Caucasus Business Week #131 by Caucasian Business Week

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BUSINESS WEEK February 1, 2016 #131

February 1, 2016, Issue 131

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Zurab Garakanidze: Gas Storage Tank will Strengthen Georgia’s Regional Positions Jean-Elie Malkin: Survey Will Increase Society’s Access to High-Quality Healthcare Services

GEL Sees Historical Bottom

EVERYBODY AGAINST LARI The GEL exchange rate keeps depreciating. Last week the Georgian national currency saw its historical minimum against USD (1USD=2.49 GEL). Unlike the previous year, when GEL was extremely depreciating, in January 2016 the devaluation paces have decelerated. Despite encouraging statements by the government and the National Bank representatives, the GEL is not expected to easily regain public conﬁdence after

Other Side of Business

TSEZAR CHOCHELI: I HAVE PAID THE PRICE FOR ESCAPING COMMUNICATION WITH MEDIA Pg. 8

the 1.5-year depreciation period. The GEL stability directly depends on the National Bank monetary policy. Moreover, the NBG and the Government should take steps to restore public trust to the GEL. To this end, they should make simple and clear statements. In the current situation, the NBG head should be addressing our society from TV companies to persuade the population into the reliability of the

GEL, but the NBG does not make even one comment on the exchange rate volatility. Unforeseeable environment causes extreme panics in the society. For example, on January 22 the GEL rate depreciated by 0.03 GEL, because currency auctions could not be held until Monday. Unpredictable environment arose in the weekend period and the exchange rate hit even 2.51 point in the market. Pg. 5

Zurab Kukuladze: Georgian Bank Sector Hampers Georgian Economy Modernization

Pg. 4

Pg. 11

Pg. 6

Setup Your Offshore Company in Dubai AMIR KHWAJA Director of Evergreen Businessmen Services in Georgia Pg. 9

Bank Sector’s Profits Exceeded 0.5 billion GEL in 2015 According to the National Bank of Georgia (NBG), net profits of Georgia-based commercial banks in 2015 marked 537 million GEL, up 63 million GEL compared to 2014 (475 million GEL). In December 2015, commercial banks reaped 84.5 million GEL more profits compared to November 2015. In 2015 the Georgian bank sector reaped record profits thanks to the GEL exchange rate volatility. Georgian based commercial banks have issued about 70% loans in USD. Therefore, the national currency depreciation increased their revenues. The increased credits portfolio proves this consideration. In 2015 the loans portfolio annual growth rate marked 33.7%, but the loans annual upturn was

only 10.4% without the exchange rate effect. Total assets of commercial banks in 2015 rose by 24.7% and constituted 24.4 billion GEL, while the annual real growth in GDP in 2015, according to preliminary estimations, made up 2.8%. To put simply, the annual growth in Georgian economy has not marked even 3%, while the bank sector growth constituted about 25%. “Today, our economy is attached to the bank sector that follows short-term visions. Today the bank system is oriented on withdrawing money from the economy, while the economy cannot produce such volume of wealth that would satisfy the bank sector’s interests and, on the other hand, nourish the whole country. Pg. 7

GEORGIA TO HOST FIRST WORLD TOURISNMANET IN WSOP POKER The Eastern Europe’s first world tournament in WSOP poker will be held in Tbilisi, Georgia. The most prestigious tournament will start at the Sports Palace on March 3 and end on March 9. The prize fund makes up 700 000 USD. Moreover, 7 WSOP Circuit rings will be raffled and their owners will be recorded in the world poker history. Two winners will travel to the USA for the WSOP Global Casino Championship to fight for the world champion title. Pg. 12

NEWSROOM

2 MAIN EVENTS Georgia’s GDP is Expected to Rise: UN Report

GEORGIA INTENDS TO BECOME A MOVIE SET FOR FOREIGN FILM INDUSTRY

N predicts Georgia’s real GDP growth at 2.5 percent in 2016, 2.7 percent — in 2017, according to the UN report World Economic Situation and Prospects 2016. According to the UN data, Georgia’s GDP growth decreased up to 2.5 percent in 2015 (compared to 4.8 percent in 2014, 3.3 percent — in 2013). According to the UN forecasts, the inflation will amount to 5.1 percent and three percent in Georgia in 2016 and 2017 respectively. The inflation amounted to 5.8 percent in Georgia in 2015 (compared to 3.1 percent in 2014, as well as deflation at 0.5 percent — in 2013). The report entitled “World Economic Situation and Prospects” is prepared at the beginning of each year by the United Nations Department of Economic and Social Affairs, the United Nations Conference on Trade and Development and five regional commissions of the organization. The design of watches are divided in three categories: automobile, aviation and nautical. Each model is a special one and they are named after the automobiles, airplanes and ships that have left considerable traces in the world history.

Georgia Wins Global Contract to Develop Military Vehicle for Saudi Arabia

eorgian military engineering centre has beaten some of world’s leading military equipment developers and scored a million dollar Saudi Arabian contract for an armoured medical evacuation vehicle. Georgia’s State Military Scientific Technical Centre Delta was awarded a contract for supplying over one hundred Didgori Medevac vehicles to Saudi Arabia following lengthy trials that took much of the last year. Delta was chosen after its Didgori prototype finished first in rigorous testing in the Middle East. The final contract was valued at nearly 100 million GEL ($40 million USD).

SOCAR To Increase Gas Supply To Georgia in Winter

February 1, 2016 #131

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nder a new government initiative, foreign ﬁlm companies have an opportunity in the case of shooting the ﬁlm in Georgia to get 25% of qualifying costs back. According to the Minister of Economy Dmitry Kumsishvili, Film in Georgia’s goal is

to make the country an attractive place in Eastern Europe for filming and to develop national cinematography. Accordingly, this new program will significantly contribute to the promotion of Georgia in terms of favorable filming locations and attracting foreign filmmakers. “At the moment we are negotiating with pro-

duction companies in various countries. We offer very favorable conditions for all those who wish to make a film in Georgia. The practice of the return of 25% of the qualified costs has been tested in many countries, which have made major strides in the development of the film industry. In general, this is very important as increases the country’s recognition in the international arena as well as creates new jobs, increases the qualification of local staff, and ultimately, brings economic benefits to the country, “- the Minister notes. According to the Minister, the development of the film industry will also contribute to the inflow of foreign currency and the lari strengthening. Film in Georgian, part of the Produce in Georgia program, will offer benefits to local and international producers interested in film production. In particular, the project involves the creation of a system of “one window” for production companies who want to make a film in Georgia. This system provides assistance to foreign production companies in finding locations for shooting, selection of local staff, establishing communications with the concerned persons, the solution of various bureaucratic issues, etc. The program provides incentives for shooting feature films, television, documentaries, animation films, TV series, advertising products, reality shows and music videos.

