Caucasus Business Week #129

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BUSINESS WEEK January 18, 2016 #129

January 18, 2016, Issue 129

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MORE DETAILS EMERGE ON NEW SOCIAL MEDIA PLATFORM FROM GEORGIAN DEVELOPERS – INCLUDING ITS NAME Pg. 6

PROCREDIT BANK POSITIONS WORSEN

Pg. 7

TURMOIL AROUND FINANCIAL SUPERVISION AGENCY Pg. 5

GEORGIA DEVELOPS HEALTHCARE FACILITIES

Pg. 11

RUSSIA-TURKEY CONFLICT’S IMPACT ON GEORGIAN POWER Pg. 4 SECTOR

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January 18, 2016 #129

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MAIN EVENTS KUMSISHVILI: BARGAINING PROCESS IS HELD WITH INVESTORS OF ANAKLIA SEA PORT

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argaining is held in order to envisage state’s interests maximally in Anaklia Sea Port project” , - Minister of Economy has declared to GBC in response of the question, when investor of Anklia Sea Port will be named.

Dimitri Kumsishvili hopes that they will be able to name the investor in January.

Minister declares that active operations are carried jointly with the consultants on that complex project in order to envisage all details and state interests as well.

The government must select investor of Anaklia See Port between two investor companies - JSC ANAKLIA DEVELOPMENT CONSORTIUM and ANAKLIA PORT AND INDUSTRIAL ECO PARK. Submission of application on Anaklia Sea Port Construction has started in August, 2014.

Construction of Deep Water Sea Port is envisaged, which cargo turnover capacity will be over 100 million t in a year. The project envisages construction of free industrial zone as well.

ANOTHER 2 PROJECTS WERE FUNDED WITHIN THE PROJECT PRODUCE IN GEORGIA

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he government has approved another two projects within the frame of Produce in Georgia.

According to Ministry of Economy, one project envisages launch of wooden and metal door manufacturing plant and investment of more than 1,9 million GEL. The second plant will produce dried fruit. The mentioned enterprise will be constructed in Samgrelo region and the products will be made with new technologies – method of fast getting rid of the fluid from fruits. The matter concerns to the procession of 150 t fruit and investment of 642 thousand GEL. Over 100 persons will be employed in both projects.

$5 MILLION USAID GRANT HELPS DISADVANTAGED GROUPS IN GEORGIA

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he United States (US) has allocated about $5 million USD to help people with disabilities, women, youth, ethnic minorities, and disadvantaged groups in Georgia. A relevant agreement was reached between the United States Agency for International Development (USAID) and Georgia’s Ministry of Finance.

The agreement will provide $4.95 million, over the next five years, in support of increased inclusion and integration of targeted populations in Georgia, including people with disabilities, women, youth, ethnic minorities, and disadvantaged groups.

USAID/Georgia said the development assistance grant agreement was signed by USAID’s Caucasus Mission Director Douglas H. Ball and Georgia’s Finance Minister Nodar Khaduri.

The grant agreement will support Georgia’s efforts to build an increasingly stable, integrated and healthy society. It will further expand and complement two other grant agreements, signed between the two countries on December 22, 2015, to provide up to $69.3 million to assist Georgia with its democratic and economic development over the next five years.

Over the last 23 years, the American people have provided over $4 billion in assistance to Georgia.

“The three development assistance grant agreements are an important part of the United States’ continuing assistance to Georgia and reflect the United States Government’s strong commitment to strengthening and sustaining Georgia’s democratic, free-market transformation,” the USAID/ Georgia said.

GEORGIAN GOVERNMENT LOOKS TO LIBERALISE TAX CODE

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he Georgian Government is planning to simplify the Tax Code and create better conditions to the business society.

Georgia’s Prime Minister Giorgi Kvirikashvili announced the Government had started active works to liberalise the taxes following the Estonian model.

We are actively discussing to establish Estonian model in Georgia. In particular, the model comes to the income tax only in case of profit-sharing.

Meanwhile, in case of the re-investing the companies will not pay

the income tax. This will support to mobilise investment resrouces and the existing potential,” Kvirikashvili explained at today’s Government meeting.

The Prime Minister announced the Government would cooperate with the International Monetary Fund (IMP) representatives to Georgia to create the draft law. First it should be discussed at the Government meeting and then sent to the Parliament for further approval. Only after that the law would enter into force.

Meanwhile, a month ago Georgia’s Finance Minister Nodar Khaduri also talked about the simplifying of the country’s Tax Code. Khaduri announced the amendment would come into tax limitation period.

According to the amendment the six-year limitation period was reduced to three years. However, according to article 309, paragraph 62, the threeyear term was regulated and defined as follows: From January 1, 2015 to January 1, 2016 period - 5 years and; From January 1, 2016 to January 1, 2017 period - 4 years.

The limitation of 6-year term was extended until 1 January 2015, while the 3-year shifting period would start from 1 January 2016.

The Minister added the tax audit process will become more time-limited in order to avoid “further problems” to the business society.

Proposed changes also considered scrapping several types of unpaid taxes, including unpaid tax debts that originated before 2011. As for the tax debts that were originated before 2013 they would be written off in case the taxpayer did not have any activities within the following period.

Changes also related to import tax. Khaduri said import would exempt from value added tax (VAT).

The Finance Ministry also announced income tax reform for this year.

MOODY’S: GEORGIA’S REAL ECONOMIC GROWTH WILL AVERAGE 3% IN 2016

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lobal rating agency Moody’s forecasts Georgia’s real economic growth will average three percent in 2016, according to the local weekly Englishlanguage newspaper The FINANCIAL. AVP-Analyst at Moody’s Ernest Sergenti told The FINANCIAL Georgia’s real economic growth was predicted to average 4.8 percent between 2010 and 2019.

Meanwhile, he said with low domestic savings, Georgia’s economic growth model will remain heavily dependent on external financing. In his words Georgia faced the challenge of ensuring healthy economic growth prospects, while simultaneously reducing external vulnerabilities.

Georgia is characterised by high and volatile growth, which we estimate will average 4.8 percent between 2010 and 2019, relatively low income per capita ($7,653 USD in 2014 on a purchasing power parity basis) and a relatively small economy ($17 billion USD in 2014),” said Sergenti.

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Moreover, Georgia’s economic growth model is heavily dependent on external financing for investment, since domestic savings are low, at 13.7 percent of GDP in 2014. This is also reflected in the country’s large current account deficit. As such, Georgia faces the challenge of ensuring healthy economic growth prospects, while simultaneously reducing external vulnerabilities,” Sergenti added.

While talking about Georgia’s economy Sergenti said economic slowdown last year was mainly caused by slowdown in Georgia’s major trading partners.

In the first half of 2015, growth fell to 2.6 percent, down from 4.8 percent for all of 2014.

This was mainly due to the slowdown in Georgia’s major trading partners, with remittances down 31.8 percent year-over-year in July and merchandise exports down 24 percent over the same period,” said Sergenti.

He said despite the fact that Georgia’s trade

links with Russia had declined greatly since the 2008 conflict with Russia, they were still substantial and have been increasing since 2013.

For instance, in 2014, Russia accounted for 10 percent of Georgia’s total merchandise exports, up from 6.5 percent in 2013; and, in July, Russia accounted for 46 percent of total remittance flows to Georgia. Georgia is therefore also vulnerable to the economic downturn in Russia,” Sergenti said.

However, as Sergenti noted, the commencement of the Association Agreement (AA) and the Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union in September 2014 was supportive of the rating because it improved Georgia’s medium-term economic and institutional strength prospects.

