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November 9, 2015 #121

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November 9, 2015, Issue 121

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BE INFORMED, DO BUSINESS

COMMERCIAL BANKS’ PROFITS EXCEED

500 MLN GEL The GEL Exchange Rate Volatility Has Also Fueled a Growth in Profits of Commercial Banks, Besides the Development Trends

At the end of 2015 the sector’s net profits will exceed 0.5 billion GEL to hit a historical maximum.

An analysis of financial indicators of commercial banks shows the GEL exchange rate volatility has also inspired such an extreme growth in the sec-

tor’s profits, besides the development tendencies.

The sector has already made the first record.

In September commercial banks’ net profits rose by 86 million GEL and marked 377 million GEL in the January to September period, up 24% com-

pared to the same period of 2014 and up 37% compared to the same period of 2013. This signifies, at the end of 2015, the sector’s profits will exceed 0.5 billion GEL, while the figure marked 475 million GEL in 2014.

WORLD NEWS

INFLATION TRENDS INTENSIFY

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Dachi Tsaguria: Comfort Of Each Passenger Is Important For Us Pg. 4 Vazha Beriashvili: 30% of TBC bank’s Deposits Are Open Through Internet Banking Pg. 6 GEORGIA IS MAKING FURTHER STEPS ON HEPATITIS C ELIMINATION PROGRAM

National Bank Keeps Raising Monetary Policy Rate to Curb Inflation, But in Vain

From November 3-5, Tbilisi hosted a conference regarding Hepatitis C elimination program.

International advisors group from US Center of disease and control, WHO, Emory and Hopkins universities discussed and evaluated current project that has been implementing over six months in Georgia.

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RUSSIA’S LAST INDEPENDENT ENGLISH NEWSPAPER ENDS DAILY EDITION Pg. 13

Ilham Aliyev: I am Pleased We Don’t Have Any Difference of Views

n October 2015, Georgia’s inflation rate marked 5.8% as compared to the same period of 2014. The inflation rate made up 0.8% compared to September 2015.

The annual inflation upturn has more hit regions than the capital city. According to GeoStat, the national statistics service of Georgia, in October the annualized inflation rate in Tbilisi marked 5.1%, Telavi – 5.9%, Kutaisi -6.6%, Gori – 6.9% and Batumi – 7%.

PASHA BANK HOSTED REPRESENTATIVES OF DIPLOMATIC CORPS

Pg. 5

On November 4th PASHA Bank Georgia hosted representatives of Diplomatic Corps in Georgia.

PASHA Bank is a regional corporate and investment bank serving large and medium enterprises in Azerbaijan, Georgia and now already in Turkey.

PASHA Bank, being an active member of EUGeorgia Business Council, gladly agreed to host a site visit organized by the EUGBC. Pg. 12

TURKISH AIRLINES PERFORMS THE MOST FLIGHTS FROM TBILISI INTERNATIONAL AIRPORT Foreign Airlines Perform 89% of Flights, Domestic Pg. 9 Airlines Hold only 11% Market Ratio

DEVELOPERS EXPECT PRICE HIKES FOR REAL ESTATE

Pg. 10

GEORGIA TO UNVEIL NEW SKI RESORT IN 2015

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NEWSROOM

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AZERBAIJANI PRESIDENT: I AM PLEASED WE Georgia Becomes DON’T HAVE ANY DIFFERENCE OF VIEWS MAIN EVENTS

a Member of Large Freight Transportation Project

Georgia joins to Trans-Caspian international transport consortium, which envisages transportation of Chinese maritime cargo by Georgian Railway.

The parties hold a meeting to sign the foundation documents (China, Kazakhstan, Azerbaijan, Georgia) in Chongqing, which will be also attended by the largest shipping companies.

The consortium aims to attract transiting cargo from China to Turkey and Europe via Georgian corridor.

According to Levan Sulaberidze, director of “Trans-Caucasus Terminal”, the matter concerns to the offering of alternative route instead of the so called “Northern Route”, especially for cargo which should be transported in Turkey. The offer envisages creation of attractive package for shipping companies, which means time reduction and special price offer. This will be the 1st biggest project of Silk Road restoration.

EBRD: Modest Economic Growth to be Sustained in Georgia European Bank for Reconstruction and Development (EBRD) predicts economic growth in the countries of Caucasus despite the external economic challenges.

According to the EBRD’s latest economic outlook Countries in the Caucasus (Armenia, Azerbaijan, Georgia) continue to be influenced by the regional economic and security challenges.

European Bank predicts that Georgia is expected to sustain modest economic growth in 2015-16.

The EBRD expects that growth in Georgia will moderate to +2.5 per cent in 2015 and keeps its modest growth forecast of +2.6 per cent for 2016.

Annual Inflation Increased Up to 5,8% According to “Sakstat”, inflation level has amounted to 0,8% in October comparing to previous month. Annual inflation is 5,8%, while average inflation level – 3,5%. However, consumer prices have not been increased significantly through the last month. Food staff and alcohol beverages are grown in prices by 0,9%.

Costs are increased on dairy products and eggs – by 3,3%, vegetables and greens – by 6,5%, while prices are declined by 9,2% on grape and fruit.

Price increase are continued in the Ministry of healthcare and totally, growth of 2% has been fixed. At that, costs are increased by 6,7% on pharmaceutical products.

Prices on the service in hotels, cafes and restaurants are grown by 2%.

As for the annual inflation, food staff and nonalcohol beverages are grown by 4,1% comparing October, 2014.

Fruit and grape is increased by 22,2%, fats – by 15,6%, coffee, tea and cocoa – by 10,4%; Prices are increased by 11,1% in the healthcare segment, at that prices are increased by 27,4% on pharmaceutical products.

T

he President of Azerbaijan Ilham Aliyev, who chose Georgia as the first country to visit after November 1 Parliamentary elections in his homeland, has held his first official meeting with Georgia’s President Giorgi Margvelashvili.

The strategic partnership between Georgia and Azerbaijan, political-economic relations and global issues were the major topics of the bilateral meeting, held last night in an enlarged format at the Presidential residence in Avlabari, Tbilisi.

Immediately after the meeting the sides signed an agreement to deepen relations in the fields of politics, security, trade-economic, transit, transport, culture, education and science.

In their statements for media both President confirmed the existence of the “irreversible friendship” between the two countries that had begun decades ago.

The fact that the Azerbaijani President came

to Georgia shortly after winning the Parliamentary race is an obvious example of his respect to Georgia,” said Georgia’s President Margvelashvili.

Twenty years ago, in light of the positive relationship between out nations, strategic cooperation between our countries was established, giving a very important role to Azerbaijan, as well as to Georgia and the whole Caucasus region,” he said.

“Today we discussed strategic cooperation, connecting us with Azerbaijan, far-reaching plans in relation with the Caspian Sea, as well as the Black Sea. We spoke about the deepening of transport and energy projects,” Margvelashvili added.

The Georgian President reiterated the two countries’ relations had “passed a serious exam” during and after the Russia-Georgia war of 2008, when Azerbaijani “definitely and clearly” revealed its support to Georgia’s sovereignty and

territorial integrity.