PM KVIRIKASHVILI: PEOPLE ALL OVER GEORGIA NEED TO BE AWARE OF EU BENEFITS

eorgia’s Prime Minister believes more can be done to ensure the entire population of Georgia, especially those living in rural areas, is aware of the benefits of assimilating with the European Union (EU). PM Giorgi Kvirikahsvili today said the Government will elaborate a strategy to provide a comprehensive information campaign targeting people in Georgia’s regions about the benefits Georgia receives from the EU. The country’s top official made his comments while meeting with the Governmental Commis-

sion of Georgia on EU integration at the Government of Georgia’s Administration building in capital Tbilisi. PM Kvirikashvili stressed “an important and comprehensive” campaign would be planned by relevant ofﬁcials to ensure the entire Georgian population was aware of the beneﬁts Georgia gets from the EU, in “all sorts of directions”. The Georgian people should have information about what opportunities are being provided by the Georgia-EU close cooperation; how Georgia is transforming to offer better life conditions for everybody living in the country.

They should know about their high-level educational and business opportunities that are suggested through various twinning programs,” he said. Kvirikashvili stressed the EU had supported Georgia as it carried out a range of reforms at the instructional and legislative level that would ensure country’s fast integration into the European space. In the coming days the Governmental Commission of Georgia on EU integration is due to approve the 2015 Action Plan for implementing the obligations of the Georgian-EU Association Agreement (AA).

zerbaijan’s state oil company SOCAR has reached an agreement with the South Caucasus Pipeline and Shah Deniz consortiums to increase gas supply to Georgia in winter seasons. SOCAR said it conducted talks based on an appeal from Georgia on assistance in optimizing gas supply from Azerbaijan. The company said all the members of the Shah Deniz and South Caucasus Pipeline consortiums agreed to review the seasonal restrictions set by relevant agreements on gas supply from the Shah Deniz field to Georgia. “As a result of the reached agreement, in winter seasons only the gas supply to Georgia will increase by 50 million cubic meters,” added SOCAR. “The support for the Georgian side’s appeal is also indicative of good-neighborly relations between Azerbaijan and Georgia, and serves as an undisputed basis for strengthening and developing the mutually beneficial cooperation in the future.” Earlier, SOCAR representatives held talks with Georgia’s government and discussed the technical issues of gas supply, as well as the possibility of increasing the supplies. Azerbaijan exported 1.6 billion cubic meters (bcm) of gas to Georgia in 2015. The gas from Azerbaijan to Georgia is delivered via the Baku-Tbilisi-Erzurum gas pipeline, which transports the gas produced at the Shah Deniz gas and condensate field in the Azerbaijani sector of the Caspian Sea. SOCAR supplies its own gas to Georgia via a pipeline that passes through Azerbaijan’s Gazakh district. The pipeline’s transportation capacity is about three bcm a year.

GEORGIA-TURKEY SIGNS DEAL TO SIMPLIFY CUSTOMS RULES

eorgia and Turkey are simplifying bilateral customs rules to make it easier for goods to pass between the two nations. Today Georgian and Turkish ofﬁcials signed an agreement to launch an electronic International Road Transports (eTIR) – a standard, internationally recognised customs document that allows nations to exchange data electronically. The agreement aimed to ensure the secure exchange of data between the customs systems related to the transit of goods between Georgia and Turkey by harmonising administrative for-

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malities of road transport and facilitate the cross border transportation of goods in transit. Georgia’s Finance Minister Nodar Khaduri met Turkey’s Minister of Customs and Trade Bulent Tufekci yesterday in Turkey to sign the deal. At the meeting the two sides expressed their willingness to simplify custom services and raise conﬁdence in both countries’ customs administrations. Launching an eTIR would have a positive impact on trade relations between Georgia and Turkey, believed Georgia’s Finance Ministry. Also yesterday the Georgian Minister at-

tended an International Customs Day ceremony in Turkey’s capital Ankara. Turkey is Georgia’s number one trade and economic partner. Trade turnover between Georgia and Turkey reached $1.38 million USD in January-November 2015. The sum of Georgia’s exports reached $174.2 million USD in the reporting period, which was 20 percent less compared to the same data of 2014. Meanwhile imports amounted to $1.2 million USD; 23 percent less than in 2014.

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 February 1, 2016 #131

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INTERVIEW caucasus business week

February 1, 2016 #131

GAS STORAGE TANK WILL STRENGTHEN GEORGIA’S REGIONAL POSITIONS “We have already found due ﬁnances for constructing a gas storage tank, Georgian Energy Minister Kakha Kaladze noted. SOCAR is interested in participating in the gas storage tank construction, he added. Required funds have been mobilized from the oil and gas corporation, he said. “We have priority positions, because we plan to launch gas storage tank construction in 2016. If there are no complications, we are sure that in 2018-2019 the second phase of ShahDeniz will be put into exploitation and we will be able to receive additional volumes and our country will have an advanced position”, Kaladze said. Georgia has multiply tried to organize gas storage tank construction works, but in vain. However, today the gas storage tank project seemingly will be implemented genuinely. Expert in energy issues ZURAB GARAKANIDZE talks about Georgia’s perspectives from the gas storage tank construction and the importance of the project implementation, in general.

ply and a gas storage tank. Based on the current economic and geopolitical developments in the region, Georgia should deﬁnitely construct such a gas storage tank. Both current suppliers are state monopolists, not only gas supply monopolists, but also state monopolist companies, both SOCAR and GAZPROM. Therefore, Georgia has a critical need of having a gas storage tank for energy security. -Who should implement this expensive project? -The Asian Development Bank (ADB), the European Investment Bank (EIB) or maybe even a private structure. Georgian Oil and Gas Corporation (GOGC) has started negotiations on the issue. Consequently, - Do we genuinely need the gas storage tank and is it a real solution to the current problems? - The gas storage tank construction is a relevant issue for many years, starting 1990s. In 1992 the then government of Georgia invited a German company that developed feasibility studies. This documentation may be efﬁcient even today, because the documentation describes the place, where previously the Samgori deposit existed. Moreover, in 2009 the similar attempts were recorded in Ninotsminda and this is the third attempt. Even more so, all countries around Georgia own gas storage tanks.

