Caucasus Business Week #142

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April 18, 2016 #142

April 18, 2016, Issue 142 - www.cbw.ge

tourism

world

business

How much does it Cost to Travel in Georgia?

Impact of China on Europe and Central Asia

Anaklia Sea Port to Receive First Ship in 2019

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Pg. 13

The Impact of Religion on Georgia’s Economy Whatever one thinks about the benefits of religion for the Georgian economy, the cost of an Orthodox religious lifestyle does not seem to be overly high Pg. 6

Pg. 5

Threats Hidden in Bank Agreements The financial literacy level is low in Georgia and research works by various international organizations prove this consideration. Georgia ranks 96th among 144 countries in terms of financial literacy level in the society. According to the report of Standard&Poor’s international rating agency, only 30% of Georgian citizens understand financial details. Under the rating, only 22% of the respondents correctly realize the importance of risk diversification, while 31% incorrectly interpret this principle; 66% of the respondents understand the inflation correctly and 12% incorrectly. At the same time, 54% of the respondents have correctly interpreted the essence of an interest rate and only 32% knows what the compound interest rate is.

Norway, Denmark and Sweden share the first three positions in the world rating of financial literacy level. Afghanistan, Albania and Yemen occupy the last positions. The research report developed by Smart Camping and Bankable Frotier Associates (BFA) with support of the Business and Economy Center (BEC) has outlined sharp issues in relations between microfinance organizations and clients.

Pg. 5

Banking Regulations According to the National Bank of Georgia (NBG), commercial banks currently preserve 11.9 million GEL USDdenominated deposits. This signifies the US currency dominates in the Georgian market. GEL-denominated deposits account for only 4.3 billion GEL. Economic experts assert that the development of a flexible insurance system will encourage more citizens to save money at commercial banks.

As a result, commercial banks will be able to attract money resources and the state economy crediting indicators will increase. This is a simple chain for enforcement of the deposits insurance system.

The deposits insurance system runs in all countries of Europe and the CIS, such as Latvia, Lithuania, Luxemburg, Albania, Poland, Russia, Ukraine, Armenia, Azerbaijan, Kazakhstan and so on. Without this system the banking sector crisis that broke out in the USA and Europe in 2007 would bring more disastrous results.

Pg. 7

2 GOVERNMENT

NEWSROOM Minister of Finance of Georgia Met EBRD’s Representatives Mostly the discussion was about Georgia’s new 4 year strategy made by EBRD, that includes entirely all the priorities for Georgia, including the encouragement of private sector.

The government approved the agreement to be signed with “Gazprom Export” According to the document, old terms of the contract remains under the force, as of it, Georgia will take 10% of gas instead of natural gas transit to Armenia.

ECONOMY

Georgia’s GDP Data Shows a Very Predictable Pattern World finance officials who meet in Washington this week confront a bleak picture: Eight years after the financial crisis erupted, the global economy remains fragile and at risk of another recession.

IMF to Publish the Review on Georgian Economy for July According to the Fund, the challenge is how to contain external vulnerabilities, while providing support to the economy and ensuring continued financial sector stability.

BANKING

TBC Bank Profits and Assets Grow TBC Bank assets have increased (+ 10%Y.Y). The loans portfolio upturn constituted 12% year on year, while deposits growth rate made up 5.2% year on year.

Georgia Ranked the 116th in the World by its Per Capital Personal Income The International Monetary Fund (IMF) reports that the average annual income per capita in Georgia amounted to $ 3789 in 2015.

BUSINESS

Concessions on the Import of Hybrid Cars to Come into Force Since May 1, the customs duties on the import of hybrid cars will be reduced by 50% - the corresponding initiative was approved by Parliament in two readings

Fuel Quality to be Controlled Starting from May Starting from next month, the business operators can be fined GEL 8 thousand for selling petrol and diesel which don’t meet standards.

COMPANY

Rakia Georgia to Spend 40 mln USD on Sheraton Hotel Renovation The renovation process of the hotel “Sheraton Metechi Palace” started in 2013. Thus, it will be completed by the end of 2016.

PM: New Silk Road offers vast opportunities for countries involved Georgia’s geopolitical importance, its role in the New Silk Road project and its free trade agreement with China were some of the things Georgia’s Prime Minister Giorgi Kvirikashvili spoke about in his interview with China Central Television (CCTV).

Kvirikashvili stressed Georgia had a major plan of infrastructural modernisation, which would increase its regional competitiveness.

The Georgian leader also talked about the importance of China’s ‘One Belt, One Road’ initiative – a vast development strategy starting in China and spanning across Eurasia.

“The ‘One Belt, One Road’ initiative is a very important initiative for us. It offers a lot of new opportunities to countries along the Silk Road,” Kvirikashvili said.

He added Georgia considered the Silk Road project as not only an initiative to restore one concrete road spanning East to West, but to also unite a whole network of many roads.

“We are talking about competitiveness, increased contact between humans, [and] infrastructure modernisation,” Kvirikashvili said.

He believed Georgia had the potential to become a regional trade and logistics hub, which

would boost trade between Europe and Asia. In the interview the Georgian high official highlighted the importance of having online platforms that would make information available for investors.

“We believe electronic platforms are an important space where information about our projects are available for investors, including Chinese investors, [and] increases the visibility of all countries along the Silk Road,” Kvirikashvili said.

In the same interview, Kvirikashvili stressed he believed a free trade agreement between Georgia and China would attract more foreign tourists to the Caucasian country.

Tbilisi hosts international forum-promoting corporate social responsibility Georgia’s capital Tbilisi will host an international, two-day conference in the middle of April dedicated to promoting of corporate social responsibility (CSR) in Georgia.

CSR promotes a vision of business accountability to serve stakeholders – investors, shareholders, clients and staff – whereby a business operates in compliance with the spirit of the law, ethical standards, national or international norms for the good of the business and the environment.

The international event will be held on April 22-23 at Tbilisi Marriott Hotel and host about 100 Georgian and foreign delegates. The Global Compact Network Georgia will be established within the conference.

The conference will touch on a range of issues such as international standards on corporate sustainability, international and Georgian practice in the field and future opportunities to develop CSR in Georgia.

BUSINESS WEEK caucasus

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 12 Director: Levan Beglarishvili WWW.CBW.GE

April 18, 2016 #142

Mobile phone: +995 591 013936 Email: caucasianbusiness@gmail.com

The conference was organised by local non-governmental organisation Civil Development Agency (CiDA), Global Compact Network Georgia and the Human Rights Secretariat of the Administration of the Government of Georgia.

The event was supported by the East-West Management Institute’s (EWMI) ACCESS project though USAID funding. Partners of the event are the United Nations Global Compact and the American Chamber of Commerce in Georgia.