Following this topic Margvelashvili stressed despite Russia’s aggressive actions on Georgian soil and permanent creeping occupation, Georgia “was devoted” to its transit role and could perform this role successfully to better connect Europe with Asia.

The projects we are speaking about are being implemented. Their perspectives are the deepening of energy and transport cooperation in Europe and more active participation of the Caspian states in this regard.

I am sure that these projects have great potential. However, they have potential not only for the Caspian Sea region but more globally, engaging China and in the regard of the development of the great corridor and we see each other as partners here too,” Margvelashvili said.

In response the Azerbaijani President confirmed Margvelahsvili’s words, saying Georgia and Azerbaijan’s relationships in economic and non-economic directions were mutual.

I am pleased that we do not have any obstacles and a difference of opinions in any issues with Georgia.We are friends, we are brothers and our successful meeting and visit today is a successful step for our dynamic development in future,” Aliyev said.

The Azerbaijani official stressed that if the Baku-Supsa-Tbilisi-Ceyhan and Erzurum gas pipelines had not been built years ago, no one would be able to speak about the new South Stream.

We would not have the luxury to discuss it,” Aliyev said.

This concept has been successfully implemented step by step and I hope that Azerbaijani gas will be exported to Turkey in 2018 and in the European market in 2020. It is a great energy project and $45 million USD will be invested in it,” Aliyev added.

The Azeri leader added Azerbaijan had large gas reservoirs. This meant that after 100 years Azerbaijan would continue to be able to satisfy its own demands but its neighbours and then export gas to Europe.

Shortly after President Aliyev arrived in Tbilisi yesterday afternoon, he visited the Tbilisi monument honouring his late father Heydar Aliyev, where he paid his respects and laid a wreath.

After this he visited Heroes Square and the memorial of the fallen heroes who died for Georgia’s territorial integrity.

Today the Azerbaijani official was scheduled to meet Georgia’s Prime Minister and other top officials.

VERDICT DELIVERED: COURT SAYS OWNER OF RUSTAVI 2 IS EX-OWNER QIBAR KHALVASHI

T

he verdict about the much anticipated Rustavi 2 case has been delivered today - Tbilisi City Court ruled the only legal owner of 100 percent of shares of the TV company was Qibar Khalvashi, the channel’s former owner.

Tbilisi City Court Judge Tamaz Urtmelidze announced the verdict this evening and said 60 percent of the company shares would go to Khalvashi while the remaining 40 percent would need to be registered under the name Panorama LTD, the company owned by Khalvashi.

Meanwhile Judge Urtmelidze did not fully satisfy Khalvashi’s claim, specifically the part where he fought for the copyright of the company’s logo and other intellectual properties. His claims about financial compensation from the current owners were also rejected.

Moments after the verdict was announced, the defenders – the current owners of Rustavi 2 – said they “did not expect more” from Judge Urtmelidze as they believed the judge was “strongly

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biased” against Rustavi 2.

Lawyers representing the TV channel said they would certainly appeal the decision to a higher court. They also said Judge Urtmelidze reached a very “unprofessional” decision and stated he had “committed career suicide” today with the verdict.

Meanwhile director general of the TV company Nika Gvaramia said today’s verdict “meant nothing” for those who were employed at Rustavi 2, in reference to an announcement made yesterday by the Constitutional Court.

The Constitutional Court yesterday ordered a temporary suspension of a normal clause in the country’s Civil Code, which said a court of the first instance was eligible to order an immediate enforcement of a court verdict even if the verdict was appealed. This meant Tbilisi City Court was not able to order an immediate enforcement of today’s verdict.

Earlier Khalvashi said if he won the lawsuit none of the “professional employees” of the company would lose their jobs.

In Court today the judge only announced the factual verdict. His motivations for arriving at that verdict must be explained within a month from today.

Khalvashi’s lawyer said they would discuss the verdict, after which they might also appeal the parts of the lawsuit which were not satisfied 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

November 9, 2015 #121

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INTERVIEW caucasus business week

GEORGIAN RAILWAY:

November 9, 2015 #121

Comfort of Each Passenger is Important for us Georgian Railway has introduced many innovations for improving the quality of services. All passengers who often travel by train appreciate these changes. Georgian Railway draws a great number of passengers thanks to low-cost tickets.

DACHI TSAGURIA, a head of the Georgian Railway service quality development office, talks about specific innovations and plans: - The situation in passenger trains has dramatically improved. Today, we have many innovations. What specific projects do you implement to improve the quality of services?

- Georgian Railway receives revenues from cargo transportation and we subsidize passenger transportation services. We do our best to create full comfort to our passengers and to make their travel more pleasant.

We have introduced a new cleanup system with modern equipment and technique. The system enables to clean carriages by 180degree steam and high pressure. Previously, we used to clean carriages from outside by hand. We have restored the wash plant for carriages that had been suspended after the Soviet Union collapse.

Today all carriages are washed by special brushes at the wash plant and only after that carriages go to platforms.

At the same time, we make focus on improving the quality of services. Therefore, we have signed an agreement with Ilia State University’s Business School on training our staff. Cashiers, operators, conductors, who directly relate with passengers, pass trainings. This is an irreversible process. We are very content with results of these trainings, because the quality of services has improved.

Moreover, for many years information displays had not worked. As a result, passengers could not receive information on when this or that train would enter the platform. We have bought due equipments and installed them at 18 main stations all over

Georgia, modern electronic information displays.

To improve the quality of services, we have simplified ticket purchase process. In summer the flow of passengers grows, therefore, long queues arise at booking offices. To order the queue, we have installed special regulating systems to manage queues. We have also performed much job to alleviate ticket purchase process.

Europe. Ticket prices ranges from 1 GEL to 55 GEL depending on destinations. We have also introduced 10-month discount campaign and our passengers are able to buy 40GEL tickets at 25 GEL and 23 GEL tickets at 18 GEL. All these innovations inspire us. We do our best to maintain low prices and simultaneously, to increase the quality of services.

“Georgian Railway has never had so valuably and thoroughly repaired locomotives. These machines were tested and they showed very good results”

Today passengers are able to buy tickets on various websites, for example, on www.railway. ge or at quick payment terminals It should be also noted, according to various international reports, Georgian Railway has set one of the lowest tariffs worldwide and ranks second in the world and first in

- As to arrangement of wagons and platforms, last period wagons were improved, but we suppose considerable job should be still performed…

- We have launched intense rehabilitation of carriages. Wagons unrepaired for 10 years used to run to foreign countries. The foreign park has been almost fully amortized. We have not spared efforts on this project and we have repaired 17 wagons of 20 ones. By the end of 2015, we plan to have overhauled all 20 wagons.

We have also repaired locomotives, 7 ones. They were modernized at the highest level jointly with the Locomotive Repair Plant. Georgian Railway has never had so valuably and thoroughly repaired locomotives. These machines were tested and they showed very good results.

We also provide active job to repair platforms all over Georgia. At this stage, we have reconstructed 8 platforms and we plan to repair 12 ones in 2016.