Turkey owns two good gas storage tanks with 1.5 billion capacities. Ukraine possesses

13 underground gas storage tanks, Russia has 26 ones, including 20 underground ones. Our neighbor Armenia owns the Aboviani gas storage tank. Azerbiajan owns Karadaghi and Kalmaz gas storage tanks with total of 3.5 billion cubic meter capacity. -The fact is our country could not implement this plan so far. What is the main problem that hinders the gas storage tank construction? -The point is that the superior factors have always coincided with the gas storage tank construction issues. For example, in 2008 the allocated funds were spent without purpose. Today, the Government has taken a decision and SOCAR is ready to take part in the project implementation. I believe that the country striving for energy safety must own two attributes – diversiﬁed sup-

The financial issues are not expected to be problematic. According to expert estimations, the project is valued by about 250 million USD. - How will this gas storage tank assist Georgia in resolving the current problems? - We know that at this stage Turkey receives natural gas from Russia through two pipelines: Blue Stream and the so-called Trans-Balkan pipeline. When considering the issue of toughening gas supply sanctions, the Russian Federation officials do not rule out the possibility of full suspension of natural gas supply to Turkey. In this case, Georgia could make benefit from reasonable employment of additional gas volume in the gas pipeline. Discussing similar issues in live program may seem less attractive, but the country

should have structures that would discuss similar geopolitical issues. - Do you mean that Georgia may use gas pipelines for not only domestic consumption, but also other purposes? - Certainly. In this period all gas pipelines are overloaded by natural gas and Georgia is able to satisfy the domestic consumption in winter period, while in summertime the country will be able to export natural gas from here abroad. For example, in 2006 gas pipeline explosion resulted in natural gas supply cessation from Russia. In that period we did not have a gas storage tank and our country could not provide any reaction. Therefore, these factors shook Tbilisi and the regions of Georgia. Analogically in 2009 when Russia stopped natural gas supply to Ukraine, the industry of Ukraine was not much affected from his disruption, unlike the Georgian experience, because Ukraine owns a great number of gas storage tanks. I would refer to the 2015 sample too.

Because of the ongoing repair works on our pipeline, Armenia could not receive natural gas for a month, but the Aboviani gas storage tank managed to fully satisfy the needs of Armenian consumers and industry.

GEORGIAN RAILWAYS WARNS PEOPLE NOT TO CROSS TRAIN TRAFFICS DUE TO WEATHER CONDITIONS

e notify you that railway stations, passenger platforms, railway crossing, railway tracks and all other facilities (territories) related to train trafﬁc represent places of excessive hazard. JSC Georgian Railway asks you to cross the railroad in only specially marked and arranged places to prevent life threats. Citizens are able to safely cross the railroad by footbridges, tunnels, underpasses and specially arranged pavements. Crossing railway tracks in forbidden zones and beyond special zones, violates the 5th part of the 106th article of the Georgian Code of Administrative Offenses and results in due sanctions. At the ﬁrst stage, the citizen will be warned. At the next stage, the citizen will be forfeited by a 1/10 part of the salary. In the railway stations without bridges or tunnels, a pedestrian must cross the railway track in the place that is marked by “Crosswalk”. Before walking on the pavement, the citizen must make sure no train, locomotive or wagon moves on the railroad. The

citizen must wait until the approaching train has passed away and make sure no train moves on the second railroad. When crossing the railway track, the citizen must look at the trafﬁc light, listen to the voice signal and determine the state of the level crossing gate. The railroad may be crossed when the level crossing gate is open. If there is no level crossing gate in the railroad crossing zone, the citizen must make sure that no train is approaching the crossing zone and only after that he/she is let cross the railroad. It is categorically forbidden to cross the railroad when the level crossing gate is closed. It is banned to get beneath the halted wagons. It is also banned to walk along the railway tracks within a 5 meter distance. It is inadmissible to walk on bridges and tunnels without special paths for pedestrians. It is categorically banned to cross the railroad without due signs. Georgian Railway urges you to cross railway tracks in only special crosswalks by protecting all due regulations! Let’s Take Care for Our Lives!

bfm.ge

February 1, 2016 #131

ECONO-MIX

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EVERYBODY AGAINST LARI

PAWEL GRELA

Economic Analyst

The GEL exchange rate keeps depreciating. Last week the Georgian national currency saw its historical minimum against USD (1USD=2.49 GEL). Unlike the previous year, when GEL was extremely depreciating, in January 2016 the devaluation paces have decelerated. Despite encouraging statements by the government and the National Bank representatives, the GEL is not expected to easily regain public conﬁdence after the 1.5-year depreciation period.

GEL Sees Historical Bottom “The GEL stability directly depends on the National Bank monetary policy. Moreover, the NBG and the Government should take steps to restore public trust to the GEL. To this end, they should make simple and clear statements. In the current situation, the NBG head should be addressing our society from TV companies to persuade the population into the reliability of the GEL, but the NBG does not make even one comment on the exchange rate volatility. Unforeseeable environment causes extreme panics in the society. For example, on January 22 the GEL rate depreciated by 0.03 GEL, because currency auctions could not be held until Monday. Unpredictable environment arose in the weekend period and the exchange rate hit even 2.51 point in the market. Therefore, the NBG should provide maximum efforts to prevent extreme volatilities”, Merab Janiashvili, the vice president for the Association of Young Financiers and Businessmen (AYFB), noted. The NBG President Giorgi Kadagidze delayed again to make reaction to the GEL ex-

Photo by Nino Menteshashvili

change rate changes on January 22, because the NBG president appeared before the society only on January 26. It should be also noted Giorgi Kadagidze made focus on parliamentary hearings on the 2014 report and not on the 0.03-point depreciation of the GEL. The recent depreciation of the GEL exchange rate largely depends on negative expectations that arose after the developments in the neighboring countries, Kadagidze noted.

“Amid the 2.4 exchange rate the imports have declined to such an extent that the currency inflows and outflows are balanced. Money mass is another factor. We have maximally limited money mass and the money mass growth has fallen to zero, in practice. Consequently, monetary aggregates cannot provoke the GEL exchange rate depreciation”, Giorgi Kadagidze noted. It is worth noting that the statistics on the NBG website differs from the NBG President’s statement. The assertions by Kadagidze as if the NBG had practically minimized the money mass growth in the currency market to prevent the GEL exchange rate depreciation, does not reflect the truth. In December 2015 the NBG increased the GEL volume in turnover by more than 100 million GEL and this mass has supposedly got into

the currency market and affected the GEL exchange rate. It is difﬁcult to regain the public trust to the GEL, while the society sees the NBG President and other members make incompetent statements and in some cases even swindle the population. Similar statements bring opposite results for the national currency stability and damage it. Moreover, Zurab Tkemeladze, the head of the parliamentary committee of sectoral economy and economic policy was exposed in ignorance of elementary economic terms:

“We should not confuse deﬂation, when the GEL depreciates against USD, with the inﬂation, when the GEL depreciates against commodity. The GEL has depreciated against goods within 6% range”, Tkemaladze noted. Economic expert Temur Basilia casts doubt on the competence of the Georgian MP. Basilia has published his FB considerations about the latest statements by MP Zurab Tkemaladze:

“I believe the ofﬁcials on the key economic positions must have elementary knowledge of economics and know basic economic terms. If this principle is violated because of certain reasons, it is better that these persons make statement on the issues

that they know and not mention hearsay economic terms. We should not confuse elementary economic terms: deflation does not mean the national currency devaluation against USD; in reality the deflation is opposite process of the inflation, when prices of goods and services decline, the inflation indicator falls below zero”, Basilia says in his statement.

