Caucasus Business Week #118 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK caucasus1

WWW.CBW.GE

October 19, 2015 #118

www.facebook.com/CBW.ge

October 19, 2015, Issue 118

caucasus business Partnerweek News Agency

BE INFORMED, DO BUSINESS

TBILISI SILK ROAD FORUM 2015

IMF PREDICTS GEORGIA’S ECONOMIC GROWTH WILL REACH 5% IN 2020

ccording to the new IMF forecast for 2015 and 2016, Georgia will have 2 percent economic growth in 2015 and 3 percent in 2016, while in 2020- 5 percent. Pg. 8

GEORGIA PLAYS VIRAL TRANSIT ROLE CONNECTING IRAN TO EUROPE

Mamuka Bakhtadze: Georgian Railway for State Development

eorgia will play an important role connecting Iran to Europe thanks to a new transit corridor that Iran and Bulgaria are opening through Georgia. Pg. 10

POWERCHINA TO INVEST IN RIKOTI PASS AND ANAKLIA SEAPORT DEVELOPMENT

Pg. 4

eorgia’s government negotiates with Chinese large company POWERCHINA, on massive investment projects. Pg. 2

AJARA-MANUFACTURED CIGARS TO GO TO CHINESE MARKET

meri company engaged in cigars and cigarillos manufacturing began talks with Chinese investors. According to the company’s Director, cigars manufactured in Adjara might be exported to China this year. Pg. 11

TBILISI TO ACQUIRE NEW HOTEL DEPICTING SHOTA RUSTAVELI’S POEM QUOTES

hotel based on the Knight in the Panther’s Skin by Shota Rustaveli will be opened in Tbilisi. The project is carried out by the Israel-Georgia Business Chamber. On competition conditions, the design idea should be based on the Knight in the Panther’s Skin Pg. 11

160 000 Families May Be Evicted from Accommodations in Georgia The Authorities seem to be disturbed by protest rallies of development project customers and they have decided to abolish evictions by police force. In this way the Government hopes to resolve problems of ten thousands of real estate owners. But the new bill has left all parties discontent, except for the Georgian Dream coalition. Supporters of banks and businessmen assert

PASHA Bank is the sponsor of two-day event TMG 2015 – Telecom Meetings in Georgia which takes place on October 21-22. By sponsoring the meeting PASHA Bank once again underlines its support for the development of local business and economy. Pg. 10

In August 2015, as compared to July 2015, commercial banks increased the crediting volume in the economy by 315 million GEL to 14.99 billion GEL in the aftermath of the GEL exchange rate depreciation and reassessment of foreign currency denominated loans, the National Bank of Georgia (NBG) reports. Pg. 9

Why does Nodar Khaduri Lobby Questionable Project of the United National Movement? Georgian Finance Minister Nodar Khaduri has taken a decision on introduction of soft drinks electronic labeling regulations. Without due substantiation, the Finance Ministry plans to pay about 6 million GEL a year to Sicpa Swiss company from the state budget. The company is said to be a favorite body of the UNM party.

Galt & Taggart Clients Can Now Trade at Global Capital Markets

A Georgia-based medical insurance and hospital provider is seeking a London stock market listing that would value the company at about £260m — as more overseas medical companies choose to raise capital in Britain. GHG is the single largest scale healthcare services and medical insurance provider operating in the fast-growing, predominantly privatelyowned, Georgian healthcare market. The management of GHG is targeting at least doubling of 2015 revenues by 2018. The ﬁrm plans to expand through the further development of existing and recently acquired hospitals, focusing predominantly on the higher revenue referral hospital segments in Tbilisi. Nikoloz Gamkrelidze, chief executive of

an adoption of the bill will create problems to the business sector, while supporters of damaged real estate owners assure this bill is a particle of the huge problem and it will protract the process, not resolve it. Despite this, the parliament’s majority considers the bill with great scrupulousness and plans to adopt it by the end of 2015. Pg. 5

Government Competing with the Business Sector Every year the Georgian Finance Ministry borrows hundreds of millions of GEL from commercial banks through issuing and sales of state securities to them, while businessmen complain about lack of ﬁnancial resources. Naturally, commercial banks prefer to lend money to the Government without risks than to put money in risky business.

PASHA Bank is the Sponsor of Telecom Meetings in Georgia

Irakli Garibashvili: Azerbaijan is a Strategic Partner of Georgia Pg. 5

Georgia Healthcare, said the initial public offering would enable the group to renovate Sovietera hospitals, roll out general practice clinics and reduce debt. The move is the latest in a growing trend for overseas healthcare companies to use the London Stock Exchange as a route to ﬁnance. GHG also intends to launch a network of new ambulatory clinics across Tbilisi and in other major cities in Georgia. The shares are expected to be admitted to listing on the premium listing segment of the Ofﬁcial List and to trading on the London Stock Exchange plc. BGEO.L climbed 5.1 percent in afternoon trade to1,992.00 pence.

The soft drinks electronic labeling regulations project was developed by the previous Authorities. The new government initially suspended the project, then postponed it and now the Finance Ministry is trying to enact this project. Previously, Finance Minister Nodar Khaduri objected to the labeling regulations. Pg. 5

Mahir Mammadov: SOCAR Ready to Compete with Gazprom in Georgia Pg. 10

Silknet and Geocell to Jointly Coin Future Silknet and Geocell, Georgia’s two leading telecommunication companies, have introduced a new unique product – Twist. The innovative product enables subscribers to enjoy telecommunication services such as Silknet’s high-quality internet, Silk TV and Silknet’s landline telephone packages, as well as the METI (MORE) product of Geocell. The new product enables subscribers to receive Silknet’s high-speed internet, as well as Geocell’s doubled package of the METI product for extra 2 GEL a month and Geocell’s package of the METI Unlimited for extra 14 GEL a month. Pg. 8

Georgia is Starting Implementing Registries of Oncology Diseases Battling with oncology diseases is a worldwide issue. In Georgia the number of cancer diagnosed patients is high, compared to other countries. However the exact statistical number was unknown, before January 2015. Pg. 8

Restaurant OUR GARDEN welcomes you! Visit OUR GARDEN and see that it’s not just another restaurant!

Come and relax at OUR GARDEN, Between Tsiteli Sopeli and Bulachauri turns. Contact us: +995 599 801 801

2 MAIN EVENTS GOVERNMENT ALLOCATES 7.5 MILLION GEL FOR PROMO CAMPAIGNS

GOVERNMENT NEWS

October 19, 2015 #118

caucasus business week

GEORGIA LAUNCHES MEGA-PROJECT WITH CERN AND OTHER GLOBAL TECHNOLOGY LEADERS

,5 million GEL will be allocated to Tourism Administration for marketing and promotion campaign of Georgia. According to government decree, the sum is allocated for the government’s reserve fund. To remind, Tourism Administration has already started advertising camping for winter season. New image video “Winter in Georgia” is broadcasted on CNN and Euronews. To remind, the video will be broadcasted by Euronews on Russian and English from October 1 until December 15, while from October 5 to October 30 – CNN. It worth mentioning, that Tourism Administration spent over 10 million on marketing and promotion campaign on Spring, 2015.

DAVID SAGANELIDZE CHANGES THE PARTNERSHIP FUND’S PRIORITIES

he Partnership Fund (PF) will sign Memorandums with a number of companies tomorrow. The head of PF David Saganelidze stated before the Silk Road Forum opening. In his words, the Memorandums will be mainly singed in agriculture, tourism and industrial areas and not in the energy ﬁeld, because, as Saganelidze noted, Georgia had managed to make this area attractive for foreigners. “The role and function of the Partnership Fund will be very large. The Fund’s purpose is to develop the industries the country needs most. It’s also very important to give the opportunity to the Georgian businessmen to draw closer to the foreign investors and attract as mush foreign investments to the country as possible. The Partnership Fund is working with Chinese investors, it is one of our ﬁrst goals, we will hold a presentation for many companies, in particular, several Memorandums will be signed tomorrow,” he stated.

POWERCHINA TO INVEST IN RIKOTI PASS AND ANAKLIA SEAPORT DEVELOPMENT

eorgia’s government negotiates with Chinese large company POWERCHINA, on massive investment projects. Two strategic projects, such as building Anaklia deep-sea port and renewing Rikoti highway are being discussed. PM Irakli Garibashvili met with the representatives of POWERCHINA few days ago. Company operates in 108 countries and its investment portfolio equals to tens of billion USD, The annual revenue in 2014 was USD 42.4 billion. By the end of June 2015, POWERCHINA performed 1,565 overseas projects in 110 countries in the ﬁelds of engineering construction, design consultation and equipment manufacturing.

TSKHENISTSKALI HPP CONSTRUCTION TO START IN 2017

o-understanding memorandum on implementation of investment project, cost of 723 million USD, has been signed between Ministry of Energy and Co-investment Fund on Monday. “Co-investment Fund” has invited the leading Iceland companies of energy sphere Landsvirkjun and Verkís in order to prepare feasibility study and general design of HES cascade. According to preliminary research, the cascade unites 4 hydro power stations: “Luji HES”, “Mukhra HES”, “Lentekhi HES” and “Tsageri HES”. Its total installed capacity amounts to 347.1 mgwt, while average annual output – 1, 743.7 million kWh. Major part of generated electricity will be exported in Turkey. At this stage, detailed research on project’s impact on the environment will be carried on alongside the feasibility study. Active construction phase will be started in 2017.

he Government of Georgia has chosen to collaborate with leading international partners to launch a €500 million (1.8 billion GEL) project supporting modern technology development in the country. Georgia ﬁrst started working on the Technological Institute and Hadron Therapy mega project last year, which envisaged establishing a Science Education Centre for Modern Technology Development for Georgia’s capital Tbilisi. More details were revealed about the project after a group of experts involved in the project met in Tbilisi yesterday. The meeting involved members of a commission responsible for dealing with issues relating to the foundation and the

concept of the project. The meeting was chaired by the country’s Prime Minister Irakli Garibashvili, who said the project would cost around €500 million and the whole sum would be provided by the Cartu Charity Foundation - a charity fund established and ﬁnanced by Georgian tycoon and former Prime Minister Bidzina Ivanishvili. Ivanishvili also attended yesterday’s meeting and introduced Georgia with the international partners who will help Georgia launch this largescale project. These partners were top ofﬁcials from CERN - the European Organisation for Nuclear Research, CNAO - Italy’s National Centre of Onco-

logical Hadron Therapy and INFN - the National Institute of Nuclear Physics. The three world-class scientific organisations and the Georgian Government officially signed a document outlining their future cooperation after yesterday’s meeting. While talking about the importance and scale of the project, Garibashvili said Georgia would be the fifth country in the world to have a science and education centre of this caliber. Some of the world’s top scientists will be engaged in working process of the Technological Institute, which will support important research and provide students of all levels with worldstandard technological education.