Foreign speakers invited to the conference include experts on corporate sustainability and business ethics from Ericsson and TeliSonera Group, Chief of Local Networks at the United Nations Global Compact - New York office, a delegation from the Global Compact Network in Poland and an OECD Responsible Business Conduct Policy analyst.

www.cbw.ge <<

61% of Respondents of NDI Survey Support Integration with EU

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Air Pollution Indicators along with the Streets of Tbilisi

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Georgian Railway Introduces ISO Standard for Service Quality Improvement

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Georgian CSOs to Assist Government in Improving Intercity Transport Safety

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Georgia Unable to Export Honey to EU in Current and Next Years

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 18, 2016 #142

PUBLICITY

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INTERVIEW

4 Georgia Intends to Sell Electricity to Iran According to Georgian Energy Minister Kakha Kaladze, the government intends to take action to start electricity exports to Iran.

This opportunity will be provided by a project that is currently being implemented by Armenia, in the framework of which, new power lines and substations will be built.

According to Kaladze, the agreement on synchronization of energy systems between Georgia, Armenia, Iran and Russia will allow Georgia to diversify its energy market.

“This is a very important project, and I’ll be happy if we are able to successfully implement it. The project provides for the sale of electricity to Iran, which is a very promising market, especially after the lifting of sanctions. We must make maximum use of the resources and capabilities of this country.

However, he notes that Armenia is already working on a project for the construction of new power lines and substations.

For the First Time in Georgia, Gori, Wind Power Plant is being Built Deputy Prime Minister and Energy Minister Kakha Kaladze told news agency Ipress.ge that a wind power station is being built in Georgia for the first time and the project is expected to be completed by October.

“I am very glad we will implement the project finally. I am looking forward to see the first results. The first wind power plant in Georgia will be carried out be near Gori, where the tunnel and the Gas stations are located,” Kaladze told iPress.

“When travelling by plane and visiting European countries, for instance Germany or Austria, you see those wind power stations and you realize that you are in Europe. I feel very proud that soon Georgia will have a wind power plant also. Our country will again prove that Georgia is a part of Europe” Kaladze said.

Azerbaijan, Kazakhstan, Georgia Creating Transportation Consortium Azerbaijan, Georgia and Kazakhstan agreed to create the International Trans-Caspian Transportation Consortium, said Nadir Azmammadov, spokesman for the Azerbaijan Railways CJSC, speaking to Trend.

The agreement to create the consortium was signed today in Baku during a meeting of the operator companies engaged in cargo transportation via the Trans-Caspian International Transport Route.

Azerbaijani companies ADY Express and ACSC Logistics, Kazakhstan’s KTZ Express and Georgia’s Trans Caucasus Terminals LLC became members of the consortium.

April 18, 2016 #142

Georgia’s Water Exports Infrastructure Project Waiting for 1.5 billion USD Investment

W

ater, natural gas, electricity, transportation and private investments – what is the fate of the Georgia-Iran joint projects of several billions of USD? What are supporting and obstructing factors for their development? Bilateral economic relations, ongoing and coming projects.

In his interview with the eugeorgia.info Abas Talebifar, the extraordinary and plenipotentiary ambassador of Iran to Georgia, overviews these issues.

Transportation and Logistics - Over the past years Georgia-Iran economic relations have been increasingly deepening and we welcome this tendency. For instance, in 2014 Georgia issued about 3 000 transit licenses to Iranian transport companies. The figure rise to 14 000 licenses in 2015.

Besides land communications, Iran is also interested to connect its railroad to Georgia and put into exploitation the new transportation corridor from the Persian Gulf to the Black Sea. We want to develop two directions: 1) IranArmenia/Azerbaijan-Georgia-Black Sea to Europe and 2)Iran-AzerbaijanRussia to Europe.

-You have mentioned another South-North transportation corridor…A couple of weeks ago Foreign Ministers of Russia, Iran and Azerbaijan signed a memorandum on cooperation between their railway operators. According to spread information, Russia seems to be ready to make 400 million USD investments in constructing the Resht-Astara section in Iran. Is it possible that the North-South Corridor will compete with our route and Georgia may turn out in offside position? Do Iranian and Asian cargoes suffice to load both directions at full capacity or they are considered as alternatives to each other?

-No, Georgia will perform one of the central roles in transportation of Asian cargoes to Eastern Europe; The Black Sea ports are of crucial importance. We are working on putting both corridors into action simultaneously.

By the way, I have already met with the Minister of Infrastructure of Georgia on this issue.

Power System In February 2016 Iran, Georgia, Russia and Armenia concluded a quadrilateral memorandum on creating a joint electricity system. We believe this agreement is of vital importance.

Abas Talebifar Ambassador of Iran in Georgia

We will not need to construct new HPPs, because we will be able to receive energy resources from the neighboring country in case of emergency situations. Previously, Iran used to buy electricity from Georgia through GIG company, but we used to pay the transit fee. Under the memorandum, our countries will be united within the joint transit system and Iran will receive electricity from Georgia in the deficient season, in winter period and return the volume in summer period.

- What volume of electricity will be exchanged?

- At this stage, technical details, tariffs, their revision regimes and volumes are not known. Energy Ministers of all four countries will sign the agreement in Yerevan..

- As to the natural gas imports that was widely discussed, does it remain on the agenda again?

- We discuss probability of imports of 200-500 million cubic meters of Iranian natural gas to Georgia. The negotiations are still continued. Favorable

tariffs and payment regime issues are being still negotiated. Regretfully, the print media has often written as if this issue was politically-motivated, but this is not true. We are interested in just economic cooperation. As to the technical capabilities for gas exports: Iranian gas imports to Georgia may be carried out in four directions, including through gas pipelines of Azerbaijan or Armenia, because none of them has been fully replenished. The third variant implies the so-called SWAP Principle, under which, Georgia will receive natural gas from Gazprom and in exchange, Iran will supply natural gas to Armenia. And finally, natural gas may be exchanged for electricity. All four variants are being negotiated again by due offices of our countries.

Water - Iran faces constant shortage of water. According to the recent forecasts, droughts will go on and the existing problem will deepen. Intense droughts

have resulted in disappearance of the Urmia lake. The Persian Gulf countries are rich of energy carriers, while Georgia is rich of water resources. Consequently, water may become a good source of revenues for Georgia. There are two options for replenishing the Urmia lake: a) Pumping out river water from western Georgia. Due institutions have been already working on feasibility studies of this project; 2) imports of Georgia’s artesian waters to Iran via Azerbaijan.

This is a very good project. Its feasibility studies have been already prepared.

The project calls for constructing underground channels and basalt pipeline. The research works have taken 1.2 million USD. - What volume of water may be exported from Georgia to Iran and what is an estimated value of the project?

- The Urmia Lake’s valuable rehabilitation needs 28 billion cubic meters of water. Iran is ready to purchase the entire volume of water that Georgia may put out for sales. There is no other country in the neighborhood of Georgia that needs water, except Iran. As to the project value, it is approximately valued by 1.5 billion USD. The project calls for putting 2-meter-diameter pipeline within the 280-km section in Azerbaijan. Iran is ready to guarantee the project’s financial support. Initially, when we started talks about water imports, both the government and NGOS sector of Georgia used to perceive this issue with some estrangement. Today, according to my information, this issue is being actively discussed. The water exports issues were negotiated as part of the visit of Energy Minister Kakha Kaladze to Tehran.