As he added, the country was also modernising its transportation infrastructure and was undertaking reforms that would enhance its competitiveness, productivity, and export volumes.

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 January 18, 2016 #129

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ANALITYCS

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January 18, 2016 #129

caucasus business week

RUSSIA-TURKEY CONFLICT’S IMPACT ON GEORGIAN POWER SECTOR ZURAB GARAKANIDZE Doctor in Economics, Tbilisi State University Professor

The Russia-Turkey relations have rushed into a blind alley after Turkish fighter aircrafts threw down Russian SU-25 hornet. Some circles have even actualized the issue of abolishing the Karsi Agreement signed in October 1921. Russian President Vladimir Putin accuses personally the family of Turkish President R.T. Erdogan of smuggling crude oil from Syrian and Iraqi Islamic insurgents…

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he tensions between these countries affect the geo-economics perspectives of Georgia too.

It should be noted that Turkey imports 98% of the consumed gas, 92% of the consumed oil and 20% of coal, including the country buys 60% of the imported gas, 35% of the imported oil and 30% of the imported coal from the Russian Federation. Turkey generates 31% of consumed electricity by natural gas. The country receives a part of gas and electricity from Georgia…

Electric Energy Industry Georgian vice Prime Minister Kakha Kaladze noted that the logic extension of the Black Sea Transmission Network (BSTN) implies the formation of a joint network with Russia, Azerbaijan and Armenia in order to, finally, establish a regional energy market.

K. Kaladze made the statement at the session of the Energy Charter Conference Ministerial in December 2015 – “Promotion of Regional Cooperation through Cross-boarder Energy Trading”.

“By the financial support of the EU financial institutions Georgia has implemented the Black Sea Transmission Network (BSTN) project. The BSTN operation started in 2013. This project will empower the Georgian transmission system connection with the neighboring countries, especially with Turkey and ensure the reliability of exports, imports and transit of electricity in the Region. This is one of the most important infrastructural projects in the power sector that aims to provide 700 megawatt transmission between the Georgian and Turkish networks”.

The Georgian Vice Prime Minster also stressed: “The logic extension of the BSTN project implies a formation of a joint network with Russia, Azerbaijan and Armenia in order to create a joint energy market. It should be also noted we have real technical fundament for implementing this project, but the regional security problems may frustrate this process. Namely, the Metsamori nuclear power plant (NPP) in Armenia generates excessive electricity and the country exports it to Iran and receives natural gas in exchange (this operation is rather a barter exchange, then exports).

RosAtom, which owns shares in Metsamori, plans to extend the exploitation period of the second power block (407.5 megawatts) for 10 years.

Metsamori’s annual generation is 2.5 billion kw/h, a 35% of Armenia’s total generation. Georgia with excessive portion of hydro power plants in its western regions needs to ensure balanced supply of electricity to the eastern part of the country. To this end, the government has developed a three-stage strategy for developing the Georgian power system (2015-2025).

For the past years, Azerbaijan increases the portion of natural gas in electricity generation. Therefore, the country has balanced system of generation and transmission of electricity.

Meanwhile, these countries have less achievement in relation to the electric energy systems of two big neighbors – Russia and Turkey.

Turkey has extremely increased electricity consumption for the last two decades. The country is mainly based on the generation of steam power plants that work on mineral resources. However, the country plans to construct three nuclear power plants. Russian RosAtom has already launched the construction of Akuiu NPP in the city of Mersi, at the Mediterranean Sea. The NPP was to comprise 4 units of ВВЭР-1200 Russian power blocks, but the recent tensions have led to the project suspension, despite the Russian party has made serious investments in the project implementation. A Japan-France consortium also plans to launch construction of the second big NPP in 2017, while the a Chinese consortium will commence the third NPP construction in 2019.

Thus, Turkey was expected to become the regional center of power generation by putting these facilities into exploitation by 2020, while the Russian Federation was to become the region’s largest investor in the NPP sector. Russia owns 34 reactors in 10 regions and its atomic sector generates 24 000 megawatt power a year.

Despite the outdated infrastructure, the government has announced a plan for enhancement of the main facilities and to reach 30% generation in the atomic sector by 2030 and 50% - by 2050.

Moreover, the International Energy Charter that was signed in June 2015, including by Georgia, Armenia, Turkey and Azerbaijan outlines Georgia’s perspectives to

become an electricity hub in the Region. Georgia genuinely has such a potential. Mr. Kakha Kaladze noted: “Today Georgia finished the construction/rehabilitation of 500 kilowatt transmission lines with Russia and Azerbaijan. The 500 kilowatt transmission line construction works with Armenia will be also finished in the near future”.

However, Armenia and Russia will not supply electricity to Turkey in the near future. Therefore, Georgia will have to increase generation to export electricity to Turkey. To this end Georgia is implementing large-scale HPP construction projects. Nevertheless, the projects are accompanied by a number of ecological problems too.

Is it possible to establish a joint regional energy market in the near future amid the current political tensions between the potential partners? We suppose this is impossible at this stage. The point is that Azerbaijan and Armenia adhere to the 1994 UN ceasefire agreement after the 1990s hostilities, the Russia-Georgia weak economic relations is slowly growing after the 2008 hostilities. Therefore, we welcome the idea of creating a joint regional electricity market, but we suppose the International Energy Charter Conference Ministerial made focus on the midterm perspectives, not the nearest future.

Thus, Turkey cannot receive electricity from Armenia for its needful eastern parts because of ArmeniaAzerbaijan confrontation. Moreover, Turkey will not receive Russian electricity from the Kavkasioni network through Akhaltsikhe-Borchkha transmission line, after the Russia-Turkey tensions. Therefore, in the near future Georgia cannot become a specialized regional hub for distributing electricity from various sources to various directions…

Oil, Swiss Company Role The Russia-Turkey confrontation may make the most negative impact on transportation of the Caucasian oil to global markets. TengizShevrOil international consortium exports oil from the Tengiz field and Russian Seaports through the Turkish gulfs of Bosporus and Dardanelle. On December 8, 2015 Kazakh Economy Minister Erbolat Dossayev noted at the government meeting that in December 2016 the country would launch commercial extraction of oil from the giant offshore field of Kashagan, the Caspian Sea sector.

Kazakhstan planned to put into exploitation this field in 2014, but the inauguration was postponed twice because of breakdowns on marine pipelines. The Minister also updated the government meeting that the country would finish the reconstruction of Tengiz-Atiru-Novorossiysk oil pipeline of the Caspian Pipeline Consortium (CPC), which is the Russian-Kazakh-American-Italian consortium. The reconstructed pipeline is to transport the Kashagan oil to the Black Sea port. The pipeline’s annual transportation capacity is 28 million tons, but the output will increase to 67 million tons.

The CPC reconstruction project calls for building 10 new oil pumping stations (2 in Kazakhstan and 8 in Russia) and reconstructing 5 ones. A total of 6 new oil terminals will be built in Russia (each one with 100 000 cubic meter capacity). The third exports berths will be also arranged near Novorossiysk. Kazakhstan has also started replacing the 88 kilometer section by the bigdiameter pipeline. The project’s investment value is 5.4 billion USD. Nevertheless, the Russia-Turkey cold war may thwart the project implementation despite the ongoing works. The first emergency signal appeared in 2011,

when the flood destroyed the new terminal of CPC near the city of Krimski, Novorossiysk.

The second factor is related to the Moscow-Ankara political tensions that are aggravated by the ecological Cold War. The point is that the CPC reconstruction completion will at least triple the workload of Turkey gulfs at the end of 2016. Currently, an ocean liner crosses the Bosporus Gulf every 12 minutes in the center of Istanbul, while this time interval may be narrowed to 4 minutes.

