2014, says independent watchdog Freedom House. In a report released on Tuesday, Washington-based Freedom House assessed 29 countries across Central Europe and Eurasia and said nearly half suffered downgrades in their democracy scores.

GEORGIA GAINS VISA FREE TRAVEL TO ARGENTINA, URUGAY AND CHILE

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ravelling to South America is becoming easier for Georgian citizens. People wanting to travel to Argentina, Uruguay and Chile will be allowed to visit these countries visa-free for a short stay, announced Georgia’s Foreign Ministry. This agreement was reached on day one of Georgia’s Foreign Minister’s visit to South America, which began earlier today and will end on June 26, announced Georgia’s Deputy Foreign Minister David Kereselidze.

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honorably hosting the event, which was of international importance.

“This is a great challenge for our country and a huge privilege at the same time. Construction works are almost finished and the facilities are being cleaned. We are waiting for the Olympics and for many guests. Tbilisi will be very crowded at the end of July,” he said.

“After the Olympics are finished, two weeks later we will host the UEFA Super Cup final, which is also a great opportunity to attract many tourists and visitors to Tbilisi,” Garibashvili noted.

The construction works on the European Youth Olympic facilities will be finished in two weeks.

The 13th EYOF will open in Tbilisi on July 26 and continue until August 1.

GEORGIA HAS THE BEST INDICATORS OF ACCESS TO HEALTH CARE, SAYS PM

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eorgia’s PM Irakli Garibashvili announced at Expo-Georgia that the government’s healthcare policy had been successful for the past three years.

According to the PM, Health Minister Davit Sergeenko’s contribution has been great; he has been

involved in the process from the very beginning.

“Our healthcare policy has proved to be very successful and Mr. Serrgeenko’s special contribution needs to be stressed. Due to him the state insurance program has been very successful.

More available healthcare is one of our priorities.

Research has shown that the program works well.

No Georgian citizen is without state support today,”- Irakli Garibashvili said.

“It is very pleasant for our government to see all our efforts and successful reforms reflected in research conducted by the WTO, World Bank and USAID. This is a great stimulus for us,”- Irakli Garibashvili stated.

CONFRONTATION BETWEEN PRESIDENT AND PARLIAMENT CONTINUES- LEGISLATURE CONSIDERS SEPARATION OF SUPERVISORY FUNCTION FROM NBG

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he Parliament has begun consideration of an amendment on separating the supervisory function from Georgia’s National Bank.

The legislative initiative will be discussed at a joint session of the Committees of Sector Economy and Economic Policy, Procedure and Rules, Budget and Finances, and Legal Issues. The session will be held at the Kutaisi Parliament building.

As is known, the Presidential Administration, the banking sector, and some international and non-governmental organizations have negative attitudes towards these legislative changes. They claim the bill, if passed, will weaken the independence of the National Bank.

Despite the initiative proposed by the parliamentary majority, the President of Georgia has started

choosing the central bank’s new President today.

According to the Constitution, the President willl submit the central bank’s head to the Parliament.

George Kadagidze’s term of office expires in February next year.

George Abashishvili, adviser to the President on Economic Affairs, believes that the draft law on the separation of the supervision function from the National Bank contradicts the Association agenda.

As Abashishvili told at today’s press conference, the Association’s agenda clearly identifies that the changes in banking supervision must be carried out only on the basis of the EU expertise, especially the recommendations of the European Central Bank.

In this context, Abashishvili called on the project’s authors to hold consultations with the international financial institutions.

In his words, the need for qualified and professional discussion must be stressed.

He says the European Central Bank doesn’t support the separation of the supervision function from the National Bank.President’s advisor notes that neglect of the opinions of the international financial institutions will damage the country’s image.

TBILISI BUDGET INCREASED BY GEL 45 MILLION PREPARATIONS FOR THE YOUTH OLYMPIC GAMES UNDERWAY

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bilisi budget increased by GEL 45 million. The decision was taken by the City Assembly a few days ago.

The changes to the capital’s main financial document were caused by the natural disaster and the upcoming Youth Olympics.

As a result, GEL 13 million from an additional 44 million 732 thousand will be spent on the organization of the Youth Olympic Games. The remaining amount will be spent on infrastructure

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projects and aid for the population affected by the disaster.

According to Jaba Samushia, Chairman of the Budget and Finance Committee at the Tbilisi City Assembly, 5 million from 13 million allocated for the Olympics are required to purchase inventory.

According to him, if we look at the funding, we’ll see that only 50 million was spent in 2015 for the event.

“We had to spend 100 million only in 6-month period. In 2014, 27 million were spent on the event and the lion’s share falls on the sums spent by the new government. Why should we work in a force majeure?”, - Samushia claims.

As for other allocated funds in the Tbilisi budget, they will be spent on the elimination of the consequences of flooding.

Samushia notes that about 14 million will be directed to eliminate the consequences of the disaster, about 18 million will be a loan intended for infrastructure projects.

“13 million which goes to the Olympics are the funds allocated from the central budget. As for 14 million, which will be spent on the elimination of consequences of the natural disaster, they include 10 million of government assistance, as well as the voluntary transfer, a million and a half donated by the people. Also, 2 and a half million were mobilized in the city budget . 250 thousand were allocated from the government‘s special fund which aims to assist the the bereaved families and 200 thousand from the President’s Fund will be used for rent apartments for the victims “, - Samushia explains.

In his words, 14 million allocated for those affected by the natural disaster is not enough and the amount will increase in the future. Samushia notes that the funds mobilized on the accounts of commercial banks have not yet been reflected and after they are transferred, the state budget is likely to be revised again.

Tbilisi City Assembly approved the changes in the city budget on June 23.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

Editor: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Lazare Gvimradze

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge

June 29, 2015 #105

PUBLICITY

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BUY APARTMENTS AT “METROCITY” RESIDENCES WITH INTERNAL CREDIT value-added services and impeccable location, “MetroCity” residences offers an exclusive lifestyle, with parking, green area, outdoor swimming pool and playground for children. ”MetroCity” is unique with its special maintenance services.

According to Mrs. Irma Kamadadze the owners of residences will receive added services such as Telephone, Messages and wake-up call services, Visitors Monitoring, Common Area and Visitors control, 24/7 Safety and Security, Shopping Assistance, Concierge, 24/7 Technical Service As-

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.S.C. “Metro Atlas Georgia” Investment Management Company was founded in 2012 and has invested mega project “MetroCity” in Batumi. ”Metro Atlas Georgia” is under the ownership of the brand “Metro Holding”, which has its share on Istanbul Stock Exchange, in Turkey and leads over 35 000 employees in more than 70 companies worldwide.

“Two residential complexes include 464 apartments. Those who cover the down payment of 10% of the apartment price, remaining amount will be paid over the next 36 months with 3 % interest per year and who cover 25% remaining amount will be paid over the next 60 months with 5% interest per year. In this way we try to increase the activity of the residence” – said Irma Kamadadze, the head of sales group at MetroCity.

STARTING PRICE FROM 1425$ With the ideal size of the apartments, numerous

sistance, Housekeeping and cleaning service.

The project implementation has begun in February 2015 and will be successfully completed in April 2017. Residences from 38 m2 to 300 m2 are available.

“Our residences are unique because only we have specially designed outdoor pool for the residences that is absolutely free of charge” – said Kamadadze.

Near the residences MetroCity project includes two five star hotels, private school and private

swimming pools, panoramic terrace restaurants, casinos, spa, shopping center including 100 brand stores, sport club, a la carte restaurants, cinema, bowling center, playing park for children, closed gold sand beach and the biggest conference hall in Transcaucasia for 1500 person. ”Metrocity” is in 2 km. distance from Batumi International Airport and from the city center in 500 m. The complex with its location is harmoniously mixed with mountains and sea views. Here is everything where the friends and family gather.

4 HEADLINES ECONOMY MINISTRY BUILDING GOES FOR 9.5 MILLION USD

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he building of the Georgia’s Ministry of Economy and Sustainable Development has been sold for just under $9.5 million USD. Online bidding for the central city building on Chanturia St in Tbilisi officially closed at 5pm today.

It has been revealed the building was purchased for $9,450,000 USD (21,766,185 GEL) however the buyer has not been revealed.

INTERVIEW caucasus business week

MAMUKA KHAZARADZE: DESPITE REGIONAL CRISIS WE MAINTAIN POSITIVE TENDENCY Mamuka Khazaradze, a TBC Bank supervisory board chairman, has represented Georgia, for the first time, at the award ceremony of the EY World Entrepreneur of the Year. The event was organized by EY company, the world’s leader in the field of auditing, taxation, financial deals and advisory services. This great event was held in Monaco.

Mamuka Khazaradze has shared his opinion on the importance of this event:

INVESTORS WANTED FOR GEORGIA’S GONIO PROJECT

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eorgia is calling for international investors for a project to develop a 315 hectare former military range in Georgia’s western town of Gonio, south of Batumi.

The project is ready and soon the Georgian National Investment Agency will present the Gonio development project to the Government for approval, before getting underway.

But before this can happen investors are needed.

The Agency is now searching for investors who will commit to the Gonio development project.

LAGHIDZE WATERS EXPANDS EXPORTS MARKET

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aghidze Waters” company plans to expand its export markets. In the near future they may export a syrup to Ukraine, Armenia and Azerbaijan. According to the company’s representative Vakhtang Laghidze, 20-30 tons of syrup are exported to Russia monthly, now 8-9 varieties of syrup are sent to Russia as well as are sold in Georgia.

“Laghidze water” stopped exports to Russia in 2013 due to non-payment of the amount for 30 tons of syrup by the Russian company “Tikhvin lemonade plant”.

GEORGIA RED CROSS LAUNCHES TBILISI FLOOD FUNDRAISING CAMPAIGN

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he Georgian Red Cross Society (GRCS) is starting an international fundraising campaign for Tbilisi flood victims through the web platform Ammado.

Ammado, initiated by the GRCS, is an online donation platform that offers fundraising and donation services to non-profit groups and companies. Facilitating donations is available in over 75 currencies, 20 payment methods and numerous languages.

- What kind of a contest is it and how important is it Georgia be represented at similar events?

-This consent was set up in the USA 30 years ago.

Later the event was expanded all over the world and businessmen from various countries of the world take part in it. This year the award ceremony was held in Monaco, where winner businessmen from 65 countries attended the event. The people who are changing the world have attended the event. I had an honour to participate in this event for a week jointly with these people. I have conducted many meetings, where we have shared our experience to each other. I deeply appreci-

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zerbaijan, Georgia and Romania signed on June 24 a joint declaration on supporting the development of the Azerbaijan-GeorgiaRomania Interconnector (AGRI) project, said a message from Romania’s energy ministry on June 24. AGRI is a part of the Southern Gas Corridor, which is a priority energy project for the EU. It envisages the transportation of gas from the Caspian Sea region to the European countries through Georgia and Turkey.