The GEL exchange rate is still unstable. State officials and the NBG representatives compete with each in shifting responsibility to external factors and in making incompetent statements around the GEL. Similar approaches cause logical distrust in the society and this factor devaluates the volatile national currency seeing historical bottom. The position of influential bodies is appreciated in the developed countries. For example, the words by Alan Grispens, the head of the US Federal Reserve System was creditworthy all over the world. This is a mitigating factor, but the NBG President is a different case. Statements by the NBG President and the government should be identical. Our society loses trust to them as they make controversial statements because of political confrontation. And the time has come, when the NBG President, parliament, finance and economy ministers should show valuable position to calm down the currency market and regain public trust to the national currency.

INTERVIEW caucasus business week

February 1, 2016 #131

GEORGIAN BANK SECTOR HAMPERS GEORGIAN ECONOMY MODERNIZATION - How would you appraise the corporate social responsibility efforts of our bankers and the bank sector, in general? -We should highlight the issue from different standpoint. We should not request commercial banks to respect moral standards. It is useless to talk about emotional aspects with commercial banks. The government should ensure the environment, where commercial banks will develop long-term visions and plans. Today, the bank sector cuts the branch that it relies on.

ZURAB KUKULADZE, editor-in-chief for the Bank and Finances newspaper, overviews the bank sector issues and challenges

- Several days ago Sberbank CEO Herman Gref openly criticized the Russian Authorities. The Russian Federation has lost the competition and the development paces have decelerated, he pointed out. Georgian bankers have never made similar important statements, even more so critical considerations against the Government. How would you appraise such restraint of Georgian bankers, who avoid similar freedom and active involvement in economic discussions? - First of all, I would like to approve Gref’s statement, because this was an absolutely correct and timely statement. In due time, the Russian economy had very good starting conditions for the state economy modernization. The Russian economy was making huge beneﬁts amid the 140-150 USD price per barrel of crude oil, but the local oligarchs under the umbrella of the pseudoliberal economy failed to valuably employ this money and the country became oil-dependent economy. This situation fully corresponds to the condition of the undeveloped countries. In the end, the Russian Federation is facing the situation when global oil prices have plunged and the oil-dependent economy stays on the verge of ﬁnancial collapse.

In general, GDP indicators cannot be used as a ground for assessing the state economy. The Russian economic problems have reafﬁrmed that the main thing is how modernized the economy is, how strong the production is and how strong the industrial development is.

GDP value may increase or decrease, but it is not correct to rely on the GDP indicators.

The Russian economy challenges resemble Georgian ones very much. Our economy cannot start real modernization because of the same reasons. Indeed, the scales are different, but the characteristics are identical – All Economic assets are monopolized by several clannish groups that enjoy political support. These clans particularly strengthened under the ruling of the United National Movement (UNM) and, under the pretext of free market principles, they monopolized the whole market and only several business groups control all major economic assets. In this situation, these business groups make focus on maintaining and strengthening the existing conditions. They do not strive for development. The bank sector should be also overviewed in this same context, because this sector has become the finance sector monopolist field. As to your question on why bankers avoid involvement in discussion of economic issues, I can openly say that they are not interested in changing the current system, because they tune this system. On the one hand, bankers do not make loud statements, but they are active in backstage confrontations, they lobby certain issues and their main objective is to maintain the integrity of the current system. For instance, we remember serious efforts of the bank lobby against the securities market development. The bank lobby is active in all directions even today. For example, one of the commercial banks even finances a NGO, which openly defends the principles that were established in our country under the ruling of the previous Authorities. Unfortunately, the Georgian bank sector hampers the modernization of the Georgian economy.

If we examine the policy that our commercial banks carry out, main accents are made on encouraging services and commerce. As to production, industry, these fields are left without financial resources in practice. Consequently, today we have the economy attached to the bank serctor that follows short-term visions. In practice, the bank system today is oriented on withdrawing money from the economy, while the economy cannot produce such wealth that would satisfy the interests of both the bank sector and also nourish the whole country. According to the September 2015 report, the bank sector recorded 155 million GEL seized properties. This signifies that commercial banks in Georgia follow the strategy of withdrawing, not developing. Consequently, similar approaches will bring problems within the bank sector too, as the field is facing liquidity problems that are curbed thanks to open support from the National Bank of Georgia (NBG). - Amid the GEL depreciation commercial banks have announced about restructuring the loans. The new prime Minister is also content with this process. How would you appraise this process and what additional mechanisms should Georgian commercial banks apply in this situation? - We should not discuss the issue in midterm perspective.

Naturally, the GEL depreciation generated huge social difﬁculties, because bank liabilities rose in value. However, we should consider the economy all around. The problem became evident today, but it started far earlier. The loans dollarization coefﬁcient is about 70%. We should make focus on resolving this problem and we should actualize this issue. As to the responsibility of commercial banks for restructuring loans, we should not expect commercial banks to show mercy. Joint standards

should be developed and introduced, including in terms of extension of the credit maturity periods or interest rates revision. The National Bank’s assertions that commercial banks belong to the private sector and they should decide themselves whether to set preferences to consumers, is not correct. The NBG is a chief regulator of commercial banks and it must protect the interests of both the bank sector and its clients. In reality, the problem acquires universal character if the consumer loans become problematic nationwide. Not only the quality of credit portfolios will worsen. In reality, the people who should care for the real economy development, will be ejected from the economic development process. Commercial banks should not hope for benefits if the situation worsens in long-term perspective. Esnalving the economic actors will damage the bank sector’s interests too. - Do you back the idea of restricting issuance of consumer loans? - Our society follows a very bad principle that a commercial bank is always right. If you do not want a credit, you should not take it. I stress this is jus evil! On the one hand, commercial banks are monopolists in the finance system and Georgian citizens are unable to draw financial resources from alternative sources. On the other hand, bank products should not be considered as an ordinary product like home appliances and so on. Taking and consuming credits generates necessity of certain skills and habits. The current administrative legislative basis fully serves the interests of this specific market actor, while commercial banks must differ two simple economic terms from each other – the Demand from the Requirement.

Commercial banks make a use of financial deficiency in the economy, i.e. from the requirement, and they issue high-risky credits. A major part of these credits turn problematic. However, commercial banks manage to return the loans anyway. They have no problems with withdrawing really-issued credits, because they are in very privileged situation compared to their clients in both legal and qualification terms. In this situation, I believe the NBG should introduce regulations to minimize the consumer loans risks. Otherwise consumer loans should be limited. In reality, consumer loans bring no real effect in the economy development, because these credits finance imports. This money leaves the country and is spent on promoting the production of our trade partner countries. - What outcomes should we expect from abolition of forcible expulsion of bad-payers from their homes? Why do business and bank associations protest against this decision? - As to the abolition of forcible expulsion, this is one of the necessary steps, but it is not sufficient to make credit organizations maximally care for the consumers’ real potential and offer higher-quality credit products to the market. I repeat this is not sufficient.