PM: AZERBAIJAN IS A STRATEGIC PARTNER OF GEORGIA

zerbaijan is a strategic partner of Georgia and this policy remains unchanged, Georgian Prime Minister Irakli Garibashvili has told journalists, while visiting Baku. The Prime Minister described as “nonsense” statements by some political rivals alleging that Georgia will review its energy trade with Azerbaijan with the prospect of purchasing natural gas from Russia. “There cannot be any talk about replacing Azerbaijani gas with natural gas from another country. Azerbaijan is our strategic partner. Reconsidering our mutual relations is not and cannot be a topic of discussion,” he said. “Further development and the strengthening of the strategic partnership with Azerbaijan is a priority for the Georgian government. Our policy toward Azerbaijan remains unchanged.” Azerbaijan is Georgia’s main gas supplier, Garibashvili noted. He also hailed the results of his recent Baku trip. “During the meeting with Azerbaijani Presi-

dent Ilham Aliyev in Baku we discussed close relations between the two countries and ways of deepening the ties even further.” Earlier, a working meeting was held between the Chairman of the Board of Gazprom Alexey Miller and Georgia’s Minister of Energy and Natural Resources Kakha Kaladze in Brussels. During the meeting, the sides discussed trade in natural gas. They also discussed the supply of Russian natural gas to Georgia, as well as its transit to third countries. The current supply of Russian gas to Georgia is carried out only in the form of payments for its transit to Armenia, for which the country receives 10 percent of total shipments. According to Kaladze, the negotiations with Gazprom include only a commercial component and do not interfere with the energy independence of the country, Georgia Online reported. He also said that Azerbaijan is the strategic partner of Georgia. “Here we are talking only about commercial gas. As you know, the commercial market is regulated, and any company

can go to Azerbaijan, Russia, Iran, Turkey, Armenia, and to import natural gas at a reasonable price for it. There is no, was not and will not be restrictions on it,” said Kaladze. Earlier, the State Oil Company of Azerbaijan expressed its readiness to compete with Russia’s Gazprom company in the Georgian market. This was echoed by Mahir Mammadov, the head of SOCAR Energy Georgia, a subsidiary of SOCAR in Georgia. “If Georgia decides to increase the supply of Russian gas, accordingly, we will be adapting to the new conditions and to develop further,” said the company head. “But in general, we are ready to compete.” He noted that nevertheless, the strengthening of Gazprom in the Georgian market would not have a signiﬁcant impact on SOCAR’s activities in this country. The transit of gas supplies through Georgian territory is carried out anyway and this won’t have any affect, according to Mammadov. As for gas supplies to Georgia itself, gas volumes for consumption have been contracted for a ﬁxed term.

GEORGIA BUILDS FOUR HPPS WORTH $723M TO GAIN ENERGY INDEPENDENCE

eorgia is starting to implement the largest energy project the country has ever seen to move Georgia one step closer towards energy independence. Four new Hydro Power Plants (HPPs) – Mukhara HPP, Lentekhi HPP, Ludji HPP and Tsageri HPP – will all be built along the Tskhenistskali River in Georgia’s Racha-Lechkhumi and Lower Svaneti regions. The Tskhenistskali HPP Cascade project, which united building the four HPPs, was worth $723 million USD. When complete the HPPs will enable Georgia to replace expensive thermal power during the three coldest winter months and to export energy during the remainder of the year to take advantage of the seasonal differentials in power prices between Georgia and its neighbouring countries. Energy independence is the most important goal for our Government and we do our best to

BUSINESS WEEK caucasus

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 12 Director: Levan Beglarishvili Mobile phone: +995 591 013936 WWW.CBW.GE Email: caucasianbusiness@gmail.com

achieve it [and] at the same time we try to make Georgia more attractive for investors to implement more energy projects in the country,” said Georgia’s Energy Minister Kakha Kaladze. This will contribute in creating more job places and developing the economy faster. Building the HPPs while using other alternative energy resources is one of the main goals of Georgia’s energy policy,” he said. Those involved in the development and construction works - Georgia’s Ministry of Energy and the Co-Investment Fund - signed a special agreement today signalling the launch of the 347.1 megawatt Tskhenistskali HPP Cascades project. Collectively the HPPs will generate about 1.7 billion kW of energy per hour. Co-Investment Fund chief executive director Goirgi Bachiashvili stressed the average annual production rate of the Cascade HPPs would be 17 percent more than Georgia’s current annual elec-

tricity consumption. This is a huge project that will signiﬁcantly increase the country’s energy efﬁciency. During the different stages of the Cascade construction, large-scale infrastructural and social projects will be implemented. Thousands of people will be employed there and millions of GEL will be added to the central as well as regional budgets. All this will improve the conditions in the RachaLechkhumi and Lower Svaneti regions,” he said. According to preliminary assessments, the active phase of construction will begin in 2017. In the meantime several research studies will be conducted to determine the impact of the four HPPs on the environment. Icelandic companies Verkis and Landsvirkjun Power will be responsible for the technical-economic studies and designing the Tskhenistskali HPP Cascades. In this regard a special agreement was signed between the Co-Investment Fund and the Icelandic companies today.

Editor: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Lazare Gvimradze; Shiva Parizad. Designer illustrator: Giorgi Magradze. Technical Assistant: Giorgi Kheladze

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

PUBLICITY October 19, 2015 #118

caucasus business week

INTERVIEW

October 19, 2015 #118

caucasus business week

GEORGIAN RAILWAY FOR STATE DEVELOPMENT New Vision with Focus on Logistics and Logistic Services

Georgian Railway director general MAMUKA BAKHTADZE talks about the company potential and opportunities. The railway potential is determined by geographic location and characteristics. Georgian Railway is not a major railway infrastructure, but we serve a quite vast space, including the countries without a direct access to the Sea such as Azerbaijan, Armenia, Kirgizstan, Tajikistan, Uzbekistan, Turkmenistan, and Afghanistan. This is a quite vast geographic space, the central part of the Eurasian continent, the Central Asia that is rich of mineral resources and consequently, Georgia’s transit potential doubles and triples. Our country receives consignments from these historical routes. At the same time, a new management has come to Georgian Railway and we have considerably revised this vision. We say we are not a railway company that provides services from the Azerbaijani border up to the Black Sea ports. Moreover, railroad is not our main business, as we make focus on logistics and providing logistic services to our major partners.

The financial reports clearly show positive outcomes of this strategy. According to the 2014 financial report, the ratio of crude oil transportation in total revenues marked 10%, that is 22% in total operating profits.. As to the global picture, besides the mentioned countries, we have targeted China and especially its western region. Naturally, in February 2015 we substantiated to everybody and sent signals to the market that Georgian Railway possesses technical opportunities to transport consignments in 9 days instead of previous 40 days through an alternative way. This issue has been valuably promoted since then and Georgia has become a participant of the Silk Road joint space initiative. Coordination with Azerbaijani and Kazakh railway systems is one of the most important points in this initiative, because all of us belong to one corridor space. To better implement and manage the initiatives, in 2013 we set up a coordination committee that unites all companies that participate from the Kazakh-China border up to the Black Sea ports. This committee basically unites companies of mainly three countries such as Azerbaijan, Kazakhstan and Georgia. We could not achieve such results without a coordinated performance as part of this committee. The committee makes accents on joint marketing, introduction of united and transparent tariffs, development of joint technological basis, and adjustment of information technologies. Moreover, the committee makes focus on harmonizing customs procedures to cut customs clearance time and on implementing joint infrastructure projects and visions. The transit coordination board aims to better coordinate infrastructural projects and the KarsiAkhalkalaki railroad is a good sample. Not only Georgia and Azerbaijan, but also Kazakhstan, China, Turkmenistan, Uzbekistan are waiting for inauguration of this railroad section. We find the Afghan

direction also very interesting. - Does the Karsi-Akhalkalaki new transportation corridor project implementation meet the schedules? - As to schedules, we expect the first cargo train to be off in the Georgian section by the end of 2015. As to the Turkish section, the inauguration schedules may be extended by several months, but infrastructural projects are often accompanied by similar postponements and there is nothing critical. - How efficiently does Georgia employ the existing opportunities? What challenges does Georgian Railway face in terms of drawing new clients and consignments? - To answer this question I will refer to the official statistics. Our objective is to increase living standards in Georgia and reach an economic growth. In the developed countries the ratio of the transport logistics sector in GDP exceeds 12%. Regretfully, our country cannot satisfy this standard yet. This signifies the sector is capable to at least double the current indicators. I think it is difficult to name any other sector in Georgia with similar potential and with similar achievements in a short period. This is our responsibility and therefore, we have decided to set up a logistics company on the basis of Georgian Railway to better defend the state interests. Naturally, only the state sector’s zealous efforts cannot valuably employ the country’s transportation potential. Our cooperation with the private sector is of vital importance in this respect. We have already created certain precedents, for example, the Batumi Railway Station opened in 2015 in the aftermath of cooperation between the state and private sectors. As a result, Batumi has acquired a new beautiful and necessary asset. We plan to continue this practice in the part of transportation and I would like to urge the business society to show more interest in our sector.