Georgia decreases cattle import to Azerbaijan he total value of exports of cattle in live weight from Georgia to Azerbaijan decreased more than twofold in January-May 2015, the Georgian National Statistics Service’s report as of JanuaryMay 2015 says.

During this period, the cattle totaling $ 6.66 million was exported from Georgia to Azerbaijan.

For comparison, Azerbaijan imported cattle in the amount of $15.7 million from Georgia in January-May 2014.

region is facing a crisis period, we have managed to maintain positive tendencies, including in terms of growth in GDP. Our country is 15th in terms of simplicity of doing business. These achievements astonish them.

-What is the reason investment inflows in 1Q15 have shrunk by 35% compared to the same period of 2014?

-I believe delayed reactions to the expected challenges have brought similar results. In 2014 we knew the coming year would bring many difficulties to Georgia. The GEL devaluation started.

USD strengthened in relation to almost all currencies and naturally, the Georgian GEL could not be an exception. Money transfers from abroad also declined and many other factors have created a crisis situation. In similar cases we should take such steps and offer such initiatives to the market and investors that will balance the situation.

-How would you appraise the statements that the business sector should be adjusted to the political frames?

-I would recall Roosevelt’s words: What is good for General Motors is good for the USA. I do not know what the country policy signifies without economic power, strong companies and upturn in production. All these goals are achieved by private companies through their own initiatives. I believe what is good for the Georgian company that creates new job places this is the most useful and beneficial policy for the whole country.

Foreign investors consider Georgia to be one of the attractive countries in terms of investment environment. Last period transnational companies and various influential businessmen are showing a growing interest in Georgia. Estonian multimillionaire OLEG OSINOVSKI is among similar businessmen. We offer a full version of his interview.

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AGRI PROJECT MEMBER COUNTRIES INK JOINT DECLARATION

ate relations with the jury which unites the most distinguishes acting and former businessmen.

For example, the SONY founder, a businessman from Hong-Kong who has organized the network of Japanese fast food restaurants in the world.

-What negotiations have been conducted?

-They had collected all the information in advance. EY is an auditor company that provides professional assessments. The information from the very first day of my 24-year pathway is reported to the jury in details. Many persons are involved in this process from both central and regional branches. Then they are interested in the human factor. Figures do not surprise anybody here. The main factor is a social responsibility, that is, what is the benefit the society and our customers receive when we do business. Everyone guesses that the business sector cannot exist separately from the society and the business should share the benefit to the customers.

-What was the result of your visit to Monaco?

- By the way, a businesswoman from Kenya and one of the businessmen from Asia have concluded a very interesting agreement. Waiting in the backstage prior to their appearance at the stage, they invented a quite reasonable global project.

I would like to stress Georgia and our group have raised much interest. We have given quite comprehensive interviews to almost all media agencies. They have found Georgia’s recent achievements very important and interesting. Despite the

GEORGIA’S EFFORTS FOR DRAWING INVESTMENTS PREVAIL OVER OTHER COUNTRIES WE HAVE WORKED IN Banks Seem to Have Colluded High Interest Rates

TBILISI IN FOCUS ON GOOGLE MAPS ne of the world’s most widely-used online mapping services has added Tbilisi to its worldwide service.

Every street and any building in Georgia’s capital Tbilisi is now in focus on Google Maps – an online mapping service that offers satellite imagery, street maps and street view perspectives of the city.

Adding Tbilisi data on Google Maps involved a total of 3,500 km road network and 160,000 buildings. Earlier only parts of Tbilisi featured on the online map.

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- In how many countries does your company operate and when did you decide to launch operation in Georgia?

- Our company is a major railway company in the Baltic countries. We have been operating in 15 counties and hold subsidiaries in 9 countries. As to Georgia, we launched operation in Georgia 6 years ago. We think this decision was one of the advanced steps for our business expansion.

- Georgian energy sector is considered to be one of the priority directions for investors. You are reported to have some interests in this sector. When did you pay attention to Georgia’s energy sector? What projects have you launched in this field and what is the volume of your investments in this field?

-This is a genuinely interesting field. I travel to various countries by bicycle every year. During one of similar tours in Georgia, I noticed an old HPP at the Goderdzi Pass. The sheet indicated 1930 as the year of construction. Naturally, I halted and I explored whether this asset was in exploitation. The staff confirmed the HPP was working. Then I explored whether the HPP had maintained its original condition or something had changed. They answered nothing had changed for about 80 years and everything was working excellently. This fact made me start thinking and persuaded me investments cannot be outdated in the Georgian power system.

Later we started thorough exploration of this field and launched an implementation of the first project on the river Kintrish. The HPP will open at the beginning of 2016.

This is the first project of ours and we have invested about 10 million USD in it.

- Investment return from HPPs is a long-term perspective and this factor is considered one of the negative aspects in the hydro power field. When do you expect to receive the return?

-You are right. This is a very conservative and longterm business. About 10 years are required to receive return from the hydro power sector. It seems illogical to make investments in similar long-term business. On the other hand, this business will operate without additional investments for the next 100 years. Therefore, we are not afraid of making investments in Georgia’s energy sector. We believe in Georgia’s future and development.

- Political stability is one of the important factors for making investments. It is interesting whether you feel political and economic stability in Georgia.

- I believe in Georgian people and I am sure the population will not let any negative take place in the country. I would not wish stability, to be true, because stability leads to stagnation. Continuous processes should be developed in the country so as politicians be smart and mobilized. I do not expect either current or future Authorities to take any illogical steps. I see from my relations with politicians and businessmen their goal is EU integration and the development of Georgia. I am glad the current Authorities, like the previous Authorities, have been following this course and indeed, this is wonderful.

- We know you are implementing other business projects too, besides energy projects. Namely, you are reported to be planning a construction of a huge residential complex. What would you say about this information?

- We have purchased an about 3.3 million square meter land from the Georgian Authorities near Tbilisi.

This will be an entirely different settlement with new concept. This settlement will include 1200 energy efficient houses, nursery schools, hotels and restaurants. The project is valued at over 1 billion USD. The project will be implemented stage by stage and the first portion of the investment will be 15-20 mil-

lion USD. The complex will also include a European-standard gulf playground. An international level architect is leading the construction project and this is a very important factor. The first stage will be completed at the end of 2016 and first houses will be sold in the same period. The project will be fully finished at the end of 2017. The Authorities provide overall support and they have pledged to make motorways and perform all other required jobs.

- Businessmen always provide comprehensive exploration of the target country’s investment environment prior to making investments in it. It is interesting whether you take into account international ratings like Doing Business and so on.

-To be frank, this is not important for me. I take decisions independently and I do not need to follow recommendations. It is my decision whether to believe or not in this or that country. I do believe in Georgia.

- Where do you see main challenges? Which directions should be enhanced?

-I believe the country lacks for investments and this is a major problem. Another and a very important problem is high interest rates on loans. There are few business companies which are able to serve similar interest rates. I understand consumer loans terms, but in case of the business sector, only narcotics business would enable to serve these rates.

These factors frustrate the development and the Authorities bear major responsibility for this. Interbank competition should intensify. Today I have impression commercial banks have colluded high interest rates. At the same time, the Authorities must not stop counter-corruption efforts.

- What would you suggest the Georgian Authorities to draw more investors?

- I would like to stress the Georgian Government is working much harder on the issue than all other countries we have been working in. I would only suggest the government to follow the Estonian sample and abolish the profits tax. Initially, the budget revenue may decline, but, in general, everything will be differently: GDP and the whole economy will grow.

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HOW MUCH DOES A WEEKEND TRIP TO TBILISI COST?

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Nutsa Galumashvili or those wanting to travel to new places without spending too much, Tbilisi is one of the best destinations to explore, as Georgia is listed among countries with lowest cost of living.

CBW has tried to clarify at what price visitors with average incomes are able to spend their weekend trips in Tbilisi and what innovations the city offers them during the summer season.

Tbilisi is one of the most ancient cities of the world. It is 1500 years old… The origins of its name come from the warm sulfuric wells, as in Georgian ‘Tbili’ means warm. Tbilisi is home to a population of roughly 1.5 million inhabitants. It remains a popular destination because of its low prices, beautiful architecture, youthful spirit, vibrant nightlife, and rich history.

Tbilisi has lots of great attractions and they’re all affordable or free. The thermal baths are good for health and body.

The tradition of sulfur baths has existed in the region since antiquity. Prominent 19th century Russian poet Pushkin loved to rest here. Located right in the old town, Sulfur Baths are easy to find thanks to the building with distinctive domes.

You should seek out as much Georgian food as you can in Tbilisi. Georgian food consists of bread, dumplings, all sorts of meat, seasonal vegetables, walnuts, eggplants, mushroom, fruits, dairy products, and cheeses — it will fill you up! Prices are very affordable, but try to find where the locals eat to get the best price and quality.

Tbilisi has a cheapest network of trams, buses, and subways. They’re all affordable, but be sure to always validate your ticket because they do check riders’ tickets often (you don’t want to get fined).

Tbilisi Taxi costs about 3-5 GEL but due to Tbilisi traffic jams you should use other means of transport.

Hostels and hotels are pretty cheap in Tbilisi as well. There are also a good number of very cheap ones; or you can spend a little extra if you want more comforts. Rental apartments are a great option in Tbilisi.

In Tbilisi, you can find bars and clubs for people with completely different lifestyle.

The nightlife is great, and you will see a lot of young people everywhere.

Tbilisi has loads of interesting attractions: such as horse riding, biking, wine and cheese tasting places.

See our Infographics below to approximate how much a week trip to Tbilisi will cost you. Enjoy your stay in the city that is the historical crossroad of East and West.

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TOP STORY MAJOR PART OF FOREIGN COMPANIES ABSTAINS FROM ISSUING INFORMATION ON FRANCHISING AGREEMENTS

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he association of Young Barristers has introduced the results of the monitoring of social responsibility, labor rights, foreign appellations, trademarks and legal status of Georgia-based companies.

Salome Goglidze, a lawyer at the Young Barristers, says citizens prefer to purchase expensive things, products and other goods with foreign brand names with international authority and recognition. However, scrupulous exploration shows these companies just swindle the consumer market – they do not hold due quality papers, franchising agreements and have no obligation to deliver information on their status to the customers. The organization has made accent on which companies use trademarks, a symbol or a complex of symbols in line with legislation, whether they own an agreement on franchising or any other licenses/ permissions or the right to use the appellation of a foreign company. At the same time, the presented information should be profoundly explored and the society should have information on the indifferent and irresponsible attitudes from the companies.

According to the monitoring, only 3 companies from the selected 19 companies have taken part in the research and given full information. Five companies have only notified they do not hold the status of a famous foreign brand in Georgia.

Consequently, the mentioned companies have preferred not to answer other questions. The remaining 12 companies have entirely refused to communicate with the company. The association had invited: Carrefour, Coca-Cola, McDonalds, SOCAR, DIESEL, Radisson, Benetton, Beeline, Swatch, Ives Roche, Samsung, Forbes, Ziraat Bank, Qatar Airways, Villeroy and Boch, Swarovski, VIVUS.ge, KFC and National Geographic. Under the selection criteria, the companies were to be from various consumer sectors for identifying their brand status in relation to their appellation.