- What other projects will Georgian Railway implement?

- Naturally, we will not be confined with only these innovations and we plan to introduce many other projects. We are working on changing the ticket sales system. The new system will be introduced in summer 2016.

This system will secure passengers from unexpected complications, fore examples, if passengers lose tickets, they will be able to travel by train anyway.

- Would you unveil further details of this system?

We want to introduce e-tickets with barcodes with information on passengers.

Conductors will check e-tickets through barcode readers.

Moreover, we plan to rehabilitate Tbilisi Railway Station. As reported, we have repaired Batumi railway station through an entirely new concept. Today Batumi Railway Station is the best one in Georgia. I would like to congratulate not only Batumi residents, but the whole country on this fact. We also want Tbilisi Railway Station to have a good appearance. We are developing a new project and we believe everything will be excellent.

I would like to assure all passengers of Georgian Railway that we care to create full comfort to each passenger.

ECONO-MIX

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INFLATION TRENDS INTENSIFY National Bank Keeps Raising Monetary Policy Rate to Curb Inflation, but in Vain In October 2015, Georgia’s inflation rate marked 5.8% as compared to the same period of 2014. The inflation rate made up 0.8% compared to September 2015. The annual inflation upturn has more hit regions than the capital city. According to GeoStat, the national statistics service of Georgia, in October the annualized inflation rate in Tbilisi marked 5.1%, Telavi – 5.9%, Kutaisi -6.6%, Gori – 6.9% and Batumi – 7%.

MERAB JANIASHVILI Economic Analyst

I

t should be noted, for the last three months the inflation rate has missed the NBG’s target indicator (5%), while the NBG keeps raising the monetary policy rate YTD. On November 4 the monetary policy coefficient grew by additional 0.5% to 7,5%. Such a high rate was last recorded in 2011. At the same time, we should note that

Starting February 2015 the refinancing loan rate has gradually increased to 7.5% from 4.5%.

Despite sharp growth in the monetary policy rate, the inflation rate increases on monthly basis.

Such an extreme growth in the refinancing rate reaffirms the inflation expectations are growing in the country and the NBG president also confirms this: “Regretfully inflation expectations are very high”, Giorgi Kadagidze told the Archevani TV program. The tightened monetary policy badly affects the economic development. To put simply, when the NBG makes the refinancing loan interest rate more expensive for commercial banks, the bank sector also have to increase interest rates on credit products. At the same time, the interest rates of some loans are directly attached to the monetary policy rate. Therefore,

The NBG-tighetned monetary policy rate has already brought negative results. The loan affixed to the refinancing rate will grow in value for 8 587 borrowers. Moreover, the GEL-denominated credits will also increase in value.

In September the average weighed annualized interest rate on GEL denominated loans rose by 1.8 points to 20.6%, while the rate on retail loans increased by 2.1% to 24.5%.

The NBG names the GEL devaluation as one of the main factors for growth in inflation, as well as the products that have increased in price after the currency depreciation.

“The supply-affecting factors determine the inflation growth tendencies. Namely, the exchange rate depreciation has increased production expenditures in value and increased prices on distinct imported products. The upturn in electricity tax has also made important influence on the inflation indi-

cator”, the NBG statement reads. It was easily foreseeable that the GEL devaluation would increase prices in the country. However, both the Government and the NBG have paid less attention to this challenge for the last year, because they were accusing each other of the exchange rate depreciation.

After reciprocal accusations during several months, the government and the NBG reached “a friendly agreement” that none of them was guilty of the national currency devaluation and both parties shifted the responsibility onto outer factors.

The Government was assuring the fiscal policy could not make negative affect on the currency devaluation, while the NBG objected to tightening the monetary policy rate because of expected rise in loan value and economic growth suspension. As a result, none of these parties changed the policy and the GEL exchange rate against USD depreciated to 2.39 point from 1.75 point for a year. The GEL rate against EUR fell to 2.60 point from 2.18 point year on year.

As a result,

1. The national currency exchange rate has declined by 40% and neither external nor internal factors have fueled this process; 2. The inflation rate has increased and missed the target indicator and keeps rising; 3. The monetary policy rate has tightened. First, GEL denominated loans have increased in value and all negative results will be reaped in the near future.

4. Why was not the monetary policy rate tightened to stop the currency depreciation, while a year later the refinancing rate was raised anyway to tackle the devaluation problems?!

INTERVIEW

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VAZHA BERIASHVILI: 30% OF TBC BANK’S DEPOSITS ARE OPEN THROUGH INTERNET BANKING TBC Bank is one of the most outstanding among Georgian banks in terms of remote banking services. Recent surveys conducted on different internet portals prove that customers believe TBC Bank’s internet and mobile bank is the best.

I would add that TBC Bank is the first Georgian bank to be awarded two global prizes from the world’s influential magazine Global Finance in 2013 – a prize for the Best Integrated Webpage in the World and a prize for the Best Payment System in the World. TBC Bank’s Internet bank has received 18 awards in different nominations since 2012.

How does TBC Bank manage to be a world leader in terms of distance service development and, more precisely, what are the advantages of its internet and mobile banks compared to it competitors? We spoke about these topics with the deputy director of Retail and SME business,VAZHA BERIASHVILI. – How would you characterize competition in the market in terms of distance service development and what advantage do you have over your competitors?

– TBC Bankhas internet bank and mobile bank that are indeed outstanding in the Georgian market. In the first place,

Our advantage is that we try to make our services simple and convenient for the customers.

Today, customer does not need to use username, password and other details in order to login in internet bank or mobile bank. They should be able to make a banking transaction via internet or mobile bank in several seconds. That means we are constantly focused on simplicity.

Certainly, the second advantage is that our products are tailored to meet our customers’ needs. In mobile banking, for example, a customer can set up the transaction information, which simplifies transferring money to family members or close acquaintances. In addition, a customer can review their financial turnover from the previous month and get an idea about their budget so they can compare spending to that of previous months, plan future budgets, and simplify the management of their funds.

In fact, in terms of distance services, TBC Bank is now at the stage that it is really competing against foreign leading banks.

You are probably aware that TBC Bank is the only Georgian bank that has received an award for the Best Internet Bank in the World.

– As I understand, the award is based on more than just simplicity – other factors, such as design concept and security are also considered, correct?

During the last several years, TBC’s number one priority in distance

services is mobile banking.The first thing we do when we introduce a new service is we conduct a thorough analysis on how this service will work in mobile banking and, only after that, in internet bank.

Simplicity is a part of this strategy. However, our goal is not to create innovation just for the sake of innovation. Our objective is to have satisfied customers who find TBC Bank’s internet bank and mobile bank comfortable, convenient, and simple. As for security, creation of security guarantees is as fundamental as the A-B-Cs for a bank like TBC. The security of our applications and software is tested by foreign companies, special tests are conducted and, of course, the customer has is completely guaranteed of its security.