Investments Iranian companies show much interest in doing business in Georgia. I cannot name specific projects, because their examination process is underway. I can say that tourism, agriculture sector, including dairy industry and medicines are considered the most attractive fields in this country. Moreover, the oil refinery construction project is being also developed. However, these projects cannot be implemented until money transfer restrictions have been removed. Georgia has abolished visa regime with Iran, but Iranian companies cannot carry out financial operations at domestic commercial banks, while Swift international money transfer company has long admitted Iranian companies into the system as a result of lifted economic sanctions. How will our companies launch business activities in Georgia? They cannot bring money in sacks.

April 18, 2016 #142

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ECONO-MIX

Construction of the port starts late in 2017 and finishes late in 2019.

The first ship will be received by the beginning of 2020.

MERAB JANIASHVILI Economic Analyst

Anaklia Sea Port to open in 2019

Threats Hidden in Bank Agreements

T

he financial literacy level is low in Georgia and research works by various international organizations prove this consideration. Georgia ranks 96th among 144 countries in terms of financial literacy level in the society. According to the report of Standard&Poor’s international rating agency, only 30% of Georgian citizens understand financial details. Under the rating, only 22% of the respondents correctly realize the importance of risk diversification, while 31% incorrectly interpret this principle; 66% of the respondents understand the inflation correctly and 12% incorrectly. At the same time, 54% of the respondents have correctly interpreted the essence of an interest rate and only 32% knows what the compound interest rate is.

Norway, Denmark and Sweden share the first three positions in the world rating of financial literacy level.

Afghanistan, Albania and Yemen occupy the last positions.

The research report developed by Smart Camping and Bankable Frotier Associates (BFA) with support of the Business and Economy Center (BEC) has outlined sharp issues in relations between microfinance organizations and clients. However, similar problems are reported in all other credit institutions to, including in commercial banks.

Namely, clients do not thoroughly realize the loan maturity periods and conditions. Despite 97% of clients of microfinance organizations receive the loan payment schedules, 28% of the borrowers do not know the interest rate of their loans, while 22% cannot recall how much they have paid to cover the loans.

Credit organizations make a good use of low financial literacy of borrowers and, as a rule, they manage to impose enslaving credit agreements on clients. Regretfully, there is a lessdeveloped practice of examining loan agreements in Georgia. This signifies people take loans without reading credit or debit agreements and frequently similar approaches bring sorrowful outcomes.

For example, we submit here the articles of bank agreements that a major part of Georgian clients sign without having read them.

“The bank is authorized in any time, at its own discretion and unilaterally, to: • Change the bank product’s volume; • Increase the amount of the agreement-determined interest rates, commission fees or/and fines by no more than ¼ amount of the existing rate; • Change the amount of the agreement-determined interest rates,

commission fees or/and fines determined by other agreement(s) that are related to this Agreement, within the Agreement-determined conditions; • Determine types of commission fees or/and the amount of their rates related to a use of bank products that are determined by this agreement or/ and other agreements related to this agreement” – this is an extract from an installment payment scheme agreement of one of the commercial banks (it is useless to name specific commercial banks, because an absolute majority of commercial banks incorporate similar or heavier articles in credit agreements). „The bank is authorized, in any time, to: • Terminate this Agreement by notifying the client in at least 10 (ten) days earlier before the agreement termination; agreement on processing bank operations of a physical body.

• Change the terms of services, specifications or/and price described in this agreement (if the bank-determined tariffs change), offer to the client or terminate some or several services determined by this Agreement; • The bank is authorized to make changes (additions) to the text of this agreement by placing appropriate information on the bank’s internet website or/and at buildings of the bank branches and service centers in at least 10 (ten) days earlier before making such changes (additions).

To put simply, the bank is authorized, in any time, at its own discretion and unilaterally, to increase the interest rate on the issued loan, request ahead of schedule repayment of the loan; grow commission fees and fines; change any conditions, under which this loan was taken, at its own discretion, without any consent of the client.

Moreover, several credit agreements comprise the articles that make the client refuse his/her own right to receive information on changes to loan conditions. For example: • “The client agrees that the bank not deliver information on changes (including on the changes related to the indexed interest rate or/and the interest rates that are favorable for the client)” – this is an extract from the credit agreement of one of the commercial banks.

Moreover, the agreement entitles commercial banks to change any conditions in the agreement in any time at their own discretion. They are also authorized not to notify clients about such changes.

As a rule, commercial banks notify clients on increasing credits in value, but this is not their obligation in most cases, but only goodwill.

If you have foreign currency denominated loan, then you may see such articles that entitle commercial banks to increase the interest rates if the GEL exchange rate strengthens (because the strengthened national currency enables borrowers to pay smaller installments) and receive extra profits from the GEL exchange rate depreciation (when clients have to pay higher installments a month). In this situation, nobody will revise your credit interest rate.

Commercial banks often declare that they issue loans, i.e. lend their own money in the form of credits, and consequently, they are authorized to set such conditions and rights in the agreement that they want, because clients receive the credit organization’s finances and the banks are authorized to put forward any conditions in the process of lending the sum.

It is interesting that clients sign enslaving agreements even when place their deposits at commercial banks. In this situation, the client is a lender and the bank is borrower. Following the logics of credit institutions, the creditor should receive thorough rights in relation to borrowers. However, in Georgia everything proceeds in the wrong way.

Commercial banks acquire many excessive rights when concluding both lending and borrowing agreements with clients. As a result, clients, in most cases, lose their money. For example: • “The bank is authorized to unilaterally change the demand deposit interest rate or/and the method of reaping the interest rate and the bank shall notify the depositor about this change by placing appropriate information at the offices of branches and service centers or the internet website in at least 1 (one) month earlier”.

To put simply, the client may open a deposit at a commercial bank with 12% interest rate and the bank is entitled to lower the yield rate to 8% in two months, at its own discretion, without any explanations, by placing the due information on its own website, Who knows?! Maybe clients explore the bank websites every day.

Hence, we should thoroughly examine agreements to be more informed about the hazards that may storm us in the future. Clients should request commercial banks to remove such articles from the agreements that seem enslaving to them and that may inflict financial losses to them.

You may achieve no success in relation to credit agreements, but in case of deposits, it is the client’s prerogative to dictate conditions to commercial banks. We should not let commercial banks use our indifference and gain huge profits.

“

It is interesting that clients sign enslaving agreements even when place their deposits at commercial banks.

”

“Anaklia Sea Port will be built with maximum security of ecology”, – Paul Force, Vice President at the Conti Group declares, whose aim is to get in the list of eco projects.

Paul Force made the statement after the discussion of technical details of Anaklia Deep Sea Water Port.

The meeting was attended

by Levan Shonia, governor of Samegrelo-Zemo Svaneti, U.S. State Department Principal Deputy Assistant Secretary for Economic and Business Affairs, Kurt Tong, Paul Force, Vice President at the Conti Group and Zurab Pickhaia, financial director of ANAKLIA DEVELOPMENT CONSORTIUM. They have discussed development state of the port.

