Caucasus Business Week #140

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April 4, 2016 #140

April 4, 2016, Issue 140 - www.cbw.ge

econo-mix

trade

mfo’s

Online Credits for Enslaving Agreements

Georgia-Israel: Economic Perspectives

21% loan owners Gave Up Food to cover credits

Pg. 5

Pg. 6

What is Happening Around Sulfur Baths?

Pg. 7

Pg. 9

Will Societe Generale Withdraw from Georgia?

Does Hualing Group Plan to Buy Billionaire Bank? „I would take every my efforts, apply all leverages to maintain this major bank group in the Georgian market. The Government, the regulatory body should take maximum efforts in this case”, Bank Republic founder Lasha Papashvili noted.

In due time Lasha Papashvili concluded an agreement on entrance of Societe Generale in the Georgian market. This was one of the successful deals in Georgia that goes beyond the classification of pure business bargain and is rather perceived as a deal of state importance.

Societe Generale represents a certain visiting card for Georgia and it stresses Georgia’s investment attractiveness, it is a certain guarantee for potential investors, Lasha Papashvili noted.

“The bank’s withdrawal would be very bad fact for the country”, he added.

Papashvili talks with only presumptions and hints. “There is no smoke without Fire”.

The bank sector’s backstage, meanwhile, asserts that the French Group is about withdrawing from the country and its asset will be bought by major Hualing Group company of China.

Hualing Group has been already operating in the bank and real estate markets of Georgia. The Group is a Basisbank stakeholder. The bank has considerably increased the portfolio and it ranks among top eight leading commercial banks of Georgia in terms of assets. The bank ranks third in terms of net profits (3.4 million GEL) as of March 2016, while Bank Republic is second in the same category.

None of them confirms this available deal. Both managements of Bank Republic and Basisbank expressed astonishment around the scales of dissemination of this information. Hualing Group denies any information, however they are not authorized to unveil similar information, anyway.

This information astonished Basisbank founders too. Zurab Tsikhistavi assures this is unreal information, but he could not explain motivation of disseminating similar information. There is no explanation to similar moves. Nor the main goal of these rumors could be outlined.

However, the logics suggests that the bank sector may see the past decade’s major deal in Georgia.

We should just take a breath before real plans and intensions come to the surface to see how much will be paid for the most expensive bank assets, when emotions and astonishments will settle, when confusion disappear and both participants and spectators of this deal calm down.

2 GOVERNMENT

NEWSROOM Georgia and Korea Sign Double Taxation Prevention Agreement Georgian Finance Minister and Korean Republic vice Prime Minister signed an agreement on Prevention of Double Taxation and Tax-payment Evasion.

Announcement on the Treasury Securities Auction 2016 On April 6, 2016 the Ministry of Finance of Georgia on Treasury Securities Auction will issue Treasury Bonds with nominal value of 20 000 000 GEL and maturity of 2 years.

ECONOMY

Georgia’s Net International Investment Positions Worsens Georgia’s net international investment positions made up 17.9 billion USD at the end of 2015, that is, GDP’s -128.6 % (based on the report of the past 4 quarters).

Rapid Estimates of Economic Growth, February 2016 GDP growth rate amounted to 2.6 percent y-o-y in February 2016.

The estimated real GDP average growth equaled 1.7 percent for January-February 2016 y-o-y.

BANKING

Annual Averaged Yield on GEL-denominated Loans Rise to 24.1% In February 2016, as compared to January 2016, the volume of GEL-denominated loans issued by commercial banks shrank to 39 mln GEL.

EBRD to Open 100 million USD Credit Line for Bank of Georgia Bank of Georgia will receive the sum in two positions to serve three target directions. including for financing small and medium sized business companies.

BUSINESS

Rustavi Nitrogen Will get 155 Million From EBRD The sides have achieved an agreement, that works on the contract between biggest chemical company and European Bank will be finished within 2 months.

Partnership Fund has supported finishing of the deal.

Brewing Industry Awaits the Revision of Excise Duties Brewing industry expects the excise tax on beer to be revised in a new summer season - the issue could be considered at a meeting of the Prime Minister’s Economic Advisory Council.

COMPANY

Black Sea Rivera to Build Hotel in Ganmukhuri Ltd. Black Sea Rivera will build at least 120 room hotel complex in Ganmukhuri. The company was named as the winner of electronic auction that was held by the Ministry of Economy and Sustainable Development.

World Bank Backs Development of Knowledge-Based Innovative Economy The government of Georgia and the International Bank for Reconstruction and Development (IBRD) signed an agreement on National Innovative Ecosystem Project that will be financed by the World Bank (WB) in the amount of 40 million USD.

The agreement was signed by Georgian Finance Minister Nodar Khaduri and WB regional director in the South Caucasus Mercy Tembon.

The project calls for expanding internet services and information technology coverage in the country, developing innovative hubs and networks of innovative centers in target cities and villages, increasing innovative activities of companies and private bodies and their involvement in digital economy and developing their innovative potential, supply of technical assistance and conducting trainings.

The project will be implemented by the Georgia’s Inno-

vation and Technology Agency (GITA).

“The Georgia’s Innovation and Technology Agency (GITA) will implement very important and useful project – development of national innovative ecosystem in regions and involvement of companies and physical bodies in the digital economy.

This project will foster, on the one hand, establishing modern innovative tendencies in Georgia and, on the other hand, creating innovative approaches for growing efficiency of our business operation.

I would like to express gratitude to the International Bank for Reconstruction and Development (IBRD) for financial support.

Implementation of innovative ecosystem project will foster the business development, establish new technologies, bring innovative ideas and create new job places”, Finance Minister Nodar Khaduri said.

“GENIE is a new phase of WB support to our government.

The project is to foster inclusive growth through development of knowledge-based innovative economy.

Investments will be carried out in various sectors to increase innovative potential, expand access to human capital and financial sources.

This project will make investment in the future of Georgia through reforms and investment projects that were carried out by the government over the past years in terms of development of infrastructure, improving the entrepreneurial environment and rule of law”, WB regional director in the South Caucasus Mercy Tembon noted.

Georgia faces $15 billion foreign debt, says NBG Georgia is borrowing more money off foreign lenders and the country currently has a foreign debt of $15 billion USD, latest figures reveal.

The National Bank of Georgia (NBG) revealed the country’s gross external debt increased by $357 million during the fourth quarter (Q4) of 2015. NBG said from that, an increase of $441.1 million was due to transactions.

The data showed Georgia’s gross external debt accounted for 107 percent of the country’s Gross Domestic Product (GDP).

NBG revealed the state sec-

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April 4, 2016 #140

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tor external debt amounted to $6 billion or 43.3 percent of GDP. From this the debt of the general Government was $4.4 billion or 31.5 percent of GDP. The external debt of Georgia’s banking sector reached $2.9 billion or 21.1 percent of GDP. NBG said the external debt of other sectors stood at $4.4 billion or 31.8 percent of GDP, while $3 billion or 21.5 percent of GDP was from inter-company lending.

The majority (94.7 percent) of Georgia’s gross external debt was denominated in foreign currencies.

NBG said the net external debt of Georgia was 9.4 billion or 67.3 percent of GDP, as of December 31, 2015. The net public sector external debt was $3.5 billion or 25 percent of GDP, said the bank.