After the Cyprian щшд tanker Nassia collapsed in 1994, Turkey tries to prevent the Bosporus Gulf overloading. Ankara provides tireless efforts to maximally reduce the number of oil tankers in the Gulf to lower oil leakage threats in the center of the giant metropolis.

Therefore, despite the requirements of the 1936 Montro and 1982 UN Sea Conventions, the Turkish Authorities permanently try to reduce the intensity of sailing of tankers. The country requested that navigation pilots and tugboats accompany oil tankers over 200 meters in length in the daylight period, then the country proposed to build Samsun-Ceyhan and Burgas-Aleksandropulos land pipelines. The country also initiated to establish the Gulfs Ecology Foundation with 30 million USD capital, but in vain. The Gulf’s workload will be expectedly enlarged after completion of the CPC reconstruction. It cannot equally satisfy the interests of all power manufacturers of Turkey, Russian and the Caspian basin. Amid the Russia-Turkey tensions, the appearance of the so-called Big Kazakh Oil will supposedly fully disorder the situation there. As a result, Turkey may even close Gulfs.

The above-mentioned factors suggest that a new alternative route should be developed that would contain less problems. We think the alternative route could transport Kazakh oil through Russia, Georgia and Turkey crossing the Abkhaz section. If the corresponding agreement is timely signed, the Kazakh oil transportation will be carried out under the supervision of SGS Swiss company, by the consent of the World Trade Organization (WTO). This route will be more profitable at the end of 2016 compared to other existing projects.

Similar project was relevant in early 1990s and it called for transporting oil to Turkey via Georgia, namely, via the autonomous Republic of Abkhazia.

According to estimations by Russian experts, the Russian Federation losses from the Baku-Tbilisi-Ceyhan pipeline inauguration exceeded 5 billion USD since 2006, because the oil exports from Azerbaijan to Novorossiysk considerably decreased. Moreover, according to the same report, Russia’s losses from the BakuTbilisi-Erzurum gas pipeline inauguration exceeded 3 billion USD since 2007. Furthermore, If Turkey introduces ecological restrictions in gulfs, oil transportation through the Turkish gulfs will become unprofitable for Russia and Kazakhstan. Meanwhile, the Russian Federation state budget for 2016 is based on the 50 USD oil price, while the Russian President Vladimir Putin signed the bill on December 15, 2015 and the next day, on December 16, the global oil prices fell to 38-37 USD per barrel.

Therefore, under the aegis of the WTO, under the SGS supervision, Moscow may remunerate the losses if oil transportation is carried out via the Abkhaz section and the Baku-Tbilisi-Akhalkalaki-Karsi railway.

Therefore, this route would satisfy the Russian Federation interests too.

The mentioned routes are supposed to cross the Abkhaz territory, but the Russia-Georgia confrontation around the Abkhaz conflict resolution issues may thwart the implementation of this alternative project for the Kazakh oil transportation. However, some experts

assure that the mentioned project may be implemented through the neutral Swiss company – SGS. We believe this issue may be negotiated by Russia, Georgia, Turkey and Kazakhstan, because the Russian Authorities will be persuaded in its opportunity for remunerating the previous losses. If the negotiations are underway, Georgia will be able to negotiate specific energy projects in the context of Abkhazia with the support of such influential member of the CIS as Kazakhstan. The mentioned project will be profitable, because the railway will be connected with Europe through the Marmarai tunnel under the Bosporus gulf, without sea ferry. The field specialists assert that the project is a profitable one…

The oil transit will enable Russia and Georgia to receive additional transit revenues, but it should be also noted that the Georgia-Russia confrontational background will create serious obstacles for implementing the alternative route. Therefore, it is necessary that Kazakhstan and other Central Asian countries also be interested in this project.

Natural Gas The Russia-Turkey relations are worsening in the gas sector too. Ankara is trying to replace Gazprom with a 60% ratio in the Turkish natural gas consumption, by other suppliers. Turkey planned to employ a major part of this gas for electricity generation for the nearest 10 years. In December 2015 Moscow announced suspension of the Turkish Stream project implementation. The first pipeline with 15.5 billion cubic meter annual output was designated for Turkey, while another similar pipeline was designated for the southeastern European countries.

Turkey receives 30% of the total consumption from Iran through Tavriz-Erzurum gas pipeline, but in winter period Iran’s domestic consumption grows and the gas supply to Turkey is sometimes suspended. Therefore, eastern parts of Turkey are supplied by Russian natural gas and from the South Caucasian pipeline. The latter pipeline crossing Georgia operates at a halved workload. For example, the pipeline transported only 4,5 billion cubic meters in 2013 and 6 billion cubic meters in 2014. The natural gas transportation volume will increase in this pipeline starting 2018, when Turkey will put into exploitation TransAnatolia gas pipeline, as a constituent part of the South Gas Corridor.

In December 2015 Turkish Prime Minister Ahmet Davutoglu met with Azerbaijani President Ilham Aliyev and the parties decided to accelerate the TransAnatolian Gas Pipeline construction. Moreover, in the same period Turkish President R. T. Erdogan visited Qatar and signed a long-term memorandum on liquefied gas supply to Botas, the state energy company of Turkey. No information was spread on the agreed volume of liquefied gas supply.

This signifies Turkey does not fully trust the South Gas Corridor and insures the country by liquefied gas.

Currently, Turkey receives liquefied gas from Algiers and Nigeria, annual 4.4 and 1.2 billion cubic meters, respectively, but Turkey cannot increase liquefied gas imports, because the total capacity of its two LNG terminals makes up only 1.5 billion cubic meters.

Moreover, Turkey faces difficulties with replacing Russian natural gas by alternative sources. Indeed, recently discovered gas fields in the eastern part of the Mediterranean Sea creates perspectives for natural gas supply to Turkey, but disordered relations with Israel, Greece and Egypt and the northern Cyprus occupation may frustrate similar perspectives. Therefore, Turkey cannot become gas supply hub and this failure will make negative impact on Georgia’s gas transit perspectives too.

January 18, 2016 #129

ECONO-MIX caucasus business week

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TURMOIL AROUND FINANCIAL SUPERVISION AGENCY

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isputes around the financial supervision agency have risen to the surface again. The Constitutional Court of Georgia has abstained from passing a rush decision on the suspended agency. Moreover, even the essential court discussion has not been appointed yet. Meanwhile, the jobless staff of the agency asks the Parliament to tackle issues with salaries and working conditions.

The agency members “were forcibly delayed”.

Therefore, according to the 32nd article of the Labor Code (payment of salaries for forcibly suspended job), these workers should fully receive their due salaries. Moreover, if they apply to the court, they will definitely win the case, Gocha Aleksandria, the deputy chairman of the Trade Unions of Georgia, told the Banks&Finances newspaper.

“They must be paid salaries despite the constitutional court’s decision on suspending the financial supervision agency operation. The agency members are forcibly delayed. According to the Labor Code requirements, workers must fully receive their salaries if they are forcibly delayed. The state owes arrears of wages for several months. If these workers apply to the court, they will definitely win the trial and we will assist them if necessary”, Gocha Aleksandria said.

“The board members have sent a letter to the parliament chairman of Georgia. The letter notes that in September 2015 the Parliament approved the board of the Financial Supervision Agency, the board chairman and the agency head. The Agency started operation immediately and approved: 1) the agency statute; 2) the staff list 3) organizational structure of the agency and 4) the 2015 budget of the agency.

In October, the constitutional court suspended commissions to the agency board and the agency head for carrying our certain operations, but the officials remain authorized to continue working on a number of issues. Consequently, the necessary working conditions for the agency (a building for operation, computer hardware, payroll budget and so on), that was to be ensured by the National Bank of Georgia (NBG) by the law, has not bee fulfilled yet.