– The strategy of developing mobile banking is determined by the modern lifestyle. It is nearly impossible to imagine a person in the 21st century person - and especially the new generation - without mobile phones. If we do not develop services that are tailored at them, we will clearly lose them as customers. On the other hand, mobile banking is a very comfortable product in the era of traffic jams. Going to a bank for a simple transaction means wasting a lot of time; if you have a mobile phone at hand, why not use the mobile bank service? In addition to the new generation, these services are also actively used by the older generation – 1/3 of our customers are people above 45 years of age, so these products are not just suitable for young people. After some period of time, as the internet penetration increases, every generation will use distance management channels.

- What is the growth dynamics of your customers? What has caused this growth? How many customers do you have now?

- Two years ago we had approximately 15 000 customers. That number grew to 60 000 in one year, then it reached 100 000. Now we have 200 000 customers. Such growth in the number of customers is not just about having a good, sought-after product; we also put a great effort in educating customers how to use it. When a customer comes

“Two years ago we had approximately 15 000 customers. That number grew to 60 000 in one year, then it reached 100 000. Now we have 200 000 customers”

By the way, when foreign specialists evaluate distance management systems, they look at the number of customers and the growth dynamics first. The pace of introducing innovations, security and simplicity also plays an important role.

In addition, they consider ratings on the Apple store and Google Play. Any customer can check these ratings. We are proud that TBC’s rating is constantly five stars. We are very attentive to this.

It is notable that even foreign banks find it hard to maintain five stars. In Georgia, we are used to the fact that we do not hold leading positions in all the major fields. However, we can proudly say that we are among the best in the world in terms of distance service development and we often hold an even better position than banks in advanced countries.

– As you noted, the development of mobile banking is a top priority for the bank. Why has the bank chosen this strategy?

to the branch, we do not simply give them the password for internet bank – we explain and show them how it works. We answer their questions.

Currently, TBC Bank has a very small number of such customers who have access to the internet but do not use internet banking. As for mobile banking, this service is also growing. Currently we have 85 000 customers. However, the growth dynamics is very high. The number of mobile banking users grows by 100 or 150 percent every year. I think this trend will continue in the future.

– How did the development of distance channels impact the queues in the branches?

Did this cut back on the work load in the branches?

– Certainly the active usage of distance services had an impact on the branches. The branches will gradually (and this process has begun) transform from places for banking transactions to consultation centers; customers can already make

utility payments, receive loans or open deposits through distance channels. Consequently, the number of customers does not grow at its previous rate. Certainly, this has eased pressure on the branches. The distance channels have very high growth dynamics. It is notable that 30% of our deposits are open through internet banking since the process is easy and comfortable and does not require much time.

– You constantly add new functions, what is the frequency and what process does the product go through before reaching the customer?

It has been several years that we have been developing nonstop–we are constantly renewing our distance channels. I can promise our customers that there will always be novelties.

We renew the functional 5-6 times a year and we do not plan on slowing down. We will continue adding new functions in to both mobile and internet banking. As for the processes that the product undergoes from its creation to launching, first we get the ideas from our customers. We process the information we receive from them and, at the same time, use international practice, observe customer behavior and demands. I would like to note that the customers are actively involved in this process. Before the programmers start coding, we work on the outline, test the features of the function in the mobile and test it with our clients. After that, automated testing is carried out in order to avoid potential flaws.

When a new product is introduced, all the features might not be launched at the very beginning, a minor drawback might turn up. What is important is to improve any problems as quickly as possible. With our strategy, we easily give up a product that is not useful. Guided by this principle, we have even terminated products that were deemed unnecessary.

– Which product is the most popular?

– Most often, account balances are checked or a mobile top up is made through mobile banking. The transfer of money to family members is also popular. More experienced customers also try to analyze their finances.

– How do you see the dynamics of distance management in five years?

– In five years, I cannot imagine a 40-45 year old person living in a city who does not use these remote banking services. I think that these services will develop and their usage will increase in Georgia, just as they are now developing in Scandinavian countries.

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COMMERCIAL BANKS’ PROFITS EXCEED 0.5 BILLION GEL IN 2015

TBC Bank Has Signed an Agreement The GEL Exchange Rate Volatility Has Also Fueled a Growth in about GEL 48 Profits of Commercial Banks, Besides the Development Trends Million Loan from BSTDB

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t the end of 2015 the sector’s net profits will exceed 0.5 billion GEL to hit a historical maximum. An analysis of financial indicators of commercial banks shows the GEL exchange rate volatility has also inspired such an extreme growth in the sector’s profits, besides the development tendencies.

The sector has already made the first record.

In September commercial banks’ net profits rose

IRAKLI MEKVABISHVILI EBRD Chief Banker “The Georgian bank sector is distinguished in the region in terms of quality of assets and probability. Despite the GEL depreciation, commercial banks have managed to maintain the credit portfolio at the adequate level. The ratio of bad loans has considerably declined. At the end of the year the portfolio may worsen, but the expected losses may be remunerated through current profits and capital”.

to September 1. If we reflect the growth in absolute indicators, the same indicator has increased by 3.5% to 24.79 billion GEL, Vakhtang Charaia, a head of the Tbilisi State University Center for Analysis and Prognosis says

“This success of the bank sector represents an indisputable achievement of the Georgian finance market, but it is interesting what steps and activities were taken by commercial banks to earn similar huge net profits. It is also interesting whether the historical maximum of net profits (the January to September period) was achieved through only foreign currency conversions”, Vakhtang Charaia said.

by 86 million GEL and marked 377 million GEL in the January to September period, up 24% compared to the same period of 2014 and up 37% compared to the same period of 2013. This signifies, at the end of 2015, the sector’s profits will exceed 0.5 billion GEL, while the figure marked 475 million GEL in 2014.

The sector’s total revenues in the January to September period marked 2.643 billion GEL. Interest revenues extremely increased to 1.606 billion GEL. A monthly upturn made up 190 million GEL. Revenues from retail loans exceed revenues from corporate loans by 262 million GEL. Revenues from commission fees have also extremely increased to 40 million GEL. The Georgian bank sector registers 19 commercial banks as of October 1, 2015, including 17 commercial banks with foreign capital coparticipation and one as a branch of foreign commercial bank.

Despite the restriction after the GEL exchange rate volatility effects, the bank sector confidently keeps growing and total assets of commercial banks rose by 2.6% as of October 1 compared

LADO GURGENIDZE Executive Chairman of the Supervisory Board of Liberty Bank “The Bank continues to perform well, focusing on the profitability and return on equity while keeping our capital buffer high. In fact, our capital base is now so robust, that in Q3 2015 we paid our maiden (post-2009 turnaround) common dividend of GEL 8 million or GEL 0.0014986 per common share”.

A detailed analysis shows that commercial banks earned 19.2 million GEL in the September net profits (total profits equal 85.3 million GEL) through conversion operations, as well as 92.5 million GEL in the January to September net profits (total profits equal 377 million GEL).

These indicators constitute about 24.5% in total profits. These indicators exceed the 2014 same indicators by 27.8%, exceed the 2013 same figures by 35.1% and surpass the 2012 same figures by 57%, he added.