According to the monitoring, Coca-Cola Bottlers Georgia, Carrefour and Beeline have partly answered the question. The monitoring has showed up special offices at these companies permanently carry out monitoring of the rights and obligations of the employees. Moreover, all three companies have concluded 12-month or unlimited labor agreements in line with the labor code. As to the information on the world brand status of these companies, according to Coca-Cola bottlers Georgia, it uses the name of Coca-Cola and this is registered at the national center of intellectual property, while Carrefour and Beeline have not provided similar information. As to Ives Roche, Villeroy and Boch, National Geographic, Forbes and Swatch, their information referred to their operation in Georgia with a brand status. According to their information, their companies are not related to any foreign company, they were founded in Georgia and they do not represent a branch of any foreign company and do not hold the status of any foreign company. Moreover, the remaining 12 companies have not provided any information.

Therefore, we could not collect information on standards of labor rights protection, legal status and their accountability to the consumers.

The monitoring has showed the Georgia-based companies with foreign appellations do not care enough for the corporate responsibility and social dialogue. Therefore, we face difficulties with delivering exact information to the society on which companies use the status of a brand and own an agreement on franchising or any other permits and licenses or the right to use the appellation of a foreign company.

The Young Barristers have notified the companies having refused participation in the research to provide valuable information on the mentioned questions until July 31, 2015, and to publish the information on their official websites for sake of the public interest.

For information: We started working on the research “Foreign Companies in Georgia, their Status and Employees” in March 2015. The monitoring has been developed as part of an independent initiative of the organization.

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ECONOMY

caucasus business week

FINANCE MINISTER: STATE BUDGET WILL SHRINK BY ABOUT 140 MILLION GEL

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ccording to the Prime Minister of Georgia Irakli Garibashvili, the adjustment of the budget is a normal practice, and the government should have done it earlier, but better late than never.

“Almost all countries in the region have imple-

mented fiscal adjustment, based on a serious economic crisis in the neighboring countries especially in Ukraine and Russia. Thus , we must adapt to new realities and to act in accordance with them “- said the head of government.

The state budget will be reduced by about 140 million, - the Minister of Finance said at today’s governmental session where he presented an amended draft budget.

“We have actively worked with our colleagues.

We took into account what happened in Tbilisi on June 13-14 and today we are presenting the final draft. I want to tell you that the budget will be reduced by about 140 million; this will mainly concern the ongoing expenditures,”- Nodar Khaduri pointed out.

FINANCE MINISTRY TO INTRODUCE AD VALOREM TAX ON TOBACCO PRODUCTS

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inister of Finance has granted the right to make amendments to the decree “On Fixing the Retail Selling Price of filtered and non-filtered cigarettes” 9 days earlier before the introduction of new tax.

The retail selling price of filtered and non-filtered cigarettes for the period July 1, 2015 – January 1, 2016 has been fixed on April 30. However, the prices will be revised, if Revenue Service will reveal dissimilar price form the cost fixed by the

Ministry of Finance on any type of cigarettes through the period of April-May 2015.

This news enabled Ministry of Finance to make the amendments to the decree before July 1, 2015.

The retail selling prices are fixed on cigarettes of 208 naming.

To remind, excise rate on 20 pieces of cigarette will be 5 percent of the total retail selling price, after the introduction of ad valorem tax.

The new tax will be introduced from July 1.

“PARTNERSHIP FUND” STARTS CONSTRUCTION OF 5 NEW HOTELS JOINTLY WITH PRIVATE PARTNERS

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rakli Kovzanadze, executive director of “Partnership Fund” has declared with TVcompany “Maestro”.

“Partnership Fund” will take part in hotel construction on Rustaveli avenue, former building of Ministry of Justice in Tbilisi. The fund will fund the construction with 12 million USD. “Hyatt” will carry out management of

the hotel. The Fund will construct 3+ star hotel Radisson Red near White Bridge in the historical district of Kutaisi.

Hotels will be constructed in Abastumani, Poti and Zugdidi.

“We should invest 150 million USD in the capital, which should be added by the banking components, the ratio equals to 40/60. It should be noted, that our project volume exceeds 2 million USD”, - Irakli Kovzanadze declares.

To remind, hotels have been already constructed with Partnership Fund’s co-funding: Rixos Borjomi – in Borjomi, “GINO Welness SPA” – in Akhaltsikhe, “Royal Batoni” - in Kvareli, Radisson – in Tsinandali. And, 150-room hotel in Sairme.

GEORGIA SHOWS BEST REGIONAL INDICATORS IN TERMS OF INVESTMENT ATTRACTIVENESS

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eorgia has best indicators in the perspective of investment destination among neighboring countries BDO public accounting, tax and advisory company published survey research - International Business Compass 2015, which studies investment environment of world countries.

The BDO International Business Compass measure the attractiveness of a country as a multidimensional concept in three dimensions: the economic, politico-legal and socio-cultural conditions.

The appeal of a country is associated with its level of development. It is understood as a combination of economic, politico-legal and social factors. On the one hand, the attractiveness of a particular country with regard to potential investment decisions is at the forefront, which clearly expresses an economical perspective. On the other hand, economic factors alone can only reflect the situation of a country in a limited fashion, because political, legal, social and cultural aspects also play a part and ultimately have an influence on how appealing a country is as an investment

location.

The three dimensions correlate with each other and are therefore statistically not entirely independent. However, this is neither required for their aggregation within the index, nor is it realistically achievable. From a statistical point of view, the attractiveness of a country is a level variable as a result of the interaction of a number of factors.

Remarkably, in 2015 investment indicator of Georgia has improved by 5 points in compare with 2014 and currently our position is 43 in the rating list.

It should be mentioned that our positions have improved after 2013, when Georgia was number 54 in the list. Our neighbor country Armenia is number 66 in the rating list and stepped back by 7 points in compare with the previous year. Other countries in the region have important improvements – Azerbaijan advanced by 13 points and is number 65, Ukraine advanced by 20 points and is number 89, and Russia advanced by 4 points and is number 100. In contrast with 2014 Turkey improved positions by 10 points and is number 57 in the rating list.

June 29, 2015 #105

STRATEGY FOR DEVELOPMENT OF SMALL AND MEDIUM-SIZED ENTERPRISES TO BE READY BY YEAR’S END

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he working group, which includes representatives of government agencies, experts and business environment, will finalize the strategy for the development of Small and Medium Enterprises in Georgia before the end of 2015.

The aim of the strategy is to encourage those types of entrepreneurial activity, increase their competitiveness and share in GDP. The document’s authors believe that it is the accelerated development of small and medium-sized businesses that will create new jobs and alleviate the problem of unemployment.

The program is designed for 2016-2020 years.

According to Deputy Economy Minister Irma Kavtaradze, it includes several priorities and concrete measures for their development, including the creation of institutional frameworks, the creation of a competitive environment, the internationalization of small and medium-sized enterprises, an increase of the accessibility to finances, introduction of innovations and promotion of different kinds of research.

The strategy will take into account the main European principles of stimulating small and medium-sized businesses.

GDP PER CAPITA AMOUNTS TO 884.5 MILLION USD

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eostat published Georgia’s GDP calculated on the basis of new data - as you know, previously it was thought that the population of Georgia was 4.4 million people, respectively, all the macroeconomic indicators were calculated on this basis.

However, the 2014 census showed that the population of Georgia is really about 3, 7 million people and for this reason all the macroeconomic data has been called into question. According to new data, in the first quarter of 2015 Georgia’s GDP amounted to $ 884. 5 per capita.

In the same period of 2014 this figure was $ 802,9.

According to preliminary data, as of November 5, 2014, in total 3,729,635 people are residing in the territory controlled by the central government which is 14, 7% (641 900 people) less than the results of the census conducted in 2002 (4 371 535 people).

TBILISI IN TOP 20 CHEAPEST CITIES IN THE WORLD

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bilisi has been named in the Top 20 cheapest cities in the world for expatriate employees to live and work in, according to a global survey done by Mercer Global.

The list, ranking the world’s most expensive and inexpensive cities for expatriates, compared expenses in 207 cities across five continents, based on the calculation of the prices of 200 goods and services including housing, entertainment, food, transport and education.

In this survey, Tbilisi was ranked the tenth cheapest city.

The complete Top 20 cheapest cities for expatriates to live in, keeping in mind their respective relationships with the dollar and conditions compared to NYC, are as follows: 20. ISLAMABAD, PAKISTAN 19. GABORONE, BOTSWANA 18. TEGUCIGALPA, HONDURAS 17. JOHANNESBURG, SOUTH AFRICA 16. YEREVAN, ARMENIA 15. KOLKATA, INDIA 14. TIRANA, ALBANIA 13. LA PAZ, BOLIVIA 12. BELGRADE, SERBIA 11. SARAJEVO, BOSNIA AND HERZEGOVINIA 10. TBILISI, GEORGIA 9. MANAGUA, NICARAGUA 8. CAPE TOWN, SOUTH AFRICA

7. MINSK, BELARUS 6. BANJUL, GAMBIA 5. SKOPJE, MACEDONIA 4. TUNIS, TUNISIA 3. KARACHI, PAKISTAN 2. WINDHOEK, NAMIBIA 1. BISHKEK, KYRGYZSTAN The most expensive cities in the world, according to Mercer’s survey, are: 1. LUANDA, ANGOLA 2. HONG KONG, CHINA 3. ZURICH, SWITZERLAND 4. SINGAPORE, SINGAPORE 5. GENEVA, SWITZERLAND 6. SHANGHAI, CHINA 7. BEIJING, CHINA 8. SEOUL, SOUTH KOREA 9. BERN, SWITZERLAND 10. N’DJAMENA, CHAD The costliest city for the third consecutive year, surprisingly, is Luanda, the capital of Angola. Despite being recognized as a relatively inexpensive city, the cost of imported goods and safe living conditions in this country are available at a steep price, hence the hostile working and living environment for expatriates coming into Luanda.

The Mercer survey is designed to help multinational companies and governments determine compensation allowances for their expatriate employees.

ECONOMIX

7 FLOOD INFLUENCE ON GEORGIAN ECONOMY

June 29, 2015 #105

caucasus business week

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ous diseases. A major part of the civil volunteers needs tetanus vaccination.

All the above-mentioned factors grow healthcare expenditures and affect the state budget.

ANNIHILATED INFRASTRUCTURE The economic infrastructure is of vital importance, as the developed infrastructure grows productivity, facilitates transportation and communication sector. Valuable infrastructure and quality makes the investment environment attractive. Much time and huge budget funds are required to rehabilitate the destructed roads and infrastructure.