The salaries for the agency board members have not been determined either. “I ask you to instruct due committee to monitor the law enforcement”, the agency members demand from David Usupashvili.

The agency representatives have also met with representatives of the parliament’s finance and budget committee. “Our main demand is not related to salaries. The financial supervision agency demands for due working conditions and monitoring of the law enforcement. The constitutional court has suspended part of the commissions, but another part of the commissions still remain valid. We do not discuss this issue. We demand that the law enforcement monitoring be carried out and due working conditions be created”, Irakli Kovzanadze noted and added the agency representatives maintain their commissions, while they have not due building for assembly. „They should receive due salaries. Other issues should be examined by lawyers whether their demand comply with the constitutional court’s decision”, Tamaz Mechiauri said. Mean-

while, lawyers ask for additional time to study the case and plan to make statements later. At this stage, they only confirm that the agency members must be paid salaries.

However, the NBG rejects satisfying the board members’ demands. Allocation of subsidies to the financial supervision agency from the NBG budget will be illegal and ungrounded, because the NBG keeps executing the financial supervision functions.

“The National Bank was obliged again to supervise the finance sector. Consequently, according to the existing legislation and the constitutional court’s decision, the NBG continues executing the financial sector regulations. It is worth noting, according to the staff list submitted by the agency board, the number of the agency office employees is to increase by 67 persons compared to the current quantity of employees in the NBG, who are responsible for supervising the finance sector. At the same time, according to the budget bill, the agency plans to increase administrative expenditures by 10 million GEL compared to the existing budget”, the NBG statement reads.

CONSTITUTIONAL COURT NOT HURRYING

The constitutional court of Georgia passed a decision on suspension of the financial supervision agency operation in October 2015. According to the constitutional court’s statement, the court plenum accepted an appeal of Georgian MPs (Zurab Abashidze, Giorgi Baramidze, David Bakradze and others. Total of 39 MPs) against the Georgian Parliament. The plaintiff party argued against amendments to a number of legislative acts, including into the Georgian organic law on National Bank. As reported, based on these amendments, the Financial Supervision Agency of Georgia was established as a legal entity of public law (LEPL) to execute the NBG functions for supervising the finance sector.

“Five members of the plenum decided that before a final resolution of the issue, enactment of the disputable norms could shake the finance-bank sector of Georgia and bring irreversible outcomes to concrete bodies (participants of banking process,

investors, depositors).

Therefore, the constitutional court suspended the operation of the financial supervision agency, before a final resolution of the issue, and the due functions were maintained to the National Bank”.

Under the legislation, the constitutional court must pass a decision in a 4-11 month period. According to Giorgi Gotsiridze, a lawyer for the Association of Young Lawyers of Georgia (GYLA), the 22nd article of the Georgian law on Constitutional Court, reads that the appeal discussion period must not exceed 9 months and the period may be extended for additional 2 months. This signifies ultimate period is 11 months.

If the case is considered to be a priority one, then the constitutional court is entitled to pass a final resolution within 4 months. For example, in summer 2015 the constitutional court considered the case of Gigi Ugulava to be a priority one and passed the verdict in about a month. As a result, Gigi Ugulava was released from prison for a day.

In this case, the constitutional court has not considered the financial supervision agency to be a priority case. The Banks&Finances was told at the court that the legal discussions have not been appointed yet and the legislation determines 9 month period for this case.

PRESUMED FATE OF THE AGENCY

The distrust to the NBG President Giorgi Kadagidze is a real motive for creating the financial supervision agency. Consequently, the new agency was to expose reasons for extreme collapse of the GEL exchange rate and to stabilize the exchange rate. Additional goal of the agency was to recover the financial market. For many years the NBG has supervised commercial banks, while other bodies of the financial market were in offside. The securities market remains undeveloped, that is one of the main instruments for success of the finance sector in any developed country. Neither pension funds nor the insurance sector has developed in Georgia.

Therefore, nobody would assess the NBG performance as a success.

All this process should be liberated from political tinctures and specific steps should be taken for the financial market development, financiers assert. It is not of much importance whether the financial supervision agency remains in the NBG structure or operates as a semi-independent struc-

ture. Both models successfully operate in the developed countries, financiers assure.

Therefore, if the NBG is liberated from Giorgi Kadagidze, the main opponent of the ruling Authorities associated with the United National Movement (UNM), the final decision of the constitutional court will not matter for the Authorities.

“Giorgi Kadagidze will complete his 7-year term on the NBG president’s position in February 2016. After Kadagidze leaves the NBG, the Georgian President must submit a new member of the NBG board to the parliament. After that, the NBG board will elect the new president of the NBG. Under the Georgian organic law on National Bank, the NBG board is a supreme body of the NBG that consists of 7 members. New member was approved in the board in December 2014. Three members will complete their terms in December 2016. This signifies the old members of the NBG board will have to elect the new president of the NBG. Therefore, if they find the new member acceptable, they will elect him/her the NBG president. In other case, the current vice president Archil Mestvirishvili will execute the commissions of the NBG President, who is from the team of Kadagidze and has the trust of the board members”.

At this stage, the NBG board members are: Giorgi Kadagidze, the NBG President, the board chairman. He became the board member in February 2009. Before, he had chaired the financial supervision agency. In 2009 the agency was united into the NBG. Archil Mestvirishvili, the vice president, joined the board in December 2009.

Otar Nadaraia, the vice president, joined the board in December 2009. He has been working at the NBG since 2003.

Lasha Jugheli, the board member since 2009.

Before, he was an assistant to Giorgi Kadagidze at the financial supervision agency.

Vazha Jankarashvili, the board member since May 2012. Before, he has worked on various positions at the Prosecutor’s Office.

Nikoloz Gongliashvili, the board member since 2012. Before, he has worked at the prosecutor’s office and the Georgian Public Broadcaster (GPB).

Nikoloz Kavelashvili, the board member since December 2014.

If Archil Mestvirishvili fulfills the NBG President’s commissions, he will remain on the position until December 2016, when his membership term is finished. Supposedly, three new members will be elected in the board in January 2017. This signifies the NBG board will have five new members and his new team will elect the new president of the NBG for a period of 7 years. Therefore, the spring will cast light whether the NBG is liberated from political aspects and whether the Government will still have plans for enacting the new agency. www.bfm.ge

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n December 2015, Caucasus Business Week offered an exclusive scoop into early developments regarding an upcoming social media platform by a Georgian firm in conjunction with US tech experts. Now, the new project from the yet-anonymous creators finally has a name: SPRECT. The upcoming social network has an appropriately striking logo, with the people behind it promising strong symbolism and a solid brand identity once the full toolset is revealed. And what’s more exciting, they’re also promising a powerful new word in marketing, not just social networking systems.

BUSINESS caucasus business week

January 18, 2016 #129

MORE DETAILS EMERGE ON NEW SOCIAL MEDIA PLATFORM FROM GEORGIAN DEVELOPERS – INCLUDING ITS NAME

“Content delivery to the right people at the right time and at the right place is arguably the most crucial success indicator in businesses today, and it’s something we aim to revolutionize a fair bit. Think a new branch in marketing tools,” commented the head of the project during our visit to their office.

The progressive SPRECT still remains largely mysterious, with more details to be unveiled as time passes. According to the developers, the platform is currently slated for a soft launch sometime in the next few months, and Caucasus Business Week will be covering the venture’s unfolding.