“Consequently, we can conclude that despite huge net profits commercial banks have received from conversion operations, their ratio in total net profits is declining, as commercial banks are expanding the range of activities and services and we welcome this fact”, Vakhtang Charaia noted.

The GEL exchange rate changes have partly driven a record profits of commercial banks, Mikheil Tokmazishvili, the former member of the Georgian National Bank (NBG) board, said.

“Money has real value in time. This signifies the value of money changes in the course of time. Conse-

quently, commercial banks and finance organizations know very well that they should not issue such category of money that will depreciate after a certain period. The currency depreciation natural process was also accompanying this period”, Mikheil Tokmazishvili said and added that commercial banks attached GEL denominated credits to the USD exchange rate to return the loans due to the current exchange rates.

Consequently, commercial banks have made profits from not only USD denominated loans, but also from GEL denominated loans.

“Thanks to these calculations the GEL devaluation has brought significant profits to commercial banks. As a result, the devaluation has increased the nominal value of their money”, Mikheil Tokmazishvili said.

It is worth noting in September, as compared to August, commercial banks’ credit portfolio increased by 327.1 million GEL (up 2.1%). Without the exchange rate volatility effects, in September the loan portfolio growth marked 1.2% to 15.7 billion GEL as of October 1, 2015. In the same period, the GEL denominated loans portfolio increased by 89.6 million GEL (up 1.6%) and foreign currency denominated loans portfolio rose by 237.6 million GEL (up 2.4%).

The Larization coefficient of total loans marked 35.87% as of October 1, 2015.

This signifies the dollarization coefficient exceeds 64% and specialists consider this figure alarming and urge the NBG to take efficient decisions. However, similar proportion of loans nourish commercial banks and grows their profits.

RAMAZ KUKULADZE Deputy CEO at Bank Republic, Societe Generale Group „The last three quarters have brought excellent results. The bank has strengthened.

The quality of assets has improved. The nine months of 2015 were successful for the bank in terms of profits”.

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BC Bank and the Black Sea Trade and Development Bank (BSTDB) have signed an agreement in the amount of GEL 48 million. The 3 year local currency SME Loan facility will enable TBC Bank to finance small and medium-sized enterprises in Georgia.

BSTDB has arranged to obtain the local currency funds through a private placement of GEL denominated bonds arranged by TBC Capital, a subsidiary of TBC Bank. This is the first such offering from BSTDB. “We are delighted to continue our partnership with BSTDB. The transaction is of great importance not only for TBC Bank but for the entire financial sector as it enables us to provide loans in local currency that are increasingly in demand from our customers and will enable TBC Bank to further strengthen its position in the SME segment. This transaction reflects both institutions’ commitment to continue cooperation and we look forward to more years of productive partnership. In addition, the issuance of the bonds will support local capital market development” commented Vakhtang Butskhrikidze, CEO of TBC Bank.

“We are pleased to continue our successful relationship with our longstanding partner, TBC Bank and to offer a product that eliminates currency risks. This first GEL denominated loan, provided by BSTDB, will support TBC Bank in stimulating economic growth and job creation through development of Georgia’s SME sector. The new, Georgian Lari denominated facility will complement BSTDB’s existing USD 10 million SME Loan Facility and USD 10 million Trade Finance Facility with TBC Bank,” said Ihsan Ugur Delikanli, BSTDB President.

ABOUT BSTDB BSTDB is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. The BSTDB headquarters are in Thessaloniki, Greece. BSTDB supports economic development and regional cooperation by providing loans, credit lines, equity and guarantees for projects and trade financing in the public and private sectors in its member countries. The authorized capital of the Bank is EUR 3.45 billion. BSTDB is rated long-term “A-”

by Standard and Poor’s and “A2” by Moody’s.

HEALTHCARE

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November 9, 2015 #121

GEORGIA IS MAKING FURTHER STEPS ON HEPATITIS C ELIMINATION PROGRAM From November 3-5, Tbilisi hosted a conference regarding Hepatitis C elimination program. International advisors group from US Center of disease and control, WHO, Emory and Hopkins universities discussed and evaluated current project that has been implementing over six months in Georgia. The purpose of the meeting are to encourage further development of Hepatitis C elimination program and also to increase public awareness.

Georgia’s Hepatitis C Elimination Program is a Historical Event JOHN WARD The US Center for Disease Control and Prevention

David Sergeenko: Hepatitis C Elimination Program is Undergoing Continuously According to the Ministry of Healthcare, 130-150 million people suffer from C hepatitis disease, With the WHO’s criteria, Georgia is considered as a high-prevalence country.

Program has been implementing for six months and more than 5000 patients are undergoing treatments, the second stage of Hepatitis C elimination program, which is about to start from December 2015 and include treatment of 20 000 patients, was announced on a meeting.

“From April 2015, the Ministry of Health, started Hepatitis C elimination program, which attracted worldwide attention. First phase of this program foresees free access to diagnosis and treatments,” David Sergeenko said.

Treatment course is undergoing continuously with the newest directacting generation of Sofosbuvir. Currently we are working on Hepatitis C elimination strategic program, which includes specific tasks and activities.

According to the Minister, the major task for this meeting was to present the results that will lead the start of a new large-scale elimination program.

Georgia has reached largest progress in six month, it is a historical event. We try to implement elimination of this dangerous disease.

Group of experts, will help Georgia to implement the program,” John Ward, head of The US Center for Disease Control and Prevention said.

On the first day of the conference the group has discussed condition of C hepatitis program in Georgia, also results of population survey and challenges of C hepatitis prevention and control.

The group will assess conducted works and will work out recommendations about priority interventions, program indicators and following phases of elimination program.

The involvement of the international expert team will give Georgia’s C hepatitis elimination program qualified experience and will plan new perspectives for overall healthcare system.

Georgia Will be The First Country to Fully Eliminate Hepatitis ” MARTIN DONOGHOE (WHO Regional Office for Europe) This is an incredible initiative and a very bold action that the Georgian government and the Ministry of health has taken to actually be the first country to embark on an initiative to eliminate Hepatitis c. If Georgia will be able to do it they will be the first country to eliminate Hepatitis C. and I think it’s a very bold initiative and it reflects the great political commitment from Georgian authorities to not only to eliminate hepatitis c but also to strengthen public health in Georgia.

JEAN-ELIE MALKIN: Georgia is The First Country, Where Hepatitis C Elimination Will Be Implemented Today’s meeting is very important to evaluating the ongoing project of eradication of Hepatitis C, which is unique program in the world, I would like to say this program is very important to show how Georgia could make a huge progress on such a big issue as Hepatitis C, right now there are more than 5000 patients who are undergoing treatments, program has started 6 months ago - that demonstrates the willingness, the commitment, evolvement of the government of Georgia especially the Minister of health David Sergeenko, in moving forward to improving access to the services for the population.

We with the minister with the colleges of the Georgian administration we are working very hard to improve the whole component of public health and this success campaign of hepatitis c is a very good example to push us to cut analyses process.

This program consisted of two phases, the first phase is practically finished, and more than 5000 patients with liver disease are undergoing treatments and the second phase is planned to continue until 2020 and of course there will be lots of efforts in screening people who are at risk, in order to identify those who are living with the virus of Hepatitis C in order to treat all of this people in the second phase.