- You have stressed the role of the Silk Road inauguration and the potential for considerable growth of the sector’s ratio in GDP. How long will this process proceed and when should we expect touchable results? - Naturally, the whole process will take enough time. We are sure it will be difficult for Georgia to valuably develop its transportation policy without developing deepwater seaports. Therefore, the Anaklia seaport inauguration is of vital importance and it is our priority. According to our estimations, the Anaklia Seaport will at least double our container transits to the Black Sea direction. Moreover, oil processing volume will considerably increase in the Middle Asia and our cargo transportation turnover will further grow. Therefore, we have positive expectations in this direction. We should also remember that the power sector and the oil business record a quite high volatility level and this factor directly or indirectly hits the transportation sectors. Nevertheless, these challenges are of short-term character and we believe in the midterm perspectives our forecasts will come true. - What will be the effect of the railroad modernization project implementation and how important is the project? -The main mission of the railroad modernization project is that historically the Rikoti Pass limits the Georgian Railway transportation capacity. There are the most complicated geographic conditions there with heaviest operational sections – high rocks, difficult sections and our trains have to decelerate moving. The Anaklia Seaport development, naturally, has actualized an intensification of moving in this section and a growth in transportation capacity in this zone. This is the first challenge. The second task is that we should resolve problems with rocks and curves to considerably improve the safety degree. These measures will also reduce the Tbilisi-Batumi passenger train’s travel time and cut exploitation expenditures in the mentioned section, - in whole these arguments are firm and financially justified. - Do you plan implementing joint projects with the business sector like the Batumi Railway Station? Are any negotiations underway with companies? - We hold four subsidiaries and we relate with the business sector through these subsidiaries. As to other projects, I would name advancements in the IT direction. We have started introducing SAP system for the first time in the Region. We plan significant investments in the electricity supply. Our network has been electrified by nearly 100% and the valuable electricity supply network is of vital importance. To this end we plan to fully rehabilitate transformer substations. The Vale direction development is also worth noting. Vale was a closed space for 15 years in terms of cargo transportation and two weeks ago we have received the first coal consignments that will be further transported to Turkey. We also pay much attention to multimodal and combined transportation services to transport consignments that are related to new technologies. For example, we are providing an intense job to arrange a railway transportation of trucks. We need special trains to this end, but considerable funds are required to implement this project and we have been performing zealous job in this direction. - Opponents assert and the statistics also proves last period cargo turnover has dropped. How would you comment on these assertions? What job do you perform to draw new clients and consignments? - In 2011-2012 there were various forecasts the liquid cargo turnover would drop in the railway sector, because the pipeline infrastructure has been considerably developed, their transportation capacity has almost tripled. Railway is unable to compete with pipeline systems, in practice. When talking about a contraction in oil transportation volumes in the corridor, it should be noted, regretfully, incorrect information is delivered to our society, because the Baku-Tbilisi-Ceyhan pipeline is considered a part of Georgia’s infrastructure. It is our transit potential. The oil that was previously transported by railroad

is now transported through the BTC pipeline. Our operating proﬁts and revenues have tripled since 2010 and this signiﬁes we follow a correct strategy. In 2010 the ratio of liquid cargo transportation in total revenues was 50%; today this segment makes up only 7%-8% in total revenues. A formation of sustainable transportation relations is of huge importance.

Today our cargo structure is diversified. We have businesses in maximally top margin products. Oil has gone to pipelines, but oil products transportation has considerably increased, doubled, in practice. Oil products business is by 40% more profitable business than crude oil. A financial report is a main document and we have recorded a historical maximum in these indicators. I am sure we will improve the 2014 indicators in 2015. Our company bonds were placed at the London Stock Exchange (LSE) and our bonds trend show how optimistic and reliable analysis is made by analysts and investors concerning our performance. Therefore, I believe in this case we should be based on maximally unbiased criteria. -Tbilisi is hosting the Silk Road Forum. The transportation corridor is one of the relevant issues along with a number of panels. What are the messages Georgia should send to the forum participants in this respect? -We are hosting a genuinely historical forum. The list of participants and their status prove this consideration and the world’s leading media agencies will widely cover Tbilisi Silk Road Forum. More than 300 delegates are arriving from only China… We welcome this process and I hope the forum should become a traditional event. Our main messages should make focus on Georgia’s transit potential, liberal and legal environment in our country for doing business in this field. We should also make accents on international agreements, including the associated membership agreement with the EU that provides free trade opportunities to our country.

In 2015 Georgia will become the first country to start talks about free trade regime with China. Moreover, Georgia enjoys free trade regime with all countries of the CIS, as well as with Turkey… The transportation sector is tightly connected with trade and international trends. In this term we should emphasize our transit and trade potential. The transportation infrastructure development also signifies additional investments in the infrastructure, more tourists, intensification of businesses activities and so on.

SOCIAL ISSUES

October 19, 2015 #118

160 000 FAMILIES MAY BE EVICTED FROM ACCOMMODATIONS IN GEORGIA

Abolition of Evictions by Police Cannot Tackle Problems for Real Estate Owners

he Authorities seem to be disturbed by protest rallies of development project customers and they have decided to abolish evictions by police force. In this way the Government hopes to resolve problems of ten thousands of real estate owners. But the new bill has left all parties discontent, except for the Georgian Dream coalition. Supporters of banks and businessmen assert an adoption of the bill will create problems to the business sector, while supporters of damaged real estate owners assure this bill is a particle of the huge problem and it will protract the process, not resolve it. Despite this, the parliament’s majority considers the bill with great scrupulousness and plans to adopt it by the end of 2015. Namely, the bill abolishes the 3rd part of the 172nd article of the Georgian Criminal Code that, in combination with the subentry B of the 2nd entry of the 17th article of the Georgian law on Police, entitles the police to evict citizens from their own real estates. According to the bill’s appendix, the bill was developed to amend essential legal errors that are characteristic to the police and extrajudicial practice in evicting citizens from real estate. Moreover, the eviction of citizens by police force contradicts the 2nd entry of the 20Th article of the Georgian state constitution, according to which, no one is authorized to enter a residential apartment and other privately owned facilities without a consent of owners provided there is not court decision or the law-provided indispensible necessity. At this stage, those who have lost accommodations are interested in what will be their beneﬁts from enacting this bill. NANA JAPARIDZE, a representative of the committee for protecting the rights of victims of the bank and usurers systems, says if the eviction process is substantiated by the court decision, then no one is able to contradict the process, while if the enforcement order is issued by a notary, it should be appealed to the court. The situation will be heavier if the real estate has been set out for an auction, but the owners should not surrender and take consultations from lawyers to grasp even a petite opportunity to cancel auctions and the property alienation decision be announced annulled, Japaridze noted.

“If the enforcement order is issued by only a notary without a court decision, the document must be appealed to the court”, Nana Japaridze said. Property owners should follow these recommendations if the parliament adopts the bill. However, the association of banks claims that the bill should oblige the court to discuss these issues for a month and the enforcement bureau to execute the decision immediately. In this case the bill will let property owners stay in their places for additional one month and ultimate outcomes will not change. The bill cannot fully resolve the problem, Nana Japaridze said and added the government should ensure an allocation of low interest rate loans to this category of our citizens and employ them so as this category become solvent. “This bill cannot foster the problem resolution. In Georgia 160 000 families may be evicted from their own accommodations. Therefore, this bill cannot alleviate their condition. This is a drop in ocean and despite this fact there are many ob-

caucasus business week

jectors, even the business ombudsman contradicts the bill. The government should genuinely keep its promises. It would the most reasonable to issue low interest rate loans to these people and to employ them so as they pay off debts themselves”, Nana Japaridze said. As reported, even the business ombudsman’s ofﬁce has expressed a negative position concerning the bill. The ofﬁce has released a special statement saying administrative

“

appealing to the court. If someone thinks his/ her rights are violated, he/she apply to the court anyway.

Are you aware of the reasons why borrowers do not appeal to the court? Because they know they are wrong and the court will pass decisions against them

(extrajudicial) regulations for preventing real estate infringement or other sorts of encroachment is an efﬁcient mechanism for protecting ownership rights and an abolition of these regulations will deteriorate the legal state of owners, namely, increase expenses of business bodies and protract the process for defending their rights. ZURAB GVASALIA, a head of the Association of Banks, noted an adoption of this bill will worsen the current situation. Representatives of the judicial system and the enforcement bureau noted at the parliament discussions they lack for human resources to discuss similar cases for a month and execute decisions immediately.

Having inquired reasons for developing this bill, we were said the court passes just decisions. No one has banned the process of

“

No one will immediately visit them and evict them from their accommodations. They receive notiﬁcations, warnings and certain terms. Within this term they are able to submit an appeal to the court. If the owner’s rights are genuinely violated, evictor will bear losses, because they should restore the plaintiff in the previous rights and remunerate eviction losses. Are you aware of the reasons why borrowers do not appeal to the court? Because they know they are wrong and the court will pass decisions against them. -Zurab Gvasalia noteod. He does not rule out that the process may be protracted for a long period and the business sector will fail to make proper calculations. Consequently, the most liquid property such as an apartment will lost its value for participating in business and civil relations. Moreover, the bank sector risks grow. If commercial banks require a 30% co-participation of the apartment value for issuing a mortgage loan, after the bill adoption they may require 50%-60% co-participation ratio. Owners will be more damaged, because the court will pass decisions against them and they will have to cover the trial expenditures too. Hence, the process participant parties do not consider the bill adoption to be the problem solution and they urge the government to take more efﬁcient decisions.

TOP NEWS WHY DOES NODAR KHADURI LOBBY QUESTIONABLE PROJECT OF THE UNITED NATIONAL MOVEMENT? Who Acts behind the Swiss Company that will receive millions of GEL from the state budget?