HOUSEHOLD LOSSES The natural disaster has left over 260 persons unsheltered. People have lost living houses, all household things and essentials.

he June 13 flood has left incurable wound on the heart of Georgian citizens. We have lost lives of our compatriots, many families remain unsheltered, motorways and infrastructure have been demolished, animals have been drowned.

Besides these losses, the flood has inflicted significant economic and environmental damage to our country.

At this stage, it is difficult to precisely estimate the losses, but there are general economic aspects that will be definitely affected by the natural disaster.

SLOWDOWN IN TOURISM BUSINESS Summertime is considered to be a tourism season. This sector was very important for the Georgian economy, but the GEL rate devaluation has further enlarged its significance in 2015.

At the same time, the recent flood in the capital city declines the tourism attractiveness of both Tbilisi and the whole country. As a result, the tourism sector may face serious slowdown.

FLOOD INFLUENCE ON GEORGIAN ECONOMY The natural disaster has brought healthcare problems to many citizens.

People need both physical and psychological assistance. In general, the flood disaster, even more so, along with animal carrions, grows the risk of vari-

THREATS TO BUSINESS SECTOR The companies located within the natural disaster zone have been also damaged. The building of Vake meat processing plant has been damaged.

All machineries have been annihilated.

Swatch and ArtTime stores have been also damaged. The Georgia-American Future School, Happy Lounge entertainment center and Matrioshka restaurant have been also damaged.

DECLINE IN PRODUCTION Major part of our citizens remains stressed by the natural disaster and their performance at offices has shrunk. Problems in the transportation sector also lower their performance.

As a result, the economic activity has declined.

INCREASED ENVIRONMENTAL AND SANITATION EXPENDITURES The flood has resulted in growth in environmental expenditures. The landslip has demolished a part of the woodland.

Sanitation losses for environmental cleaning, transportation of died animals and the territory disinfection are also very huge.

ZOO RESTORATION EXPENDITURES The capital city will have to spend much money on restoration and construction

of the ZOO and bringing variety of new animals there. All these costs will be taken from the state budget.

Based on the above-mentioned, the following works must be performed in the capital city: 1. Cleanup and rescue activities (ongoing); 2. Environment protection works; 3. Water system management works;

4. Infrastructure and zoo construction/ restoration works.

Today, all Georgia stands united and overall support is being provided to the natural disaster victims. This is an encouraging ground for seeing optimistic future. At the same time, the money will turn from one sector to another and no economic progress will be made, in practice. Investments in-

jection into the business sector is one of the main ways for the economic revival, but today the frustrated companies are facing the natural disaster results and the business environment in Georgia has become less attractive.

Consequently, the Authorities have to draw a huge amount of grants and international financial resources to withstand these challenges.

GLOBAL ALLIANCE PRESIDENT PRAISES GEORGIAN HEALTHCARE SECTOR RESEARCH RESULTS

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t the introduction of a research on Georgia’s use of healthcare services and expenditures (2014) at Expo-Georgia Dr. Jean-Elie Malkin, a president of Global Alliance international advisory company appraised Georgia’s recent achievements in the healthcare sector as a huge progress.

“The document of the World Bank on the assessment of universal health coverage which was presented the Minister of Health David Sergeenko is a very interesting and a

very informative document.

This report shows clearly the huge progress which has been made by Georgia in giving the population access to the services and care. Almost more than 99% of the population right now due to the universal health coverage which was implemented in 2013 have access to these services.

So it’s a huge progress, but at the same time, this document emphasize and highlights what should be addressed in order to sustain this system and this mechanism.

First of all, the management of the univer-

sal health coverage should be improved in order to have sustainability and to have the opportunity to continue to provide the population with these services. The second issue which has been raised by this document, which should make the progress, is the prices.

The prices in Georgia still are high for many part of the population. And finally, it emphasizes very well also the need to improve the primary healthcare with a view of hospitals and to reshape this system in more balancing between the hospitals and the primary healthcare. These three issues are being taken into account in our project of the Global Alliance in supporting the government and improving the health system and we will leverage this very good document in order to move forward to reach this goal”, Dr. Marlkin said.

As reported, on April 6, 2015 Georgian Health Minister concluded a long-term agreement with Global Alliance with the aim to develop an innovative program for healthcare system management, to adjust Georgian healthcare standards with EU requirements and to provide access to guaranteed and high-quality medical services and medications.

The research was developed with a financial and technical support of the World Health Organization (WHO), the US Agency for International Development (USAID)

project for healthcare improvement and the World Bank (WB). The research reads: 1. The overall healthcare program has inaugurated a universal provision of the statefinanced medical services to the population (29.5% in 2010, 40% in 2012 and 99.9% in 2014).

2. Over a half part of the healthcare program beneficiaries (51.4%) had been never insured before.

3. Compared to 2010, in 2014 the population more often visits the healthcare service suppliers and self-treatment expenditures have shrunk.

4. The overall healthcare program inauguration has diminished financial barriers on services, especially on outpatient and hospital services.

5. Financial attainability has grown for medications and laboratory researches.

6. The part of patients who used to pay for medical consultations during their visit to doctors has shrunk to 35.6% from 73.7%.

7. Access to services has increased, particularly in rural areas.

8. Universal access to medical services have considerably decreased pocket expenditures and increased financial protection 9. Public awareness of overall healthcare program is high (74%). The customers experience in healthcare system has improved.

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QUOTES

caucasus business week

“Infrastructure Spending to Grow by GEL 85 Million” NODAR KHADURI Minister of Finance of Georgia states The Government intends to increase spending on infrastructure by GEL 85 million in 2015. “Operating costs for the acquisition of various goods and services by the government agencies will be reduced by 71 million. Spending on infrastructure projects will be increased by 85 million, including compensation for damage caused by flooding. 10 million has been already allocated to fight the consequences of natural disasters, we’ll allocate another million to repair roads damaged by the landslide. In the near future GEL 20 million will be allocated to overcome the consequences of the natural disasters, “- he said. Overall, infrastructure spending in the 2015 budget amounted to GEL 855 million.

“Decision was Taken on KhudoniHPP Construction”

KAKHA KALADZE The Minister of Energy of Georgia The decision on construction of Khudoni Hydro

Power Plant has been taken and the final version of the agreement has already been compiled.

According to the Minister of Energy Kakha Kaladze, in the coming days society will be acquainted with the details of the project.

“The decision about how and in what form KhudoniHPP will be built has already been made, and the information on this subject will be released in the near future,”– says the Minister.

According to available information, one of the points of the new agreement provides for the state’s participation in the project in the face of the Partnership Fund, which may have only a1020 %- stake in the project.

Furthermore, to abandon registration in the offshore was among the requirements imposed by the state to “Transelectrica” company engaged in the project as well as to present a report on the environmental impact of the HPP construction, etc.

“Government’s Communication and a desire to be aware of everything is very healthy“

MIKHEIL CHKUASELI General Director of “Geo Plant” Georgia has serious export potential. On one hand

this enables us to employ population not just in western Georgia, and on the other, to make tea an important source of currency revenue.

This year we have sold raw material tea. Including the tea which we have not produced yet and plan to produce, up to December. This means that we have made $18-22 million export inflow in country.

It has been five years through which we have offered new products to customers annually.This year will be no exception; In the current year “Prince Gurieli”, which has so far only been presented in the form of black and green tea, will expand into the entire line.

We have constant communication with the government. Especially in recent period, when the Ministry of Agriculture started to develop a program for the development of tea. I think the Communication and willingness from the government to be aware of this issue is very healthy .

“A Georgian Central Park will be built in the Flood Affected Vere Gorge”

EMZAR JGERENAIA Head of Business Chamber As Emzar Jgerenaia, head of the Business Chamber has told journalists, the Vere River has ended its wave of destruction and now it is time to rebuild. “We have invited foreign experts to research the issues of Vere Gorge. The project we have devised offers an interesting prospect of creating a small, but beautiful Manhattan in the middle of Tbilisi, complete with its own recreational

zone. Naturally, there will be a dam built and bank reinforcement work done in order to keep the river in its place,” Jgerenaia said. According to him, the specialists claim that if a dam is constructed, the project becomes perfectly feasible. “The dam will serve as a guarantee that the June 13th tragedy can never repeating in Tbilisi. Our project also implies restoration of the recreation zone and construction of a park with sports grounds, as well as hotels, business centers and apartment building”- explained Jgerenaia. Mr. Jgerenaia also claimed that they have already made their plans known to the government. “The message we sent to the authorities was quite clear; we also had conversations with several ministers about our project and are now awaiting a response. We have also presented our idea to Tbilisi City Hall.” By his estimates, the project will cost 1.4 billion GEL and that they will try to obtain financing from donors and investors.

“We are currently holding negotiations with businessmen, and they have expressed readiness to invest in this project. We need to change our view on the situation as such. Misery and tragedy have no place in Vere Gorge – only opportunity and future prosperity,”- Jgerenaia concluded.

June 29, 2015 #105

NEW DIRECTIONS IN “PRODUCE IN GEORGIA” PROGRAM An interview with Deputy Minister of Economy of Georgia Keti Bochorishvili - As reported, “Produce in Georgia” program will include anew direction - tourism. This is a growing trend, although it is concentrated in Tbilisi and Batumi. Will this program contribute to the expansion of the hotel business in the regions, as well as growth of low-cost 3-star hotels across the country?

- In recent years, the number of tourists arriving in the country is growing steadily, and Tbilisi and Batumi are especially of their interest. Although, there are other tourist destinations where the number of hotels is not still sufficient in order major international tour operators to start working for them.

The program “Produce in Georgia” was launched almost a year ago, and its main idea is to stimulate production. The project is constantly amended, we have a constant contact with businessmen and try to add the individual components on the basis of their interests. International branded hotels in the regions are of great importance, as it will allow the regions emerge from the shadows and appear on the world map as their marketing and advertising will be carried out by the management of large companies.

If you look at the statistics, branded hotels occupancy is 20% higher, they have international booking system, they are represented throughout the world, management has extensive experience in hotel management and service, etc.

- When we talk about bringing the branded hotels, it is obvious that it will take much more money, including for business. What will be the role of government in this process?

- If we compare the costs for attracting big brands with costs for marketing and service improvement, the difference will be minimum, moreover, it will cost even a little cheaper. So if everything is planned appropriately from the very beginning, the costs will be distributed much more economically.

- What is the limit on financing of each project?

- This is a loan in the amount of GEL 500 000 to 5 million. Operating hotels which plan to expand may also involve in the program.

There are several criteria the beneficiaries will have to meet. In particular, he must own the land on which it is planned to build a hotel, he should negotiate with international partners, must have a relationship with the banks.

Aid will be provided to entrepreneurs in such components as the co-financing of interest pay-

ments for the loan and payment of the cost of the brand within 2 years.

Our goal is to help businesses get on the feet and start working. It must be designed so that after two years it no longer needed any help from the state.

A program promoting Georgian regions is not designed for Tbilisi and Batumi, where the hotel business is very well developed and our intervention is not required.