BANK

February 1, 2016 #131

COMMERCIAL BANKS REAP RECORD PROFITS Bank Sector’s Profits Exceeded 0.5 billion GEL in 2015 ccording to the National Bank of Georgia (NBG), net profits of Georgia-based commercial banks in 2015 marked 537 million GEL, up 63 million GEL compared to 2014 (475 million GEL). In December 2015, commercial banks reaped 84.5 million GEL more profits compared to November 2015. In 2015 the Georgian bank sector reaped record profits thanks to the GEL exchange rate volatility. Georgian based commercial banks have issued about 70% loans in USD. Therefore, the national currency depreciation increased their revenues. The increased credits portfolio proves this consideration. In 2015 the loans portfolio annual growth rate marked 33.7%, but the loans annual upturn was only 10.4% without the exchange rate effect. Total assets of commercial banks in 2015 rose by 24.7% and constituted 24.4 billion GEL, while the annual real growth in GDP in 2015, according to preliminary estimations, made up 2.8%. To put simply, the annual growth in Georgian economy has not marked even 3%, while the bank sector growth constituted about 25%.

HEADLINES

Georgian Designer Manufactures Amazing Watches in Switzerland

n 2011 Georgian designer Zviad Tsikolia introduced his wristwatch manufactured in Switzerland. In 2015 the wristwatches were produced under his surname ofTsikolia. Aviation, military weapon and racing machines represent his main inspirational source. He pays huge attention to the quality and design of the watch. Designs for all models are created in Georgia, but wristwatches are made in Switzerland.

MERAB JANIASHVILI Economic Analyst

caucasus business week

One Kilogram of Georgian Dried Persimmon Goes for 8 EUR in the Netherlands

I “Today, our economy is attached to the bank sector that follows short-term visions. Today the bank system is oriented on withdrawing money from the economy, while the economy cannot produce such volume of wealth that would satisfy the bank sector’s interests and, on the other hand, nourish the whole country.

According to the September 2015 report, the bank sector recorded 155 million GEL seized properties. This signiﬁes that commercial banks

See the Chart – Net Proﬁts of Commercial Banks (millions of GEL):

in Georgia follow the strategy of withdrawing, not developing. Consequently, similar approaches will bring problems within the bank sector too, as the ﬁeld is facing liquidity problems that are curbed thanks to open support from the National Bank of Georgia (NBG)”, Zurab Kukuladze, editor-in-chief of the Banks&Finances newspaper, noted. Revenues of commercial banks increased by about 1 billion GEL to 3.148 billion GEL, including interest returns made up 1.980 billion GEL, up 400 million GEL compared to the previous year’s interest return. According to the report, commercial banks received more than 1 billion USD revenues from physical bodies (up 188 million GEL compared to 2014), while the indicator of corporate loans marked 730 million GEL (up 150 million GEL year on year). The individual sector remains the main source from where commercial banks draw huge proﬁts. Consumer loans bring largest yield to commercial banks thanks to high interest rates and short maturity periods. The consumer loans portfolio has increased by 0.5 billion GEL year on year.

Commercial banks receive huge profits from commission fees. The year of 2015 was not exception. The sector’s revenues from bank service commission fees reached 247 million GEL. The bank sector’s high profitability clarifies why bankers have highest salaries in the country. According to Geostat, the national statistics service of Georgia, highest salaries are recorded in the finance sector. The commercial banks’ ratio in Georgia’s total finance sector is 93%. According to Geostat, the highest salary in the third quarter of 2015 was recorded in the finance sector (1500 GEL), the housing sector ranks second with 1413 GEL and the state governance is third with 1313 GEL. The lowest salaries are recorded in the education field – 470 GEL.

n 2015 Geofood company exported a test consignment of 100 kilogram dried Persimmon to the Netherlands and supplied it to the supermarkets that trade in bio products. The supply price per kilogram marked 8 EUR. The company failed to export the second consignment. Geofood founder Giorgi Kochlamazashvili told the Business Morning that his company will not stop exports of dried Persimmon, but in the future he will insure himself and the company will buy only high-quality dried Persimmon from households that will meet the EU market standards. “Dried Persimmon is an in-demand product. Not only Persimmon, but all sorts of dried fruits. Filbert is also very sellable. I do not know whether it is produced in Georgia, but in the Netherlands the dried mulberry is also very popular. They pay attention to quality and packing. The drying process must fully meet all hygienic standards”, Giorgi Kochlamazishvili said.

Georgia Cigar Manufacturer Expands its Business Activities To China

meri company manufactures Georgian cigar in Keda, the Autonomous Republic of Ajara. The company produces 30 varieties of cigar and about 60 related accessories. The company sells cigars in Tbilisi, Kutaisi, Batumi, Zugdidi and Poti. Imeri also exports the product to Turkey. Imeri company has enlarged the production as part of the Produce in Georgia state program, the government’s administration reports. The company has invested 250 000 USD in the production renovation, of which 40 000 USD was mobilized as an agro loan as part of the state program. The company started growing tobacco leaves of Georgia traditional variety of Oriental in the Ajara highland zones in 2007. Based on recommendations of foreign consultants and experts, the company decided to manufacture cigars and cigarillos of special taste from the local tobacco leaves. Patterns of the ﬁrst Georgian cigars were manufactured by Taru Martani 1918 in Indonesia, on May 5, 2009. Imeri company launched the production in 2014.

4-star Hotel to be Built in Abastumani

high-class hotel will be built in the resort of Abastumani. The project worth $ 26 million is carried out jointly by the Georgian Partnership Fund and “Redix Group”. A 160-room facility which will be located in Daba Abastumani will include a cafe-restaurant, a conference hall, meeting rooms, a swimming pool, a bar, spa and other facilities. According to the PF at this stage only a few family-type hotels are operating in Abastumani, which is considered one of the strategic resort settlements.