eorgian Finance Minister Nodar Khaduri has taken a decision on introduction of soft drinks electronic labeling regulations. Without due substantiation, the Finance Ministry plans to pay about 6 million GEL a year to Sicpa Swiss company from the state budget. The company is said to be a favorite body of the United National Movement (UNM) party. The soft drinks electronic labeling regulations project was developed by the previous Authorities. The new government initially suspended the project, then postponed it and now the Finance Ministry is trying to enact this project. Previously, Finance Minister Nodar Khaduri objected to the labeling regulations. He even suspended an enactment of these regulations by recommendation of ex PM Bidzina Ivanishvili, but now Khaduri has changed position and he has proposed the project himself. Businessmen are blaming the new regulations. They have been vainly demanding for 3 months for meeting with the government officials. Neither the Finance Minister nor the Prime Minister is interested to listen to their arguments. The businessmen complain they have received no answer for 3 months. Who acts behind Swiss company Sicpa that was hired by the previous Authorities for implementing the electronic labeling project? These questions arose immediately and corruption collusion was also mentioned in this respect. The former prosecutor general Zurab Adeishvili is named to have lobbied Sicpa company, while his favorite official Jaba Ebanoidze is named to have prepared the electronic labeling project. Ebanoidze and Adeishvili were accused of deliberately leading Cartu Bank to bankruptcy. Ebanoidze was charged with assistance in concealing property through imaginary or pretended bargain, assistance in preparing, selling and using fabricated payment and credit cards and misuse of official duties. Ebanoidze pled guilty. “The accusation is based on several articles, but I acknowledge this accusation to a certain extent and everything will be decided at the trial”. The court sentenced a 30 000 GEL bail to him. Sicpa partners and trustees are in Georgia. BGI Advisory Service Georgia founder Zaza Bibilashvili defends the Rustavi 2 interests as a defense lawyer. Another Giorgi Kavlashvili, who is a well-known figure for our society, was considered a good executor of special operations. Sicpa Security Georgia’s director Giorgi Jikia was accused of cheats and document forgery. The Swiss company selection process also raises certain doubts: Sicpa Security Solutions Georgia was founded on April 4, 2008, while the competition terms requested a 5-year experience from applicant companies. Despite these requirements, Sicpa company won the tender on November 10, 2011. The Tax Code norm was violated that the labeling services would be carried out by the body selected by the revenue service under the regulations of the Georgian legislation. The previous government set a high tax for the electronic labeling – 5.5 EUR for every 1000 bottles. Under these terms, Sicpa would make 200 times more rprofits compared to the real value of the performed job. Nodar Khaduri has lowered the tariff to 10 GEL per 1000 bottles, excluding VAT. Now Sicpa will receive 100 times more profits from the state budget. But Khaduri has found a way out. The previous government planned to impose tax burden on the business sector, while Khaduri has charged the state budget. Khaduri has decided to assist the Swiss company in earning money at the expense of the state budget. According to the Finance Minister’s decision, the electronic labeling price will be covered by the revenue service. According to the revenue service information, yearly turnover in the market accounts for about 500 million domestic and imported bottles of soft drinks. As a result, the state budget will have to pay about 6 million GEL to Sicpa a year, including VAT. The Finance Ministry has submitted no arguments to the society and the business sector to substantiate the need of introducing electronic labeling regulations. The Ministry says they have to calculate expenditures the revenues service will spend on these regulations every year. The Ministry refuses to divulge the mechanisms for calculating the service price. The Ministry cannot also answer the question whether the Georgian market records that volume of unregistered goods that would be worth paying 6 million GEL from the state budget. The soft drinks electronic labeling project was lobbied by the previous government and is being lobbied by the current government too, but the new Authorities have obliged the state budget to serve the interests of the Swiss company that was selected by the previous Authorities through violation of the competition terms and the Georgian legislation.

SILK ROAD

October 19, 2015 #118

caucasus business week

TBILISI SILK ROAD Tbilisi Silk Road Forum was attended by delegations of 31 countries; authorities of 20 international, finance and donor organizations

bilisi held its ﬁrst Silk Road Forum on October 15-16. The Georgian PM Irakli Garibashvili was the main initiator of the Forum. Garibashvili conceived the idea of creating a forum highlighting Georgia’s role in the New Silk Road last year, during his visit to the World Economic Forum in Davos. Centuries after the Silk Road was established to facilitate trade between the East and the West, the historic trade route is viewed as a potential for new

beneﬁts for Georgia. More than 800 high ofﬁcials attended the Tbilisi Silk Road Forum. They discussed the prospects of the New Silk Road and how to best use Georgia’s transit potential. On day two of the Forum, held in Georgia’s capital Tbilisi, the country’s economic team offered specific investment projects to potential big investors, with trade, energy, transport, infrastructure and tourism industries in focus for future joint projects.

THE FORUM’S AIMS ARE SIMPLE, YET BOLD: • To raise awareness and brief the investment community of the scale and range of potential cooperation across the Region • To facilitate regional cooperation and trade • To enhance partnership in: transport, energy, trade and people -topeople contacts • To reﬂect Georgia’s drive for foreign direct investment and economic growth.

We will double- We see excellent Expanding ties up Georgia’s opportunities in is crucial funding Georgia LÁSZLÓ BARANYAY Vice-President European Investment Bank

BRUCE ANDREWS Deputy Secretary of Commerce of the U.S.

t’s important for Georgia to increase its access to financing in order to grow the competitiveness of Georgian economy. The European Investment Bank will provide that within the frame of European Commission mandate. There are difficulties in the financial sector, but it might be overcome. I believe that Georgian economy strongly needs diversification.”

irst of all, I’m glad to be here. It’s a wonderful opportunity not merely to talk about all the good news, what is happening in Georgia, but it is a brilliant opportunity to talk about Georgia’s, as well as the region’s future economic development. There are a lot of economic opportunities, which can be used to establish a new logistic hub by regional cooperation in Georgia. In fact, it is possible to arrange a signiﬁcant new infrastructure in the region. We see excellent opportunities. Which will greatly beneﬁt not only to Georgia but the region as a whole,” - Andrews declared.

HERNANDO DE SOTO President of Institute for Freedom and Democracy

am from Peru, which population is 30 million, which is a small part of the world. I want to say that expanding ties is very important. Those countries are developed, which manage to do that. I hope that the Forum will promote establishment of the ties among the local and successful foreign representatives.”

We expect big investments in the infrastructural projects DMITRI KUMSISHVILI Minister of Economy and Sustainable Development

hope that the declaration adopted at the Forum, the meetings between the government and the private sector held within the Forum will have an impact on our country’s increasing prosperity. We are on the ﬁnal state of revealing the winner of Anaklia Deep Water See Port. This is a part of Silk Road, which should give more opportunity to our country in the development of Silk Road.” “China has several important instruments of funding infrastructural projects in Georgia, including Silk Road Fund, Asian Infrastructural Bank and other important ﬁnancial institutions, they are completely focused on funding of infrastructural projects. I want to thank government of China for co-organization of the forum and Asian Development Bank, which was the main sponsor,” the Minister declared.

SILK ROAD

October 19, 2015 #118

caucasus business week

FORUM 2015 Georgia is given opportunity to integrate with neighboring countries DAVID SHARK World Trade Organization (WTO)

he Silk Road is a world of novelty. However, it has worked very well for centuries. A proper use of the project means many possibilities and prospects for the countries that are united around it. Today we’ll talk about the prospects of the Silk Road. It is very important that so many countries have gathered today. The Georgian people will be given the opportunity to increase business opportunities and integrate with its neighbors.”

Georgia has a huge potential in manufacturing XIAOHONG YANG ADB director of Transport and Communications Division

t Tbilisi Silk Road Forum Xiaohong Yang addressed the mass crowd and claimed Georgia had the potential to become a regional cargo hub, but the country needed to take make the most of this opportunity. We do not consider Georgia as only a transit corridor. Georgia has a huge potential in manufacturing, We are ready to help the Georgian Government to research the market to ﬁnd out who the global producers are.”

Silk Road idea will depend on abilities of countries along this road to work together GIEDRIUS PUODZIUNAS Ambassador of Lithuania to Georgia

ealization of promising Silk Road idea will depend on abilities of countries along this road to work together, All trade barriers must be eliminated in order to implement the initial idea of Silk Road.” “Silk Road initiative will be proﬁtable if trade all along the way is enhanced. Uniﬁed railway law crucial for that.”

Georgia has a good location that will help the country play an important role as a regional hub SHEIKH NAHAYAN MABARAK AL NAHAYAN Minister of United Arab Emirates Culture, Youth, and Social Development

his Forum is a very important event. The new Silk Road concept will completely transform the region and promote economic development. Georgia has a good location that will help the country play an important role as a regional hub.” The UAE ofﬁcial said his meeting with Georgia’s Prime Minister was “very fruitful” and expressed hope relations between Georgia and the UAE would continue to strengthen.

GEORGIA FEELS FIRST BENEFITS OF TBILISI SILK ROAD FORUM ANAKLIA BLACK SEA PORT The Anaklia Port development project is considered as one of the ﬁrst and major projects to be implemented within the New Silk Road initiative. The Georgian Government decided to develop the Anaklia deep-water port a year ago. In August 2014 the Government asked potential investors to submit expressions of interest to develop the mixed-cargo port on a build, operate and transfer basis. The newly-developed port will be located on Georgia’s Black Sea coast near Anaklia in western Georgia, and will be spread over 1,000 hectares and have access to a deep sea canyon. As well as developing Anaklia Port, upgrading and developing logistics and industrial zones and constructing an airport and liquid gas termi-

nal were also planned for the region. Authorities are expected to announce a free economic zone on the Anaklia Port territory however further details were yet to be ﬁnalised prior to execution of the investment agreement. RIKOTI PASS TOLL ROAD Other projects implemented in Georgia through the efforts of Silk Road Forum participant investors was the Rikoti Pass toll road, the Tbilisi railway bypass and more. While delivering a speech at the conference yesterday, Georgia’s Economy Minister Dimitri Kumsishvili said Georgia was expecting “big investments” in the infrastructure direction. Investing in developing the Silk Road hap-

pens every day. Only the Chinese side created several instruments to finance infrastructural projects. These instruments are the Silk Road Foundation, Asian Development Bank (ADB) and other important financial institutions, which are completely intended to finance the infrastructural projects,” Kumsishvili said. Meanwhile, Chinese investors expressed interest in building a new toll road through the Rikoti Pass, connecting the eastern and western parts of Georgia. The existing tunnel, which was built during the Soviet Union, has been undergoing repair for several years and been closed for some periods, forcing drivers to instead use a winding mountain road.

GEORGIA-SLOVENIA SIGN TRANSPORT AGREEMENT Yesterday Georgia’s Economy Minister Dimitri Kumsishvili met Slovenia’s Infrastructure Minister Peter Gasperic and discussed opportunities to strengthen trade and economic relations between the two countries. Afterwards the Ministers signed an agreement on International Road Transport of Passengers and Cargo. Kumsishvili said this agreement meant Georgian and Slovenian transport vehicles could now move around their partner county safer. At the meeting the sides also talked about developing tourism and launching direct ﬂights between the countries.

TELECOMMUNICATIONS caucasus business week

October 19, 2015 #118

HEADLINES SEPTEMBER RECORDS REAL ESTATE MARKET REVIVAL

ccording to Agency for Public Registry, activity on the market is grown comparing to September of the previous year, as well as August. Namely, registration transaction of real estate is increased by 9.1% comparing to the same period of the previous year and the ﬁgure has made up 40 079 units within the whole country. However, registration transaction is increased by 21.4% comparing to the previous month. At that growth has been ﬁxed in primary (24,5%), as well as in the secondary transaction number (20.7%). In addition, both primary (22.3%) and secondary transaction number (6.4%) is increased comparing to the same month of the previous year.