Our task is to attract tourists to other regions and to make Georgia the country of all- year-round tourism and not seasonal, as it is now.

- What is the budget of the program?

- “Produce in Georgia” program’s budget is GEL 10-16 mln. It includes a component to support entrepreneurship and the develop the hotel sector.

We must understand that the results should not be expected today or tomorrow. This is a long-term program, and we’ll see the first results no earlier than in one year.

Moreover, at this stage the issue to include the hotel sector in the program is preparing for submission to Parliament. Most likely, it will take effect no earlier than 1 August.

- Whether foreign investors will be able to use this program, and will the local businessmen find themselves in a losing position?

- Conversely. Foreigners have always had the opportunity to invest, and the Georgian business has always had a problem of unavailability of finances. From this point of view, there will be no restrictions. The project is designed for all those who work in the territory of Georgia. Most importantly, the project to be effective and create jobs. Anyone who has experience and meets the criteria can participate in the program.

PMC RESEARCH CENTER: DIALOGUE OF EU INTEGRATION PROCESS FOR MOLDOVA AND GEORGIA

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MC Research Center (PMC RC), with the support of International Visegrad Fund hosts a two-day knowledgesharing workshop to facilitate the effective management of the EU integration for Georgia and Moldova.

The aim of the event is to assist Georgian and Moldovan businesses and Governments to have a better coordinated dialogue on potential costs and benefits in the EU integration process. More specifically, the timely implementation of DCFTA. In the framework of the workshop, Visegrad countries (Poland, Czech Republic, Slovakia and Hungary) will share their positive experience they accumulated in the process of creating effective platform for dialogue between public and private sector.

Key stakeholders from Georgia, Moldova and Visegrad countries, such as: government agencies, business associations, experts, international organizations and donors (EBRD, EIB, WB, IFC,

USAD, EU and others) will participate in the event.

Sharing experience of Central European countries will allow Georgia and Moldova to manage the process of EU approximation more effectively. It will also assist the governments to introduce such policies that will support small and medium businesses and inform business about all the benefits and procedures that will support their competitive entry at the European 500 million market.

On the other hand, dialogue will give society opportunity to obtain detailed information about the opportunities Association Agreement offers.

To ensure maximum effectiveness, the second workshop of the project will be held in Chisinau, Moldova, on October 21-23, 2015.

The workshops are held under the International Visegrad Fund project “Sharing Experience of Public-Private Dialogue in EU Integration Process for Moldova and Georgia”, that is implemented by PMC Research Center.

June 29, 2015 #105

BANKING & STATISTICS

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JANUARY-MAY RECORDS 13% DECLINE TBC BANK ANNULS LOANS OF IN GEORGIA’S FOREIGN TRADE DISASTER VICTIMS

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he foreign trade turnover in JanuaryMarch, 2015 amounted to USD 3 917 million, according to the new report of Georgia’s National Statistics Department which i13 percent less than last year, Export was USD 884 million, which is 28 percent less than last year, while import was USD 3 033 million, or three percent less than last year.

Georgia’s negative trade balance was USD 2 150 million, which is 55 percent of the whole foreign trade turnover.

The turnover with the European Union in January-May totaled USD 1 179 million, which is 1 percent more than last year. Export was USD 242 million (4 percent less), while import was USD 937 million (3 percent more).

Georgia’s foreign trade with the Commonwealth of Independent States (CIS) amounted to 1 USD 127 million in January-May 2015 that is 22 percent less than in January-May 2015. Export was USD 338 million (46 percent less), while import was USD 789 million ( 3 percent less). The CIS states accounted for 21 percent of Georgia’s trade turnover (9 percent in January-May 2014).

The top export products for Georgia in the beginning of the year were copper ores and concentrates with 12 percent of export, followed by cars with 10 percent, while in third place ferroalloys with 10 percent of the whole export.

GEORGIA’S EXPORTS FALLS BY 4% WITH EU, BY 46% WITH CIS

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ccording to “Sakstat”, Georgia’s foreign trade turnover with the EU countries has made up 1,179 billion USD in January-May of 2015, which is less by 1% comparing to the index of the previous year. Product of 242 million USD has been exported from Georgia to the EU through 5 months, the figure is less by 4% comparing to January-May of 2014. Import volume is grown by 3% year-over-year. The share of those countries has amounted to 30% in Georgia’s foreign trade turnover. It should be noted, that the share of European countries is grown in circulation, as well

as in the data of export and import. Namely, the EU has occupied 27% in the export and 31% in the import (reportedly, 26, 22 and 27 percent in JanuaryMay, 2014). As for the foreign trade turnover with the CIS countries has made up 1,127 billion USD in January-May, 2015, however, the drop is 22% yo-y. Export is reduced by 46% and the index has totaled to 338 million USD, while import volume – by 3% and the figure is declined to 789 million USD. The share of CIS countries in Georgian foreign trade turnover has been 29%, including export – 38% and import 26% (respectively, 32, 53 and 24 percent in January-May, 2014).

GEORGIA’S IMPORTS FROM IRELAND GROW 39 TIMES

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his is the first case, when Ireland is in the top-10. This country ranks 9th in the top-10 of Georgian biggest trade partners, as a result of trade operations. It has come at the expense of import. If we compare the same period of the previous year, the import volume is grown 39 times.

Namely, import from Ireland has made up 145,58 million USD in January-May, 2015. Export volume is insignificant and it merely totals to 85 thousand USD. It should be noted, that the greatest share of import, 143 million, has been made in May. As for the other countries of top-10, the share of 10 biggest trade partners of Georgia has amounted to

65% in foreign trade turnover through JanuaryMay, 2015. The biggest trade partners are: Turkey (611 million USD), Azerbaijan (360 million USD) and China (304 million USD).

The top-10 also includes: Russia ($ 274 million), Ukraine ($ 209,6 million), Germany ($ 203,3 million), Armenia ($ 155,3 million), the US ($ 147,2 million), Ireland ($ 145,6 million), Bulgaria ($ 129 million).

It should be noted, that Bulgaria is the sole in the top-10, to which Georgia has a positive trade balance i.e. export exceeds import. Namely, export has been 77,4 million in these countries, while import 51,6 million USD.

TREATEMENT MEANS TOP GEORGIA’S LIST OF IMPORTS ITEMS

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ccording to “Sakstat”, as of 5 months data, Georgia has made import of treating means, cost of 262 million USD, which is 9% of the total import. The import of the mentioned import is grown by 128% comparing to the same period of the previous year. Oil and oil products are on the second position with 242 million USD, which is 8% of import. Cars import is on the third place with 217 million USD. The top-10 also includes: natural gas - 199.6 mil-

lion, copper ores and concentrates - 98 million, telephone sets - 52 million, wheat - 41 million, cigarettes - 28.6 million, trucks - 25.6 million, the so-called reinforced concrete - 25.5 million.

The biggest groups of importing basket hold 39,3% of the total import.

It should be noted, that import volume is grown by 156,2 million USD in May comparing to April and the growth has totaled to 707 million. As of 5 month data, import volume in the country totals to 3,033 billion USD.

MOST NATURAL DISASTER VICTIMS TO HAVE THEIR LOAN DEBTS WRITTEN OFF

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nformation about loan debts owned by the disaster victims will be known in a few days - the President of the National Bank announces. According to George Kadagidze, the commercial banks will make a statement in this regard. He says that most natural disaster victims will have their loan debts written off. In Kadagidze’s words, insur-

ance will cover loan commitments if there are insurance guarantees, a different approach will be applied to other cases. According to the latest information, the June 13 flood killed 19 people, dozens of families were left homeless. From the people left without a roof over their heads, 328 people were temporarily accommodated in different hotels and 92 are renting apartments.

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BC Bank annuls loans of disaster victims TBC Bank will exempt the disaster affected individuals of the liability to pay off loans.

The bank made a decision to annul loans of the disaster victims, which means that the disaster victims, officially registered by Tbilisi Hall, will no longer have to cover their debt in TBC Bank.

“As you know TBC Bank opened a charity account and started active fundraising. Together with citizens the bank raised more than 1 million GEL. The money will be transferred to City Hall special account to ensure that the victims get systemic support”, - the bank informed InterpressNews. More than 300 legal and about 5000 psychical entities transferred money to the bank’s charity account.

RUSSIAN BUSINESSMEN ACTIVELY INVEST IN ONLINE LOAN COMPANIES nline loan companies are going for future expansion. In Europe, Bulgaria and Ro-

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beyond the CIS markets and began developing on the global markets. In addition, Russian businessmen express their interest in investing in this business.

Similar to vivus.ge, the Russian capital in Georgia is represented in one of the famous online loan companies moneyman.ge. The company’s co -investor is a Russian businessman Vadim Dimov i who established the Dymov company that produces more than 170 items of sausages and deli meats, and book shops “Republic” in Russia.

Russian media reports about the entry of the remote consumer lending company into the Spanish market. As of the figures for the past year, Spanish online-lending market was estimated at 300-400 million Euros.

Dimov carried out another investment in MoneyMan in May, but Emery Capital with 6 million dollar investment has become the project’s leading investor. The company invests in the international technology startups which have a significant growth potential.

MoneyMan has been operating in Kazakhstan and Georgia. However, its global growth begins from Spain.

The company notes that doing business in the post-Soviet markets, where the population speaks Russian and have Russian-like behavior model, is significantly different from doing business in Western European countries. The company is studying European and South American markets

mania are of its interest, the company is searching for partners in Brazil.

MoneyMan was founded in 2011 by professional financiers Boris Batin and Alexander Dunayev, who worked for more than 10 years in the financial sector in the leading international banks.

A few months ago, “Commersant” wrote that the Russian billionaire Oleg Boyko who founded online loans company vivus.ge planned to turn his company into the world leader in this field in 2015. In early 2012 he bought 75% of the Latvian company 4finance . Vivus.ge is an international brand of 4Finance Group.

“Banking and Finance” editor Zurab Kukuladze says that in Georgia online lending has become popular for several reasons. First of all, we are talking about quite low culture of the financial services consumption when people undertake certain obligations and are not aware of the liability conditions. Another important factor is the country’s acute social background, which is why people are forced to use expensive products; the third and equally important factor is the financial services disadvantages, which is primarily relatively mild regulations towards financial institutions. In contrast to banks and microfinance institutions, online companies give out loans under simplified conditions and methods making this market more attractive.

Online loan organizations are legally registered as limited liability companies and do not fall under the National Bank’s regulatory space.

PRESIDENT INAUGURATES CONSULTATIONS ON SELECTING NEW NBG PRESIDENT

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he President of Georgia will begin consultations on choosing a new head of the National Bank of Georgia, his advisor for economic affairs George Abashishvili states.

According to him, he will personally hold consultations with international financial institutions, NGOs, experts, business associations, bank sector, economic-profile ministries and the National

Bank of Georgia. “I would like to inform that George Kadagidze’s term in office is about to expire… From today I will begin selecting his successor and this process will be transparent.