ELIT ELECTRONICS UNVEILS BIGGEST STORE IN EAST POINT SHOPPING MALL hosting clients with dishes of famous and skillful chefs. You will have the opportunity to see and taste culinary masterpieces cooked by the modern devices every week.

Elit Electronics has been operating on the Georgian market for 20 years. The company trades in the cutting-edge and top-quality products and creates maximum comfort to clients so as they buy high-quality products. The company also provides top-class consultations and always introduces innovative projects in the market.

Today Elit Electronics manages the largest trade network in the Georgian market of home appliances. Best products, wide and constantly renewable assortment, warranties and aftersale services, delivery of purchased products and topquality services – all these aspects strengthen the name and place of Elit Electronics in the Georgian consumer market.

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lit Electronics has unveiled its biggest store in the East Point shopping mall.

Devices, unique concept, exclusive equipment and highest-level standards of the world’s leading brands – Elit Electronics has assembled all these opportunities into one space and unveiled the biggest store of home appliances.

The store is distinguished for its sizes and unique concept. Elit Electronics offers the widest option of products of the world’s leading brands in Georgia.

The store inauguration ceremony was attended by: Mr. Umit Korkmaz, a BSH services vice president, and Mr. Michael Schallhorn, a BSH board member.

“Elit Electronics is one of the most important partners. We have been partners for 20 years in both retail and aftersale services. This cooperation grows year by year and we welcome this ten-

dency”, they noted.

The store offers showrooms of the world’s leading brands such as Apple, Samsung, LG, Sony, Bosch, Siemens, Gorenje, Philips, Acer and Lenovo.

Moreover, consumers are able to buy top class exclusive kitchen products of BOSCH and SIEMENS companies. It is famous that Elit Electronics is an authorized partner of Apple, exclusive and sole representative of Bosch, Siemens and Gorenje and official retail partner of LG and Samsung in Georgia.

The Elit Electronics’ store provides maximum comfort for its clients. Guests are able to enjoy the children entertainment space and leave children there while choosing and buying desirable products. The store also offers Elite Café services with yummy coffee; customers are able to take a rest to freely take decisions.

The store will also establish a tradition for

BANK

January 18, 2016 #129

caucasus business week

PROCREDIT BANK T POSITIONS WORSEN

7 HEADLINES

GEORGIAN GLASS GOES TO THE ITALIAN MARKET

ProCredit Bank beyond List of 2015 Five Top Banks MERAB JANIASHVILI Economic Analyst

hree major Italian producers of mineral water have signed a contract with the manufacturer of glass “Georgian Glass”.

The contract conditions will include monitoring of product quality, shape of the bottles, the materials from which they are produced.

The bottles designed by both local and Italian experts are calculated for products in the high price segment.

A shape of bottles and materials have been developed specially for exports to Italy.

In the first phase 25 million bottles meant for 13 types of mineral water were made for the Italian customers. A similar number of the products are planned to be exported in 2016.

A total of 280 people are employed at the “Georgian Glass” factory.

MILLENNIUM HOTEL OPEN IN TBILISI IN EARLY JULY

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he year of 2015 was not successful for ProCredit Bank Georgia, unlike its competitors. The previous year turned out one of the most profitable period for all other commercial banks, while ProCredit Bank Georgia positions have worsened. As of December 1, 2015, ProCredit Bank has left the list of Georgia’s five leading commercial banks in terms of deposits.

FIVE TOP COMMERCIAL BANKS IN TERMS OF DEPOSITS AS OF DECEMBER 1, 2015 (IN GEL)

The bank sector’s deposits constitute 14.065 billion GEL as of December 1, 2015, including the ratio of five top commercial banks is 81%.

The portfolio of individual and corporate deposits (excluding commercial banks) has increased by annual 26% (11.166 billion GEL as of December 1, 2014). VTB Bank has replaced ProCredit Bank in the list of five top commercial banks. (Table 1) It should be noted ProCredit Bank has been one of the leading commercial banks in Georgia for many years in terms of assets, deposits and credit portfolio. Before 2013, ProCredit Bank ranked third in terms of assets. In 2013, Bank Republic and Liberty Bank pushed back ProCredit Bank to the 5th position, while the January to September report in 2015 clarified that even VTB Bank has replaced ProCredit Bank on the fifth position.

It should be noted the year of 2015 was successful for the Georgian bank sector unlike the Georgian economy, in general. The final report has not been published yet, but the January to November and the fourth quarter indicators prove that the Georgian bank sector has earned record profits in 2015.

The bank sector’s assets marked 24.6 billion GEL as of December 1, 2015. Bank assets rose by 25.8% compared to the same period of 2014.

Gross profits of commercial banks will exceed 0.5 billion GEL at the end of the year and this will be the highest profits in the history of commercial banks.

The analysis of the bank sector’s financial indicators show that the extreme upturn in profits was driven by both the sector development and the national currency volatility. The revenues of commercial banks rose by about 1 billion GEL for a year and the figure made up 3.148 billion GEL, including 1.980 billion GEL interest return, up 400 million GEL year on year.

The credit portfolio’s annual growth rate in commercial banks made up 33.7% as of December 1, 2015. The credit portfolio enlargement is mainly related to re-assessment of foreign cur-

rency denominated loans after the GEL exchange rate devaluation. Without the exchange rate effect, the credits portfolio annual growth rate was 10.4%.

At the same time, the last quarter of 2015 recorded commercial banks to have narrowed crediting the economy. For example, in October the figure decreased by 12.5 million GEL to 15.35 billion GEL. As reported, the Georgian bank sector received record profits in 2015. Net profits of commercial banks rose by 71.2 million GEL year on year and marked 453 million GEL in November 2015. The figure is up 18.67% compared to 2014 and up 16.05% compared to the same period of 2013. In 2014 commercial banks’ net profits made up 475 million GEL. Amid such a success of Georgia-based commercial banks, it is surprising that ProCredit Bank positions and indicators are worsening. According to the January to September indicators, ProCredit Bank profits made up 14.716i million GEL, while competitor commercial banks have earned more than 100 million GEL in the same period.

THE GEORGIAN BANK SYSTEM’S LEADING COMMERCIAL BANKS IN TERMS OF TOTALASSETS, UNDER THE REPORT OF THE THIRD QUARTERS OF 2008-2015, IN GEL. (Table 1)

onstruction of a 7-star hotel in the center of Tbilisi carried out by an Arab company “Dhabi Group” will be completed in early July of this year – the company’s CEO Sam Edwards told “Commersant”.

According to him, it was planned to open a hotel earlier, but as a significant part of the building materials are imported from Europe, the construction was delayed.

“Currently, all the necessary materials are already in Georgia and the works have intensified.

85% of the construction works, including internal, have been completed. The total amount of investments reaches $ 100 million, “- says Sam Edwards.

As reported, Millennium Biltmore is functioning only in the United States, California, and the second hotel will be opened in Tbilisi.

“We also plan to open a casino in the hotel. For a long time we have been negotiating to bring to the casino management company that works with gambling establishments in Los Angeles and Macau. So far, negotiations have not yielded positive results, as the company has put forward unacceptable conditions and consultations were terminated. Now we are in talks with another company, which also operates in the US, “- Sam Edwards notes.

In his words, in parallel with the construction of the hotel, the restoration of the historic building of the Institute of Marxism-Leninism on the basis of which the hotel is being built is underway.

They say in the “Dhabi Group” representation that the company is in negotiations with the Georgian government on the implementation of several other strategic projects.

“We are negotiating about a few specific projects.

We want to make major investments in Georgia, while negotiations are underway, we cannot say anything specific,”- the CEO of” Dhabi Group “ adds.