IMF PREDICTS GEORGIA’S ECONOMIC GROWTH WILL REACH 5% IN 2020

he IMF published the new economic growth forecast. IMF retained Georgia’s economic growth rate forecast at 2%. According to the new IMF forecast for 2015 and 2016, Georgia will have 2 percent economic growth in 2015 and 3 percent in 2016, while in 2020- 5 percent. The Fund believes that the global economic growth in 2015 will be 3.1%, 0.3% less than in 2014 and 0.2% less than in the 2015 growth forecast published in July. They also believe that economic recovery will begin slowly in developed countries, while activity in emerging economies is expected to be reduced. IMF analysts say that due to the slowdown in capital inﬂows and foreign exchange pressure, risks for emerging markets have increased and therefore developing economies are expected to start growing since 2016. As for Georgia’s neighboring countries, the report says that Russia’s economic growth will slow down by 3.8%, in Ukraine – by 9% , in Azerbaijan a 4% growth is expected, in Armenia economy will grow 2.5%, while in Turkey - by 3%.

GEORGIA IS STARTING IMPLEMENTING REGISTRIES OF ONCOLOGY DISEASES

attling with oncology diseases is a worldwide issue. In Georgia the number of cancer diagnosed patients is high, compared to other countries. However the exact statistical number was unknown, before January 2015. This year Ministry of health has started implementing registering these diseases and will conduct the exact number of how many patients are battling cancer and how many new cases were revealed in 2015. Head of Chronic Disease Division at National Center for Disease Control and Prevention Dr. Nana Mebonia made comments in this regard: Registering oncology diseases has started from January 2015 and will end in December. Data will show the exact number of new cases, before 2015 there was no registration and therefore statistics showed that number of patients decreased. Unfortunately information provided was false and on the contrary the number increases. At this stage Georgia uses data of International Cancer Research center “GLOBOCAN” which aims to provide contemporary estimates of the incidence of, mortality and prevalence from major type of cancers, at national level, for 184 countries of the world. The GLOBOCAN estimates are presented for 2008, separately for each sex and, for incidence and mortality data, for ten age groups. 1-, 3- and 5-year prevalence data are available for the adult population only (ages 15 and over). “According to GLOBOCAN every year there are 10 000, 12 000 new cases of cancer, but Georgian experts opposite GLOBOCAN and say that approximately 8000 cases are revealed in Georgia, however with the existing data 5200 cases of cancer diseases has been recorded,” Mebonia added. It is important to evaluate, the number of diseases to assess the effectiveness of preventive events.

SILKNET AND GEOCELL TO JOINTLY COIN FUTURE Changes the Two Companies will Jointly Bring into Telecommunication Market Twist together with Geocell and Silknet

ilknet and Geocell, Georgia’s two leading telecommunication companies, have introduced a new unique product – Twist. The innovative product enables subscribers to enjoy telecommunication services such as Silknet’s high-quality internet, Silk TV and Silknet’s landline telephone packages, as well as the METI (MORE) product of Geocell. The new product enables subscribers to receive Silknet’s highspeed internet, as well as Geocell’s doubled package of the METI product for extra 2 GEL a month and Geocell’s package of the METI Unlimited for extra 14 GEL a month. A joint payment system represents an additional advantage of the Twist product. Subscribers are able to make payments to the same account in Silknet. Discount tariffs run for five numbers of Geocell’s METI package together with Silknet’s desirable product. Georgia’s two leading telecommunication companies have combined their products and created a good preconditions to provide consumer-oriented, modern-technology and simplified services. “Starting today we offer an entirely new product to Silknet and Geocell subscribers – a combined product of internet and cellular communication services called as Twist. This service is an entirely new and innovative product in the Georgian market. The product reflects the global trends of combining cellular and landline internet services. We are glad to have introduced this service in Georgia for the first time. This comfortable product enables subscribers to manage both landline and cellular communication accounts through a joint account. Moreover, for the first time in Georgia, subscribers are able to receive cellular services through the post-paid system, besides landline service.

Geocell subscribers are also able to enjoy the post-paid method, when they will receive services and pay for the service at the end of a month”, Silknet director general Levan Buchukuri said and stressed the service will be ﬁnancially proﬁtable and both companies offer about 20% discount rates to subscribers. Geocell director general Pavel Smalinski noted the product is a unique one in Georgia and the whole Region. “Peculiarities of both companies are different

and it was quite difﬁcult to develop a one product from all these peculiarities. I express my deep gratitude to personally Levan Buchukuri for this cooperation. Now we are able to provide simplest and the most comfortable services to our subscribers”, Pavel Smalinski noted. The Silknet’s website has published a specially developed calculator for this product that enables subscribers to select a desirable combination simply and it is very simple to enjoy the new product thanks to this calculator.

Silknet and Geocell Cooperation and Plans

he companies have introduced a genuinely innovative product in the Georgian telecommunication market. This is the first precedent in Georgia, when two leading companies in different segments develop and introduce a joint product with a focus on future cooperation. The company managers assure only this innovative product will not confine them and this cooperation will further grow. Moreover, this innovative product was developed through 6-month joint efforts. Seemingly, the Twist is a certain test product and if it justifies we should expect Silknet and

Geocell to continue developing joint products to gain leading positions in the market. And they will genuinely need to provide huge job to become the market leaders, because in both segments the companies rank second and come behind Magti and Caucasus Online respectively. Properly planned cooperation will deﬁnitely guarantee a success.

Everything depends on how Georgian consumers will accept similar products. It is also fact similar approaches are better than a merger of companies. It is more expedient to operate in specific segments separately, but to develop joint campaigns and offer new tariffs with the aim to draw new subscribers and satisfy their interests. Competitor companies have not fixed their position regarding this issue yet. Neither Mati nor Beeline nor Caucasus Online have made comments yet. Consequently, it is unclear whether other telecommunication companies will also take a example of the Geocell-Silknet cooperation. The fact is we have witnessed an interesting precedent and subscribers will make a use of this. Tariffs will expectedly decline too. If this effort justifies, Silknet and Geocell are expected to make focus on joint planning of future projects and campaigns.

Foggy Future

imilar innovations in the Georgian telecommunication market are welcome, indeed, but there are several unclear aspects in expected future cooperation formats and we will overview these issues too. According to the latest reports, Scandinavian company TeliaSonera plans to alienate Geocell. No speciﬁc information is divulged regarding new owners or whether the company will merge with other company. In this context we should remember the roars around Silknet and internet market, in general, when two leading providers Silknet and Caucasus Online were going to merge and a due application was also submitted to the Georgian National Communications Commission (GNCC). Experts and specialists used to note the merger was unacceptable, because a monopolist body would dominate in the market and the consumer interests would be encroached. Nevertheless, the amalgamation issue remains relevant and the GNCC has not ﬁnished the consideration process yet.

If a new owner buys Geocell or the company merges with other company and if GNCC satisfies the application and Caucasus Online and Silknet merge, how will all these companies continue cooperation? If Geocell joins the union of Caucasus Online and Silknet, all other companies will face major problems and difficulties, while subscribers will bear major losses because of uncompetitive conditions in the market. To put simply, the fact is the future is foggy. We hope Geocell’s fate will be clarified, even more so Geocell director Pavel Smalisnki noted Geocell is a Georgian company and despite the TeliaSonera decision it will definitely continue operation in the market. We hope the amalgamation of the companies will not take place in the internet market too and Silknet and Geocell will offer jointly or separately new packages, low tariffs and continue cooperation as this happens in global markets.

October 19, 2015 #118

ECONO-MIX caucasus business week

GOVERNMENT COMPETING WITH THE BUSINESS SECTOR

very year the Georgian Finance Ministry borrows hundreds of millions of GEL from commercial banks through issuing and sales of state securities to them, while businessmen complain about lack of ﬁnancial resources. Naturally, commercial banks prefer to lend money to the Government without risks than to put money in risky business. In August 2015, as compared to July 2015, commercial banks increased the crediting volume in the economy by 315 million GEL to 14.99 billion GEL in the aftermath of the GEL exchange rate depreciation and reassessment of foreign currency denominated loans, the National Bank of Georgia (NBG) reports. MIKHEIL CHELIDZE, a president of the Georgian Small & Medium Enterprises Association (GSMEA), noted the small and medium business sectors have no access to loans, in practice, because commercial banks follow extremely conservative policy in this direction.

Commercial banks refrain from issuing loans without mortgage guarantees, in practice, while small and medium enterprisers cannot provide mortgage guarantees, - Mikheil Chelidze said. LEVAN GOGSADZE, a head of GT Group holding, comments on complicated relations with commercial banks. The difﬁculties especially worsened after the national currency depreciation, Gogsadze noted. The reﬁnancing rate increased to 7% and the GEL denominated loans have also risen in value. Moreover, commercial banks abstain from issuing GEL denominated loans and interest rates have also considerably increased on them. If a

“

Why do Commercial Banks Reject Issuing Government’s Cheap Money to Small and Medium Business Sectors jointly with the NBG the government has developed regulations for placing money at commercial banks. Under these regulations, 200 million GEL from sales of treasury bonds will be placed in the form of deposits at the same commercial banks that buy securities from the Finance Ministry. This signifies the Finance Ministry returns expensive loans attracted from commercial banks to the same commercial banks at 1%. In this case, commercial banks make profits, but state economy’s benefits from this scheme are unclear, because the turnover of these sums is absolutely nontransparent. The Finance Ministry does not supervise the turnover of these sums, but collects detailed information about projects the commercial banks have financed through these funds, the Finance Ministry reports. As to the public awareness, these relations concern only two private bodies and the legis-

On the one hand, the government promulgates a support to the small and medium business sectors; on the other hand, the government seems to be competing with these sectors

USD denominated credit’s interest rate makes up 9%, a GEL-denominated loan’s interest rate is 17%-18%. In this situation, any investment becomes nonsense. -Levan Gogsadze said. Meanwhile, commercial banks show much interest in treasury bills and bonds. This year the Finance Ministry planned issuing 1.097 billion GEL securities, according to the 2015 state budget, including 497 million GEL were to serve old liabilities, 600 million GEL was a new internal debt, but in spring the state budget was revised and the issuance plan was reduced by 100 million GEL. Despite these moves, commercial banks prefer a client with guaranteed 500 million GEL. The state sector borrowed 600 million GEL from commercial banks in 2014. One more important detail is that the government returns 200 million GEL from the mentioned sum to commercial banks under the pretext of crediting the state economy. Namely,

“

lation does not entitle the Finance Ministry to publicize these relations, the Finance Ministry officials noted. Hence, the government has become the most reliable and stable client for commercial banks. Experts assert, On the one hand, the government promulgates a support to the small and medium business sectors; on the other hand, the government seems to be competing with these sectors. When the state borrows about 1 billion GEL loans from commercial banks, naturally, commercial banks find it less attractive to finance other highrisky sectors. Specialists assert commercial banks refrain from financing risky commercial projects. For example, it is ruled out that commercial banks finance a new startup business. This conservative policy seems to be reliable and the profits indicators also prove this consideration. First of all, commercial banks seek a stable

environment to have guarantees of return of issued credits. Small and medium-sized business sectors belong to risky bodies, because their market offers many unclear situations, they operate in complicated conditions and therefore, they may fail to return bank credits. Hence, the ratio of small and medium-sized business sectors in total credits portfolio is comparatively smaller, the NBG board’s former member MIKHEIL TOKMAZISHVILI said and added the small and medium-sized business sectors need longterm credits, while commercial banks make a focus on issuing short-term loans to reduce risk factors.