Consultations about the issue will be held with international financial institutions, NGOs, experts, business associations, bank sector, economicprofile ministries and the National Bank of Georgia, “- Abashishvili says.

DIRECTOR GENERAL: STOCK EXCHANGE WILL INTENSIFY OPERATION IN SEVERAL MONTHS

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eneral director of the Stock Exchange predicts activation of Stock Exchange in several months, after the government will introduce pension saving system. While, NBG will take decision to expand mortgage market for commercial banks. According to George Presishvili, we should not have long-term GEL without pension reform, however, there is a political will and corresponding legislative package is being prepared, respectively.

Insufficient savings, especially in national currency, is the main hamper by this time. Respectively, the money will be streamed to the Stock Exchange after the accumulation of sums on the pension funds. Appearance of the buyers will activate the emittants – to make more emission. This will acti-

vate other investors as well inside and outside the country, international financial institutions, local and foreign retail investors, ordinary citizens, who will make the choice between banking deposits and acquiring of securities. To note, , the Georgian Stock Exchange has established Tbilisi Stock Exchange. According to Paresishvili, they work on the documentations, which should be submitted to the NBG for a licensee.

The shareholders of the Georgian Stock Exchange (58%) have decided attraction of investments with emission of 4 million at the session held on May 29 and Tbilisi Stock Exchange continues to work in this direction.

Share growth by emission and acquiring of share is permitted for 42%-shareholders of NBG, who have not supported IPO.

EVENT 10 BSTDB CONCLUDES THE 17TH ANNUAL MEETING OF THE BOARD OF GOVERNORS caucasus business week

June 29, 2015 #105

direction on the fields that will receive support and loans for the private sector,” he noted to the press.

The Black Sea Trade and Development Bank (BSTDB) is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. The BSTDB headquarters are in Thessaloniki, Greece. BSTDB supports economic development and regional cooperation by providing loans, credit lines, equity and guarantees for projects and trade financing in the public and private sectors in its member countries. The authorized capital of the Bank is EUR 3.45 billion. BSTDB is rated long-term “A-” by Standard and Poor’s and “A2” by Moody’s. For information on BSTDB, visit www.bstdb.org.

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he Board of Governors of the Black Sea Trade and Development Bank (BSTDB) held its 17th Annual Meeting of the Board of Governors under the Chairmanship of Mr. Giorgi Kadagidze, President of the National Bank of Georgia.

The Board of Governors approved the 2014 Annual Report and financial statements. The Bank posted a net profit for the tenth consecutive year, which amounted to over EUR 14 million. The Board of Directors approved 29 new operations for the total amount of EUR 350 million, a 30% increase over the previous year.

The Board elected the Governor for the Hellenic Republic as Chairman of the Board of Governors. The Governors for the Republic of Moldova and Romania were elected as Deputy Chairmen, for a period of one year until the next BSTDB Annual Meeting decided to take place in Greece in June 2016.

“This is an organization that continues expanding its activities in Georgia and finances various projects, and our goal here is to help this financing grow, improving access to long-term financial resources for our business,” stated Giorgi Kadagidze to the press during the meeting. “We discussed the overall amount of investments and financing as well as future plans which covered several important projects.

The Black Sea Trade and Development Bank primarily utilizes Georgia as a proxy for economic financing, and we had discussions about the next stage and beginning directly financing real sectors as soon as today.”

David Lezhava, the Deputy Minister of Finance of Georgia, summarized the meeting as a door to new opportunities to Georgia’s private sector. “[The Black Sea Trade and Development Bank] have conducted a large number of operations in Georgia, primarily partnering with financial institutions in the real sector. This annual meeting saw the discussions for strategic

PURPOSE TO SPEND THE MONEY ACCUMULATED INTO CHARITY FUNDS? – WHAT DO PEOPLE THINK?

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arket Intelligence Caucasus (Exclusive licensee of TNS is south Caucasus) publish survey results regarding to purpose of spending money accumulated into charity funds for June 13th tragedy in Tbilisi.

At first, by the name of whole TNS team we would like to express our deepest condolences on recent processes in Tbilisi. Also we are thankful to citizens who supported the city, people together and made impossible possible.

Fortunately, citizens and companies responded adequately to the tragic situation and quite big sum of money has been collected to charity funds. Therefore, people has interest about how to distribute this money. As we noticed such interest from the side of society, we shortly started studying this issue.

As the study shows, absolute majority of Tbilsi citizens (98%) think that collected resources into charity funds should be used for buying houses for families affected by the disaster and helping them generally. Should be noted, that recovering damaged infrastructure and defense system for Vere riverbed found to be important and stands on second and third paces (26% and 20%). (picture #1) There is no sharp differences according to social-demographic parameters of the citizens but some deviation emerges by influence of employment status. (picture #2) Employed citizens of Tbilisi name recovering damaged infrastruc-

ture and defense system for river Vere more frequently than unemployed. Planting new area for zoo turned to be slightly more important for employed people than for unemployed.

Tbilisi citizens’ opinion towards appropriateness of highway on river Vere valley is also interesting. 55% of Tbilisi citizens consider that highway should be recovered and it should be functional again, while just 21% thinks that highway should be abolished by various reasons. For 24% of citizens it was hard to answer on that question. (picture #3) It’s natural that for people having own car the issue of highway is more sensitive, so just 13% of them supports abolishing the highway on river Vere valley while 23% of people not having own car thinks that way.

TNS acknowledges that research results might be influenced by the heavy emotional background caused by the recent situation. So we will present results of repeated survey after a certain period of time.

June 29, 2015 #105

BUSINESS

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caucasus business week

A NEW WINE LAW NOT TO HINDER TRADE An interview with Deputy Minister of Agriculture of Georgia Levan Davitashvili

- As reported, the government is working on a new wine law. What will it change for the business?

- A lot of innovations that are not included in the current version of the law are planned in the project. It will actually be a new document, as the current law was passed in 1998- too much time has passed and many things have changed. The quality of wine improved, its recognition on alternative markets has grown. Reality has changed not only in Georgia but throughout the world. Accordingly, the old law did not meet the new realities.

- Was a signing of the Association Agreement with the European Union a reason for adopting a new law? Or it comes to bringing legislation into line with international standards to simplify the wine exports to different countries?

- Both these factors should be considered. In terms of the Association Agreement, there are some requirements, such as the transfer of certificates of origin to the customs authorities. This is the EU’s requirement. But at the same time we are making many new changes, which were not a requirement of the European Union, but are accepted in international practice, accordingly, they should be taken in our country.

For example, Georgia is rich with grape gene pool - we have more than 500 original varieties, and their protection is the most important task, which will be reflected in the new law. The draft states that it is the obligation of the state, namely it must take care to preserve the gene pool of grapes. That of course, does not exclude the activity of the private sector in this area.

- How did the business sector meet this initiative? Are entrepreneurs ready to perform all the items that will be included in the document?

- Business sector, on the contrary, was the first who raised the question of the need for these

changes, as the old paper no longer met the new realities and created certain barriers to trade, as it did not take into account all categories of products, which are accepted worldwide.

Accordingly, it hindered trade relations - because if the list of goods specified in the document, doesn’t include a particular product, the state cannot issue a certificate required for the export.

We will introduce to the law all categories of products directly from the classification of the International Organization of Vine and Wine (OIV). In such a situation, it will be much easier for the business to establish communication with foreign partners.

- The project involves rules for labeling wine and grape beverages. What does that mean, and what will be the new rules?

- All countries with development viticulture and winemaking have a special approach to wine, in contrast to all other products. Our food code provided a standard approach to wine as to all other types of products.

The current law provides a special, unique approach to wine and grape alcohol.

In particular, it will not be obligatory to place all information on the label as in relation to other products. The fact is that the wine is considered to be low-risk product, respectively, there is no need to list all the ingredients on its label.

- It is also planned to amend the Administrative Code, which defines the penalties for violations of the law on wine. What are the sanctions?

- First of all it specifies what can be considered a violation - such as the lack of geographical indications on the label.

- Recently, analysts concerns have justified who said that too much dependence of wine exports on the Russian market could harm the economy of Georgia. Now the Wine Agency considers China its main priority. In your opinion, can the Asian market replace Russian, and how much time will it take?

- Our main task is to create awareness of Georgian wine in those countries where it is lacking.

The state allocates funds and helps business. In this direction, we have some progress. According to statistics, the country sees the growth of exports to new markets, including China, which we assess as very promising and interesting.

China is a country where the number of consumers grows by 40 million annually. The European market is already overwhelmed, and it’s very difficult to find a niche there, for the same money we can get much better results in Asia.

GEORGIA’S ADVERTISING MARKET IN CRISIS

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risis hits Georgia’s advertising market. The private sector saves money on advertising and spends less than in previous years.

Since April 1, new advertising regulations have entered into force in Georgia, which limited the air time for advertising to 12 minutes per hour and 4 minutes for sponsorship services.

Changes still at the level of the project became the object of fierce criticism from a number of media, who believed that the advertising restrictions would lead to higher prices and thus lower demand that on the one hand will hit on the independence of broadcasters, on the other - will harm the advertising business.

But now, a few months after the adoption of the new standards, many advertising companies believe that the reason for the decline in their industry was caused not by new regulations but the economic crisis. According to TV International

founder George Sulakauri, this type of regulations existed before 2005 and their introduction has changed almost nothing.

“The prices for advertising grow each year, and the current growth is not associated with the new regulations. All TV companies have their advertising resource that can be always efficiently used.

Today the problem lies not in the regulations but in the economic crisis. It’s hard to give specific figures, but the decline trend in demand is quite obvious. Many regional broadcasters hoped that the new regulation would increase the interest in them, but it was a miscalculation, as advertising in the regional TV company will eventually cost more than in one central channel watched across the country, “- Sulakauri notes.

Shalva Alavidze, Director of W Media company, also explains problems in the advertising business by the economic crisis. According to him, the regulations are not that problematic, some TV companies even received profits.

“Customers didn’t hailed regulations but met them with understanding. In general, these regulations are nonsense, besides the developers have not considered many things, and now they are trying to finalize the document. As for prices, they even have decreased due to the economic crisis. The problem is that customers prefer to spend less. The country is experiencing stagnation, most try to save money, including on advertising, “- he explains.

HOW DID THE LARI DEPRECIATION AFFECT THE CONSTRUCTION BUSINESS?

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he lari depreciation reduced the value of construction and, therefore, the cost of the new spaces, which caused the price decline in the market, however, this trend is not of mass character.

Only some construction companies lowered prices, some of them in the frames of discount actions in order to retain the right to raise prices considering instability of the national currency.

“Commersant” wrote that the lari depreciation had not brought the exporting companies positive results as they are largely dependent on imported raw materials and loans taken in dollars.

This time we are interested in how the depreciation of the national currency affected construction companies who sell apartments in dollars, accordingly, which revenues in the lari increased.