“Construction of the port starts late in 2017 and finishes late in 2019. The first ship will be received by the beginning of 2020. The investment made in this project will have an impact on the region. These will be low tariffs, employment of local residents and positive impact on the local business”, – Vice President of “Conti Group” declares.

It was noted at the meeting, that directly 3400 local residents will be employed in the construction of the port

and constantly 6400 entities will work in the port.

“Economic effect of the Port is very large, enough large works are carried and much money will be spent.

Lot of local Georgian companies will be engaged in the construction. The initial capacity of the port should be 900 000 TEU containers.

However, the Port is for 100 million t”, – Zurab Pickhaia, financial director of ANAKLIA DEVELOPMENT CONSORTIUM declares.

U.S. State Department Principal Deputy Assistant Secretary for Economic and Business Affairs, Kurt Tong welcomes the Port construction and declares, that Anaklia Deep Sea Water Port is the most important project not merely for Georgia but the whole region. To remind, ANAKLIA DEVELOPMENT CONSORTIUM will implement construction of Deep Water Sea Port and FIZ. ANAKLIA DEVELOPMENT CONSORTIUM is the joint company of “TBC Holding” and American Conti International.

6 According to a study from 2015

by WIN/Gallup, 93% of Georgians consider themselves to be religious ISET-PI.GE

A

ll other nations of the world are less enchanted about religion. Worldwide, on average only 63% of people say they are believers, and in some countries, like China and Japan, the number goes down to 7% and 13%, respectively.

Given that in this ranking Georgia has a shared second place, I want to speculate about the economic consequences of such firm belief. While connecting economics and religiosity may seem to be an obscure endeavor to some readers, this avenue of research has a long tradition and generated many fascinating insights. In this article, I want to report on features of belief systems that were found in this branch of academic research to be conducive or detrimental to economic success.

The reader, who may be much better acquainted with Georgian Orthodoxy than I am, is invited to draw own conclusions for Georgia.

ECONOMY

April 18, 2016 #142

There is only one country in the world which has a higher rate, namely Thailand, where this number stands at 94%, while the same percentage of religious people as in Georgia could only be found in Armenia, Bangladesh, and Morocco.

The Impact of Religion on Georgia’s Economy

Costly Lifestyle

Afterlife Vs. Here And Now Religions differ very much in regard to their orientations towards the afterlife. The most extreme cases are arguably Judaism and Islam. According to the prominent American Rabbi Neil Gillman, for a long time Judaism did not even know the concept of afterlife: “With Daniel, composed at the very end of the Biblical period, bodily resurrection enters into the picture for the first time. Until then, death is death. When you are dead, you are dead. Nothing. No mentioning of the soul in the Hebrew scriptures. Not as an entity. It is the breath that vivifies the body, and death is the extinction of that spark.” (Quote from the conversation he had with Robert Kuhn, to be seen on closertotruth. com). Gillman goes on to say that the concept of an afterlife was introduced to Judaism in the Maccabean wars, when there was a need for martyrs. It was difficult to motivate warriors to sacrifice their lives fighting against the Hellenistic Seleucids if there was no reward whatsoever. In this situation “comes the author of Daniel 12 who says that death is not the end, that those of you who die for God and Torah and Israel will be resurrected.”

Also in modern times, the afterlife plays a rather minor role for Jewish believers. If there will be consequences for good or bad deeds, they are rather expected to happen in the current world. When in 2003, a terror attack blew up a bus in the ultraorthodox Shmuel Ha-Navi neighborhood in Jerusalem, killing 20 people who came back from their prayers at the Western Wall, representatives of the ultraorthodox community considered this to be punishment for sins. As an ultraorthodox Jew named Hechkel Rosenboim explained: “The attack happened in the period of ‘in-between times,’ which is the three-week vacation that the ultra-

of course much less of an authority than God, may have his own moral flaws, and, most importantly, it will often be easy to hide corruptive deeds from his eyes (or just not tell him about it). In this respect, the church of Georgia seems to resemble more the Catholics than the Protestants.

A hierarchy of clergy is set between the individual believer and God.

Orthodox community enjoys during the summer. During this time, there are many immodest behaviors, such as going to the beach, where the laws of separation [men and women swim separately] aren’t upheld. It shows that God is signaling to the people of Israel that even during this time, one must study the Torah. Always study the Torah.” (Quoted after an article by Haim Levinson in Maariv).

The other extreme is Islam, where life here on earth is not much more than a kind of “exam”, serving to separate the pious from the sinners and, if the test was passed, gives admission to paradise. All that is in this world is nothing but dunya, worthless in itself and just preparation for the eternal afterlife.

The stakes are high – eternal paradise vs. eternal hell. (Hence, it is particularly easy to recruit suicide bombers among Muslims, as there is a strong incentive to secure one’s eternal place in heaven through one single deed on earth.) But what about economics?

The more a person is oriented towards the afterlife, the less they are eager to accumulate wealth before death, which is an important driving force for economic zeal. This idea, which goes back to Max Weber, also applies to the distinction between Catholics and Protestants. As Jerry Bowyer paraphrased Weber in Forbes Magazine: “The focus

on this life as opposed to the afterlife tends to create large income streams. […] The result is a well-educated, highly skilled diligent work force and large pools of capital. Without this, or something like it, modern capitalism would not have arisen as it did.”

Where is Georgian orthodoxy located on this scale of worldly vs. afterlife orientation? It seems to be as if the Georgian Orthodox church, most prominently represented by its Patriarch, is very interested in worldly affairs. The most unusual experience in this respect I had three years ago, when, on behalf of USAid, I had authored a study on the fiscal implications of the local self-government reform which was on the agenda at that time. I met with deputy ministers and other government experts to present our results, and despite the matter being highly technical, there was a lot of controversy around this reform. However, I was surprised when a few weeks after we had concluded our work, the Patriarch himself chimed in: “We will never tolerate this [the reform] and will do our best to make sure this does not happen.” (Quoted after eurasianet.org.)

To me, its strong political involvement suggests that the Georgian church is very concerned about the world here and now and does not focus excessively on the world hereafter.

Direct Vs. Indirect Responsibility Religion also has a strong influence on the level of corruption in a society.

This has been pointed out most clearly when comparing other groups with Christian Protestants – in most studies, Protestants are so much less corrupt than everybody else that in corruption research one calls this the “Protestant Effect” (cf. Shadabi: “The Impact of Religion on Corruption”, Journal of Business Inquiry, 2013). The scholars who found these results hypothethize that in Protestantism, each believer is directly held responsible by God, without any intermediaries (priests, saints, popes).

In Protestant theology, clergy does not have any privileged access to God, and – unlike saints in Catholicism – can for sure not influence God’s decision about whether one goes to paradise or hell.

In Catholicism, on the other hand, the individual is part of a hierarchical structure in which, as far as salvation is concerned, he is not held responsible

by God directly, but by the priest (who, as part of his worldly ground staff, also takes the role of the confessor). A priest is

There is another economic aspect to religion. Namely, exercising religious activities may require a lot of resources.