NBG explained the gross external debt statistics were harmonised with balance of payments and included external debt of the public sector (general Government, public corporations and the national bank) and the private sector (banking and other sectors).

Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Reporters: Nino Kuparashvili, Lazare Gvimradze; Shiva Parizad.

Designer illustrator: Ilia Chrelashvili. Technical Assistant: Giorgi Kheladze

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

April 4, 2016 #140

PUBLICITY

3

THE BANKER

4 TBC Bank’s regional director Levan Diasamidze explains the crucial information every citizen, who wants a mortgage loan, should have before applying to the bank.

A mortgage loan, compared to other credit products, is primarily a longterm product. There are different risks associated to GEL, USD, EUR or other currency depreciation in a long-term period.

Levan Diasamidze Regional director

A

mortgage loan is a common banking product intended for the purchase of an apartment or commercial space. The terms for bank mortgage loans are getting more sophisticated and flexible.

- What is a mortgage loan and how does it differ from a consumer loan?

- The general public understands the term “mortgage loan” in many ways. Quite often the term mortgage loan is used for any type of the loan that is guaranteed by real estate. Such usage is frequent and promoted by micro finance organizations, as they use the term “mortgage loan” as a type of collateral, not a type of loan. However, in commercial banking, a mortgage loan has a different purpose than other types of loans. A mortgage loan is intended for the purchase of real estate - house, summer house or land.

This is the main difference between a mortgage loan and a consumer loan: while the former is intended for the purchase of real estate, the latter can serve the various consumer needs of a customer (e.g.: purchase of TV, mobile phone or some other item).

- What is the first thing a customer should pay attention to when getting a mortgage loan?

- First of all, it is crucial the customer fully analyzes the obligations he or she assumes when receiving a loan, and understands that those obligations will have to be honored within a set time period. Consequently, the customer must determine whether his or her income source is stable and long-term. The customer also needs to analyze the risks that he or she will face in case of default. After deciding that a mortgage loan is a rational decision, the customer needs to pay attention to the following points: the various commission fees related to loan disbursement; the effective interest rate; the fines in case of default or advanced payment; the loan repayment schedule; the loan currency and the loan duration. In order to completely understand all the obligations, it is important that the customer reads all agreements he or she signed when receiving the loan.

April 4, 2016 #140

What should you know before getting a mortgage loan?

- What is the difference between effective interest rate and annual interest rate?

- Effective interest rate is the interest rate defined by the credit agreement and it reflects all the financial costs incurred by the loan recipient for the loan. Annual interest rate is the cost of the loan without considering additional costs.

That means it is important to compare not only annual interest rates

but also effective interest rates when comparing the loan products offered by different financial organizations.

This enables a customer to determine which offer is more beneficial.

- Why do interest rates differ for mortgage loan in GEL and mortgage loan in USD? - A mortgage loan, compared to other credit products, is primarily a long-term product. There are different

risks associated to GEL, USD, EUR or other currency depreciation in a longterm period. As a result, the stability of a currency or the cost of the loans a customer receives can change significantly in the long-term, which explains the difference in the interest rates on mortgage loans in different currencies.

In Georgian reality, the interest rate on loans in USD or EUR is lower than on loans in GEL.

TBC Bank Named as Best Bank for 2016 The Global Finance, the world’s influential financial magazine, has named TBC Bank as the best bank for 2016.

In its exclusive research, the Global Finance named winner commercial banks in the emerging markets. Over the past 5 years on end TBC Bank has won the best bank’s nomination. In whole, the Global Finance has named TBC Bank as winner in this category 8 times.

“TBC Bank showed magnificent results in 2015 too. The bank’s profits have risen by 38%, the correlation of expenditures to revenues have improved.

The loan portfolio has risen by more than 25%. TBC Bank has proved that it shows special responsibility to the Georgian market and all stakeholders”, Joseph Giarraputo, the Global Finance editorial board chairman, noted.

“We are very proud that we have

obtained the best bank’s nomination for the fifth time at a run. This fact stresses that TBC Bank is demonstrating special financial results and maintains leadership in terms of innovations and services. I would like to thank the whole team of TBC Bank for its contribution to empowering and developing our Bank”, TBC Bank director general Vakhtang Butskhrikidze said.

- What does a floating interest rate loan mean and what is the National Bank’s refinancing rate?

- Lately there are many loan products with floating interest rates. For loans in USD, the reference rate is LIBOR, (LIBOR – London Interbank Offered Rate); for loans in GEL, the reference rate is the National Bank’s refinancing rate. Changes in the reference rate directly impact the loan interest rate.

For example, we have a loan with an annual floating interest rate of 12%.

When the loan was received, the refinancing interest rate was 8%; if the refinancing rate changes to 7% after the bank gave the loan, our annual interest rate will change to 11%. If the refinancing rate increases, however, the annual interest rate on our loan will also increase.

Detailed information about interest rates and their statistics for GEL can be found at www.nbg.gov.ge. Information for interest rates in USD is available at www.global-rate.com.

- What causes the change of interest rate and what are the trends since 2008?

- The change of interest rate on credit products, as well as deposit products, can be caused by various factors, starting from our personal financial situation and ending with regional and global events. There is a direct correlation between a country’s financial stability and bank interest rates: the more stable and financially sustainable a country is, the lower the interest rates for banks to raise funds.

The situation has been more or less stable since 2008, and there is no significant increase in the price of loan products.

- What is the major advice you would give to those wishing to purchase an apartment with a mortgage loan?

- As I have already noted, it is important to really understand all the obligations related to getting the loan. It is necessary for customers to analyze their financial condition and the state of the country’s real estate market.

The decision to apply - or not to apply - for a loan should be made only after taking these issues into consideration.

Once a customer decides to take a mortgage loan, all the offers from different financial organizations should be thoroughly analyzed: comparing effective interest rates, determining the currency of the loan and so forth.

In addition, it is very important that banking clients read the loan agreement and ask questions about aspects of the agreement that are unclear.

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Georgia is The Most BusinessFriendly Country

According to the statement of Philip Hammond, who is Secretary a British conservaof State for tive politician, the Foreign and secretary of state for Commonwealth foreign and commonAffairs wealth affairs since 15 July 2014, Georgian economy and political reforms have made tremendous progress.

Hammond made an announcement on the briefing that was held after the meeting with Georgian Prime Minister Giorgi Kvirikashvili.

“We welcome rePHILIP HAMMOND

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ECONO-MIX

April 4, 2016 #140

Online Credits for Enslaving Agreements

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gional cooperation.

Georgia indeed made tremendous progress by taking into account political and economical reforms.

Georgia is considered as the world’s easiest country in terms of doing business.”

“In addition corruption combating works quiet well in Georgia. Thus, this index meaningfully increases the potential rate of Georgia as a midpoint of Asia and Europe. “- noted Philip Hammond.

MERAB JANIASHVILI Economic Analyst

Where Georgian Citizens Will Have Visa-free Access?

Georgian citizens will be able to access to 29 countries and territories without any visa requirements any more.

Below are presented the list of EU Member States, nonEU countries, and candidate countries of the Schengen zone, where Georgian citizens will be able to travel visa-free.