In addition, we should considering a fact that part of the building materials - armature, concrete, cement, block, sand and other are locally produced. It should be noted that national currencies depreciated against the dollar in the countries from which companies are bringing building materials - for example, Ukraine and Turkey, and, consequently, their prices are competitive. There are cases when Georgian companies pay the Ukrainian and Turkish suppliers in their currency that excludes the rise in prices for products.

As for other construction costs, 50% goes to wages and salaries. Accordingly, their costs in this regard reduced as only a small number of companies increased salaries.

Tornike Abuladze, Executive Director of “Arci” , explains that the costs increased in 20% of

construction companies while in 80% of companies they lowered. As for the selling prices, a slight decrease is being observed in the market, some companies announced discount actions but the process will not become a trend until the developers and users have a sense of stability with respect to the lari exchange rate.

In his words, not the national currency rate but its stabilization at one mark, even by 2,3 points, is important for the construction companies.

According to him, bank loans in dollars hinder a positive effect from the lari devaluation for the majority of developers.

In Abuladze’s opinion, the lari devaluation creates problems for those who wish to purchase an apartment and have income in the lari but have to acquire an apartment at the dollar rate.

Considering all this, Tornike Abuladze believes that anyway it is a good time to buy an apartment, but advises customers to take out a loan in the national currency.

They say in “Tri -D” company that their profits increased due to the prices set in dollars, but at the same time they increased salaries. In addition, some materials are imported from abroad, in dollars, and in this direction the costs have increased.

At this stage the cost of the apartment built by the company reaches $ 680. The company speaks about a high demand due to high and stable quality.

Chairman of the Supervisory Board of m2 company Irakli Burdiladze says that construction materials are mainly imported and therefore they’ve failed to reduce prices.

DUNKIN’ DONUTS EXPANDS IN GEORGIA

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he American fast- food chain Dunkin’ Donuts opened two new branches in the center of Tbilisi.

In addition, types of sandwiches increased from 16 to 20. The range will grow at the expense of chicken, vegetable, meatless and vegetarian dishes. According to Soso Pkhakadze, one of the founders of “Wissol Group”, which owns a Dunkin’ Donuts franchise in Georgia, over the past few months sales rose by 25%.

“Our sandwiches are made with fresh ingredients and are not cooked on oil – all sandwiches roast on the grill,” - he says. The businessman notes that Dunkin’ Donuts products are absolutely harmless to health. Currently 8 Dunkin’ Donuts branches are operating in Tbilisi.

“Commersant” reports that until July 20 the company plans to open 3 restaurants. By the end of the year the total number of Dunkin’ Donuts restaurants will grow to 17.

GEORGIA WINS 20 MEDALS AT INTERNATIONAL WINE COMPETITION

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eorgian wine is cementing a name for itself as among the top wines of the world after receiving top honours at an international wine competition in the United Kingdom. Judges of the Decanter World Wine Awards (DWWA) were impressed with Georgian wine varieties and presented several of the country’s wine producers more than 20 awards honouring local wine. Of the medals, four were silver and 16 were bronze. The most number of medals were awarded to Schuchmann Wines Georgia and Teliani Valley. In total 240 wine experts judged 10,000 wine varieties. 305 wines got golden award, while 1,944 wines were awarded with silver and 4,810 with bronze medals.

Georgia was the best performing country in the region. Russia gained two silver and five bronze medals while Armenia received one silver and

three bronze medals.

A total of 240 wine experts judged 10,000 wine varieties at the top competition; 305 wines received gold awards, 1,944 wines gained silver awards and 4,810 wines won bronze medals.

Overall France was the most successful country – it received 58 gold and 398 silver medals.

The next country to gain the most medals was Italy (36 gold and 340 silver medals) followed by Spain (31 gold and 179 silver medals).

The DDWAA is a London-based international wine competition that is regarded today as world’s biggest wine competition. Since its foundation in 2004, the competition reached a record high last year with over 15,000 entries from about 50 countries. The results of the competition are published on Decanter’s website and in Decanter’s August magazine, which is published monthly in about 90 countries.

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CURRENCY caucasus business week

STEEN’S CHRONICLE: THE MARGINAL COST OF EVERYTHING Steen Jakobsen Chief Economist & CIO / Saxo Bank Denmark

• PROFIT BOTH DRIVES AND EXPLAINS STOCKS • RISING COST OF CAPITAL WILL FILTER THROUGH TO PROFITS IN AUTUMN • IGNORE RISES IN CAPITAL COSTS AT YOUR PERIL • BEST ADVICE? STASH YOUR CASH AND USE IT LATER

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tudying economics, to be honest, is of little practical benefit, but one thing I did learn which continues to help me is this: Capital should always be allocated to the “marginal cost of capital”.

What’s interesting in this context is that the stock market in its most simple form is really an input– output black box: In goes the “cost of capital” – out comes “profit”. I don’t think anyone will disagree that long- and medium term it’s the profit which both explains and drives stocks best.

The most profitable companies get the best stock returns, Philip Van Doorn explained recently in a MarketWatch column. (See his list of the most profitable S&P 1500 companies here.)

Van Doorn’s conclusion reads: This brings me to the “dilemma” of today’s market: The marginal cost of capital is significantly higher. My own Marginal Cost of Capital chart (50% US, 25% Germany & Japan 10-year yields) is up from -3.0 Z-score to +1.0 since the low in late January – a significant move by any standard.

Of course there is a delay in time from rising rates to profit – the “black box” takes 6-9 months to process the changes in input prices (cost of capital) but it increasingly clear that should the stock market continues up, and the consensus is more positive than any time before, it will entirely be driven by increase in multiples.

The credit cycle peaked in March/April last year and now the cost of capital has been rising since January (six months) which means by September/October the full impact will be felt on profit. There are also some good reasons to expect buy-back programmes to lose some steam as the continued aggressive buy-backs are mostly funded not from free cash flow created, but new net lending meaning we are getting “worse” quality earnings on top of rising input costs.

I note that several people love to comment that I am always “negative” on stocks, that may be the case when journalists quote me, but in terms of money managed I am neutral – not long, not short – I have not done a stock index deal in more than six months and I maintain my equity exposure at the required 25% mainly through mining and commodities now.

The real peak was in April 2013, with a new “lower” peak in April 2014. The above chart shows US high yield (HYG) vs. YoY return in the S&P500. The correlation seems reasonable…..

Leveraged loans – high risk credit lending – is also coming off.. again, the peak was April 2014ish….

In more liquid assets – the 10-year and 30-year generic US yield and the 30-year average mortgage rates look like this:

You can ignore these rises in capital cost at your peril but I would warn that this is NOT going away – we can discuss Fed next move in 3D, 50 colors and with conviction but the cost of capital is rising already even before Fed is starting its “normalisation”. The Fed is now priced to go most likely in December, but I remain with September as December becomes political with primaries and US elections. The data should be “good enough” – not great but the trend will be rising (from a very low point).

The strategy for most assets remains one of wait-and-see to me: I keep recommending the few people who want advice to bring back their stock portfolios to a January 2013 level – keep the profit in the “piggybank” to be used later. There are too many unknowns to proceed full steam ahead – the tax of “volatility” in now again increasing:

The “catalyst” for change is the first Fed move – It will be a full blown “margin call” – if you add my models plus the Fed consensus together with the “prediction” made in February, things are suddenly interesting.... What is clear is that the market “expected return remains zero over 3, 5 and 7 year and how you tackle that downbeat scenario really is an exercise in capital preservation.

Safe travels, Steen

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ith the Federal Reserve failed to provide clear signs of September rate hike, the much anticipated move, disappointment amongst market players drove down the greenback for one more weekly loss against majority of its counterparts. Moreover, weaker than anticipated print of inflation and industrial production numbers, coupled with lower interest rate projections for the coming years, also contributed towards registering consecutive third weekly decline by the US Dollar Index (I.USDX). At the European front, the Greece talks again failed during its last ditched efforts, forcing the EU to call an emergency meeting on Monday; though, the regional currency failed to reflect such pessimism as speculations strengthened that the region wouldn’t allow for Grexit. The GBP was a clear winner as improvements in Inflation and labor market details supported speculations that the BoE may surpass the Fed in hiking interest rates while the JPY remained a bit mixed with the BoJ continue supporting loose monetary policy by mentioning strong economic outlook.

After witnessing headline numbers/events during last week, this week’s economic calendar offers lesser events to fuel the Forex market. However, Flash Manufacturing and Services PMIs from EU, Germany and China, US Durable Goods Orders and final version of Q1 2015 GDP and German CPI are some of the important details that could provide considerable Forex moves during the current week. It should be noted that the UK economic calendar is empty during the current week. Let’s discuss them in detail.

Even if the Federal Reserve failed to comment on September rate hike, Fed Chair remained static on its first fed rate hike during 2015 should the economic indicators continue improve. Hence, a positive GDP reading on Wednesday, coupled with the strong Durable Goods numbers on Tuesday, could again strengthen the expectations for the Fed’s nearterm interest rate hike, in-turn rejuvenating the US Dollar rally. Moreover, the housing market numbers have been printing better numbers off-late and could become an added support for the USD during its releases on early week days.

With the US growth numbers all set to register its first quarterly decline in four to -0.2% number, the Federal Reserve might become cautious before signaling their first interest rate hike since 2006. However, such interruptions into the outcome was well orchestrated with the weather effects and should the actual GDP reading either matches the -0.2% or remains below its intermediate forecast of -0.7%, the USD can witness lesser negative effects. Also, a surprise reading into the positive region could fuel the greenback towards reversing some of its early month losses.

Moreover, the monthly reading of Durable Goods Orders m/m, scheduled for Tuesday, also supports the expectations of a strong USD as the figure is likely to register -0.6% mark against previously reported -1.0% while the Core reading is expected to reverse previous decline of -0.2% with the 0.6% growth in orders. Housing market details, namely Monday’s Existing Home Sales and Tuesday’s New Home Sales, are also in the cadre of expected US positives as the Existing Home Sales is likely to rise to 5.27M against its prior reading of 5.04M while the New Home Sales is expected to rally to 524K comparing its previous number of 517K. In addition to the headline numbers, the monthly Personal Income-Spending details, scheduled for Thursday release, together with the weekly Jobless Claims, are showing mixed signs as details relating to income and spending are a bit more US positive while the Jobless Claims may pullback some of the greenback gains if meets the forecast signaling higher numbers.

Even if the cautious view of the Federal Reserve,

June 29, 2015 #105

FEWER BUT IMPORTANT ECONOMICS MIGHT TRIGGER US DOLLAR RECOVERY coupled with downgraded forecasts, pulled back some of the greenback gains, a positive GDP reading could wipe the market pessimism and may help the US Dollar regain its strength. However, Greece talks could become an important indicator to determine the countermoves of the USD, as a successful deal will continue hurting the greenback.

Chinese HSBC Flash Manufacturing PMI, scheduled for Tuesday, opens the round of Flash readings of Manufacturing and Services PMIs from Europe, Germany and the US during the rest of the week.