I was confronted with this fact when recently I guided two religious Jewish friends of mine through Tbilisi. Just over this one afternoon, I realized how many of their resources they spend on the observance of the Halacha, the traditional Jewish law. To prevent eating non-kosher food, they brought their own camping stove with them to prepare kosher food in the hotel room. On Shabbat they were not allowed to expend money, hence their tourist program was highly restricted on that day. Finally, after a long walk, we had made it to a vegetarian restaurant in the Old City, but my guests were not sure that they could really eat there, because there was no guarantee that on the plates had not been served meat at some earlier time, or the cook had prepared meat before he made the vegetarian dish, or whatnot. They called a rabbi in Israel, and after a lengthy discussion, it was decided that eating in the restaurant was too risky. Hence, we had to walk even further to a kosher restaurant close to the Synagogue. Likewise, practicing Muslims also pursue a costly lifestyle, praying five times a day, having to get up early in the morning (even if they went to bed late), keeping diet during Ramadan, and so on.

The Christian religion, on the other hand, does not demand that much time and resources from its believers. In Orthodoxy, one should go for two to three hours to the church on Saturday and the same on Sunday. This is not overly expensive and should not have a significant impact on economic activities.

Let us wrap up. Robert Barro, one of the most eminent American economists who has worked extensively on the connection between religion and economics, looks at the issue mainly from an empirical angle. In his frequently cited 2003 article “Religion and Economic Growth across Countries” (coauthored with his wife Rachel McCleary and published in the American Sociological Review), he comes to the result that “Economic growth responds positively to religious beliefs […] but negatively to church attendance.” He argues that there is a kind of inverse U-curve: looking at data from 59 countries, on average the effect of religiosity on growth is positive, yet if people excessively sacrifice resources for religious activities, the economic costs exceed the benefits.

Whatever one thinks about the benefits of religion for the Georgian economy, the cost of an Orthodox religious lifestyle does not seem to be overly high. Therefore, unlike in Bangladesh and Morocco, 93% believers in Georgia are not a number that gives rise to economic concerns.

April 18, 2016 #142

Banking Regulations Commercial Banks to Obligatorily Participate in Deposits Insurance System The Parliament of Georgia plans to launch discussions over the deposits insurance bill in June 2016. The Ministry of Finance has finally completed the document development. At the next stage, the government will wait for assessments by commercial banks. The bill calls for mandatory involvement of commercial banks into the deposits insurance system.

BANKS & FINANCE

According to the National Bank of Georgia (NBG), commercial banks currently preserve 11.9 million GEL USD-denominated deposits.

This signifies the US currency dominates in the Georgian market. GEL-denominated deposits account for only 4.3 billion GEL. Economic experts assert that the development of a flexible insurance system will encourage more citizens to save money at commercial banks. As a result, commercial banks will be able to attract money resources and the state economy crediting indicators will increase.

This is a simple chain for enforcement of the deposits insurance system.

The deposits insurance system runs in all countries of Europe and the CIS, such as Latvia, Lithuania, Luxemburg, Albania, Poland, Russia, Ukraine, Armenia, Azerbaijan, Kazakhstan and so on. Without this system the banking sector crisis that broke out in the USA and Europe in 2007 would bring more disastrous results. The previous Authorities have ignored the EU instructions for developing the deposits insurance system and they did not realize the necessity of this system in the Georgian reality.

It is of crucial importance to establish the deposits insurance system, but development of bills does not suffice to create efficient system – Flexible supervisory system over commercial banks and “greasy” state budget are also very important.

If the Authorities assume obligation for insuring deposits, they must be confident

7

BANKING

in sustainability of commercial banks, economic experts assure. Moreover, the world experience suggests that, jointly with the NBG, the Authorities must control certain leverages of regulating commercial banks.

Introduction of the deposits insurance state system amid the loose supervisory mechanism will contain certain risks.

As noted above, the EU instructs the member countries to practice the mandatory system for deposits insurance. The EU recommendations provide a detailed description of specifications of the mandatory deposits insurance system. Under these instructions, all member countries should introduce and officially recognize at least one mandatory deposits insurance system. The special commission is obliged to carry out monitoring of deposits insurance systems of the EU member countries and harmonize the legislation of its member countries with the mentioned instructions. Georgia still remains one of the countries, where financial mediation rests less-developed in the Region, especially, in terms of deposits ratio in GDP.

Objectives and Expected Outcomes of Deposits Insurance System The deposits insurance system serves to achieve the following objectives: the system provides special protection of small-sized

money amounts. Approximately 97% of individual depositors usually save no more than 4 000 GEL at commercial banks. Therefore, the system will maximally protect small depositors from risks arisen in case of commercial bank bankruptcy, because depositors will immediately receive compensations for their savings in the amount commensurate with the insured deposits.

Furthermore, public confidence in the bank sector will grow. The deposits insurance system strengthens public trust towards the financial sector and narrows availability of developing system risks.

Commercial banks will acquire more crediting resources through expanding the savings volume. As a result, the system will boost the state economy growth.

Organizational Structure of Deposits Insurance Agency In this case the society is more interested in how the deposits may be insured. The depositor will bear no financial liability, as they will just receive the agreement-determined dividends. A special financial agency will be set up, where commercial banks will direct money resources in the form of state transfers.

All countries demonstrate certain pecu-

liarities, but the core principle remains the same – the Authorities must be confident in sustainability of commercial banks. Another principle suggests that the state must compensate the losses in the event of bank bankruptcy within certain limits, economic experts say.

The amount of the deposit foundation depends on two factors: amount of the tax and primary transfers to the foundation.

Bank transfers represent a regular basis for financing the deposit system. Moreover, the government often takes active part in formation of the foundation, because it is very expensive to organize the foundation for only commercial banks. And the government finances deposit insurance agencies (in the form of loans or capital) to make the amount of future transfers accessible to commercial banks and it makes contribution to the financial stability of the country.

At this stage, the agency does not specify what amount commercial banks will transfer and what amount the government will donate.

Mandatory or Voluntary Participation Currently, both variants are practiced in the world, voluntary and obligatory systems. However, the system based on mandatory participation is considered to be the best practice, because the voluntary system attracts only weak commercial banks and the system cannot perfectly run (all commercial banks must be involved in the system so as the engagement costs be shared evenly and the scheme maintain financial healthiness). Based on this strategy, the EU urges to introduce the mandatory system in the member countries. Moreover, besides mandatory schemes, many countries practice voluntary schemes too (for instance, Germany).

Finally, banking sector experts assure that it is necessary to introduce the deposits insurance system in Georgia, because Georgia strives for the EU membership and this is one of the requirements of the EU. According to the current indicators, approximately 50% of total deposits portfolio are placed at two commercial banks in Georgia, i.e. stability of the whole system depends inappropriately on these two commercial banks. Therefore, the deposits insurance system will enable depositors to diversity their deposits.

www.cbw.ge <<

“Vinichio Valley” Project in Kakheti Introduced to Georgian Business Representatives

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Improving Seed Production and Developing Seed Certification System in Georgia

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Tbilisi Open Air 2016 Tickets Are Already on Sale

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12 Top D.C. Restaurants Featuring Georgian Wine This Spring

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PUBLICITY

April 18, 2016 #142

9

TOURISM

April 18, 2016 #142

NINO KUPARASHVILI

How much does it Cost to Travel in Georgia?