EU member states: Austria, Belgium, Germany, Hungary, Greece, Slovenia, Denmark, Spain, Estonia, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Poland, Czech Republic, Hungary, France, Sweden, Finland.

Non-EU countries: Iceland, Liechtenstein, Norway, Switzerland.

Schengen candidate countries: Bulgaria, Cyprus, Romania, Croatia.

The mostly required documents for visa-free travel are: active bio-metric passports that are valid till the day of return to Georgia and its validity must not be less than the 6 months.

What will the passenger be asked when entering the EU / Schengen area when border control checking applies.

The representative of the border control checking might be interested in the aim of the passenger’s travel (eg .: a business trip, tourism, visiting friends or relatives, a training course for up to 90 days).

Thus, the passenger might be asked by the border officer to

represent the documents in order to prove the reason of traveling.

Those following documents might be the return ticket to Georgia, hotel reservation, travel insurance, financial maintenance document (eg .: cash, travel checks, active electronic banking cards) Georgian citizens need to follow the several rules according to the brochure while traveling to the Schengen Area with no visa: •Georgians can stay in the Schengen area for 90 days maximum; •In case the traveler stays permanently for 90 days, it will be possible to re-travel in the Schengen zone again after 90 days pass •Visa-free travel does not mean the permission of working or studying in Schengen member countries for along time.

•If a Georgian citizen stays longer than 90 days in a Schengen country, he/she will be deported and be banned from entering the Schengen zone for five years. As an alternative, the person might be fined € 3,000.

Thus, soon it will be possible for Georgian citizens to travel to the Schengen zone visa- free, so the country’s authorities have started providing its citizens with necessary information regarding visa-free trips.

I

“

Agreements of online credit organizations contain enslaving provisions and reflect only the crediting organization’s interests.

”

n reality, the government and the national bank of Georgia (NBG0 have only exchanged several considerations around the issue. Practical steps still remain far away. Moreover, no legislative process is underway on the issue yet.

While the Authorities mull over how to resolve the problem, the quantity of online credit organizations and their clients grow at high paces. Numerous articles have highlighted the issue that online credits are issued for inadequately high interest rates. We just stress that online credits represent one of the expensive credit products in not only Georgia, but worldwide. However, Georgia has not yet started regulating this sector and therefore the annual effective interest rates exceed 1000%. However, some online credit organizations issue online loans with 2 000, 3000 and even 600 000% annual interest rates. This is a confirmed fact and we would not waste more time on its consideration. The main problem does not consist in only expensive credits. The real problems emerge, when clients realize what kind of agreements they have undersigned for sake of taking such inadequately expensive credits.

We have explored a credit agreement issued by one of the online credit organizations. Given loan agreements of various online crediting organizations do not much differ from each other, the agreement of one specific organization can cast light on the current realities in the online crediting market.

In this specific case we will analyze a loan agreement issued by Net Credit company. Naturally, one newspaper article cannot fully grasp all paragraphs of this agreement, but we will emphasize several most problematic aspects.

Frequently, clients of online loan organizations astonish how their personal information is obtained by third bodies (collection companies and so on, while they authorized online crediting companies themselves to act in this way, having undersigned their loan agreements.

8.3. Through this agreement the borrower fully grants unconditional rights to the lender for transmiting the personal data to the third body without seeking additional consent from the borrower, including: contact body(bodies) indicated by the borrower, companies working on collection of bad loans, companies providing money transfer services and other bodies.

Transmission of the personal data to the third party is authorized by this Agreement for executing the rights determined by the Georgian legislation and fulfilling the current obligations, including, for

Over the past months the issue of regulating activities of online crediting organizations has become relevant. Parliament members and some Ministers assure that they back the idea of setting legislative regulations on the field and the government is working on corresponding legislative aspects. searching out the borrower to make him/ her repay the loan if the borrower does not fulfill loan obligations (including through applying to the court)”, the extract from this agreement reads.

If the clients agree to undersign similar agreements, they automatically authorize the lender to transmit their personal information to the third party.

There are numerous articles on online credit agreements that are unbalanced and unfair and provide unequal conditions. However, special regard should be paid to the paragraphs that exempt the company from the obligation of notifying the client about problematic loans. „10.2. Delivery of notification to the address indicated by the borrower is available every day from 09:00 to 20:00.

The notification is considered as delivered even no person presents at the appropriate address or the present body refuses to accept the notification.

10.3. For the purposes of delivery of the notification, anybody that presents at the address indicated by the borrower, despite this person is the borrower or the family member, is considered to be an authorized body. Transmission of the notification to this person is considered that the notification has been delivered to the borrower.

10.8. If the lender has sent a written notification about overdue loan or any other ordered letters under the agreement to the borrower at any address indicated by the borrower through any mean of communication, the lender is authorized to request remuneration of the taken costs.

The Parties agree that the cost for sending every warning letter by any means of communication makes up standard 13

(thirteen) GEL that shall be paid by the borrower to the lender”, the extract from the agreement reads.

“Not to mention fair and balanced approaches, the rights given to the lender in this agreement are unreasonable and abnormal. For example, if the company decides to sue you to the court, you may remain absolutely unaware of this fact if nobody stays on duty at your home, because the company considers the notification delivered even if no recipient presents at the indicated address or where absolutely different persons live. Moreover, the lender makes the borrower pay 13 GEL as a fixed tariff for every sent notification, including email notifications. Consequently, if you have borrowed 300 GEL and the company has sent you 10 letters, including emails that you have not received because of absence at home, your borrowings will increase by 130 GEL. Agreements of online credit organizations contain enslaving provisions and reflect only the crediting organization’s interests. Consequently, if the loan becomes problematic, similar agreement will bring numerous problems to the borrower that may have seemingly taken a small loan, but the failure of paying it damages the borrower’s personal budget and business image, because online credit organizations fully use the agreement determined preferences and apply blackmails against the clients through spreading information about them to neighbors and job place.

There is only solution in this unregulated sector – you should not undersign the agreements that provide absolutely enslaving and unfair conditions.

6

SHAH DENIZ

ADB Mulls $450 mln Loan for Shah Deniz The Asian Development Bank (ADB) is considering a $450 million loan to Azerbaijan to help expand its Shah Deniz natural gas project, the bank said on Tuesday.

Azerbaijan’s biggest gas field, Shah Deniz is being developed by BP, Azeri state energy firm SOCAR and others.

It holds an estimated 1.2 trillion cubic metres of gas.

Europe is looking to Azerbaijan as it seeks to diversify its gas imports and lessen its reliance on Russian energy.

Shah Deniz I has been pumping gas since 2006 and has an annual production capacity of about 10 billion cubic metres (bcm) of natural gas.

Shah Deniz II is expected to produce 16 bcm of gas a year beginning in 2019-2020, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

“The ADB has started a review of the project, but there is no precise schedule for its approval. The ADB is evaluating its possible financing in the amount of $450 million,” the bank said in a statement.

The second stage of the Shah Deniz field development includes 26 subsea wells, two offshore platforms, gas and condensate subsea pipelines and the expansion of the Sangachal terminal near the Azeri capital Baku and the South Caucasus Pipeline. The expansion project is estimated at $28 billion.