Even if the number is expected to register its consecutive fourth reading below 50 level, it is a bit higher, 49.4, than its upwardly revised previous reading of 49.2, and an actual number meeting the forecast can provide a relief to commodity currencies, namely AUD, NZD and CAD. Moreover, an actual reading above 50 level can become considerably better for these currencies, mainly the AUD. German & EU Flash Manufacturing & Services PMIs, scheduled for Tuesday as well, are a bit mixed as the German Manufacturing PMIs is likely to continue its up-move, to 51.5 from 51.0, while the EU reading can weaken a bit to 52.0 from downwardly revised figure of 52.2.

US Flash Manufacturing PMI, scheduled for Tuesday, becomes another Manufacturing PMI to take care off. The figure is expected to test 54.2 mark as compared to its 54.0 upward revision of prior release and can become an added advantage, coupled with other scheduled events, for the USD to move up.

Other than the Manufacturing and Services PMIs, the German details, namely, Ifo Business Climate, on Wednesday, and the GfK German Consumer Climate, on Thursday, are important details to determine near-term EUR moves. With both the details unlikely to register considerable changes, the EUR moves are less expected to be affected by the outcomes except the actual figure marks excessive changes.

Having witnessed the another failure to reach the deal during talks between the Greece and its International creditors, the EU forced to have an emergency meeting on Monday that could determine the fate of Greece in Euro region. During its weekend telecom discussions between the German, French, Greek and the EU leaders, all of them seemed quite optimistic that the deal would be reached during the current week, saving the Greece from Euro exit. Moreover, the troubled nation also managed to present an acceptable proposal during its early Monday proceedings of the meeting, supporting the chances of getting the emergency funds.

With the Greece now talking the tune of its international creditors, it is much likely that the Grexit can be avoided, providing considerable up-move to the EUR. However, history of the Greece discussion has always signal failed deal and given the such instance happen during its current final meeting, the Greece default, Grexit in-turn, can’t be avoided, providing noticeable EUR weakness.

After witnessing majority of details during early week days, the New-Zealand Trade Balance, scheduled for Thursday, and the Japanese Details relating to CPI and Unemployment Rate, scheduled to be released on Friday, are some other details that could help determine the respective moves of NZD and JPY. Having witnessed a recent decline in New-Zealand GDP, a negative Trade Balance, expected to test -50M against previously reported 123M, can provide additional drag to the NZD while the Japanese CPI numbers are likely to print softer than prior announcements and could continue supporting the BoJ’s lose monetary policy, in-turn supporting the JPY weakness. Moreover, the Japanese Unemployment Rate is expected to remained stagnant at 3.3% while the expected hike in Household Spending, to 3.5% from -1.3%, may help the JPY to strengthen against majority of its counterparts.

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

June 29, 2015 #105

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RESEARCH

USE OF SECTOR THE HEALTH ENERGY - 2014 INSURANCE SERVICE

ealth insurance, as one of the financial instrument of risk management, helps us to feel safe and in case of any health problems, simplify the process of handling unexpected expenses.

ACT got interested in what kind of health insurance programs are mostly used by the Tbilisi Population and how satisfied they are with either private or global insurance services. According to the survey, majority of Tbilisi residents (86%) uses health insurance service; at the same time, it should be noted, that the major part of them uses the global insurance, while every fifth resident of Tbilisi (22%) uses private health insurance programs.

WHAT KIND OF HEALTH INSUARNCE DO YOU USE?

NEIGHBORHOOD

It should be noted that during the last three months 38% of Tbilisi residents using health insurance, also used the mentioned service. In general, women use health insurance service more actively (42%), than men (31%).

HAVE YOU USED HEALTH INSURANCE SERVICE DURING THE LAST THREE MONTHS?

It is interesting that the majority of the people (80%) using health insurance are content with the service of private as well as Global Insurance.

The survey was conducted among 405 adults from Tbilisi, in April, 2015. The statistical error of the data does not exceed 4.9%.

THE 10 BIGGEST EMPLOYERS IN THE WORLD

he world’s largest employers are not private companies.

Last week, the World Economic Forum’s (WEF’s) Agenda blog highlighted the organizations that employ the most people in the world.

The post noted that the top spot is often incorrectly attributed to Indian Railways, instead of the US Department of Defense, which employs more than 3 million people.

The good news for workers at the two largest private US employers — Wal-Mart and McDonald’s — is that higher wages are here.

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housands in Armenia’s capital Yerevan have been protesting over a 17-22% electricity price hike coming on August 1.

Things got particularly ugly over the weekend when police unleashed water cannons, and 237 protestors were arrested. Crowds have subsequently grown up to 15,000 people, and protests have spread to other cities. The protestors argue that the price increase — the third hike in the past two years — is too much for the average person to afford. One-third of Armenia’s population lives below the national poverty line, and unemployment was around 17% in 2014. On top of everything, the value of remittances sent from Armenians in Russia were hurt by the ruble’s fall. Some have been quick to draw a political connection as Armenia’s electricity network is owned by a Russian company called Inter RAO, whose chairman is Igor Sechin, the head of the state-owned oil company Rosneft, according to the Moscow Times.

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ussia’s eyeing its second recession in just seven years. This is no surprise: the 40% oil price drop slammed an economy whose energy sector makes up 20% of the GDP, and western sanctions added salt in the wound.

However, those are just the short-term obstacles that’s Russia is facing. So far, Russia has focused on a three-fold growth strategy that benefits its domestic producers (aka the oil and gas guys): import substitution, a weaker ruble, and a reduction in labor costs. However, Russia’s foreign policy agenda might affect business confidence and delay structural reform — meaning that investment prospects aren’t looking too hot right now...

T

urns out the old saying that money isn’t everything holds true.

The results are based on 146,000 interviews with adults across 145 countries and areas throughout all of last year. Participants were asked 10 questions focusing on their purpose and ambitions, their social setting and love in their lives, their finances, where they live, the pride they take in their community and how healthy and energetic they fell. While more than 40 per cent of the Australians questioned felt well and secure in their financial situation, less than a third felt healthy or liked what they do each day, according to the survey.

On the face of it, the results may appear surprising. Isn’t Puerto Rico going bankrupt? Doesn’t Guatemala have one of the world’s highest murder rates?

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ure, craft whiskeys are growing in popularity.

But one whiskey brand dominates the market: Johnnie Walker.

Johnnie Walker’s retail value was $5.3 billion in 2014, according to a research note from Bank of America Merrill Lynch. That brand is owned by British multinational Diageo.

It was followed by Jack Daniel’s, a Brown-Forman company, at $2.7 billion, and ABD’s Officer’s Choice, at $2.1 billion.

Importantly, though, some smaller brands were growing faster last year, including Imperial Blue and Haywards, both of which benefitted from the growing Indian whiskey market, according to the note.

Great potential for energy efficiency in Azerbaijan

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zerbaijan completely ensures its gross energy consumption through domestic production, which is mainly reliant on the exploitation of the country’s hydrocarbon reserves. But this does not remove the possibility of implementing an energy saving system from the agenda. Energy saving measures—as a means to ensure the growing demand for energy and power resources—are 2 to 5 times more cost-efficient than the construction of new electricity- and heat-generating facilities, according to various expert estimates. In addition, energy efficiency reduces greenhouse gas emissions, which is beneficial for improving the environmental situation in the country. Rasul Suleymanov, the chair of the Azerbaijani Energy Engineers and Specials, Agency said the energy saving potential in Azerbaijan is around 8-10 million tons of fuel equivalent. He said that the process of energy saving is being developed gradually in Azerbaijan.

E-commerce boom in Turkey reaches USD 7 billion business volume

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lectronic commerce volume in Turkey has increased 35 percent in 2014 from the previous year, reaching a volume of 18.9 billion Turkish liras (USD 7 billion), Istanbul-based Informatics Industry Association (TUBİSAD] reported recentrly. This means that e-commerce represents 1.6 percent of overall retail business in the country, the association disclosed. Growth in e-commerce in 2013 was 14 billion Turkish liras (more than USD 5 billion). Turkish people have spent 6.8 billion Turkish liras (USD 2.6 billion) on websites selling vacation spots and airline tickets while they spent 6.5 billion Turkish liras (USD 2.4 billion) for retail websites.

On betting websites, they have spent 2.1 billion Turkish liras (USD 790 million).

Although Turkish e-companies have taken a bigger share in overall retail business, they are lagging behind developed countries, the study revealed. Indeed, in developed countries, e-commerce represents 6.5 percent of retail business.

China to become biggest outward investor in 5ys

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hina is expected to become the world’s biggest overseas investor by 2020. Beijing’s global offshore assets will likely triple from $6.4 trillion, to more than $20 trillion by then, says research reported in the Financial Times (FT).

China will invest more in the developed West, much of the money come from foreign exchange reserves and portfolio investments, says joint research by Rhodium Group and Germany’s Mercator Institute for China Studies, the FT reports Friday.

However, the share of China’s direct investment is also booming. In 2000-2014, Chinese businesses directly invested €46 billion in the 28 EU countries.

The UK was the biggest recipient getting €12.2 billion over the period, with Germany getting €6.9 billion and France €5.9 billion.

Energy, automotive, food and real estate sectors attracted the most Chinese money into Europe.

With China being one of top three exporters of direct investment in the world, its outbound foreign direct investment stock (OFDI) is expected to reach $2 trillion, more than doubling the current $744 billion.

Currently China is the world’s biggest trader of goods, while its share of global financial cross-border trading remains minor; at 3.4 percent in 2011.

“Characteristics such as the size, growth and complimentarity of the Chinese economy create unique opportunities for Europe,” said the report.

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June 29, 2015 #105

June 29, 2015 #105

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

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

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

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

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food.

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

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

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

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

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

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition.

Contact information: Email: info@gsservices.ge.

Address: Shalva Dadiani 10

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

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

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

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Two residential complexes include 464 apartments with parking, green area, outdoor swimming pool and playground for children. ”Metrocity” is unique with its special maintenance services.

“Metrocity” integrates two five star hotels, private school and residences with private swimming pool, panoramic terrace restaurants, casinos, Spa, shopping center including 100 brand stores, sport club, cinema, bowling center, playground for children, gold sand beach and the biggest conference hall in Transcaucasia for 1500 guests.”MetroCity” can be found just 2 km from Batumi International Airport and 500m from the city center. The complex with its location is harmoniously mixed with mountains and sea views.

The project implementation has begun in February 2015 and will be successfully completed in April 2017.

Residences from 38 m2 to 300 m2 are available.

10% Deposit 36 MONTH INTERNAL CREDIT 25% Deposit 60 MONTH INTERNAL CREDIT

STARTING PRICE IS FROM 1425 $ Address: Leh and Maria Kachinsky Str.1, Batumi Tel: +995 577 14 17 14 sales@metrocity.ge www.facebook.com/MetroCity.GE

www.metrocity.ge

June 29, 2015 #105