Another factor consists in treasury bills that create a certain competitive environment in the crediting market. Commercial banks are able to choose to put money in either the business sector or T-bills. Despite low interest rates on T-bills, they prefer putting money in T-bills, because there are ﬁrm guarantees to return this money back, - Tokmazishvili said. It is also worth noting the current state ofﬁcials used to frequently criticize the former government concerning the state securities. The state securities are sold to replenish the state budget

deﬁcit, they used to assert. They also were accusing the previous government that the initial plan of the state budget for issuing T-bills were always violated and the issuance exceeded the initial plan several times at the end of this or that year. Doctor in Economic Sciences AVTANDIL SILAGADZE said if the Authorities plan to develop the state securities market, ordinary citizens should be also entitled to buy state securities as this happens in the developed countries.

It is good when commercial banks buy state securities, but the process would be more democratic if the Authorities let ordinary citizens buy state securities. The Georgian population, in practice, has no access to financial sources. - Avtandil Silagadze said. Commercial banks perceive the state budget as the best guarantee. Therefore, they show much demand for T-bills, he added. “The Authorities will always exist and the state budget will be always adopted too. Therefore, these transactions are practically free of any risks, but the history also teaches that bonds could entirely depreciate. At this stage, there is no similar jeopardy”, Avtandil Silagadze said. Experts assert the issuance of long-term bonds with high interest rates does not signify the Ministry carries out the securities market recovery through issuing T-bills and bonds. The issuance serves to tackle the existing financial problems at the expense of future financial difficulties. Nevertheless, as noted above, commercial banks make the most benefits from these schemes.

BUSINESS

caucasus business week

SOCAR READY TO COMPETE WITH GAZPROM IN GEORGIA

he State Oil Company of Azerbaijan (SOCAR) is ready for competition with Russia’s Gazprom company in Georgian market, Mahir Mammadov, head of SOCAR Energy Geor-

gia company exclusively told Trend. SOCAR Energy Georgia is a subsidiary of SOCAR in Georgia. Earlier, a working meeting was held between the Chairman of the Board of Gazprom Alexey Miller and Georgia’s Minister of Energy and Natural Resources Kakha Kaladze in Brussels. During the meeting, the sides discussed the cooperation in gas sphere. They were talking about the supply of Russian natural gas to Georgia, as well as its transit to third countries. The possible growth in Russian gas supply to Georgia will increase the competition in this country’s market, according to Mammadov. “It is a free market and the presence of other companies increases the level of competition and consequently, the quality of services there,” he said. “If Georgia decides to increase the supply of Russian gas, accordingly, we will be adapting to the new conditions and to develop further,” said the company head. “But in general, we are ready to compete.” He noted that nevertheless, the strengthening of Gazprom in Georgian market will not have signiﬁcant impact on SOCAR’s activities in this country. The transit gas supply through Georgia’s territory was carried out anyway and this won’t have any effect, according to Mammadov. As for gas supply to Georgia itself, the gas volumes for social consumption has been contracted for a ﬁxed term, said the company head. “For commercial consumption, we use the system of short-term (three and six months) agreements,” he added.

October 19, 2015 #118

GEORGIA PLAYS VIRAL TRANSIT ROLE CONNECTING IRAN TO EUROPE

eorgia will play an important role connecting Iran to Europe thanks to a new transit corridor that Iran and Bulgaria are opening through Georgia. Iran and Bulgaria signed a Memorandum of Understanding (MOU) last week, which conﬁrmed the two countries would jointly open a transit corridor through Azerbaijan, Armenia, Georgia and the Black Sea. Iran’s Mehr news agency reported the transit corridor would be used for passengers and cargo routes. Experts believed establishing the new corridor would have considerable impacts on the whole region developing intra-regional transportation of passengers and goods. The drafting of the protocol of the agreement will be penned and revised in Iran’s capital Tehran and Bulgaria’s capital Soﬁa, and ready to be signed in 2016 by the Transportation Ministers of the countries in the corridor, reported Mehr. It is believed the new corridor will replace the Turkish path, which has been targeted by terrorists attacks in recent months.

Ambassador of Iran to Georgia Abbas Talebifar said Iran and Georgia currently enjoyed some of the best relations they’ve ever had. We have very good parliamentary cooperation. During the last year parliamentary delegations of all levels paid visits to Iran. At the beginning of 2016 Iran’s Parliament chairman planned to visit Georgia. Economic and political relations are also developing well,” Talebifar said. In 2015, after about a 10-year pause, a session of the joint inter-governmental economic commission was held in Tehran, which was led by the then Minister of Foreign Affairs of Georgia Giorgi Kvirikashvili. About 80 important treaties were signed between Iran and Georgia. We are now planning to prepare the Georgian Prime Minister’s visit to Iran,” he added. Iranian Ambassador said “no wind, storm or hurricane” could ruin Georgian-Iranian relations. This was his response to a statement by Georgian Deputy Foreign Minister Davit Dondua who recently said: “Our American colleagues asked us to refrain from a full-scale cooperation with Iran until all obligations of Vienna are fulﬁlled”.

NOW BANK OF GEORGIA’S GALT & TAGGART CLIENTS CAN TRADE AT GLOBAL CAPITAL MARKETS

SC Galt & Taggart (Galt & Taggart) and Saxo Bank, yesterday announced the signing of an agreement that will allow clients of Galt & Taggart to access the global capital markets and invest on a multi asset basis. The product will activate in November 2015 and will provide a highly adaptive trading experience with professional tools, insights and worldclass execution to its users. Galt & Taggart, a wholly owned subsidiary of JSC Bank of Georgia, is the leading investment banking and investment management service ﬁrm in the country with a unique insight into the regional market. The company is at the forefront of capital markets development in Georgia and in the neighboring markets. Saxo Markets is the institutional division of Saxo Bank Group. Saxo Markets provides institutional clients and their end customers with

multi-asset trade execution, prime brokerage and industry-leading trading technology. Saxo Markets’ speed of innovation and use of disruptive technologies empowers institutional clients to deliver seamless experiences for their end users to access the capital markets. Saxo Markets serves institutional clients through key hubs in the UK, Denmark and Singapore. “We are very pleased to join forces with Saxo Bank to further enhance our clients’ trading experience. With this we are looking forward to extending Galt & Taggart’s track record of offering the best trading capabilities in the country. Our partnership with Saxo Bank will allow us to bring the latest technology to the market and provide our clients with full control over their investments,” said Archil Gachechiladze, Chairman of Galt & Taggart. “We are looking forward to unveiling full details of the partnership in November 2015.”

GEORGIAN RAILWAY RENOVATED 7 LOCOMOTIVES PASHA BANK IS THE SPONSOR OF TMG 2015 – TELECOM MEETINGS IN GEORGIA

ASHA Bank is the sponsor of two-day event TMG 2015 – Telecom Meetings in Georgia which takes place on October 21-22. By sponsoring the meeting PASHA Bank once again underlines its support for the development of local business and economy. PASHA Bank provides corporate and investment banking services to large and medium-sized enterprises in the region. The Bank operates in Georgia since 2013 and has supported a number of signiﬁcant events through this period. Since 2010 Telecom Meetings in Georgia create an excellent platform for networking for foreign and local companies from the sector. Delegates of more than 100 companies from Georgia, Azerbaijan, Russia and Europe visit TMG every year to share experiences, modern trends and make new connections. Among the participants there are mobile and network operators, internet providers and manufacturers of various

telecom appliances. There are some big-name companies that regularly attend TMG: Deutsche Telecom, TeliaSonera, Sparkle Telecom Italia, PCCW, Rostelecom, Turk Telecom to name a few. Apart from the big players a lot of small and medium sized telecom sector players take part in the event. “We are more than happy to support TMG meeting. PASHA Bank always strives to facilitate the events aimed at the development of local business and economy. Considering our focus on corporate business development we will continue supporting such events in future,” – says Goga Japaridze, Commercial Director at PASHA Bank Georgia. “The role of PASHA Bank in supporting our event is very important. It is also noteworthy that PASHA Bank regularly supports the projects and initiatives that serve to country’s business development and economic growth,” –says Sophie Amiranashvili, organizer of TMG 2015.

eorgian Railway” has put 7 locomotives under the exploitation after the capital repair. According to the “Georgian Railway”, repair works were implemented in Tbilisi Electric Locomotive Factory in this year and the locomotives are changed with a new design. “Safety of trains are increased as a result of locomotive repairs. The locomotives are

equipped with modern devices, which signiﬁcantly improved quality of radio signal reception and transmission. However, cabins of mechanists are totally renovated in order to improve their working conditions. The cabins are equipped with refrigerators, conditioners and micro-wave stoves”, – the company declares. It should be noted, that “Georgian Railway” plans to acquire new locomotives in this year as well. Tenders should be announced in the upcoming future.

400 TONS OF GRAPES PROCESSED IN RACHA

ccording to the National Wine Agency, vintage in Racha is being held without delays. As of 13.00 am, October 13, 400 tons of grapes have been harvested and processed in the region of Racha-Lechkhumi, including 392 tons of Aleksandreuli and Mujuretuli. Up to 900 local winegrowers sold the grapes whose revenues reached GEL 2 million. As well as in Kakheti, promises have been fulﬁlled in this region and farmers didn’t face the problem with grapes delivery, the state will process all the excess grapes which will not be purchased by private companies. Promises regarding prices also remain valid: the state will pay 5 GEL per 1 kg of conditioned

Mujuretuli and Aleksandreuli, for non-conditioned with a sugar content of less than 21 degrees – 3 GEL, while for the other grapes – 70 tetri. A vintage is coming to an end in Kakheti, where 133 thousand tons of grapes have been processed. Income of the population from the crop exceeded GEL 90 million.