How much does it cost to travel in Georgia? In particular, daily travel expenses in Tbilisi have increased from 67 USD to 178 USD. According to the Travel Value Index in Georgia, specifically, in Tbilisi, the travel cost is one of the most expensive among other European capitals.

Numbeo – has calculated the Travel Value Indices of more than 700 cities throughout the world. In addition, Numbeo sets standard of living indices for the cities in general.

According to the data of 2016, the average level of traveler index made up 78.18, while higher than average level traveler index amounted 53.53.

What about other expenses, the daily cost for a single average level traveler includes onetime meal at MC Donalds, or other such type food vendors, a single dinner in the restaurant, a bottle of Coca or Pepsi, water, beer and 4 times travel by public transport.

As for the daily expenses of greater than average level traveler unites following criteria, 3 times meals in restaurants, 6 varieties of drinks, travel by minibus 4-times in a day.

Based on the rating, the average level traveler needs 67 USD to spend in Tbilisi per day, whereas a greater than average level traveler needs 178 USD.\ In Tbilisi, the hotel prices are one of the highest. The lowest index value of hotels in Tbilisi makes up 137.50, whereas 3 – 4 star hotels it is -97.22; It should be noted that by taking a look the price indices of different hotels, Tbilisi is marked in red color on the map among more than 700 cities of the world.

Consequently, it is rather high indictor.

Travel in Georgia: Georgia’s Tourism Potentials Tourism Administration Took Part in the International Tourism Fair The National Tourism Administration of the Ministry of Economy and Sustainable Development took part in the International Tourism Fair “UITT2016” held in Kiev.

As it is stated at National Tourism Administration, there were also other Georgian companies and state entities presented at the stand. For instance, Capital Georgia Travel, Liberty Georgia Destination Management, Sairme hotels and resorts, Prestige tour, Borjomi Palace, Georgian Discovery tours and Travel to Georgia 2010.

According to them, more than 22 000 people from 60 countries have attended the fair.

Ukraine is an important tourism market for Georgia. According to statistics, in March of 2016, 11 366 international tourists visited Georgia from Ukraine, with an increase of 26.9% over the previous year’s same period, “- said at the National Tourism Administration.

Virtual Reality “Webinar” For Georgian Tourism Potential Awareness Helmet Makes In order to get acquainted with Georgia’s tourism potential Webinar was held. Additionally, it was organized by the Georgian National Tourism Administration of Ministry of Economy and Sustainable Development. A webinar (Web-based seminar) is a presentation that is transmitted over the Web. It is interactive.

According to the National Tourism Administration, large-scale marketing advertising campaign was implemented at the

internet portal “Profi+Travel Expo” during one week period.

In particular, the advertising campaign was named as “CIS countries and Georgia - 2016.”

At the portal, there were 2300 representatives of various tourist companies presented from 11 different countries.

Profi.Travel- is one of the leading Internet portals for the tourism professionals. Every day the website has up to 62,000 visitors.

Tourism Potential of Ajara is Advertized in 10 Countries Marketing and PR campaigns are in the active phase in order to attract tourist in Ajara.

According to the Department of Tourism and Resort of Ajara, preparation for tourism season is launched in 10 targeted countries (Turkey, Azerbaijan, Armenia, Poland, Kazakhstan, Belorussia, Israel, Latvia, Ukraine,. Russia). PR and Marketing campaign envisages online advertising, outdoor advertising (billboards, light boxes, branded buses), preparation of special programs on the region’s tourism potential, publishing

of advertising articles in the railways and airlines onboard magazines, as well as organizing of press and info tours.

Advertising campaign includes central cities of the countries and over 30 cities are engaged.

The department has hosted 6 press and info tours, around 120 representatives of media and tour agencies have arrived in the region. However, the Department will host 15 tours from the targeted countries until the end of the year, more than 150 tour agencies and reporters will visit Ajara.

You to Feel Like Travelling The company “Vrex” created virtual reality helmet for the purpose of tourism increase in Georgia. Nika Rostomashvili, the director of the company talked about the plans he currently has at this stage.

This is the most effective tool, mobile device in order to submit the place to make a traveler interested in visiting the country.

The main objective for the company “Vrex” is broadening awareness the beauty of Georgia out of the country’s borders.

This very simple device can be surprisingly easily placed at any smartphone. As a result, the application will be turned on.

At this point they started from such places where the ski infrastructure is highly developed, however it is planned the other places to be added also in near future.

Nika Rostomashvili announces that the company members saw huge potential in this technology that turns the situation totally reversely in a positive way.

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BUSINESS

April 18, 2016 #142

The Technological University Construction Begins in Tbilisi Foundation of Technological University Construction in Tbilisi. The founder of the Institute is the Government of Georgia itself. The project funding will be fully implemented by the International Charity Fund “Cartu“.

The main objective of the Technological University construction is to carry out several researches in the fields of physics, chemistry, biology, mathematics, engineering and computer technologies, as well as Master and Doctoral programs will be offered to the students.

WHERE TO GO

BANK

How Much Must Georgian Business Pay to Protect Copyrights?

Windows, Microsoft Word, Excel – we have been applying these software products for many years, entirely free of charge, while these products have specific prices. The Georgian business has to realize this issue now.

There is the highest level of software piracy in the country and Microsoft has decided to protect its own copyrights. Part of the business sector complains about this circumstance, because installation of legal software products is related to considerable costs. However, the Authorities have already moved to licensed programs thoroughly and supposedly, the business sector will also have to satisfy the appropriate requirements.

According to rough calculations, if the company possesses 30 computers and plans to install Microsoft’s licensed software products, it has to pay 10 000 USD for one-time purchase of a package of Windows and office programs, while in the future annual renewal of office software will cost more than 3500 USD. Based on these estimations and

the quantity of major, medium and small business companies in the country, 1 billion USD outflow voiced by businessman Lasha Papashvili may be absolutely real.

“Under the rough calculation, 1 billion USD will be withdrawn from the country every year to legalize consumption of Microsoft software. We can imagine how this fact will affect the state economy. Another aspect is that we do not want to be in the Black List. Our nation must not steal intellectuals property of others.

There were several facts when in our country Microsoft started protection of its own copyrights”, Lasha Papashvili told the Business Contact. Economy Minister Dimitri Qumsishvili noted that the Government has achieved much progress in terms of copyrights protection.

“We have told many times Microsoft representatives that the country development should be consecutive and the companies must be able to move to licensed software products”, the Economy Minister said.

WINE

JEWELRY

Georgian wines in China

Pokany Jewelry Workshop to Enter European Market

Georgian wine is increasing its prevalence in China.

Twelve Georgian wine varieties were sampled by guests at a Rotary Club of Beijing meeting, which brings together people from all walks of life to provide humanitarian and community service.

Georgia’s Ministry of Agriculture said efforts to raise awareness of Georgian wine in new export markets was starting to pay off.

This was one more step forward in raising awareness of Georgian wine in China,” read a press statement from the Ministry.