GEORGIAN ENTRÉE EXPANDS ITS BUSINESS ACTIVITIES IN NEIGHBORING MARKETS

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fter Azerbaijan, the Georgian café network Entrée will open in other neighboring countries as well. CBW was told by Entrée co-founder Jean-Michel Charles.

According to him, at this stage, market studies are under way after which it will be clear which countries a European-style cafeteria network based in Georgia will enter.

The company’s co-founder says they decided to expand in other countries after the chain opened in Baku proved successful. Jean-Michel notes that despite the sharp depreciation of the Azerbaijani manat, Entrée sales have not dropped.

“We are sure that very soon Azerbaijan will come out of the crisis, because they have all the necessary resourses for this. Thus, our plans have not changed and we continue to operate normally,” Jean-Michel Charles notes adding that the company plans to expand its business in Baku by opening three new outlets in Azerbaijan by the end of the year.

Entrée has expansion plans in Tbilisi as well. In 2016, the company plans to open 3-4 new cafés in the Georgian capital.

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BANKING NEWS caucasus business week

January 18, 2016 #129

CHANGES IN COMPOSITION OF BOARD OF DIRECTORS OF JSC PASHA BANK GEORGIA

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ASHA Bank Georgia is pleased to announce the appointment of Mr. Chingiz Abdullayev as Member of the Board of Directors and Chief Financial Officer of the Board of Directors as of January 13th, 2016.

He is in charge of supervising Financial Management, Treasury as well as Administration and Procurement Departments.

Chingiz Abdullayev started his career at Baku Stock Exchange as the Head of Listing Division in 2000. In 2003 he joined Assurance & Advisory Service of Deloitte and for the following 10 years worked at senior positions with KPMG Russia, Moore Stephens CIS and RSM Georgia with major focus on financial institutions, energy, trade and other industry sectors. Chingiz Abdullayev joined JSC PASHA Bank Georgia in 2014 as Head of Financial Management Department. He became the Member of the Board of Directors on January 13th, 2016.

The Board of Directors of JSC PASHA Bank Georgia consists of three Executive Directors, involved in day-to-day management of the Bank and its current composition is as follows: Chairman of the Board of Directors: Shahin Mammadov Member of the Board of Directors: George (Goga) Japaridze Member of the Board of Directors: Chingiz Abdullayev PASHA Bank is a Baku-based financial institution operating in Azerbaijan, Georgia and Turkey, providing a full range of corporate and investment banking services to large and medium-sized enterprises.

STATE SERVICES HAVE BECOME AVAILABLE IN MORE THAN 1000 VILLAGES VIA LIBERTY BANK

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tate services have become available in more than 1000 villages via Liberty Bank.

71 Express Community Centers are operating within the frame of the

project.

Shio Khetsuriani, chairman of Public Service Development Agency and Alex Khoroshvili, general director of Liberty Bank talked about the flexibility of the project at the press conference held in Dusheti.

Liberty Express serves to the customers in those regions, which are deprived from House of Justices or territorial offices. Services of the National Agency of Public Registry, Social Service

Agency, the National Archive and the “Mechanics” are available at express center.

However, other services are obtained as well: pension and social assistance, money remittances, account opening, taking of a credit, utility and other payments.

“Liberty Bank serves to population of more than 1,000 villages via mobile branches from 2010. we are glad that as a result of successful cooperation of Public Service Development Agency, population can get state services along the banking services. State services include obtaining of ID card, Passport and extracts from Public Registry”, – Alex Khoroshvili, general director of Liberty Bank has noted.

PROCREDIT BANK ANNOUNCES ABOUT INTEREST RATE PASHA BANK’S NEW YEAR CHARITY INCREASE ON TERM DEPOSIT GIFT TO FIRST STEP GEORGIA ACCOUNTS IN GEL

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ASHA Bank congratulated the charity organization First Step Georgia with New Year in a special way: the Bank donated a painting by Rusudan Petviashvili – “The Choice” to the fund with the right to sell it directly or via auction.

The funds raised from the sale of the painting will be applied for the educational needs of children with intellectual and physical disabilities.

Earlier this year PASHA Bank congratulated First Step Georgia with Easter and donated GEL 10 000 on behalf of its partners.

“Corporate social responsibility is a significant part of PASHA Bank’s everyday life.

We are more than happy to share our New Year joy with our partner companies as well as charity organization First Step Georgia. We hope that our small but kind gift will benefit the fund’s beneficiaries,”- said Shahin Mammadov, CEO at PASHA Bank Georgia.

“For more than seventeen years First Step Georgia is providing assistance to children and youth under eighteen years with severe and profound physical and mental disabilities, mostly from socially vulnerable families. In 2015, we started a new scholarship program under which any donor can choose a beneficiary in our organization and fund his or her studies and development programs. PASHA Bank was one of the first organizations to join this project.” – Tinatin Dolidze, Marketing Manager at First Step Georgia said.

This gift is a huge support to us and we will use the funds received from selling this picture for the benefit of our children. On behalf of First Step Georgia, I would like to thank PASHA Bank once again for their good deeds that reflect the brands’s high social responsibility.

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roCredit Bank informs customers about the higher interest rate paid on term deposit accounts in GEL. According to the bank, Good news for ProCredit Bank customers in 2016. As ProCredit Bank offers the best inter-

est earnings, +1% for deposits in GEL in order to make it more attractive to save in local currency.

The top interest rate earned by private clients on term deposit accounts is now 12%; or make regular payments into a savings plan account and earn 11.5% interest.

TBC BANK’S PORTFOLIO GROWTH EXCEEDS 2 TIMES TO SEPTEMBER 1/3 of retail crediting accounts for TBC Bank’s portfolio (2,3 billion).

The share of the bank in private individuals’ crediting totals to 30% (1.12.15), while the volume has been 24% (1,4 billion) in the same period of 2014.

The portfolio exceeds 2,3 billion GEL (H1/15 – 2,171 billion) and it is almost equally distrib-

uted in local , as well as foreign currency (1,2 billion GEL – 52%). Total retail portfolio of the sector amounts to 7,777 billion GEL (01.12.14 – 5,184 billion), whereas the increase is determined by 34% y-o-y (without the effect of exchange rate - 6% y-o-y). However, TBC Bank’s portfolio increase exceeds almost twice – 64% (01.12.15 – 2,3 billion; 01.12.14 – 1,4 billion).

January 18, 2016 #129

BUSINESS caucasus business week

HOW TO SET UP BUSINESS IN DUBAI

9

Natia Kereselidze, Evergreen Businessmen Services Representative in Georgia

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n this article I want to talk about every necessary license ,which is important to setup business in Dubai.

Our company Evergreen Businessmen Services shows you every steps, how to get license to setup business in Dubai.

Dubai has transformed itself from a local trading community into one of the most inspirational, exciting and successful cities in the world.

Nowadays Dubai is the most attractive environment for tourists and businesses. Dubai is the perfect gateway between East and West and very suitable place for the region’s imports and exports market ,one of the most profitable in the world.

Such environment encourages, new business to get new hights. Thousands of new businesses are discovering each year. Dubai’s strategic location gives easy eccess to 2.2 billion consumers, from a unique centralized time zone ,that combines East and West business hours.

Being a Business Consultant, We understand the importance of each business. We value the entrepreneur inside you and help you to setup business in Dubai.

Nationality is not a restriction in Dubai to start your own Business. But setting up a Business in UAE involves the understanding of Business Activity designed by Department of Economic Department ,sponsors documentation and Legal Approvals etc which seems to be quiet complex.

But we ensure smooth formation of your company in Dubai without a legal hassle with regards to documentation and pro services. Our experienced team can solve your each and every problem regarding your business very easy and fast.