October 19, 2015 #118

COMPANY NEWS

caucasus business week

TETNULDI SKI RESORT TO RECEIVE FIRST TOURISTS IN DECEMBER

onstruction of a brand new $52 million ski resort in the Svaneti region of Northwestern Georgia will end in 2 months and will open by the January ﬁrst, 2016. This resort will be located only 170 miles east of Sochi, Russia where the 2014 Winter Olympics are to be held. The ski resort will be on the lower slopes of 15,938-foot Mt. Tetnuldi and will be named after the peak. The ski resort will top out at 9,990-feet and have a vertical drop of 2,543-feet. The company’s Director Uka Kiladze states CBW that 75% of the works have been complet-

ed. Works are carried out by the State Construction Company Ltd. In the words of Kiladze, the project is being implemented with the ﬁnancial assistance of the French Government and the Government of Georgia. The French government allocated a credit of 18 million euros, while the government of Georgia carries out activities worth 100 million. He notes that the resort’s direct and indirect revenues will go to the state and local budgets. According to calculations, the resort will be able to serve 4 100 skiers at the same time, the ski lift total capacity – 8 400 people / hour, the resort’s tourist capacity- 6 806 people.

“GEORGIAN FRUIT COMPANY” INTENDS TO EXPORT PRODUCTS TO HOTELS & PREFERENCE HUALING THE CZECH REPUBLIC AND POLAND OPENS IN TBILISI ccording to the manager of the mainly purchased from local farmers and phe-

company Soso Manjavidze, in the end of the year they will receive a ISO certiﬁcate and will begin exports. “At this stage we export our products to Russia, Ukraine, and Kazakhstan. We are pleased with exports, but do not have enough products. In 2015, as in 2014, the company exported 750 tons of peaches and nectarines, “- he says. The company owns two small enterprises that are engaged in the sorting of fruit, which are

sants. Manjavidze notes that the company plans in the future to grow its own products. “Georgian fruit company” has received a loan of $ 600 000 under 13%, of which 10% will be covered by the state. The founders of the company invested additional $ 600 000 from its own reserves in the development of the production. The enterprise was opened in 2014 and employed up to 70 people.

ﬁve-star hotel, ﬁnanced by major Chinese company Hualing Group, has opened on the shorelines of Tbilisi Sea. The facility, named Hotels & Preference Hualing Tbilisi, was part of the Tbilisi Sea New City – the largest project of Hualing Group in Georgia. The Chinese private enterprise invested $73 million USD (175 million GEL) in building the new hotel in Tbilisi. The hotel featured 247 guestrooms, the country’s largest conference hall – measuring 800m2 – with three adjoining meeting rooms, a swim-

ming pool, golf course, ﬁtness hall and billiards room. Earlier, Hualing Group was involved in the Tbilisi Sea Plaza project. When functional the Tbilisi Sea Plaza will be the largest wholesale commercial and retail core in not only Georgia but the Caucasian region. Once operating it will become a goods/trade collecting and distributing center in the Eurasian region. As for the Tbilisi Sea New City, the project area occupied 420 hectares of land. The entire project was estimated to be completed in 10 years, with about $150 million USD expected to be invested in the ﬁrst three years.

AJARA-MANUFACTURED CIGARS TO GO TO CHINESE MARKET NEGOTIATIONS ON KAZTRANSGASTBILISI DEADLOCKED

meri company engaged in cigars and cigarillos manufacturing began talks with Chinese investors. According to the company’s Director Tamaz Turmanidze, cigars manufactured in Adjara might be exported to China this year. In his words, the Chinese delegation arrived in Georgia to hold meetings with the company’s representatives. He notes that the negotiations will start in the near future with businessmen from Lithuania, Latvia, Estonia, Poland, Kazakhstan and Belarus. At present, the company’s products are sold only on the local market. Products are made from several types of

tobacco blend. The enterprise uses mainly local and Indonesian tobacco. The company buys tobacco both from the locals and residents from other regions of Adjara. “Imeri’’ was founded in 2007 and is located on 2 000 square meters. In total $ 120 000 were invested in the enterprise. As they say in the Ministry of Agriculture of Adjara, the company also received $ 40 000 in the form of additional agro- credit. Apart from tobacco and tobacco products, the company produces up to 60 cigar accessories, including ashtrays, tobacco-pipe, boxes and more. The Georgian cigar price ranges within GEL 1.3 - GEL 32. In total 45 people are employed at the enterprise.

LILO MALL MANAGEMENT TO DEVELOP SALVATION PLAN

roblems began last year due to the devaluation of the national currency. Now the situation is so difﬁcult that the management has to think about the company’s salvation. According to the President of “Lilo Mall” Levan Gagua, during a whole year the deteriorating economic situation fell on the shoulders of the administration, and to a lesser extent – on traders operating on the market. In particular, the management has not yet raised the rent, however, as Levan Gagua notes, this cannot last forever. “Due to the devaluation of the lari, consumer activity has declined sharply. We are currently working on a plan to resolve the situation. Something must change, most likely we will have to introduce new services, “- he notes. In the words of Levan Gagua, a total of 1214 thousand people are working in “Lilo Mall”. He says that it is not true that the situation complicated after the opening of a major shop-

ping center «East Point Mall” since these trade objects have a different customer segment. “Moreover, the opening of the shopping center not far from our market can play a positive role, as many customers visiting“East Point Mall” can come to Lilo, since they are located not far from each other,” - Levan Gagua explains. According to the head of marketing department of trade center Tea Lominadze, “East Point Mall” lured away a lot of buyers, including Lilo Mall customers. “One month has passed since we started working. We expected 25 000 people at the opening but really came 35 000. According to the current data, our shopping center is visited by about 15 000 people at the weekend. Since November, when “Carrefour” and “Elit Electronics” will be opened in our center, the number of consumers will further grow. The devaluation of the lari has not reﬂected in our mall. It is possible that we’ll feel the effects of the devaluation later, “- she says.

fter the ultimatum statement of the Kazakh side to demand a compensation for damages in an amount not less than the amount, Deputy Energy Minister Ilya Eloshvili has to admit that the negotiations were actually frozen. According to him, at a certain stage, the parties almost agreed, but then there were problems, that cannot be solved so far. “Unfortunately there were problems because the parliament must approve certain actions from the Kazakh side. This issue has reached a deadlock, but on the other hand, a special group was created to resolve contentious issues at the negotiating table,” he states. In his words, the Georgian government hopes that the partnership relations between Tbilisi and Astana will not be sacriﬁced because of this problem, and a decision that satisﬁes all will be taken. “Kazakhstan is a friendly country, our strategic partner and long-term Kazakh investments are very important for us , including for the energy sector. We believe that this issue should be resolved at the negotiating table and not in international arbitration,” the deputy minister notes. The other day it was announced the creation of an ad hoc group with the participation of the Georgian and Kazakh sides, which will work

towards the adoption of mutually beneﬁcial solutions. It is expected that the Kazakh part will arrive in Tbilisi in November. Recently, the management of JSC KazTransGas issued a statement which says that JSC KazTransGas hopes within pre-arbitration procedures to settle a dispute with the government of Georgia regarding the subsidiary KazTransGas – Tbilisi. The international law ﬁrm Baker & McKenzie on behalf of JSC KazTransGas directed against the Georgian side a pre-arbitration letter with a proposal to start negotiations on the settlement of investment disputes arising in connection with investments of JSC KazTransGas in KazTransGas – Tbilisi. As the company claims, these actions of the authorized bodies of Georgia violate the rights of a foreign investor established by the national legislation of Georgia and international agreements on protection of investments. JSC KazTransGas hopes for a constructive position of the Georgian side and the early settlement of the dispute within pre-arbitration procedures. If pre-arbitration settlement does not lead to resolution of the dispute, KazTransGas will start investment arbitration and will demand the return of control over KazTransGas -Tbilisi company and compensation for damages in an amount not less than the amount of investments”, the statement says.

TBILISI TO ACQUIRE NEW HOTEL DEPICTING SHOTA RUSTAVELI’S POEM QUOTES

hotel based on the Knight in the Panther’s Skin by Shota Rustaveli will be opened in Tbilisi. The project is carried out by the IsraelGeorgia Business Chamber. The hotel will be located on Freedom Square, and the Chamber announced the competition for architects for professional decoration . According to a representative of the Chamber, applications will be submitted till November 1 and to reveal a winner, it will take additional 2 weeks. On competition conditions, the design idea

should be based on the Knight in the Panther’s Skin, quotes from a poem in 3 languages (English, Hebrew and English) should be used in exterior and interior design. The library with old books will be arranged in the hotel lobby. Winners will receive cash prizes. It will be a 4-5-star boutique hotel and will focus mainly on VIP tours from Israel. The hotel will consist of 15 rooms, 30 people will be employed during construction, while after the opening - 20 people. The hotel is scheduled to open in April 2016. The investment cost of the project is $ 5 million.