Azerbaijan is separately seeking international funding to build the Trans Anatolian Pipeline (TANAP) and Trans Adriatic Pipeline (TAP) which will form the Southern Gas Corridor. It has so far raised $1 billion via a Eurobond issue.

Georgia to Receive Gas from South Caucasus Pipeline in 2018 The South Caucasus gas pipeline expansion works have entered an important phase. Under the project, the gas pipeline transportation capacity will increase to 16 billion cubic meters as part of the second phase of the Shah-Deniz project.

The rehabilitated pipeline will transport natural gas from the Caspian Sea to Europe via Turkey.

Under the project, starting 2018-2019 Georgia will receive increased volume of natural gas at preferential rates.

The coming investment value is appraised by 2 billion USD. The works are being carried out by BP Company.

Georgian Prime Minister Giorgi Kvirikashvili, the UK Foreign Minister Philip Hammond visited the construction site. The project is of crucial importance for both Georgia and the whole region, Giorgi Kvirikashvili noted.

TRADE

April 4, 2016 #140

Georgia-Israel: Economic Perspectives and Cooperation Mechanisms MARIAM KOPALIANI

Israel is one of the exemplar countries in the world, where Georgian officials could find many interesting practices to implement in Georgia.

Israel has been fighting against terrorism since its very foundation.

Despite continuous state of war, the country has developed one of the strongest economies worldwide.

Despite tight relations between Georgia and Israel, over the past years Israeli exports to Georgia is decreasing and Israeli businessmen show less interest in the Georgian investment environment. There is much room for improving the Georgian exports too.

The latest statistics proves that Israel is not recorded in Georgia’s ten top exports markets. Moreover, exports have considerably shrunk in 2015 compared to 2014.

According to Geostat, the national statistics service of Georgia, in 2003 Georgia’s exports to Israel constituted 957.400 USD. The figure marked 1.45 million USD in 2004, 1.01 million USD in 2005, 2.3 million USD in 2006, 13.7 million USD in 2007, 2.4 million USD in 2008, 1.6 million USD in 2009, 4.2 million USD in 2010, 3.1 million USD in 2011, 36.1 million USD in 2012, 2.4million USD in 2013, 4.5 million USD in 2014 and 5.6 million USD in 2015.

As to Israeli’s exports to Georgia, the figure made up 1.75 million USD in 2003, 4.9 million USD in 2004, 9.6 million USD in 2005, 22.3 million USD in 2006, 37.8 million USD in 2007, 41.5 million USD in 2008, 69.9 million USD in 2009, 14.5 million USD in 2010, 28.6 million USD in 2011, 31.6 million USD in 2012, 31.3million USD in 2013, 41.8 million USD in 2014 and 22.5 million USD in 2015.

What factors precondition a slowdown in Israeli imports to Georgia, in particular, over the last period? How interesting do Israeli businessmen find Georgia for making investments?

In general, what are the perspectives for enhancement of economic relations between Georgia and Israel?

Israeli Ambassador to Georgia Yuval Fuchs assures that there are no obstacles and barriers in bilateral trading. However, the Israeli ambassador has recognized the statistical indicators leave a great deal to be desired.

Two conclusions can be made in this situation. The GEL depreciation and regional development tendencies is the first. The coming election period could be considered the second factors that resulted in exports contraction from Israel, Mr. Yuval Fuchs noted.

Regretfully, Georgia’s exports to Israel are also insignificant. As a result, the Israeli ambassador thinks that Georgia should increase exports to Israel and the conclusion of a free trade agreement with Israel would be one of the promoting factors.

Georgia should make focus on stability and growth of figures, Mr. Yuval Fuchs said. „Small and medium business constitute a major part of the Israeli economy. Therefore, we should have re-

Georgia Israeli export rises statistic reveales

Georgia sees drastic decline of imports from Israel

Million Dollars

Million Dollars 41,8

Total 2014: 41.8 million dollars

2012 31,6

31,3

22,5

36,1

28,6

5,6

2015

4,5 2011

2012

2013

2014

2015

2014

* Geostat

<< We want to see Georgian investments in Israel. We want to see Georgian stakeholders in the Israeli Hi-Tech sector, where almost all countries make investments >> YUVAL FUCHS Israeli Ambassador to Georgia

<< Georgia has received several major investments from Israel in the tourism and hotels segments >> ITSIK MOSHE IG-chamber of business Head

alistic expectations. We want to see Georgian investments in Israel. We want to see Georgian stakeholders in the Israeli Hi-Tech sector, where almost all countries make investments. Regretfully, Georgia is not represented in this field”, Mr. Yuval Fuchs said.

Our countries should develop economic cooperation, Itsik Moshe, head of the Georgia-Israel Chamber of Business, noted. Successful economic cooperation depends on many factors and the reality may be different from our desires, he said.

Several years ago Israeli investments in Georgia were genuinely growing, but the global financial crisis has affected this tendency too. Currently this direction is declining, but the situation is not hopeless and we should perform huge job, Mr. Itsik Moshe noted.

“Thanks to hyperactive efforts of the Georgia-Israel Chamber of Business, almost all subjective factors were neutralized that could frustrate enhancement of economic cooperation”, Mr. Itsik Moshe said.

Over the past years Israeli investments have nearly zeroed in Eastern Europe and now Georgia, thanks to its attractive investment environment, has the chance to draw Israeli investments. In 2015 the Georgia-Israel Chamber of Business launched a campaign – Return to Eastern Europe to Start in Tbilisi. Thanks to this campaign Georgia has received several major investments from Israel in the tourism and hotels segments. These

investments will build three hotels in 2016 and they will launch operation in 2017, Mr. Itsik Moshe said.

Along with Israeli investments, Georgia should share the Israeli experience in startups and Hi-Tech development to boost economic ties with Israel. Georgia has enough resources in this respect.

“This year several Georgian and Georgian-Israeli startups were created with support of the business chamber. A US hi-tech company staffed by Israeli specialists has entered Georgia with our support. This company is ready to assist Georgian startups to pave way in the global market”, Mr. Itsik Moshe said.

www.cbw.ge <<

Caucasus Nature Fund Allocated Grant to Agency of Protected Areas of Georgia

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Major Turkish Company Implements New Investment Projects in Georgia

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Chinese CNTIC Considers Launch of Manufacturing of Glass in Georgia

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Term for Interest Expression on Namakhvan HPP Cascade is Prolonged

April 4, 2016 #140

7

TAXES

What is Happening around Tbilisi Sulfur Baths?

Who Acts behind Protest Rallies around Tbilisi Sulfur Baths? The Bath Complex Has to Pay Due Tax in Any Case? Are the Sulfur Baths obliged to pay a tax for use of the sewage system under the officially determined tariff? The dispute refers to the payment for the sewage system employment. A certain part of our citizens demonstrates improper position around the issue.

mand that the complex is a monument of culture and history and a major part of tourists visit them. They also declare that the complex cannot pay the new tariff and the existing revenues cannot cover all the costs. Additional argument is that GWP demands payment for 24 hours services (the water goes to sewage system for 24 hours), while the complex does not work at full capacity for 24 hours.

The Sulfur Baths complex has long shifted accent on VIP clients and renting fashionable cabins. Their prices range from 50 to 200 GEL per hour and none of these categories lack of clients in any season of the year. Both domestic residents and foreign tourists equally enjoy the complex services. The cabins work at full capacity days and nights.