So as for the global alliance it is very important because we are working on all the components of public health and the program on Hepatitis C. This campaign is very important to demonstrate how we can make progress for the benefit of population as a very good example which will be extended to all the components of healthcare.

Who Regional office for Europe is supporting development of national plans on the viral hepatitis control and prevention and improving access to HCV treatment.

With the huge commitment and cooperation with the international organizations like WHO, US CDC. I think that this program will be first in the world to demonstrate its possibilities to eliminate this disease in Georgia.

November 9, 2015 #121

AVIATION caucasus business week

TURKISH AIRLINES PERFORMS THE MOST FLIGHTS FROM TBILISI INTERNATIONAL AIRPORT

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Foreign Airlines Perform 89% of Flights, Domestic Airlines Hold only 11% Market Ratio

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oreign airlines perform 89% of total flights from Tbilisi International Airport, while the remaining 11% ratio is reported for Georgian Airlines. According to the January to September report, Turkish Airlines is the market leader with a 20% market ratio. Georgian Airlines ranks second after Turkish Airlines with an 11% ratio. Ukrainian Flyuia ranks third with a 9% ratio.

According to the statistics, in the January to September period Pegasus Airlines’ ratio is 7%, Flydubai ranks fifth with 5%. Atlas Global, S7, Lufthansa and Aeroflot control 4% ratios, while Transaero Airlines, Air Astana, Air Cairo, ISRAIR, Belavia, Qatar Airways and Azal control 3% ratios.

Passenger Turnover Grows by 12% at Georgian Airports Along with increased tourist inflows, Georgian airports serve more passengers. According to the statistics, passenger turnover at Georgian airports has increased by 12%. In January to September 2015 Georgian Airports have served 1 769 485 passengers at regular or charter flights.

The figure marked 1 578 616 passengers in 2014.

Hence, the year on year growth marked 12.09%.

Moreover, the figure exceeds the indicators of the same period of 2013 by 25.89% (1 405 562 passengers in January-September 2013).

Tbilisi International Airport’s Passenger Turnover Grows by 18%

Passenger Turnover at Batumi International Airport Grows by only 2%

Passenger Flow at Mestia King Tamar Airport Rises by 1647.49%

Passenger Turnover Declines at Kutaisi International Airport

Georgia’s main airport has also recorded a growth in passenger turnover. Tbilisi International Airport’s passenger turnover grew by 18% by serving 1 432 631 passengers in the January to September period, up 17.80% compared to the same period of 2014 (1 216 139 passengers) and up 29.40% compared to the same period of 2013 (1 107 167 passengers).

In the reporting period the passenger turnover at the Batumi International Airport has increased by only 2% to 186 865 passengers, up 1.79% compared to the same period of 2014 (183 570 passengers) and up 9.60% compared to the same period of 2013 (170 490 passengers), the civil aviation agency reports.

The passenger flow at the Mestia King Tamar Airport has increased by 1647.49% to 3 827 passengers in the January to September period 2015, up 1647.49% compared to the same period of 2014 (219 passengers) and up 48% compared to the same period of 2013 ( 2 581 passengers), the civil aviation agency reports.

In the reporting period the passenger turnover climbed down at the Kutaisi International Airport to 146 162 passengers, down 18.20% compared to the same period of 2014 (178 688 passengers) and up 17% compared to the same period of 2013 (125 324 passengers).

Georgian Airports to Serve 208 Flights a Week The Civil Aviation Agency has approved the winter flights timetable. Georgian airports will serve 208 flights a week up to April 2016 (In the event some flights are not suspended and all approved flights are performed).

According to the statistics of the Georgian Civil Aviation Agency (GCAA), a major part of the flights in the coming winter season will be performed from Tbilisi International Airport (84.2%), Batumi International Airport will serve 9.5% of the scheduled flights, while Kutaisi International Airport will serve 6.3% of the appointed flights.

As to the Mestia King Tamar Airport, in the winter period flights are performed in good

weather. Therefore, the agency cannot forecast the frequency of flights in the winter period.

According to the timetable, in the coming winter season Tbilisi International Airport will serve flights to Athens, Alma Ata, Amsterdam, Aktau, Batumi, Bagdad, Baku, Doha, Dubai, Erbil, Yerevan, Warsaw, Vienna, Tehran, Tel Aviv, Kyiv, Minsk, Munich, Moscow, Riga, Salonika, St. Petersburg, Istanbul, Odessa, Urumqi, Sharm El-Sheikh, Sharjah, Kutaisi, Hurghada.

From Batumi Airport flights will be performed to Tbilisi, Tel Aviv, Kyiv, Minsk, Moscow and Istanbul.

As to Kutaisi International Airport, flights will be performed to Budapest, Warsaw, Vilnius,

Tbilisi, Kyiv, Moscow and Istanbul.

According to the approved plan, in the coming winter season the following airlines will operate at Georgian airports: Georgian Airways, Aegean Airlines, Air Astana, Scat, Fly Baghdad, Azerbaijan Airlines, Qatar Airways, FlyDubai, LOT, ATA Airlines, Ukraine International Airlines, YAN AIR, Belavia, Lufthansa, Aeroflot, S7 Airlines, Air Baltic, ELLINAIR, Ural Airlines, Turkish Airlines, Pegasus, Atlasglobal, China Southern Airlines, Air Cairo, Air Arabia and Wizz Air Hungary.

It should be noted in the aviation sector the winter season starts from the last week of October and ends on last Saturday of March.

Cargo Transportation Volume at Georgian Airports Decline by 14% The cargo transportation volume at Georgian airports has declined by 14% to 10 654.254 tons in the reporting period, down 13.59% compared to the same period of 2014 (12 330.245 tons) and down 12% compared to the same period of 2013 (12 064.795 tons).

REAL ESTATE

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November 9, 2015 #121

caucasus business week

CONSTRUCTION QUALITY NOT MONITORED IN GEORGIA

I DEVELOPERS EXPECT PRICE HIKES FOR REAL ESTATE

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ome Georgian real estate companies fear that the adoption of new Building Code can lead to an increase in property prices.

According to President of the Developers Association Irakli Rostomashvili, the draft Code provides for the introduction of new regulations, which may reduce supply in the market which will automatically lead to higher prices.

“The new Building Code complicates the procedure for obtaining building permits, if today we are building 100 houses, the new regulations will reduce this figure by approximately 10%,” - he says.

Bezhan Tsakadze, the founder of the construction company “GDG Group” agrees with the forecast of a possible rise in property prices.

“The Code contains requirements that will make the construction process more expensive. For example, the licensing, reinforcement system . All this will lead to an increase in property price, “- he explains.

In his words, the requirements contained in the draft must be made to the Code, but we should realize that many construction companies will not be able to fulfill them.

CEO of the construction company “Archi Group” Ilya Tsulaia, on the contrary, does not expect growth in

property prices.