Qvevri House to Open in Telavi Tourists will be able to familiarize with a pitcher (qvevri) manufacturing technologies included in the list of UNESCO-protected masterpieces already this autumn.

According to the Municipal Development Fund at the Ministry of Infrastructure, “A Pitcher House”(qvevri) will open in the village of Ikalto in Telavi municipality in the fall.

It is unclear what the Minister has implied in the term of Consecution, but the fact is that the Government has not agreed any action plan with Microsoft to alleviate the process of moving to licensed software programs in business companies.

The Georgian representation of Microsoft has not commented on prices of products and they readdressed us to the partner company. However, they noted the company is trying to protect its own copyrights, but not always through judicial leverages and it remains flexible in relation to the business companies that are ready for cooperation. Over the past 2 years, only 7 trials were recorded and five of them were resolved by negotiations, they said. „We are sure that the companies that use our software products must pay for it. When talking about personal use of our software, they cannot realize similar approaches damage various bodies. When you actively use these programs, this signifies that the government loses revenues, for instance, in the form of VATs.

David Kakabadze Pokany founder

Pokany jewelry workshop plans to unveil branches in foreign countries. The company founder David Kakabadze told the Commersant that Pokany is developing various directions and further details will be unveiled in the course of time.

The company maintains stability in operation and plans expansion in both Georgia and abroad. Namely, Pokany plans to open stores in the neighboring countries and Europe. It has set up close partnership with international partners and receives orders for various works, David Kakabadze noted.

As to cooperation with famous brands, this is not a simple process and the company continues working on these issue, he added. Pokany has been conducting negotiations with Italian jewelry brand of BUCCELLATI, wristwatch manufacturer Robert & Fils and Zannetti, phone manufacturer VERTU on developing exclusive products and models for several years.

The Pokany founder also overviews the current economic situation and the GEL exchange rate influences. These tendencies have affected the sales, David Kakabadze noted, but refrained to name specific indicators. As to the pricing for jewelry works, the company makes products for both high-income and average-income segments and despite the currency exchange volatility, the company permanently tries to lower prices, David Kakabadze said.

Therefore, we are trying to explain to companies why they must use licensed software”, Jack Pinada, lawyer for Microsoft Georgia told the Business Contact.

The Office 365 is a package of office programs of new generation based on cloud technology. The price of this package varies due to content of the package. Anyway its price is lower compared to the ordinary office package.

Moreover, some packages of Office 365 enable to work in the offline mode too. Therefore, UGT, one of the major partner companies of Microsoft, that has implemented a 19 million USD state project for moving to the licensed software products, recommends to use the Office 365 office software package and to buy computers with Windows software installed. In the event the company owns computers and wants only to move to licensed software, prices are different. It should be also noted that Microsoft products are cheaper for Georgia and other countries of the region compared to the EU countries.

Fourth Meeting of Business Café On April 12th Holiday Inn Tbilisi hosted the fourth meeting of Business Café which is a project initiated by Insource, Executive Search & Consulting and exclusively supported by PASHA Bank. The session hosted the representatives of top management of the leading companies with a special guest – Papuna Toliashvili, Managing Partner of consulting company “Synergy”, who presented the topic of discussion “Circular Organizational Structures”. The first meeting of Business Café was held in October, 2015 and since has significantly grown in popularity as it is a format that covers the topics of high relevance to the business community. Insource and PASHA Bank plan to organize four more meetings through the year.

“We are seeing an increasing interest towards the project that once again underscores the meeting format attractiveness.

Sponsorship of this project is interesting to us on a number of dimensions, foremost of them being the opportunity it gives to senior managers meet and share their knowledge and experiences. We generally try to support the projects aimed at fostering the healthy business environment. Business Café is one of the rare projects of the type which even if indirectly contributes to the above mentioned objective,” – said Anano Korkia, Head of PR and Marketing Department at PASHA Bank.

April 18, 2016 #142

HEALTHCARE

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Price of Medicine Chest for Babies Marked 191 GEL in March

I

t carries out monthly monitoring over the change in prices.

At the first stage, at four leading pharmacy networks the Healthare Platform examined the list and prices of 24 medications and items of care that are most required and recommended for babies (1-3 years old). The research works has showed up that in March the price of medicine chest for babies made up 191 GEL. List and Prices of Medications Medicine Chest for Baby (1-3 years) Medicine Chest for Baby Accessories: bathroom thermometer – 6.85 GEL Baby’s Dummy – 5.00 GEL Bottle with Baby’s Dummy – 13.05 GEL Enema – 1.53 GEL Fever Thermometer – 14.05 GEL Scissors – 11.55 GEL Items of Care: Cotton wool sticks (N100) – 2.12 GEL Baby powder – 2.17 GEL (70g) Baby cream – 7.80 GEL Baby napkin cream – 4.64 GEL Cotton – 1.00 GEL Sterile Bandage – 1.04 GEL Diamond Green – 0.30 GEL Hydrogen dioxide – 1.25 GEL Spirits – 1.40 GEL Medications: Panadol – 8.70 GEL Fenistil – 13.31 GEL Virofen – 18.00 GEL Chamomile – 1.48 GEL Viburcol (candles) – 13.37 GEL Bobotik _ 11.40 GEL Neopek – 34.90 GEL Fennel tea – 7.83 GEL Mouth multifunctional jelly – 8.35 GEL

Total: 191.06 GEL

The Healthcare Platform plans to publish a series of Panaskerteli Pharmacy as part of the Panaskerteli monitoring project. The Panaskerteli Pharmacy explores prices at various pharmacies for various segments of consumers, for example, children, family, office, driver, tourists, primary healthcare, cottage medicine chest, as well as prices of accessories.

Panaskerteli Index: Medication Prices Reduction Tendency is Evident The association of young financiers and businessmen (AYFB) has developed the so-called Panaskerteli Index with the aim to monitor medication prices. As part of this Index, the AYFB experts carry out weekly monitoring and supervision over prices of 200 most in-demand medications. According to the AYFB report, the last 4 months are demonstrating price reduction tendencies in the Georgian pharmaceutical market.

Tinatin Turdziladze, chairperson of the Healthcare Experts’ Club, overviews the mentioned issue.

-The AYFB reports prove that medication prices are declining over the past 4 months. Do you agree this report reflects the pharmaceutical market realities?

-The mentioned research reflects a certain dynamics of changes in consumer prices in the market. I do not consider these indicators to be sufficient to make extrapolation of conclusion on the price reduction. However, based on this and other empiric indicators, I would say that medication price erosion signs are evident. As expected, this is not a simple process. I think the medications that are replaceable by imported cheaper generics are declining in value. At the same time, prices have risen on the so-called blockbusters, where competition has not sharpened yet. I suppose the business sector will try to compensate losses in this way. It should be also noted that holding pharmacy networks prioritize sales of medicines of their own production. It is clear that this approach will damage the retail sales of competitive products. We are facing quite controversial developments.

- Do you think Humanity Georgia’s appearance with cheaper medications has inspired reduction in medication prices?

- Certainly, I mean this. Humanity Georgia’s strategy for supply of cheap generics has inspired eroding medication prices in the Georgian pharmaceutical market.