The GNERC determines tariffs under the existing tariff methodology for all subscribers and naturally it is not the GNERC’s competence to set a separate tariff for this or that specific consumer.

This is an entirely transparent and open process, because the GNERC has determined tariffs and its elaboration methodology. If the company violates the consumer rights, the subscriber is able to appeal against the violation in different civilized ways, but under the existing information, representatives of the complex have submitted no appeal to the Commission. This is natural, in practice.

They apply only emotional background and blackmail elements.

Let’s overview the steps taken by Georgian Water and Power in the dispute process and how this process meets legal frameworks, on the one hand, and logic chain, on the other hand.

GWP offered the bath complex directors to distribute the existing arrears under reasonable schedule, but they refused this proposal and they agree to pay only the old tariff of 700 GEL. Because of unpaid taxes GWP sued to the court, the baths complex property was seized as a guarantee (and not the company accounts, while GWP had got the right to seize the complex accounts too), not to cause suspension of the complex operation. GWP has announced that it adheres to civilized forms and it will wait for the court decision.

www.cbw.ge DAVID BAGHASHVILI

This part asserts that the issue refers to the sulfur water tariff and Georgian Water and Power demands for increasing the sulfur water tax. This is not true – sulfur water represents the category of natural resources and the bath complex has obtained corresponding licenses and the complex uses sulfur waters thanks to these licenses and the complex is to pay the officially determined tariffs.

In this case Georgian Water and Power demands for paying tax for application of its own sewage infrastructure. It is of cru-

cial importance that owners of the bath complex and Georgian Water and Power had achieved certain agreement, under which the complex was to pay fixed 700 GEL a month for use of the sewage system. However, after the change in the Tbilisi Water management, the new management has absolutely lawfully demanded for paying the tariff determined by the Georgian National Energy and Water Supply Regulatory Commission (GNERC).

It is another matter why and who achieved a verbal agreement on payment

of 700 GEL fixed tax under the ruling of the previous Authorities.

Everything is clear in this situation, but it would be better if due bodies probe into this case. There is a logic chain to think that protest rallies around the Sulfur Baths is directed by the forces that aim to show as if the GWP narrows the miserable complex and the Authorities are helpless and inactive in protecting their legal rights….

Owners of the baths complex submit certain arguments and explain their de-

<<

FIZZY – New Drink for Adventure Seekers

<<

IBRD offers $80m to support rural development in Georgia

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SOCAR Invests Over 200 Million Euros in Montenegrin Resort

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Experto Consulting to Assist VERGNET Group to Enter Georgian Market

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Jordanian Ranco Capital Studies Georgian Market

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Blauenstein Georgia to Invest 18 million in Racha

8

BUSINESS

April 4, 2016 #140

BANKING NEWS

Liberty Bank Introduces New Brand Envoys On March 31, 2016 Liberty Bank director general Aleksi Khoroshvili introduced three new brand envoys at the bank’s head office: Nino Khomeriki (chess player), Mzia Beboshvili (judoist) and Elene Midelashvili (astrophysicist).

“Liberty Bank’s new envoys are talented persons that strive for success with full essence and huge efforts. The victory and advancement of gifted young people is a history of the future success of you country. Therefore, Liberty Bank is always ready to support talented young people in achieving defined goals, be in sport, science or art”, Liberty Bank director general Aleksi Khoroshvili said.

Georgians Need to Think more of Long-term Big Gains

VTB Bank begins action on consumer loans VTB Bank begins action on consumer loans from March 22. It enables customers to access a loan of 45 000 GEL for 5-year term without guarantee.

An entity can get consumer loan for real estate acquisition or repair, vehicle purchase, covering the debt or for private purposes. The action is prolonged until April 22. The loans are available in GEL, USD and EUR. Annual interest rate is from 12,5% to 16%, while effective rate from 17,2% to 18,4%.

Bank Cartu offers the lowest yield in GEL to the depositors Yield on deposits in GEL is increased by 52%, decline is fixed on foreign exchange deposits (- 18,8% y-o-y). However, “Liberty Bank” offers the highest yield on 1 year deposit in GEL to the private individuals. Therefore, Bank Cartu has the highest yield on foreign exchange deposits.

Bad Loans Account for 538.8 mln GEL as of March 1 Volume of bad loans declined in the bank sector to 3.3% ratio in total loan portfolio. Nonperforming loans marked 538.8 million GEL as of March 1, 2016.

Bad loans (nonstandard, doubtful, bad) are regulated by 30%, 40% and 1000% reserve requirements.

Reserves for possible losses exceeded 1 billion GEL, including 69% of these reserves are recorded in three commercial banks. In terms of loan portfolio, the worst indicators are reported in Cartu Bank (8.6%); Bank of Georgia (7.1%) and TBC Bank (6.6%).

Fady Asly, Head of Agritechnics Holding LLC, Société Libanaise d’Agriculture et de Chimie SAL, and ICCG.

MARIAM KOPALIANI

I am an Agriculture Engineer specialized in plant diseases, I have received my education at the American University of Beirut.

My first job was as an agriculture extension agent in the company that was founded by my father in Lebanon.

My first salary was about eight hundred USD a month and at that time for a young single man it was a fair salary.

I left my father’s company after working for him for about a year and a half and started my own business in agriculture. I rented a greenhouse project and developed it over few years to turn it into the largest greenhouse project in Lebanon.I have been in business on my own since thirty-two years now.

I have diversified activities that cover trading frozen food products in the Middle East in addition to agriculture equipment such as pesticides, fertilizers, greenhouses, seeds, irrigation equipment and machinery. I own a fertilizer factory in Lebanon and I also own an English daily newspaper in Georgia; in parallel to that I sit on the board of several multinational companies.

I started business in Georgia in 1996; it was within our expansion plan in the region that covered Kazakhstan, Kirgizstan, Uzbekistan, Azerbaijan, Armenia, Moldova and Romania.

Georgia has a great potential to be an attractive country for investment

however its image has been systematically destroyed over the years by the actions of the Revenue Service who scared most investors in the country.

If the government puts an end to the exactions of the Revenue Service Georgia will become a very good country for business and investment.

I get to the office at 9h00 in the morning and I start with my scheduled meetings. I wake up early every day at 05h00 and handle all my e-mails and other correspondence and then I workout for about an hour, so by the time I am at the office I am done with correspondence.

Yes of course any illegal activity no matter how much money it could generate but beside that I have no issue dealing with any activity.

You have some very brilliant Georgian businessmen and women however I believe that Georgian business people should thing positive all the time and not anticipate failure, I also think that Georgians need to think more of long term big gains and less of short term small gains; one shouldn’t be penny wise and pound foolish, meaning sacrificing future big gains for the sake of making quick money at the cost of destroying the business.

I believe that there are pretty good universities nowadays in Georgia however it makes no doubt that if young people pursue advanced studies abroad once they obtain their local university degree this will give them a huge advantage and will open for them new horizons.

No it is not easy at all to make career in Georgia! Unemployment rate is very high and very highly educated and qualified people are having very hard times to find a job.

In addition salaries are generally low compared to Europe but by the same token the cost of living is much lower than in Europe.