Which license you need for setup business in Dubai • Select a business activity • Select a legal form for your business • Select a trade name of your business • Apply for initial approval certificate • Prepare a Memorandum of association and local service agent • Establish your business location • Obtain licensing approvals for your business • Collect your business license In Dubai were are two important areas Mainland and Free Zone . Each zone has its own rules and benefits. It’s for you to decide, which of the zones will be a priority for your business.

How to setup business in Mainland To setup Business Activities in Mainland you will need to register with DED (Department of Economic Development), who will issue you with a Dubai business license.

A DED Mainland license can also be beneficial because you would not limit yourself to one particular area. When you have this type of license , you are free to operate in any area of the UAE. Benefits of company formation of Business in the Mainland • You can operate your business activity from any part of UAE

• Hassle free legal formalities to seek license and registration • Smooth process in procuring office premises and infrastructure, as well as HR services • No yearly auditing mandatory • Tax free • Flexibility to rent office anywhere • Easy availability of employment visas

What is Free zone and How to setup Business in Free Zone in Dubai ?

A free zone is a segment of clearly defined and isolated land or setting, with a special tax, customs and imports regime, that is different from the mainland area ,usually involving a status of extra territoriality. Free Zones are planned for boosting international business through providing 100% ownership to expatriates. In UAE ,free zones are either attached to ports or industry specific. The main idea of establishing free zones in the UAE was for them to serve as a central business hub for companies willing to conduct business with the outer word, not specifically in the UAE. Therefore ,UAE free zone companies are intended to operate within the corresponding free zone as hub for the worldwide operations and are not licensed to operate within the rest of the UAE. As a result most of the free zone companies during the initial days were engaged in import and re -export activities.

Each free zone in UAE has its own set of laws. However, most of the businesses in the Free Zones fall under the following broad categories based on their business activities.

• Branch of a foreign company or a branch of an offshore company • Free zone Establishment /Company( FZE/ FZC/FZ LLC) • FZE or FZC are limited liability entities owned by an individual or corporate entity.

There are differences between the entities.

For example .Free Zone establishment has only one single shareholder .Free Zone Company or FZ LLC can have 2 or more shareholders.

What Are The Advantages of A Free Zone Company?

A free zone company enjoys many advantages. Some of them are: • No personal income or capital gain taxes • 100% foreign ownership is allowed in free zone business • No corporate taxes • No duties on import or export • Modern efficient communications • No currency restrictions • Excellent support services Free zones offer excellent facilities which are ideal for running business operations: • Land on lease provided for investor development • Pre-built warehouse/ factory/ office accommodation units for lease • Transportation links by air, by sea and by road

At first glance ,this may account for everything seem difficult and long process, but trust me , if you choose “Evergreen Businessmen Services “ start business in Dubai will be easy and fast.

That’s why , we are here , in Georgia, to offer you our services and help , to contact Georgian Sme’s in Dubai’S international trade area ,where

hole world is trades , where you have chance to get your business in new hights.

For more free reports contact us Adress: g.saakadze descent 11 business center “Panorama” Tel: 577433366 Email:tbilisi@setup-biz.com www.deddubai.net

WATCHES

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January 18, 2016 #129

caucasus business week

WATCHES

UNDER 200 GEL There’s never been a better time to start widening your watch collection; you don’t need to be millionaire to own a style watch that looks great, functions well, and will last for decades.

Best watches under 200! It is impossible to get a decent watch for than GEL200, right? Wrong! Yes you don’t have to spend a ton of money to get a finely crafted and highly reliable timepiece.

We have compiled a review list of some of the unique watches for under GEL200. But these are not cheap quality watches. The watches listed below are unique, look great, have superior build quality. And are available under 200 Gel price tag. Here’s our pick.

SKAGEN Price: 215 GEL Sold at: Time Georgia The silhouette of the Grenen Leather Watch echoes the curving shoreline of Skagen’s Grenen beach. Measuring 37 mm by 8 mm, the slightly smaller case of brushed stainless steel holds a classic dial with numerals marking the hours. With its cleanly contoured supple leather strap, this is a relaxed style that’s refined enough for the office.

BEN SHERMAN SWATCH

PRICE: 169 GEL (Wallet Gift Set) Sold at: Da Vinci shop

PRICE: 155 GEL Sold at: SWATCH Georgia

Ideal for a stylish gent, the Ben Sherman Watch & Wallet Gift Set is present shopping made simple.

- Watch Diameter: 4cm - Wallet measurements: H9cm x W11cm x D1.5cm - Leather wallet; embossed logo - Six card slots; one bill slot - Analogue movement - Stainless steel case - Leather strap - Water-resistant to 3ATM

Graphic, modern and made to make a statement, the TEXT-URE (SUOM102) watch starts with a matte black dial accented with bold red hands, a numberless silhouette and a shiny grey relief print for a textural look.

The coordinating strap is rendered in grey and mirrors the dial’s design. Finished with a solid matte grey case.

SEIKO SWATCH

PRICE: 215 GEL Sold at: GMT Tbilisi

PRICE: 185 GEL Sold at: SWATCH Georgia

For the modern and sophisticated man, this Seiko timepiece is designed with a fusion of casual and sharp class, adding the right amount of charm to your sleek style. It features a steel bracelet with a simple push button deployment clasp or buckle for easy access. With the accuracy, comfort and functionality you’d expect from Seiko, this timepiece is a must-have for any collection.

The stylish design turns your world on its head. Featuring an elastic strap in highgloss black, the rectangular, lacquered black body sparkles with crystals on 3, 6, 9 and 12 o’clock.

January 18, 2016 #129

HEALTHCARE

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caucasus business week

EXPERTS REACT ON INTRODUCTION OF NEW PLAYER ON GEORGIA’S PHARMACEUTICAL MARKET

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umanity Georgia company has entered the Georgian pharmaceutical market. According to the business registry, the company was registered in May 2015. Humanity Georgia will introduce a wide option of medications to the pharmaceutical market in the near future.

Quality of the company-manufactured medications is approved by the manufacturer’s EU GMP Certificate. The first set of drugs will be represented by frequently-used drugs at the end of December 2015.

Specialists, doctors and even politicians positively appraise that a new company will operate on the Georgian pharmaceutical market. The fact will boost competition on the domestic market and medications will become more affordable.

Introduction of Generics on Georgia’s pharmaceutical market which was initiated by the Ministry of Healthcare is also evaluated positively.

Generics will encourage the decrease on prices of drugs. The vast majority of people believe that Generics will regulate prices of drugs on the market.

Georgian otolaryngologist Raul Khinkiladze positively assesses appearance of HumanityGeorgia and thinks it will increase the competitiveness, which is highly important.

welcome appearance of Humanity-Georgia on Georgia’s pharmaceutical market, drugs need to be high quality. As for the Generics I use them in my ordinary practice, the most vital thing is the result that I receive from drug not the origin of it. Every drug needs to be approved by the manufacturer’s Certificate.

Family doctor Tea Pavliashvili responded to the inevitability of expanding Generic drug seg-

ment on Georgia’s pharmaceutical market and made some comments on new pharmaceutical company which recently entered Georgia: „Due to patient’s social condition, we try to prescribe Generic drugs. It is inevitable for Georgia to import and expand Generic drug segment. By entering new pharmaceutical company, the competition on the Georgian market will increase, however it will take long time for Humanity Georgia to establish itself on Georgian market.

Generally we have a great choice of drugs, that’s why the company needs to deliver highest quality drugs to succeed.

Another doctor responded to existent con-

dition on Georgian pharmaceutical market and talked about the importance of increasing affordability of medicines.