“Cost of construction projects will not grow for the bona fide companies, because they already comply with the standards buying high-quality construction materials, etc. After the adoption of the new Code, all will have to work that way. Companies that will not sustain competition, will leave the market and their place will be occupied by normal ones. In any case, the quality will increase, “- he believes.

Draft Construction Code has already been sent to Parliament, where it will be discussed before the end of the year.

n fact, no government agency has control over the construction projects carried out in the country – under the current legislation, the construction customer is responsible for the quality of the buildings under construction.

In this regard, expert opinions were divided - some experts say that small companies build more reliably, others prefer large developers.

According to the head of the Department of Spatial Planning and Construction Policy of the Ministry of Economy of Georgia David Gigineishvili, “small does not mean low quality.”

“Sometimes small companies have more opportunities to control the quality of construction,” - he says.

The officials notes that a scheme of certification of architects and engineers is being developed.

“Who will issue certificates, in what form - we are now working together with the Ministry of Education.

The requirement on certificates is already envisaged in the draft building code, but it is at the level of principle, the specific mechanism is to be developed, “- David Gigineishvili explains.

Director of the construction company “San Remo” Zaza Sanikidze also believes that smaller companies have more efficient control system than large ones.

“Large companies are building a lot,

they have large-scale projects, so they are delayed in time, quality control is less. As for the lack of professionalism, not a single architect or the designer will take the responsibility to do something bad - they have such low salaries that nobody will spoil the business and risk their reputation, “- he says.

In the words of the head of the service of investment projects of “Block Invest” Tornike Janashvili, recently construction companies are having serious problems with professionalism and it is one of the reasons banks refrain from financing construction projects.

“In issuing loans to construction companies, banks were always cautious, of course, the same thing is still going on. Very often they even refuse to issue the loan. The reason is a sharp increase in the number of construction companies in recent years, most of which have problems with professionalism. Naturally, the banks do not trust them and try not to lend. Bankers believe the biggest risk in this sector is the lack of professionalism. Today in Georgia there is no control over the construction companies. Banks are well aware of these risks and deny many applicants, “- says Janashvili.

Work on the building code has been going on for several months, and the document has not yet been submitted to Parliament.

November 9, 2015 #121

SKI RESORT caucasus business week

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GEORGIA TO UNVEIL NEW SKI RESORT IN 2015

Ski Resort on Goderdzi Pass will Considerably Grow Tourist Inflow to Ajara In this period of the year, only shepherds’ calls could be only heard from Zankebi to Chanchakhi or only grazing cattle and sheep used to violate the surrounding silence. Passengers and vehicles used to rarely appear in the Goderdzi Pass.

The situation has entirely changed today. Various vehicles are crossing the area today, the roar of caterpillars, excavators and bulldozers saturate the whole space. The Goderdzi Resort is getting ready for the season inauguration.

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oderdzi Resort, the Ajara’s new ski resort will open in 2015. The highest ropeway station is located on 2 350 meters. The resort includes the region’s longest skiing track of 4 kilometers. For the last years many projects and programs were implemented in the Ajara highland, but the Goderdzi Resort project is special for its scales and sizes, as well as fir its major in investments. The resort will satisfy all standards and requirements of the world’s distinguished ski resort complexes.

The resort construction works started in 2012 and will end this year. The resort will open on December 5. Two years ago a total of 13.264 million GEL was spent on the development works, while in 2013 a total of

2.208 million GEL was spent on infrastructure arrangement and protection works.

In 2014, the project was financed by additional 3.518 million GEL, but incomplete infrastructural works did not enable to put the asset into exploitation.

The infrastructural problems and land legalization details were resolved. The state budget has allocated 22 918 800 GEL for the ski resort projection and construction works, Archil Khabadze said.

The ski resort construction has attracted overall attention. Zimo, Foni, Doppelmayr, EnergoSektorMsheni and Iberia G are famous brands in Georgia and foreign countries. These companies have implemented many important projects.

Doppelmayr is distinguished in Europe for arranging ropeways and skiing tracks.

Goderdzi Resort was beautified by ropeways, poles of Doppelmayr company. Equipment of 5 million GEL was installed at the resort. The company has performed works worth 2 million EUR at the resort. At this stage, security systems were arranged on the resort territory.

Hotel-style wooden cottage was arranged on 380 square meters in the resort zone. Moreover, a cottage with 72 beds was constricted for visitors on the territory.

“The existing hotel-style infrastructure enables the resort to host 134 vacationers simultaneously with an overnight stay, but the infrastructure’s capacity constitutes 4 000 persons an hour. The resort has not determined precise tariffs for services. We provide intense job on pricing, because the ski resorts services represent innovation in this place. We will introduce temporary prices of services. In the 2015-2016 winter season we will regularly question our visitors concerning the temporary prices and services. Based on the collected information, we will take a due decision. At this stage, we will set differentiated tariffs due to hotel services, i.e. there will be different prices in hotel-style cottages, guesthouses and the Goderdzi Resort’s hotel suites. Orientation prices will be determined for specific suites of the hotel, without meal

tariffs. I suppose overnight stay per person will not cost over 50 GEL”, LLC Goderdzi Resort director Jemal Bolkvadze noted.

The State budget has financed the ski resort projection and construction works by 22 918 800 GEL in the village of Danisparauil, the Khulo Municipality.

Ropeway systems were imported and installed at the resort as part of the agreement signed by LLC Goderdzi Resort and Austrian company Doppelmayr Seilbahnen.

“We have drawn about 20 million GEL investments for the resort development. Additional 5 million GEL was accumulated on the company account. We aim to develop the resorts as quickly as possible”, Ajara Economy Minister David Baladze said.

From old buildings, we have maintained only several steady walls, David Koniadze, one of the managers of the resort, said.

“Our constructions will withstand many centuries. The hotel offers expensive and cheapo suites. The Goderdzi Resort visitors are already able to stay overnight here. This resort will be distinguished in Georgia for its special air and attractive environment for tourists”, Koniadze said.

The Goderdzi ski resort inauguration will considerably increase tourist inflow to the Ajara Region, representatives of the Ajara Tourism and Resorts Department, noted.

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COMPANY NEWS caucasus business week

November 9, 2015 #121

PASHA BANK HOSTED REPRESENTATIVES OF DIPLOMATIC CORPS

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n November 4th PASHA Bank Georgia hosted representatives of Diplomatic Corps in Georgia. PASHA Bank is a regional corporate and investment bank serving large and medium enterprises in Azerbaijan, Georgia and now already in Turkey.

PASHA Bank, being an active member of EUGeorgia Business Council, gladly agreed to host a site visit organized by the EUGBC. The representatives of Embassies from Italy, Greece, Turkey, Latvia, Poland, Iran, Bulgaria and Netherlands were hosted at PASHA Bank’s Rustaveli 15 headquarters.

Among the discussed topics were the Bank’s activities regarding the involvement in the recent international Telecommunication Meeting in Georgia, business conference in Brussels, Caspian Energy Forum and other business related gatherings that were sponsored by PASHA Bank.