I believe that a person should work very hard for career promotion but I don’t believe that they should be ready to do “anything” for that, meaning sacrificing their families or future or honor to achieve any promotion.

There is more to life than career, work is part of our daily equation but it is not everything! We need to find the right balance between enjoying our lives, raising a happy family and working.

In Georgia I own a Mercedes S class that is quite old but I have no intention to change it. In Beirut I have several cars, as a matter of fact I do love cars very much I owned several sport cars in my life including Ferrari, Lamborghini, Porsche and Bentley.

I usually watch my diet and try to eat healthy however I love Georgian cuisine and especially to heaviest part of it such as abkhazurat, kupati, khatchapuri and gochi!

The main thing in life changes consistently as we grow older; when we are kids main thing is to study and to play, later on it is to study and to love, after that it is to create a family and to work, after that it becomes to help others and care about the people we love.

But most important thing of all is to always remain trustworthy to your own

believes and not to ever sell them for any interest or any money no matter how costly this can be.

I travel a lot for my business and travelled all my life; I always enjoy travelling even for business.

I work out every single day and this keeps me healthy and keeps me always in high spirits and in fighting mood.

I am a fan of track and field, not of team sports. As a matter of fact I was champion of Lebanon for several years of javelin and shot put throw. I love car racing and I am a big fan of Formula One. Michael Schumacher was my favorite sportsman.

www.cbw.ge <<

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MFO’S

April 4, 2016 #140

Georgian customers suffer from information shortage about credit conditions and maturity periods of their own loans, the survey named as “Consumer Protection and Microfinance Sector in Georgia”, assures. The research work was conducted by Smart Campaign and Bankable Frontier Associates (BFA).

The research presentation was held at the Parliament of Georgia. The survey that was conducted from March to July 2015, covers various aspects of relations between the consumers and microfinance organizations.

R E S E A R C H

One of the questions asked by the project authors referred to the interest rates of borrowings. 72% of the respondents confirmed they did not know about the interest rate of their borrowings and only 28% provided positive answer to the question: “Do you know what the interest rate of your latest borrowing is?”

Moreover, the research authors posed an arithmetic question too: “If you borrow 2000 GEL with 10% interest rate, how much money will you have to pay back?”

Only 46% of the respondents gave correct answers to this question, 22% gave incorrect answers, while 32% found it difficult to provide any response to the mentioned question.

At the same time, the report by Smart Campaign and BFA proves that the clients lack for information about currency risks in relation to their borrowings.

“It is an exceptional priority objective to ensure that clients realize the risks related to the currency exchange volatility. MFOs must

explain to their clients how volatile the returnable sum may grow following the exchange rate changes. Exchange rate related public informational campaigns by public officials and the MFO network would perform essential role in explaining the mentioned risks to MFO clients. Moreover, the National Bank of Georgia (NBG) is authorized to set sanctions against the organizations that issue credits to clients that are unaware and ignorant about the loan interest rates”, the report reads.

21% of the respondents have cut food product costs for serve the credits, while 39% face difficulties and overwhelming difficulties with repaying the credits.

Moreover, the situation worsens in case of the clients who have taken USD denominated loans (49%).

The research authors have also made focus on solvency of MFO clients.

The respondents answered that they have to resort to radical steps to serve the MFO loans.

Namely, they often borrow additionally new loans to serve older ones.

37% of the respondents have taken the additional loan to serve the MFO credits for at least once.

Moreover, 21% of the respondents noted they

have to cut sustenance costs in order to pay MFO credits.

Furthermore, based on these results, the research authors assert that providers of financial services should pay special regard to the problem with aggressive sales and marketing practices, given microfinance organizations continue development at high paces.

“It is embarrassing fact that 37% of the clients have taken additional loans to serve the older credits. Aggressive sales practices by MFOs may lead some clients to accumulating alarming volume of debts. Regulatory bodies should set a sight on prevention of issuing additional loans and offering preliminari-

ly-approved credit cards to the clients without exploring their credit solvency. Moreover, in specific cases phone calls and visits could be considered as aggressive sales practices. Regulatory bodies should know that the frequent reception of text messages about credit opportunities irritates some part of clients”, the report reads.

9

72%

of customers

Don’t

Know Interest Rates of their Loans

21% Gave Up

FOOD

to cover credits

10

BUSINESS

April 4, 2016 #140

American Distiller Pearl Rock to Use Ancient Georgian Qvevri Technology American distiller Pearl Rock will use ancient Georgian Qvevri technology to produce highquality brandy.

Last month Hvino News reported that Georgia’s patent authority Sakpatenti registered unique method of whiskey distillation using traditional qvevri – Georgian earthenware vessel.

WINE

WATCHES

Small Business and Borrowed Startup Funds from Friend Led Sucess

B

eka Aslanishvili, 23, showed interest in the winemaking business in his 18.

Today he exports Chinuri wines made in the village of Chardakhi, the Mtskheta District, to foreign markets.

A German company was interested in the young enterpriser’s wine product of Nebi and the first consignment of 200 bottles will be exported to Germany in the near future.

“After I was interested in the winemaking business I remain fully devoted to this affair. Initially my family members perceived this undertaking as my ordinary hobby.

My first salary was 400 GEL as part of the summer employment program. I decided to buy Qvevri through this sum. The sum was sufficient for only two Qvevris. Now I have 4 ones”, Beka Aslanishvili told the BusinessContact.

Though, the first year was unsuccessful.

“My wine spoilt in the first year, because I had no practical skills for winemaking, but the next year I made genuinely good wine. When I decided to bottle wines, I did not have job and salary.

Therefore, I borrowed 400 GEL from my friend, bought bottles and taps and ordered labels. I paid off the debt soon, because the product

MERGER

START-UP

Magticom + Caucasus Online “We are pleased to inform you that the suspended negotiations between LLC Magticom and LLC Caucasus Online were resumed in March 2016 and finally, we have reached an agreement on a memorandum of understanding that will become the ground for concluding an agreement on sales and purchase of operating assets,” says the company statement.

PRODUCER

Non-alcoholic Drinks Factory Tskali Margebeli (Healthy Water) plans to build nonalcoholic drinks producing factory in Chokhatauri region, with the collaboration of Swiss and Austrian partners. The company made a statement to businesscontact, that first of all, 30 million euros investment package will be spent on the project implementation.

was sold easily”, Beka Aslanishvili said.

This year I have expanded the volume of production and made 500 bottles. Beka had preserved only 185 bottles when he received the order from Germany. To replenish the due amount of bottles, Beka recalled 15 bottles from the retail network.

“Iago Bitarishvili’s business has become much stimulus for me. I liked how he was making everything by his own hands. I had never made similar things before.

I was born and brought up in Tbilisi and I did not even like visiting my village, while today I rarely visit Tbilisi”.

AlterSocks – First Georgian Painted Socks Brand Nina Menteshashvili and Rezi Beselishvili Founders of Aletersocks

“AlterSocks” or waggish socks, is the new family business. The shop appeared in Tbilisi Mall two days ago.

The customers are able to see and buyout the products where there are placed the paintings performed by famous artists, as well as the paintings of Georgian traditional food and drinks.

(For instance “Khinkali”, “beer”, etc,.) As it was noted before the founders of the shop are wife and a husband, Nina Menteshashili and Rezi Beselashvili correspondigly.