GALLERY caucasus business week

October 19, 2015 #118

“I AM BOTH THE PARTICIPANT AND THE OBSERVER OF MY WORKS” The elusive and unnamed art of a young painter named IRAKLI JGENTI. What is painting? According to international descriptions, it is simply an application of paint on a canvas or paper using brushes, pens or pencils in order to convey specific stories. The word “painting” covers all imagery created by man, starting from prehistoric cave drawings and ending with avant-garde pieces displayed in contemporary art galleries. In one word, painting is an art of touch. Some achieve this touch, others haven’t even thought about it. A painter is defined by their ability to convey emotion on a canvas first and their technique of execution second.

ur guest today is a student of the Tbilisi Academy of Arts, Irakli Jgenti, who is enamored with traditional painting. Art is everything to him, and he devotes a larger part of the day to painting. He loves his everyday work; he gets exhausted but never grows tired of it. Perhaps what one loves, one never gets tired of, and instead protects, respects and never dooms it for the past. Childhood Protests “I drew as a kid. Everyone drew in my family, so I developed a protest and landed on this idea that ‘I must not draw! I must ﬁnd something else to do with my time!’ This wasn’t simply a childish protest; I didn’t want to be like anyone. Since my father was an artist, it wasn’t necessary for me to pursue the same path and think of painting.” Why Do I Draw Now? “I think I realized that no one else will draw what I will draw. My family members have their thing to say, I have mine. Competing is pointless. The only person I want to be better than is me yesterday. 4 years ago in Cyprus I made a little sketch at a bar. I was just sitting and thinking of it. It was a pen and paper doodle, and when I showed it to my family and friends, they liked it. This was promptly followed by more improvised sketches. The process sucked me in and I began enjoying it. It was a ﬁtting time in my life too; I didn’t know what I wanted and what I was destined for. This is how I started painting, and I haven’t stopped ever since. Painting chose me itself!” Money, People’s Love and Immortality “On the question of what I think about during paint-

ing, I get reminded of this story of a Chinese sculptor who was tasked with creating a patterned stand for a temple. It was a great honor for him so he began working with great enthusiasm. During the process, thoughts of the money he would make for the job started creeping on to him. He realized soon after that he was creating something horrible, so he destroyed it and started again. This time he found himself obsessed with the love he would deserve from the people appreciating the stand, which made him start again once more. During his third attempt, he thought of immortality. But during his fourth attempt, his only thought in his head was to create a good pattern. And it came out great. The stand brought the people’s love, the money and immortality all at the same time. Ideally, when I draw I should be thinking of drawing. I’ve often thought that art professionals and simple hobbyists alike are wrong when they claim that an author of a piece tried to say this and this using this color or that composition. It is just as likely that the artist was busy with studying nature in front of them, and they were so taken with staging experiments on it that there was no room in their head for things or emotions they wanted to convey and weave into the piece. If I’m not focused on a painting, I can’t work! I draw 6-7 hours a day, and only when I’m done and I get up do I notice the exhaustion and the back pains. I get super exhausted!” The Key to Success “If what a piece conveys dawns on me while I’m working on it, I won’t achieve a satisfying result anymore. Accidents hold a large role. I don’t draw in any speciﬁc medium, and I’ve worked a month on a piece at most. Although there are paintings that I would devote even larger amounts of time to if I could. But I stop the moment I get the feeling that I’m drawing someone else’s painting. That indicates the piece is complete.” I Don’t Draw for Anyone “I am both the participant and the observer of my pieces. There are paintings that make me feel super perverted while I’m working on them – as I’m obsessed

with thoughts of many women at once. If I myself realize what the piece is about, I stop painting it! I’d rather erase and start again, and I have had that happening. Creating scenes or events which can be explained are uninteresting to me.” What is Going On? “I like it when they ask me what is going on in a piece. Feedback is part of art. I am very interested in the opinions of others, of what they see and think. People help me understand my own work. Points of view, stories, impressions – these discussions are interesting to me! I’m a spineless guy and I’ve lately come to think of that as being my spine in and of itself; there is nothing tangible, nothing to grant a handhold when I’m spineless, so I’m always out of the playing field, because I’m constantly aware that what I draw is only my opinion, and that’s only how I see it, and in actuality it is unknowable. One could say the opposite too; I’m always in the playing field. I have trouble naming things in real life. Sometimes I finish a piece and I have the impression that I haven’t drawn this, someone else did.” A Day in the Life “There is no one particular type of day for me… I just draw, swim, and then see my friends in the evening if I’m not too exhausted. I’m not attracted to crowded and noisy places; I don’t have the ability to cope with it. I never see more than 2-3 friends at the same time. If I end up at a birthday, I always sneak out early and everyone knows that. It’s my personality. I usually get up at 9 in the morning, and then spend some time with my dog Ozzie, walking him and enjoying fresh air with him. When I get back home, I start drawing. I’m unable to check in on friends every day and I don’t like doing that either. I don’t think I’m a particularly active person. Music? I don’t listen to one specific performer or genre… my ears search for sounds of interest everywhere and all the time.” Healthy Eating Above All “I love pasta; I could eat it every day. I’m not a good cook myself – I’ve tried, but it didn’t work out.”

Happiness “I don’t know what happiness is… I’ve had flashes of inner peace. I don’t know how this would count for happiness for someone else, but for me these flashes truly represent inner calmness, nothing else. They usually happen when I forgive myself for being human. I barely remember a period in my life when I wasn’t under the spell of a woman. I don’t know what love is, but I know that women are everything for me.” Other Interests “I’ve liked works of many artists; Bacon, Kiefer, Doig. I’ve never tried to consciously imitate them, but influences are undeniable. If you ask me who my favorite artist is, I’ll go towards cinema directors first of all: Tarkovsky, Bergman, Bresson…” I Have Nothing to Say about God “I have nothing to say about God. My mother is the one who I believe in. I know three gods personally: my mother, my grandmother who brought me up, and my first teacher – the god of art, Roland Paposhvili. My grandfather influenced my thinking a lot too.”

WORLD NEWS

October 19, 2015 #118

caucasus business week

NOBEL IN ECONOMICS GIVEN TO ANGUS DEATON FOR STUDIES OF CONSUMPTION, POVERTY AND WELFARE

he U.S.-based economist Angus Deaton on Monday won the 2015 Nobel Prize in economics for his analysis of consumption, poverty and welfare. The Royal Swedish Academy of Sciences recognized the joint U.S. and British citizen for work addressing questions including how consumers distribute their spending among different goods, how much people spend and how much they save and how to measure poverty and welfare. “By linking detailed individual choices and aggregate outcomes, his research has helped transform the ﬁelds of microeconomics, macro-

economics, and development economics,” the academy said. Mr. Deaton, 69 years old, who is based at Princeton University in the U.S. will receive a ﬁnancial reward of around $1 million. Last year’s recipient was the French economist Jean Tirole. Although his chosen profession was famously labelled “the dismal science” by the Victorian historian Thomas Carlyle, Mr. Deaton provided an upbeat assessment of human progress over the last 250 years in his 2013 book, “The Great Escape: Health, Wealth, and the Origins of Inequality.” “Life is better now than at almost any time in history,” he wrote. “More people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die.” Across its 370 pages, Mr. Deaton sought to explain why the world is a better place than it used to be, with substantial increases in wealth, health and longevity, but also why there are vast inequalities between and within nations. He concluded that international aid had little to do with that progress, and suggested that free trade and new incentives for drug companies would make a larger contribution in the future. His attack on international aid efforts was itself criticized by Bill Gates.

SINGAPORE – HUMAN REASON’S MANIFESTATION

The Place You Should Visit

efore the 18th century, when the British mission founded a colony, Singapore was a settlement of Malay fishermen. Only several hundreds of residents used to inhabit the Island. Thomas Stamford Raffles, a British sailor and top official, militant and a governor in the British Ceylon, founded a city that in a short period turned into the major seaport in this part of the world. Nowadays Singapore represents a modern state-city populated by English-speaking residents, where ethnic Chinese constitute more than 70% of the population, 15% of the residents are Malaysians, 10% - the Indus and 5% - the socalled Eurasian (descendents of European and Asian peoples) and so on. Nevertheless, all residents consider themselves to be Singaporean. These people stand united around the idea of constructing a modern state and managing successful economy for 50 years and all of them manage to cohabitate with each other without problems. On arrival professional and qualified guides will name five main advantages and special signs

in Singapore. First of all, Singapore is the world’s one of the leading and the region‘s major ﬁnancial center with a global-scale stock exchange and a plenty of international banks. Secondly, Singapore is the world’s second and Asia’s number one seaport after Rotterdam that handles more than 1 billion tons of consignments a year and trades with over 600 seaports in 123 countries worldwide. The third advantage consists in the education system that occupies leading positions in the world. The Singapore business school is recorded in the world’s 20 top educational assets and ten thousands of foreign students go to various higher schools in Singapore. The fourth distinguishing sign is a numerous army equipped with the most modern technologies that is the best one in the region to guard the state independence. Singapore’s ﬁfth advantage is related to tourism and tourism infrastructure and we will describe it in details. ARRIVAL The route to Singapore is very interesting. Qatari Airlines offer the best conditions with the

world’s best airplanes and services. From Tbilisi you will land Baku in an hour and spend the same period in the Baku airport. After that the flight to Doha, the capital city of Qatar, will take 4 hours. After a several hour stay in the Hama International Airport you will take a five hour flight to the airport of Chang, from where any kind of transport will deliver you to the state-city of Singapore. HOTELS Singapore is famous for its hotels and recreation complexes that host tens of millions of tourists and guests a year. With high-level and modern services the hotel networks of Ritz Carlton, Mandarin and Orchard, other global leading brands and domestic hotels offer special seafood, exclusive services and all sort of comforts. MULTICULTURAL CITY Singapore is a mixture of European, Chinese and Indian cultures with all expressions and symbols. There are rare places in the world with a similar synthesis of various cultures in the same

place. Singapore is a unique place in this respect! China Town is a huge quarter with Buddhist Temples, many Chinese restaurants and minimarkets. The district of Little India is famous for trade counters with various fruits, color fabrics, Indian tea houses and food assets. Singapore’s historical zone mainly represents a unity of premises and facilities built by British colonists, where a major part of assets are administrative buildings. There are also several monuments of historical importance. Eiffel Tower in Paris, Coliseum in Rome, Big Ben in London and the Old Tbilisi views circulate in our minds and these buildings and assets represent visiting cards of these cities. And Marina Bay is a similar place in Singapore, an artificial bay beach with three major hotels beside each other covered by long vessel-shape asset to unite them. ENTERTAINMENT ISLAND The world’s most distinguished island includes a main island of Sentosa, an artificially arranged center of amusements and other extreme entertainments. This is the River Safari, the world’s biggest water amusement with a concept for introducing the world’s flora and fauna in maximally natural forms. This is not a large aquarium. This is an open space with models of the rivers of Amazon, Congo, Yang, Mekong, Niles, Mississippi and Gang. This island offers a national park of orchids and breeding orchids. This is a genuine art that has been taken to the highest level in this garden. You will nowhere else see so many colors and so much beauty. There is a large aquarium too, a whole complex of Sentosa aquariums with various sizes, shapes, and appearance with all species of fish. Amusements park of Universal Studio is unforgettable with surprising amusements of Shrek, Transforms, Mummy and Water World, with strolling Charlie Chaplin and Marilyn Monroe. On Sentosa you are also able to visit the Madame Tussauds Museum, a huge monument of Merlion with picturesque views to the city, to enjoy ropeway services to get to the seashore from mountains. To put simply on Sentosa you will play, laugh, get pleasure and entertain to the end. There are enough reasons to visit this state-city!

PUBLICITY caucasus business week

October 19, 2015 #118

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

caucasus business week

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

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

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

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

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

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

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

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

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

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

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

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

PUBLICITY caucasus business week

October 19, 2015 #118