- How would you appraise the state policy for revising medication prices through promoting free competition and inviting new players to the market?

- Our objective is not either market freedom or its regulation in itself. The objective is to make efficient and high-quality medications attainable for our citizens and a rational complex of regulations and competition is a leverage to achieve this goal. At this stage, “Competition” was injected into the pharmaceutical market.

This is a correct decision, but this move is not sufficient. This decision is correct, because we need reduction of costs, but it is insufficient for real attainability, because efficient generics cannot be cheapened endlessly. Financial support component will be required for our population.

Therefore, the Authorities should introduce cofinancing schemes, be it reimbursement or subsidization schemes.

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PUBLICITY

April 18, 2016 #142

13

WORLD NEWS

April 18, 2016 #142

Quotes

“ The bonds can be acquired at any of Unibank’s 45 branches or the head office

A weak currency is the sign of a weak economy, and a weak economy leads to a weak nation

”

The ECA are facing complex headwinds. Against the backdrop of adverse global developments, the prospects for many ECA economies are for weak growth.

Ross Perot

Armenian Bank starts Turkish Impact of China issuance of $5 million retail giant on Europe and worth nominal bonds goes bank- Central Asia rupt

U

nibank has announced today the beginning of issuance of USD-denominated nominal coupon bonds with the annual yield of 8%.

The Yerevan-based bank said in a press release that it is going to issue a total of 50,000 bonds worth USD5 million.

The face value of a bond is USD100. The maturity term is 24 months with coupon profit payments to be made quarterly. The redemption of the bonds will be made on April 8, 2018.

The prospectus, which contains detailed information about the financial standing of the bank and key information about the bond issue, was placed on the official website of Unibank on April 4, l 2016 at Error! Hyperlink reference not valid.. According to the press release, the bonds can be acquired at any of Unibank’s 45 branches or the head office.

The placement is scheduled for April 8 to June 14, 2016.

The minimum package includes 10 bonds worth $1,000.

After the placement the bonds are expected to be listed at NAS-

DAQ OMX Armenia stock exchange.

“Taking into account the interest of the public in Unibank’s bonds, it was decided to issue coupon bonds as a new, profitable investment instrument. According to the Armenian law on insurance of private bank deposits, the funds raised as bonds, as well as bank deposits are guaranteed by the Deposit Insurance Fund in the amounts stipulated by the law,” the bank said.

The prospectus was registered with the Central Bank of Armenia on April 2, 2016 and entered into force on April 3, 2016.

Unibank was the first Armenian bank to place ordinary nominal shares (UNIB) through an IPO at NASDAQ OMX Armenia stock exchange in 2015 December.

Unibank was founded in October 2001. In 2002 it introduced Unistream system. Its only shareholder is Glover Holding LTD. In 2015 the Bank was reorganized into an open joint stock company.

Today Unibank runs 45 branches providing services to over 300,000 customers.

China wants to move factories to Russia

B

eijing is ready to transfer some of its shipyards as well as chemical and steel plants to Russia’s Far East. Russia is interested, but says this can only be done in full compliance with local environmental laws.

“We are ready to accept Chinese enterprises to establish joint export-oriented production in the Far East territory”, said a spokesman for the Far East Development Department Rustam Makarov.

The Chinese factories are involved in construction, metalworking, energy, machine building, shipbuilding, chemicals and other sectors.

However, this movement will only be done if they comply with Russian environmental laws.

The agreement was reached during a visit of the Department’s head Aleksandr Galushka to Beijing. The corresponding memorandum of understanding was signed there.

Turkish retail chain Beğendik, which also owns Real hypermarket stores in the country, has applied for a suspension of bankruptcy, with a court deciding to appoint trustees as a measure.

The group made its application for its 46 Beğendik stores and 12 Real stores, as well as its restaurant chain, separately on April 7, according to the application documents, daily Hürriyet learned on April 12.

The Anatolian 3rd Court of First Instance of Trade decided to appoint trustees for the companies and take the companies under protection against any garnish orders as a measure on April 8.

Financial consultant Mehmet Yorulmazer and Uğur Gürsoy were named as trustees by the court.

According to the documents, the companies have said problems in the economy played a main role in hitting their finances. Beğendik stores have been under a 130.7-million-TurkishLira debt and the restaurant chain has been under an 11.4-million-lira debt.

Turkish retail giant applies for suspension of bankruptcy Azerbaijan’s top gold producer, Anglo Asian Mining Plc, cut its output by 17.6 percent to 14,172 ounces in the first quarter and set a target of 73,000 to 77,000 ounces for 2016.

The company increased its gold output by 19 percent year-on-year to 72,032 ounces in 2015, hitting its target for the year.

The London-listed firm said it increased production of copper at Azerbaijan’s main mine, Gedabek, and the Gosha mine to 432 tonnes in January to March, from 182 tonnes a year earlier. Silver output rose to 1,958 ounces from 597 ounces.

“The first quarter of the year has always had lower production due to the difficult winter weather conditions,” Anglo Asian CEO Reza Vaziri said in a statement on Wednesday.

A

gainst the backdrop of adverse global developments, the prospects for many ECA economies are for weak growth, at best. However, several of the headwinds also carry seeds for future growth.

The collapse in oil revenues and remittances, and the associated sharp real depreciations, improve competitiveness in the production of internationally tradable products.

The weakening of the Euro, caused by monetary policies of the Federal Reserve and The European Central Bank moving in opposite directions, makes European countries more competitive, as is already demonstrated in recent export data.

The current slowdown and transformation of China’s economy can make producers in ECA more competitive, even if the changes in China might also have negative welfare impacts for some parts of the region. In the eastern part of ECA, the task of governments is to orchestrate a coordinated crisis response. The collapse of oil revenues and the associated decline in remittances has triggered a chain reaction of shocks.

Adjustment to these shocks requires a new monetary policy regime, resolution of serious fragilities in banking sectors, fiscal reforms that put government finances on a sustainable path, while guaranteeing fair burden sharing, and facilitation of job creation in sectors that

compete internationally.

It is crucial that, while a deepening of the crisis is being avoided, policies resolutely enable the necessary shift away from the production of nontradables to the production of tradables. Improvement of institutions and governance is needed to eliminate binding constraints that deter the development of new activities.

In the western part of ECA, policy coordination within the European Union is being tested by the refugee crisis and a possible Brexit. At the same time, the modest recovery continues in this part of the region.

To put this recovery on a sustainable path, it is crucial that the European Union addresses changes in the economic environment, such as the individualization of labor markets in the sharing economy, in an effective and coordinated way.

Meanwhile, the Chinese economy has slowed down and is in the process of a fundamental transformation. The economy is shifting from investments to consumption, from inward FDI to outward FDI, and from low-skill intensive to skillintensive production These developments are having major impacts on the ECA region.

The changes in China’s economy can have adverse impacts on exporters of investment goods and natural resources. It can mean a competitive challenge for countries with a comparative advantage in skill-intensive production.

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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 18, 2016 #142

April 18, 2016 #142

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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PUBLICITY

April 18, 2016 #142