As Rezi Beselashvili pointed out to “business contact“, before it was planned to be printed only famous artists’ works on the socks. However, after conducting small survey, they have changed their mind and decided to abstain for a while.

“We were thinking that it would have been too waggish when seeing a socks with famous artists performance printed on them.

Moreover the niche on the market was absolutely free and we were considering that it would fit in. I draw myself and do design and styling feat. My wife is also creative person like me.”

Painted socks are made with 89% of natural cotton, whereas in imported ones its content amounts 70%. At this stage, it is only possible to acquire painted socks in Tbilisi Mall, but “AlterSocks” plans to start online marketing and retailing in near future.

In the future Beka Aslanishvili plans to increase the output. He names several reasons that have helped him be a success: “Many persons would give up because there were no other resources except for Qvevri money, others would stop efforts because of spoiled wine in the first year, even more so I had bought grapes by loans.

If you genuinely aspire for something you should follow the goal to the end and everything will work. Naturally, many persons have supported and assisted me, including I have acquired much knowledge from Iago Bitarishvili”, Beka Aslanishvili said.

New Georgian Handmade Wrist Watch Appeared on Market New brand “Handy” appeared on Georgian market. Handmade wrist watches are made of beech wood and natural leather.

According to Handy’s co-founder, Sophie Gurasashvili stated in her speech with”Business contact” that the idea of creating handmade watches appeared several months ago. Thus, in order to make some of the first samples, the initial capital amounted 300 GEL. “We did not think a lot about the selection of the material we wanted to use in our production process, because we have already had wood working experience.”

“Working on wood is pretty good as it is an amazing material, especially it is ecologically clean and original as well.”

The handmade wrist watches produce in technological park, however, the realization process will be carried out only through Facebook. It should be noted that Handy plans to open a store in the future.

April 4, 2016 #140

HEALTHCARE

11

Georgia’s Healthcare and Medical Staff In Need of Continuous Development

T

he Health Field’s Barometer – the 6th Wave”, a research work by Curatio fund, reads that the quality of health services and problems with continuous education programs are considered one of the main problems in the Health System.

It is interesting what reasons have inspired these shortcomings and how they can be resolved.

Rusudan Jashi, head of the association for development of clinic pharmacology and rational pharmacotherapy, overviews these issues.

Representatives of the medical sector and doctors agree that doctors must not have motivation or interest to prescribe inappropriate or excessive medications to patients. There are companies in Georgia that own both pharmaceutical companies and clinics.

This problem does not exist in only Georgia. Many countries face the same problems.

When talking about the clinic management, we should also remember that they are not created here. Our associations take samples from Europe, basically, and those practices are tailored to the Georgian reality. Doctors follow the clinic management protocols despite who owns the clinic. When this practice is established, polypragmasy will be also reduced.

No owner or manager will tell the doctor to prescribe inappropriate medication to a patient that does not fit the protocol. We should assist doctors by supplying more literature to them and by involving them in the professional education system.

The research shows that the very primary healthcare chain contains a number of problems. Polypragmasy is met in the hospital sector too, but protocols and guidelines regulate these issues somehow. In this respect the role of clinic pharmacology is decisive. Regretfully, clinical pharmacology is not educated at medical institutions. There is no institute of specialization with focus on clinic pharmacology.

Almost in all countries clinics cannot receive licenses if they do not have clinic pharmacologists. As a rule, patients bear several diseases.

A patient may be diseased by diabetes, cardiovascular diseases and so on. This signifies, under the protocol, several medications should be prescribed for every disease and finally, doctor may prescribe 10 and more medications. In this case clinics need clinic pharmacologists that will control the whole process.

The Authorities should develop a continuous medical education program. The union of medical associations has recently proposed the issue of undertaking the continuous medical education program. The association of clinic pharmacology is ready to join this process to upgrade the existing knowledge in the clinic pharmacology field. We expect the program details and the participant parties will be famous in early May.

According to the recent research works in the Healthcare sector, there are a number of shortcomings in the primary healthcare field and their eradication is one of the main challenges before the Health Ministry.

PPP Model Signifies Collaborative Control between Public and Private Sectors The company that will win the Partnership Fund announced tender will rehabilitate three hospitals in Tbilisi, equip them with modern medical technologies and train the medical staff. The following clinics will be rehabilitant as part of the tender: Children Infection and Republican hospitals and the former Oncology Center.

MP Zurab Tkemaladze, head of the parliament’s committee for sectoral economy and economic policy, talks about the issue:

This is a great event. Let’s start with Oncology Hospital. We know this problem very well.

Initially, the facility was sold to an investor, but the new owner failed to improve the situation there and the Authorities returned it back.

Today this clinic remains in the state ownership and it is important that the Authorities care for its rehabilitation. Later the Partnership Fund joined the process of seeking a new investor for these three hospitals. The Partnership Fund will engage in this business activity itself. The more hospitals employ professional staff, the better results we will reap, naturally, especially in the context of the Children Infection Hospital, because it is a huge medical center. All three facilities need recovery and rehabilitation. Therefore I believe that this project is of crucial importance”.

MP Zurab Tkemaladze also welcomes the fact the mentioned project is being implemented under the private-public partnership (PPP) format: “It is of crucial importance that the state and private sectors will equally contribute to the project implementation. Moreover, the Partnership Fund aspires to engage in the first phase jointly with the private sector and later the private sector will be able to buy off the stake. Both parties are interested in success of this project and they will carry out mutual control and all these factors will precondition successful completion of this project”, MP Zurab Tkemaladze said.

12

EVENT

April 4, 2016 #140

EXPOMED BATUMI 2016 The first international exhibition of “Medical tourism and equipment”

T

he exhibition Company “GEONET EXPO” is holding the first international exhibition of “Medical tourism and equipment” In City Batumi, in Hotel “Sheraton” on 14-16 April. The organization invites as local as foreign companies to participate in the exhibition. There on the exhibition will be presented the modern medical technologies, medical schools, dental clinics, pharmacies, and drug manufacturing companies, the modern hygienic and cosmetic care products, leading plastic surgery clinics and operating medical tourism companies.

The international exhibition “EXPO BATUMI 2016” will contribute the improvement of medical services in the region. The representatives of various leading medical clinics of different countries will be invited. During the exhibition will be held presentations, presentation of modern medical technologies, the agreements will be signed for the future cooperation and the bilateral meetings will be held. The participant companies in the exhibition are from the following countries: Georgia, Russia, Turkey, Ukraine, Azerbaijan, Armenia, Iran, and Poland.

The co-organizers of “EXPOMED BATUMI 2016” are: The government of Autonomous republic of Adjara, Health and social protection ministry of Autonomous republic of Adjara, City Batumi Hall, Trade- commerce chamber of Adjara, international investors association of Georgia, Media Support; _ Adjara TV and newspaper, “Adjara Business Week”.