“We as EU-Georgian Business Council pay paramount attention of promoting regional economic cooperation between Azerbaijan, Georgia and Turkey. In this respect, we very much welcome strategic decision of PASHA Bank to enter Georgian market”, quoted Zviad Chumburidze, Secretary General of EU-Georgia Business Council.

“We welcome the interest of the Diplomatic Corps in such regional financial institutions as PASHA Bank. More than that, we were very happy to receive this privilege of hosting the representatives from different countries and introduce them to our company,” commented Shahin Mammadov, CEO and Chairman of the Board of Directors at PASHA Bank Georgia.

WORLD NEWS

November 9, 2015 #121

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caucasus business week

RUSSIA’S LAST INDEPENDENT ENGLISH NEWSPAPER ENDS DAILY EDITION

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ussia’s only independent English-language newspaper, The Moscow Times, has stopped publishing daily issues in favour of a new weekly format.

The new owner says the move will allow him to save the loss-making publication, but some correspondents fear it spells the end of an important independent news source and training ground for correspondents.

Founded by Dutch publisher Derk Sauer in 1992 and distributed in cafes, hotels and airplanes, The Moscow Times often covered Russian news and issues in more depth than western publications. Former correspondents have gone on to success at other publications, including Pulitzer Prize-winning New York Times correspondent Ellen Barry.

As the Russian economy has slowed down and expats have begun to leave the country, other English-language publications such as the entertainment newspaper The Element have shut down.

In addition to economic difficulties, independent media also face political problems. Amid rising tensions with the west, Russian officials regularly accuse foreign media of waging an information war against Moscow.

In October 2014 Vladimir Putin signed a law barring foreign investors from owning more than a 20% stake in Russian media outlets. Following this legislation, the Finnish publishing group Sanoma sold The Moscow Times to De-

SOCAR to Construct Coal Power Plant in Turkey

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zerbaijan’s state energy giant SOCAR will complete all tender procedures within the framework of the project to construct a cogeneration unit (Petkojen) in Turkey by the end of 2015, Zaur Gahramanov told journalists on November 5.

“We expect to complete all tenders within the framework of this project by the end of 2015 and to start construction of the facility in 2016,” the deputy head of the SOCAR Department of Investments said. “Construction work will take about two years.”

He further noted that the commissioning of the unit would make it possible to not only provide the Petkim oil and chemical complex and Star refinery with electricity but also to sell part of the electricity to the residents of Izmir City.

Petkojen is SOCAR’s first step in the electricity sector, Gahramanov said, adding that the issue of financing this project was still open.

SOCAR Turkey Enerji intends to acquire a coal-fired thermal power plant with a capacity of 300 megawatts.

SOCAR Power has a 10-year project in Petkim with a capacity of 1,500 megawatts. All necessary permissions were obtained for purchasing a 300-megawatt coal-fired power plant from the state. The first phase of the cogeneration plant’s construction will be completed in 2016. Thus, up to 30 percent of current energy consumption will be saved up.

Petkim peninsula’s need for electric and steam energy will increase fourfold by 2023.

myan Kudryavtsev, who previously directed the publishing house of the Russian daily newspaper Kommersant and was a business partner of the late oligarch Boris Berezovsky.

The first weekly issue that came out on Thursday includes several reports on the troubled Russian airline industry following the plane crash in Egypt this weekend. But its new magazine-style cover also features a piece on a

local women’s football team and a story with the teaser, New Ways to Get Drunk in Moscow.

Although no mass layoffs have ensued, the newspaper has fired a photographer as part of what Kudryavtsev said was a restructuring of the photo department, and at least five other employees have left since he became owner. But Kudryavtsev has hired a respected Russian publisher, as

well as a well-known editor, who will determine the content, he said.

“If they continue to populate the website with relevant news stories each day (and this was a plan), then The Moscow Times will remain a meaningful source of news,” said former editor Nabi Abdullaev, who left the newspaper last month over personal disagreements with Kudryavtsev.

Greece Approved a Reform Bill on Friday

Crisis-hit Kazakhstan Unveils Ambitious Privatisation Plan

Armenia Approves Order On Import to Kazakhstan in WTO Context

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reece’s parliament approved early Friday a bill with reforms prescribed by the country’s international lenders, ahead of a euro zone finance ministers meeting in three days which will decide if Athens qualifies for fresh bailout funds.

Greece needs to legislate a series of reforms to pass the first review of a new bailout worth up to 86 billion euros it signed up to earlier this year. It must also revamp its banking system by the end of the year to start talks on much-needed debt relief which Prime Minister Alexis Tsipras has made a priority.

Athens and its lenders are still at odds over an effective mechanism for Greece’s troubled banks - which will be receiving bailout aid - to address non-performing loans affecting businesses, but also thousands of mortgage holders.

A 23 percent VAT tax on private education is also a thorn in talks with lenders. Athens signed up to the measure to plug a 300-400 million euro fiscal gap but later found it was highly controversial in a country where parents supplement perceived shortcomings in the state education system with extra tuition, and is now trying to find other ways to raise the revenue.

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azakhstan is set to embark upon its most ambitious privatisation plan since independence from the Soviet Union in 1991, offering stakes in its largest state-owned enterprises to international investors in preparation for eventual stock market flotations, officials told the Financial Times on Tuesday.

The move coincides with a warning from Nursultan Nazarbayev, president, that the world faces “economic turbulence” that for many emerging market countries could dwarf the impact of the global financial crisis of 2008-09.

We must act now before this chill turns into a long fierce winter,” said Mr Nazarbayev.

The crisis-hit central Asian nation’s economy has been badly hurt by the impact of falling oil prices and economic troubles in neighbouring Russia and China.

Earlier this week the government replaced the central bank governor, Kairat Kelimbetov, after the tenge currency shed a third of its value since August, when Mr Kelimbetov announced a move to a free float.

Last month, the International Monetary Fund cut its forecast for Kazakhstan’s economic growth to 1.5 per cent, from 4.3 per cent last year and an average of 8.4 per cent in 2000-2011.

However, officials may face an uphill struggle trying to attract foreign investment into larger groups such as KazMunaiGas and KTZ, which have hefty social obligations within Kazakhstan as well as big debts and investment needs.

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rmenia approved the draft agreement of the EEU on rules of import to Kazakhstan of a number of goods, whose customs duties Kazakhstan must lower below Eurasian ones pursuant to its obligations as a WTO member.

According to the agreement, Kazakhstan has the right to export goods and products processed from them (including sugar) to other EEU republics only in individual cases (including personal cars).

Re-export of goods subject to veterinary and sanitary expert examination isn’t allowed in case they were produced and delivered in accordance with norms of security different from those of EEU. To re-export such goods, Kazakhstan will introduce system of control over their origin.

The data of that system will be transferred to an analogous system of the importing country.

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PUBLICITY caucasus business week

November 9, 2015 #121

November 9, 2015 #121

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi.

E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str.

Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy

TBILISI GUIDE

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

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

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

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

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

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

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

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

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

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

Contact information: Email: info@gsservices.ge.

Address: Shalva Dadiani 10

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

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

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

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PUBLICITY caucasus business week

November 9, 2015 #121