OTHER SIDE OF BUSINESS

February 1, 2016 #131

caucasus business week

TSEZAR CHOCHELI

I HAVE PAID THE PRICE FOR ESCAPING COMMUNICATION WITH MEDIA The founder of Zedazeni and Barambo companies

I AM AN ECONOMIST and commodity expert by profession. I STARTED MY FIRST JOB when I had not turned even 15 years old. I used to work as a haymaker in the Akhalgori District collective farm. By the way, in that period we beat the haymaking record. THE FIRST SALARY WAS 850 RUBLES. This was huge amount in that period. I used to receive salary due to the volume of the performed job. I FEEL WONDERFULAT THE WORK when the plans proceed successfully. When you achieve the determined plan, you feel the best. The result is very important in business. I GO TO JOB PLACE EVERY DAY, at about 9-10 o’clock. HAVING GOT TO THE JOB PLACE, I ﬁrst examine the situation at the enterprise. It is necessary to learn in the morning how the enterprise ﬁnished the previous evening, whether there is any problems and so on. IF THERE IS ANY FIELD, WHERE I WOULD NEVER WORK – When thinking of this, I realize that I could not work elsewhere beyond the business. The entrepreneurship is everything for me. I DRINK ZEDAZENI BEER, because I like Czech beer, in general. Consequently, Zedazeni resembles the Czech Beer most of all. I LIKE THE BARAMBO CHOCOLATES very much. I give preference to the Barambo chocolate than to foreign brands’ chocolates. I am the largest consumer of the Barambo chocolate that is sold in Georgia. THERE ARE A LOT OF MAIN THINGS IN THIS LIFE. Honesty, devotion and hardworking are the chief and decisive factors. WHAT AM I AFRAID THE MOST OF? I do not know. In general, people should not be afraid of anything, because there is nothing insuperable in this life. However, I believe a person should fear only the God. I HAD HUGE PLANS AND I HAVE TO FULFILL THESE PLANS. I mean the further ex-

pansion and development of the business. At this stage, I have performed only a small part of these plans and I have to do still a lot in this sector. CAREER PLANS IS NOT A GROUND TO BE READY TO DO ANYTHING. Anyway, it is easier to make career in the business sector than in other fields, because the business chooses only the best ones. I LOVE TRAVELING, but I lack for due time. To be frank, 20 years have passed without trips and vacations. I travel much, but for only business purposes.. THE COUNTRY WHERE I WOULD LIVE WITH MUCH PLEASURE. I have not thought about this. I will think of leaving for foreign countries after having built all planned plants. COMMUNICATION WITH REPORTERS WAS NOT MY PRIORITY, but now I appreciate these contacts. Previously, I did not like communicating with media and I have paid the price because of this. However, it is better late then never. I realized this moment later. Despite my positions in the state sector or the business, it was not my lifestyle to expose my activities. Therefore, I used to escape extra appearance and posing at print media and TV companies. I was making mistakes. Now I have changed the strategy and attitude. I HAVE NO FAVORITE DISH, because I think the Georgian cuisine is very diverse and it is difficult to give preference to some dish. Starting with the simplest, for example, barbecue and ending with sophisticated dishes. I like all Georgian dishes very much. I OFTEN DRINK WINE and I like wishing welfare and longevity to my homeland. JUDO is my favorite sports. I LIKE MANY ATHLETES, including those who have brought success to Georgia. We have very distinguished athletes. It is difficult to give preference to some of them. I am proud of French wrestler Rimer. I LOVE FOOTBALL TOO. Previously, I was a Tbilisi Dynamo FC fan. Now I am Barcelona FC fan.

February 1, 2016 #131

DOING BUSINESS caucasus business week

SETUP YOUR OFFSHORE COMPANY IN DUBAI AMIR KHWAJA Director of Evergreen Businessmen Services in Georgia Setup your offshore company in UAE thru us. We at Evergreen Businessmen Services now invite you to ‘Join the World’ by starting your own offshore company based in UAE. If you have not heard about offshore companies then let me explain you the beneﬁts and advantages of forming an Offshore Company which is globally accepted and allows you to open banks account in all major currencies. You can do business just the way you always wanted to, with no much restrictions on TAX, government policies, accounting and audits. Why UAE offshore company should be your ﬁrst choice when opening offshore companies. Offshore Companies are very popular choice for International Business models, which is available now for Georgian,with providing us.

Advantages of Offshore Company • No need to rent an ofﬁce or industrial places. The legal address of offshore company registration agent is the address of the offshore company. • 100% tax free • 100% ownership allowed to foreigner • UAE Offshore Company permitted to purchase, sale and take ownership of property in UAE (subject to earlier approval of the Emirate and its particular land department). • UAE Offshore Company is not eligible to obtain a UAE residence visa for their shareholders, directors and secretory. • Fast Incorporation Procedure – Company formation documents can be delivered within 1-2 working days! • Low cost of company formation

• Globally respected jurisdiction • Allowed to open a UAE Bank Account • 0% corporation tax, income tax or VAT • No Paid-up Share Capital required for UAE offshore company • Prestigious registered UAE address • No annual audit requirement for UAE offshore company Offshore company in UAE have some likeness with the offshore company from other jurisdictions in term of registration; though there are also addition advantages offered by the UAE offshore company which make UAE offshore company on the top of the list for the selection of offshore company formation. Activities allowed for UAE offshore company formation

• Holding Company (Buy/Hold/Sell stakes of companies) • Investments and Joint Investments Company • General Trading • Advisory and Consulting Services • Professional Services • Shipping and ship management. • International services • Property Owning (Subject to land department approval) • Commission agents Company that is Intermediary Brokers (IB’s) Differences of UAE offshore company • The leading difference of offshore company in UAE is the fast incorporation time. A shareholder has to be present physically in

the ofﬁce of UAE Free Zone but a register agent must be there to assist. • Another difference is appointing of an auditor, which will perform an annual audits, and to physically hold meetings where this auditor can claim his presence. • Another main difference of UAE offshore company is that they are very fast when an amendment is needed in offshore company such as a change of a director or shareholder. • UAE offshore company needs min one director unlike other jurisdiction (which required two director). • Shareholders shall be personally signing the registration documents and their presence is mandatory in front of authority to start the process of offshore company formation. Documents required for offshore company in UAE In order to proceed with the UAE offshore company incorporation, we need the following documents: • A passport copy of each shareholder. • An original bank reference letter for each shareholder. • An original proof of residency for each shareholder. • Articles of Association, Memorandum of Incorporation and the Application for incorporating an offshore company. (A standard format will be provided by us) • CV of each shareholder in English. For every free report contact us “Evergreen Businessmen Services” Address: g.saakadze descent 11, business center “panorama” Tel: 577433366 Email:tbilisi@setup-biz.com Web: deddubai.net

PUBLICITY caucasus business week

February 1, 2016 #131

HEALTHCARE

11 JEAN-ELIE MALKIN: SURVEY WILL INCREASE SOCIETY’S ACCESS TO HIGH-QUALITY HEALTHCARE SERVICES February 1, 2016 #131

caucasus business week

The social initiative “What Hurts?” was launched on January 25. The project was jointly developed by the Ministry of Labor, Health and Social Protection of Georgia and Global Alliance company. The project calls for conducting a public inquiry through special questionnaires. The new initiative will assist the Ministry to precisely determine the current medical and healthcare needs in the society. The questionnaire may be ﬁlled out on the www.1505.ge website, as well as at the regional healthcare ofﬁces. The social research company will process and summarize the inquiry results.

he Global Alliance president Jean-Elie Malkin talks about the activities and goals in the Georgian health sector, the importance and necessity of the project implementation.