„GEONET EXPO“ LTD www.geonetexpo.ge Bako str. N50, Batumi, Georgia E-mail: info@geonetexpo.ge

WORLD NEWS

April 4, 2016 #140

13

Quotes

“

An investment in knowledge pays the best interest

”

During the period of 1995-2015, investments in the Azerbaijani economy totaled $220.4 billion

Benjamin Franklin

Investments in Azerbaijani economy exceed $220B for last 20 years

T

he political and economic stability in Azerbaijan and the protection of the rights and interests of investors are important indicators of the business and investment climate of the country Shahin Mustafayev, Azerbaijani economy minister, said in an interview with The Business Year magazine.

“Furthermore, the geographical location, hydrocarbon reserves, rich raw resources of precious metals and building materials, and a favorable climate for agriculture and tourism create many opportunities for local and foreign investors,” Mustafayev said.

“To increase the efficiency of transit and logistics operations, the Coordinating Council was established to regulate the transit of goods,” he said. “Cargo transportation tariffs were also reduced, creating favorable conditions for increasing the transit cargo transportation capacity of the country.”

Within investment promotion measures carried out in 2015 alone, Azerbaijan Export and Investment Promotion Foundation (AZPROMO) organized 261 events, out of which 177 took place in Azerbaijan and 84 abroad, according to him.

“These events showcased investment opportunities in the country to local and foreign businessmen, promoted Azerbaijani products for exports, and saw export contracts signed with foreign partners,” he said. “Exemplifying Azerbaijan’s investment attractiveness in the world, in 2015 alone over $20 billion was invested in the country’s economy.”

“In total, during the period of 1995-2015, investments in the Azerbaijani economy totaled $220.4 billion, about half of which came from foreign investments,” he said. “In addition, there are more than 7,000 foreign-invested companies currently operating in various fields.”

Turkey tourism dives amid security fears

V

isitor numbers to Turkey plunged by over 10 percent in February, the government said Tuesday, as tourism was hit by a crisis in relations with Russia and security fears after a series of attacks. The number of foreigners entering Turkey fell 10.32 percent in February from the same period the year earlier, the Ministry of Culture and Tourism said in its latest monthly statistics.

Tourism from Russia recorded one of the biggest falls amid the crisis in relations following Turkey’s shooting down of a Russian war plane in November, with visitor numbers plunging over 51.5 percent.

Georgians – who frequently head over the land border on shopping

trips – were the most frequent visitors to Turkey, followed by Germans and Iranians, it said. Tourism from Iran was one of the few sectors to show an upsurge, with visitor numbers rising almost 17 percent in the period. The figures were recorded before the latest attacks in Turkey in March which saw 38 killed in Ankara in a suicide car bombing claimed by Kurdish militants and three Israelis and an Iranian killed in a suicide attack in Istanbul blamed on IS jihadists. Israel on Monday advised all its citizens to leave Turkey, citing the potential for attacks. But visitors had already been rattled by a January attack in the tourist district of Sultanahmet blamed on IS that killed a dozen German tourists.

OPEC oil price up at $34.91 per barrel

O

PEC oil basket’s price stood at $34.91 per barrel on March 30, or $0.41 more than on March 29.

The OPEC Reference Basket (ORB) is made up of the following oil brands: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela). The global oil prices decreased March 31 amid the data of the US Department of Energy, which registers the growth of oil reserves in the country up to a record high level seven weeks running. This again exacerbated concerns over the oversupply of crude oil on the market.

The price for June futures of the North Sea Brent oil mix decreased by 0.89 percent – up to $38.91 per barrel as of March 31, 11:28 (UTC/ GMT+4 hours), while the price of May futures for WTI oil decreased by 1.3 percent – up to $37.82 per barrel.

Iranian company to build gas distribution network in Armenia Iranian company Sanergy is to build a gas distribution network in two Armenian towns in a project financed by the Iranian government, Armenia’s energy minister said.

Levon Iolyan told a government meeting that Iran would resume financing for the project, which was suspended in 2013, and would disburse a $2 million grant.

The project envisages construction of a gas distribution network in the towns of Megri and Agarak, not far from the border with Iran.

Iolyan said construction work, which is expected to start soon and to be completed within 6-7 months, would be monitored by Gazprom Armenia, an Armenian subsidiary of Russia’s gas monopoly Gazprom.

Despite the fact that the EU is ready to resume talks with Russia over the South Stream gas pipeline, the project should fully comply with the rules of the Third Energy Package, independent European Researcher Andreas Marazis believes.

Two reasons for Moscow to resume South Stream project

M

eanwhile Russia’s unwillingness to meet its requirements was the reason why the project was abandoned in the first place. The EU legislation, and the Third Energy Package in particular, prohibits companies from both owning the gas and operating the pipeline.

“On one hand, the European Union could resume talks with Russia on South Stream as European demand for Russian gas would increase in the long-term, but on the other hand, the EU’s legislation (Third Energy Package) shows that the EU will not abandon its free-market values in exchange for cheap natural gas. Third-party access and unbundling are now prerequisites for any new pipeline project, as well as for every new contract for existing infrastructure that is to be signed after the expiration of existing ones and this is a reality that Russia will have to comply with,” Marazis told Trend.

Russia suspended the South Stream project, designed to supply Russian gas to Europe bypassing Ukraine, in December 2014. Russia said “the EU’s non-constructive position” was the reason for the project’s suspension. Then it was decided to build the Turkish Stream through the territory of Turkey, instead of the South Stream.

But the project came under threat in late 2015 due to sharp deterioration of relations between Moscow and Ankara when Turkey shot down a Russian Su24 bomber with two pilots on board.

In March EU’s Ambassador to Russia Vygaudas Usackas said the European Union is ready to resume talks with Russia over the South Stream pipeline to southern Europe. Later some coun-

tries of the South-Eastern Europe expressed their interest for this project.

Marazis believes that discussions concerning the revival of South Stream, as it was initially planned, are high unlikely. Russia seems to be in favor of similar projects in Southeastern Europe, like Greece–Italy Transit Route, he said.

The analyst noted that there are two main reasons why Moscow might resume the project.

“One of them is the sharp deterioration of relations between Russia and Turkey following the downing of a Russian plane on November 24, 2015. The second reason is the recession in the Chinese economy, which has stalled the “Power of Siberia” project,” he said.

Marazis said that Europe has been a key energy export market for Russia since the 1970s and this will be the case for the coming years as well. This has led to an increasing infrastructural inter-dependence, according to the expert.

The analyst believes that countries such as Greece and Italy that in February signed a memorandum of understanding to develop a pipeline route from Greece to Italy for Russian gas, will benefit from this deal. Bulgaria, which imports almost 80% of its natural gas from Russia will also benefit as well once it is connected.

Meanwhile he noted that the South Stream, Turkish Stream, and the “updated version” of South Stream, are all politically oriented projects specifically designed to avoid and isolate Ukraine.

“Right now the most attractive gas supply project is by far the Southern Gas Corridor which is expected to deliver 10 billion cubic meters to the European markets by 2020,” Marazis said.

14

PUBLICITY

GEORGIAN RAILWAY URGES YOU TO CROSS THE RAILWAY TRACK IN ONLY SPECIALLY ALLOTED ZONES AND TAKE CARE OF YOUR LIFE! Crossing the railway track in the unpermitted places violates article 106 of the Georgian Code of Administrative Offences and this lawbreaking results in due sanctions.

April 4, 2016 #140

April 4, 2016 #140

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

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TBILISI GUIDE 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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April 4, 2016 #140