Giorgi Kvitashvli Gastroenterologist: “I try to use the brand name medications more often. The reason for this is the lack of quality control system of drugs in a country. I use those drugs, which I trust and have experienced.

Of course, I welcome the new company Humanity-Georgia on the Georgian market market and think that assessing Indian or Turkish drugs as cheap quality medications is unprofessional, especially if it has a quality certificate.

GEORGIA DEVELOPS HEALTHCARE FACILITIES

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eorgia is taking its steps to develop healthcare clinics throughout the country. Georgia’s Ministry of Healthcare and Partnership Fund carried out negotiations with Austrian healthcare infrastructure and service delivery company Alpha Medic Consortium.

Georgia’s healthcare Minister David Sergeenko, together with deputy minister Valeri Kvaratskhelia met with representatives of Partnership fund and executive director of Alpha Medic Consortium Katerina Gomenuk.

According to the executive director of Partnership Fund, David Saganelidze special group will work with Alpha Medic and the Ministry of Healthcare.

Partnership Fund has conducted research of state-owned medical clinics in Georgia with the PF in partnership with the Global Alliance for Health and Social Compact. Based on this research the Georgian Government announced a tender on management, ownership and operation of state medical clinics in Georgia.

Due to the tender rules consortium has to en-

sure that the project is done in accordance with JCI accreditation standards. The personnel must be certificated and trained within a special program. The entire project should be carried out according to United Kingdom healthcare model.

The winning consortium will be responsible to own and manage the hospital together with the state, according to the PPP principle.

A tender was announced on management, ownership and operation of three hospitals in Tbilisi – Republican Hospital, Cancer Center and Children’s Infectious Diseases Hospital.

Alpha Medic is a hospitals and healthcare management company based in Austria that has many years of PPP Projects Development (Design, Build, Equip, Operate including Healthcare and Facility Management) experience in CIS and Africa in partnership with leading EU providers of respective services.

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January 18, 2016 #129

WORLD NEWS

January 18, 2016 #129

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caucasus business week

IRAN SANCTIONS SEEN LIFTED BY MONDAY ONCE NUCLEAR DEAL VERIFIED

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ecade of sanctions imposed on Iran’s nuclear program may come to an end

by Monday, unlocking billions of dollars in frozen accounts and paving the way for a surge in oil exports from the Islamic Republic.

The International Atomic Energy Agency is expected to report on Friday that Iran has fulfilled its commitments under July’s nuclear accord with world powers, Iran’s Deputy Foreign Minister Abbas Araghchi said in Tehran. That would enable a joint announcement by Sunday imple-

menting the deal and lifting sanctions, he said.

Iran’s foreign ministry on Tuesday sent its director of political and international affairs, Hamid Baeedinejad, to Vienna, where the IAEA is based.

While Iran says it will need $100 billion to rebuild its energy industry and another $29 billion for mining and steel, foreign investors are expected to return only gradually as they wait to make sure the nuclear deal holds. Diplomats left escape clauses if the accord is violated. Should the deal fail, sanctions could be reimposed just

Share markets slide as oil price falls below $30

Azerbaijan exports over 38 million tons of oil in 2015

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zerbaijan exported 38.1 million tons of oil in 2015, Azerbaijani Energy Minister Natig Aliyev’s article published in the official press said Jan.

15.

“Some 36.9 million tons of the total volume of the exported oil accounted for the Azerbaijan International Operating Company (AIOC),” the article said. “Some 1.2 million tons more accounted for SOCAR. Most of the oil was exported via the Baku-Tbilisi-Ceyhan (BTC) pipeline.”

The Kazakh and Turkmen oil is also supplied via BTC with a capacity of 1.2 million bpd.

Azeri Light oil, produced in the Azeri-ChiragGuneshli field, is mainly exported via BTC. Besides the Azerbaijani oil, the oil from Kazakhstan and Turkmenistan, delivered to Baku by tankers, is supplied through a pipeline. Some 5.55 million tons of Kazakh and Turkmen oil were supplied via BTC in 2015.

as Iran’s nuclear work could return to unchecked development.

Friday would be the earliest date that IAEA inspectors could verify Iran has removed nuclear equipment and material from atomic sites, two diplomats with direct knowledge of the process said earlier on Wednesday. The IAEA press office declined to comment.

Global share markets tumbled as the prospect of an end to the Iranian oil export ban sent oil below $30 a barrel for the second time this week.

London shares fell 2.2% to 5788.2, while France’sCac 40 fell 2.4% and Germany’s Dax was 2.5% lower.

Wall Street opened down sharply, with the Dow Jones index sinking 2.33% to 15,997.94

points.

It came as concern grew that Iran could restart oil exports, flooding an already over-supplied market.

The oil benchmark Brent crude fell 4.7% to $29.43.

US West Texas intermediate oil fell 5% to $29.51.

Shares in mining firm Anglo American were the worst hit, falling by more than 11%. Glencore was down 7%, and BHP Billiton and Antofagasta lost 6%.

Rangold Resources rose by 5%. Gold prices tend to do well in times of investment uncertainty. The gold price held steady with a gain of 0.5% at $1093.75 an ounce.

Markets are getting crushed again

Walmart is closing hundreds of stores

verything is getting slammed again.

US stocks are selling off after a rally Thursday, which marked the best day for the S&P 500 this year. In early afternoon trading, the Dow fell more than 500 points.

The S&P 500 dropped 3% and crossed below its August 2015 sell-off low, and to the weakest level since October 2014.

Losses for stock futures deepened ahead of the market open after we got a triple whammy of economic data that missed expectations. Notably, the Empire State Manufacturing Survey fell to the weakest level since 2009, reflecting the continued pain that the sector is experiencing nationwide.

In his daily briefing, White House press secretary Josh Earnest said the Treasury is monitoring the sell-off.

almart is closing 269 stores and laying off thousands of employees.

The move will affect more than 16,000 employees, including 10,000 in the US. The closings include 154 locations in the US — 102 of which are the company’s smallest stores, called Walmart Express, which have been in pilot since 2011.

Walmart is closing the stores to shift resources to Walmart’s Supercenters and smaller-format Neighborhood Market stores.

Walmart will also shut down 23 Neighborhood Markets, 12 Supercenters, seven stores in Puerto Rico, six discount centers, and four Sam’s Clubs.

All the stores will close by the end of the month.

The company said it would try to place laid-off employees at other Walmart stores.

Employees who aren’t hired by nearby locations will get 60 days of pay and severance if eligible, as well as résumé and interview skills training, the company said.

4.5mn Russian tourists won’t visit Turkey this year

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W

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urkey expects to lose 4.5 million tourists from Russia this year, as tourism has been badly hit by the Russian crisis and regional uncertainties, said the Turkish Culture and Tourism Minister Mahir Unal.

The number of Russian visitors declined by 18 percent to 3.6 million in the first eleven months last year compared to the same period of 2014.

The number of total foreign arrivals dropped by 1.4 percent in the same period, according to the data revealed by the Tourism Ministry last month.

Russia’s travel agencies canceled Turkish packages after Moscow introduced sanctions against Ankara following the downing of a Russian warplane in Syria. The measures targeted the Turkish tourism industry and exports to Russia.

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January 18, 2016 #129

January 18, 2016 #129

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 Ave., Tbilisi Tel: 225-20-72/73/74/76 embassy.tbilisi@mfa.gov.tr Consulate General in Batumi 9 Ninoshvili Street, Batumi Tel: 422 25 58 00 consulate.batumi@mfa.gov.tr 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.esRomania Embassy

TBILISI GUIDE

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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

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PUBLICITY caucasus business week

January 18, 2016 #129