In April 2015 the government of Georgia and Global Alliance international consulting group sealed an agreement on developing innovative instruments and directions for improving the Georgian healthcare system management. Global Alliance, our experts and the Georgian Health Ministry have been jointly and efficiently working for improving the Georgian health system. This is very tight and efficient cooperation and this cooperation deepens day by day. I would like to express my deep gratitude to personally Mr. Minister and the Health Ministry employees for efficient collaboration in order to supply affordable and high-quality health services to the Georgian society. - Dr.Jean-Elie, what was your objective and have you reached them? What steps has Alliance taken? What is the objective of this social campaign “What do you worry about” and what results should we expect from this initiative? - The mentioned initiative was developed as a result of our cooperation, because we are work-

ing on covering all directions in the Healthcare system to improve the whole system.

This initiative will drive the further improvement of the public health and increase attainability and affordability of high-quality medical services. This initiative enables us to keep closer communication with the Georgian society and learn about their needs and expectations, because the system improvement is to advance the public healthcare issues. - What are the current problems in the Georgian healthcare system and what are the approaches of Global Alliance to resolve these problems? What additional advantages will this initiative bring? - The main thing is that the Health Minister is aware of problems and needs in the Georgian society thanks to his personal engagement and from his colleagues who work with the population at various medical facilities. This initiative will enable us to be closer to the population and receive more detailed information to outline and resolve speciﬁc issues. - How would you characterize the current

health system in Georgia and do you see any resources and potential for establishing the European standards and norms in the country? -This is available through close communication with the population and through outlining the public needs. Consequently, the Minister has stressed the importance of this initiative and the key principles. The population should be able to talk about their needs and problems. This is not a social research, but this inquiry will enable to make a deep analysis and this initiative will be implemented through the simplest mechanism – ﬁlling out an online questionnaire.

This initiative will enable to maximally efficiently improve the system and make it maximally beneficial for the population. This is very important for the Ministry, for us. As noted, Global Alliance tightly cooperatives with the Georgian Health Ministry. - Finally, how would you appraise the current operation of the Georgian Health Ministry? - This initiative is a clear and manifest proof, as well as the cases in relation to the H1N1 virus. The Minister had provided a very good and efficient reaction to quickly respond to the public needs and their expectations. This reaction was an expression of efficient management. This was a very good and correct reaction aimed at enhanc-

ing response to similar challenges and increasing engagement of family doctors for efﬁcient management of these processes.

This fact reafﬁrms the necessity of continuation of primary health system reforms that is the priority of the Minister and our joint program – improvement of the primary healthcare system and continuation of the operation in this direction. As reported, under the agreement between Global Alliance and the Georgian government, the health system improvement documents have been already developed. These documents call for reorganizing the primary healthcare chain, increasing cost efﬁciency, adjusting the system to the European healthcare norms and broadening an access to medical services and medications, integrating the health system into European legislation and establishing the European standards of management. At this stage, all these documents are being translated into Georgian.

The Georgian Government has decided to extend the agreement with Global Alliance up to May 1, 2016.

HUMANITY- GEORGIA GIVES HUMANITARIAN AID TO REPUBLICAN HOSPITAL manity Georgia’s partner pharmaceutical networks, the company director general Andrii Kuzma said. Before, the company plans to transmit a certain volume of frequentuse medications to central clinics in the form of a humanitarian aid.

umanity Georgia pharmaceutical company has handed over humanitarian aid to the Republican Hospital in Tbilisi, namely, the aid com-

prises cardiologic and antibiotic drugs for the Republican Hospital patients. High-quality medications imported by Humanity Georgia will be shortly introduced in the pharmacies of Hu-

“Our visit to the Republican hospital is the commencement of this cycle. I am glad today the ﬁrst Georgian patient will receive the drugs imported by Humanity Georgia”, Kuzma said. “These medications are manufactured by the best pharmaceutical companies that own EU GMP certiﬁcates

and they have also passed serial quality control at the laboratories certified by the World Health Organization (WHO). These medications are mainly used against chronic illness and they are necessary for patients and we believe our humanitarian assistance will alleviate the condition of the patients who has a vital need in specific drugs. I would like to express my pleasure that our medications are stored in intense regime and at the next stage our medications will be placed at pharmacies of our contractor pharmaceutical networks. The main advantage of our drugs is that they will be sold at far lower prices in the Georgian market. I am sure the Georgian consumer will approve the quality of Humanity Georgia medications”, Andrii Kuzma said. At the first stage, the company will import about 250 high-quality medications certified by EU GMP at affordable tariffs. Humanity Georgia has also am-

bitious plans in the direction of domestic pharmaceutical production. Namely, the company plans to build a ultramodern pharmaceutical plant worth 130 million USD. The plant will comprise a quality control laboratory certified by the WHO, the company director general noted. The Republican Hospital’s director Avtandil Imedadze noted the supply of medications against chronic illness is a significant contribution. “We expressed our deep gratitude. A certain volume of these high-quality and efficient drugs will be transmitted to our patients and I believe this factor is of vital importance for many patients”, Abtandil Imedadze said. Humanity Georgia is a dynamically developing company with ambitious plans in the pharmaceutical market and the company wants to become a supplier of high-quality, safe and affordable drugs to the Georgian pharmaceutical market, Andrii Kuzma said.

EVENT

caucasus business week

February 1, 2016 #131

GEORGIA TO HOST FIRST WORLD TOURISNMANET IN WSOP POKER

he Eastern Europe’s first world tournament in WSOP poker will be held in Tbilisi, Georgia. The most prestigious tournament will start at the Sports Palace on March 3 and end on March 9. The prize fund makes up 700 000 USD. Moreover, 7 WSOP Circuit rings will be raffled and their owners will be recorded in the world poker history. Two winners will travel to the USA for the WSOP Global Casino Championship to fight for the world champion title. Jonathan Duhamel, one of the leading poker player, will specially arrive in Tbilisi to attend the championship. Duhamel is recorded among the world’s best three poker players. Kara Scott, the

distinguished expert and reporter of these tournaments, will also visit Georgia. Before the March championship, today foreign guests answered the questions of reporters at the Rooms hotel. Natalia Bogoush, the head of the Adjarabet marketing projects, told the new conference that the prize fund makes up 700 000 USD. Moreover, 7 WSOP Circuit rings will be rafﬂed, while two winners will receive unprecedented award from the Adjarabet.com: they will take part in the WSOP Global Casino Championship in the USA to ﬁght for the world champion title. Participation in this tournament is available only after passing the WSOP. Jacky Apple, the

president of the international poker organization, who organizes the world poker tournaments, unveiled reasons for cooperating with Adjarabet. com and noted Adjarabet.com is the region’s leading company and this cooperation will be continued in the future. Kara Scott, the world-known expert and reporter of these tournaments, expressed deep gratitude to Adjarabet.com for warm hosting and performed job. “Playing poker is not only a profession, but this is also a lifestyle, because I can travel worldwide. I believe world-level players, who will arrive in Georgia in March will receive huge pleasure, because you live in a very good country

with delicious cuisine”, Scott noted. She also recommended her friends to travel to Georgia, because she has received much warmth in the country. The World Series of Poker (SWOP) is the most prestigious tournament in the world, Jonathan Duhamel noted and advised the gamers to play poker as much as possible. “The March tournament will become a historical event that will enable poker players to receive much pleasure. This tournament will give a new stimulus to your country and you will make sure when the world-level gamers will arrive in your capital city”, Jonathan Duhamel noted, who has won more than 17 million USD in poker.

WORLD NEWS

February 1, 2016 #131

caucasus business week

QATAR AIRWAYS IS PLANNING TO LAUNCH THE LONGEST FLIGHT IN THE WORLD

atar Airways may be about to launch the longest flight in the world. Airline CEO Akbar Al Baker told Bloomberg last week that Qatar will add an ultra-long-haul route between the company’s hub in Doha, Qatar, and Auckland, New Zealand. Should Al Baker’s airline go ahead with the nonstop route, it would be the longest continuous flight in the world, with a distance of 9,034 miles that would last 18 1/2 hours. Currently, the longest flight in the world is Qantas’ Sydney-to-Dallas route, which covers 8,577 miles and last 16 hours 55 minutes, according to Statista. Next year, Emirates is expected to beat Qantas for the honor with a new route between Dubai and Panama City, Panama. That flight will cover 8,588 miles and last 17 hours 35 minutes.

But all three will be eclipsed when Singapore Airlines relaunches its direct flight from Singapore to New York. The 9,500-mile, 19-hour affair was discontinued in 2013 because of high fuel costs and the early retirement of the A340-500 aircraft used to operate the flight. But Singapore announced in October that it will resume the flight after it takes delivery of the airline’s new Airbus A350-900ULR. Although the airline not announced an exact date for the resumption of the route. Qatar is expected to deploy the airline’s existing fleet of Boeing 777-200LR Worldliners. The Worldliner can carry more than 300 passengers with a range of 9,845 miles. Here are the longest flights in the world according to Statista:

Mark Zuckerberg Just Became the 6th Richest Person on Earth

AzerbaijanGeorgia-Turkey railway to be constructed in 2016

he Facebook Inc. founder saw his fortune rise $5.5 billion in early trading Thursday as the world’s biggest social network delivered another quarter of record revenue. That gives the 31-year-old a net worth of about $47 billion, enough to surpass the $45.3 billion holdings of brothers Charles and David Koch, according to the Bloomberg Billionaires Index. Facebook reported on Wednesday that fourthquarter sales were up 52 percent to $5.84 billion and net income had more than doubled to $1.56 billion from a year earlier. More than 1.59 billion users are now logging on every month, according to the company. Thursday’s surge turned a year-to-date decline of more than $4 billion for Zuckerberg into a $1.2 billion gain for the year and pushed him above the Kochs, whose industrial holdings have been hit by lower oil prices. The ﬁve billionaires that remain above the tech entrepreneur in the ranking — Bill Gates, Amancio Ortega, Warren Buffett, Jeff Bezos and Carlos Slim– have lost a combined $24 billion so far this month through Wednesday trading as global equities slump amid dimming investor expectations of global growth.

he Baku-Tbilisi-Kars (BTK) railway will be constructed in 2016, Turkish Ambassador to Azerbaijan Alper Coskun told reporters Jan. 29. “The technical problems delayed the BTK project implementation,” he said. “But they have already been resolved.” Baku-Tbilisi-Kars railway is being constructed on the basis of a Georgian-Azerbaijani-Turkish intergovernmental agreement. Azerbaijan allocated a loan of $775 million for the construction of the railway’s Georgian section. A new 105-kilometer branch of the railroad is being constructed as part of the project. The peak capacity of the corridor will be 17 million metric tons of cargo per year. At the initial stage, this ﬁgure will be equal to one million passengers and 6.5 million metric tons of cargo. The annual transit of goods from Iran to Russia via Azerbaijan will reach about ten million tons. The North-South railway will connect Northern Europe to South-East Asia. It will serve as a link to connect the railways of Iran, Azerbaijan and Russia.

Russia’s Great Shift Downward

or Russia’s battered economy, 2016 already looks miserable. The ruble has slumped to record lows as oil prices have fallen 11 percent since Jan. 1, to around $30 a barrel. The government, which gets nearly half its revenue from oil and gas, is scrambling to plug a 1.5 trillion-ruble ($19.2 billion) hole in its budget. The International Monetary Fund forecasts the economy will shrink 1 percent this year, after contracting 3.7 percent in 2015. The situation has created “an atmosphere of extreme nervousness,” Economy Minister Alexei Ulyukayev told President Vladimir Putin in a meeting on Jan. 26, according to a transcript released by the Kremlin. As grim as the numbers are, they may understate the increasingly dismal prospects for a country that only a few years ago was enjoying its greatest prosperity. Economists and business leaders, including some with strong Kremlin ties, are warning that Russia faces longterm stagnation and declining competitiveness. “We ﬁnd ourselves among the countries that are losing, the downshifting countries,” Herman Gref, head of state-controlled Sberbank, the country’s largest ﬁnancial institution, said at a conference in Moscow on Jan. 15. The situation resembles “a staircase leading down,” says Evgeny Gontmakher, a board member at Moscow’s Institute of Contemporary Development, whose chairman is Prime Minister Dmitry Medvedev.

Women, young hit most by unemployment in Turkey

omen and the young suffer the most from unemployment in Turkey, which is expected to increase in 2016. The official average rate of unemployment in Turkey hovers at around 10 percent, but youth unemployment has firmly stayed at the 18-20 percent mark, where both uneducated youths and young college graduates alike are having difficulties finding work. According to a study released in August by the research institute of the Confederation of Revolutionary Workers’ Unions (DİSK), unemployment is most prevalent among young women. “The number of unemployed among young women has increased by 85,000. The rate of unemployment [among young women] has reached 20.5 by an increase of 4 percent year on year,” the DİSK report said. The report is based on data released by the Turkish Statistics Institute (TurkStat) from May of last year. “The young have difficulty in getting their first job because they are not seen as qualified,” Seyfettin Gürsel, the director of Bahçeşehir University’s Center for Economic and Social Research (BETAM) has told reporters.

PUBLICITY caucasus business week

February 1, 2016 #131

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

caucasus business week

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

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

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

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

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

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

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

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

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

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

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

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

PUBLICITY caucasus business week

February 1, 2016 #131