Caucasus Business Week #150

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June 20, 2016 #150

June 20, 2016, Issue 150 - www.cbw.ge

Education How Much is Tuition Fee at Private High Schools in Georgia?!

Pg. 7

Banking National Bank for Protection of Consumer Rights

Interview PPP Center Starts Monitoring of Private Partnership Projects Pg. 4

Pg. 9

Investors Withdraw All Capital They Invest in Georgia

Patience, Genatsvale!

One of the first things tourists in Georgia notice is how crazy that drive from the airport to the city is. Jumping red lights, breaking rules to take over the jeep in front, the Georgian taxi driver risks his (and not only his!) life to deliver his passenger to the destination. As a distraction from the dangerous ride, the driver might offer the famous “dzhigit” (a brave equestrian) joke: a dzhigit passes on red light, but stops on green – in case another dzhigit is crossing the road.

Dzhigit-style driving is not the only example of Georgians acting in a shortsighted manner.

Prevalence of early marriages, young age at first birth, poor business ethics and low saving rates are some of the most obvious manifestations of Georgians underestimating the importance of farsighted behavior. Earlier on this blog, Florian Biermann and Robizon Khubulashvili hypothesized that Georgians are very impatient.

Pg. 6

376 million USD – this is the investments volume that Georgia attracted in the first quarter of 2016 Pg. 5

Photo/Thomas Madsen

By Frits Ahlefeldt

Panaskerteli Index Rose by 17.43% in May compared to April The association of young financiers and businessmen (AYFB), jointly with the Healthcare Platform nongovernmental organization, continues monitoring of prices on the pharmaceutical market. According to the latest research, the index has increased by 17.43% to 13 points. This signifies prices on the pharmaceutical market have considerably risen.

Monitoring is carried out on 200 medications and prices have increased on 78 ones and slightly decreased on 6 ones. As a result, the Panaskerteli Index has increased.

Several factors should be emphasized that have preconditioned upturn in medication prices: First of all, this is related to strategy carried out by pharmaceutical companies for maximizing profits.

As a rule, profits are maximized through various marketing campaigns or rising prices. Pharmacies seem to have resorted to this last mechanism and, after 6-month declination, prices have increased again. This signifies pharmaceutical companies effectively manipulate by tariffs..

Pg. 11

2 GOVERNMENT

NEWSROOM ADB Expresses Support to the Government’s four-point Reform Plan ADB expresses support to the government’s four-point reform plan – the Excutive Directors of the ADB noted in their conversation with Prime Minister Giorgi Kvirikashvili meeting.

Tbilisi to host OSCE Parliamentary Assembly in July In the beginning of July Georgia will transform into a political hub as 700 guests from 57 member states of the world’s largest security organisation come to discuss regional and global security, migration and human rights issues.

ECONOMY

Top Chinese energy giant keen to invest in Georgia One of China’s leading energy conglomerates, CEFC China Energy, is showing an interest in investing in Georgia, and not only in the country’s developing energy sector.

First Quarter Records 104 200 Internal Visits to Adjara Region Internal visitors of 15 and above age category have paid 104 200 visits to the Autonomous Republic of Adjara in the first quarter of 2016, up 17% compared to the same period of 2015.

BANKING

National Bank Forecasts Inflation Slowdown in Coming Quarters The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on June 15, 2016 and decided to reduce the refinancing rate by 50 basis points to 7.0 percent.

Money Transfers to Georgia Declined by 4.8 million GEL in May In May 2016, the volume of money transfers from abroad constituted 92.9 million USD (203.1 million GEL), which is 4.9 percent (4.8 million USD) less than the amount in May 2015.

BUSINESS

EBRD Plans to Finance Beer Plant Project of Teliani Valley The financing will consist of a senior (A/B) and a parallel loan in aggregate amount of up to €18.5 million in the total project of 37 million. The credit consist of 3 parts.

Racha-produced Dry Products to Go to Exports Markets The so-called dry products produced in the Racha Region will be exported to Germany. GeoFlower company produces dry roots of codling, bilberry, thorn, liquorice, wild pear, mandarin’s dry fruit.

COMPANY

Chinese Airline to Launch Tbilisi-Beijing Direct Flights On June 14 top officials of the aviation agencies of China and Georgia held a enlarged meeting in People’s Republic of China.

PM speaks at Humboldt University, explains why Georgia is part of Europe

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eorgia’s Prime Minister has delivered a poignant speech at Humboldt University in Germany where he explained his country’s European intentions and explained why Georgia considered itself a truly European state. Speaking to students and staff yesterday Prime Minister Giorgi Kvirikashvili said Georgia had traditionally been part of Europe and since the country gained independence from the Soviet Union in 1992, Georgia had carried out a range of reforms to return into its historical roots.

Kvirikashvili outlined Georgia’s European choice was supported by 80 percent of the Georgian population and the country’s Euro-Atlantic path was irreversible.

He noted Georgia “succeeded and continue to succeed” as it implemented all commitments within its Association Agreement (AA), which includes its Deep and Comprehensive Free Trade Area deal, with the European Union (EU).

In turn this promotes a thriving investment climate and boosts economic growth in Georgia,” said Kvirikashvili.

But associating with Europe was “more than politics and business” for Georgia.

We seek to bring Georgian and European citizens closer together across a range of sectors and at all

levels,” Kvirikashvili said. In this sense he stressed the importance of forging closer people-to-people relationships and that would be provided by the opening of borders.

This is why we place so much importance on achieving visa-free travel for Georgian citizens to Schengen countries. For Georgian citizens this is the most important and most tangible outcome of EU-Georgia association.”

He added Georgia had not only completed but in many areas gone beyond the already stringent requirements of the European Commission to ensure there was no risk of irregular migration or increased criminal activity by Georgians in EU states.

We understand that migration is not the flavour of the day in many European capitals but fear regarding migration should not be allowed to undermine the legitimate exchange and cooperation between friends and allies,” said Kvirikashvili.

He then told the story of Georgia in the most direct way possible, stressing why Georgia deserved to be part of Europe again. He said: - We are a small, strategically located country of nearly four million with enormous economic potential; - We are a democracy; - We believe in a free, open and transparent business environment; We have pretty much eradicated corruption;

- Over the last five years, we have attracted billions in Foreign Direct Investments (FDI) and unemployment has dropped; FDI in Georgia amounted to $ 1.75 billion in 2014, the highest yearly indicator since 2008. In 2015 FDI inflow summed up to $ 1.35 billion; and We share our values with the EU and we believe that our future is in working together for a safer, more democratic and prosperous European continent. Georgia’s large-scaled presence in international peacekeeping missions was also noted, and Kvirikashvili emphasised Georgia was a “top of the class of students in its NATO integration program.”

The PM concluded Georgia recognised there was still much to be done before it could fully integrate with Europe however to progress further Georgia needed to be able to count on allies, Germany among them.

Kvirikashvili ended his two-day German trip yesterday, which came shortly after Germany’s last-minute rebuttal of Georgia’s visa-free travel in EU. After top German officials met Kvirikashvili during the past two days, the German side publically said it supported Georgia’s visa-free travel in the Shengen Zone.

Discussions about Georgia’s visa liberalisation have been postponed within the Council of Europe and European Parliament until September.

Georgia-Germany deal enhances ties in vocational education

G

ermany is supporting Georgia’s development in the sciences, technology and education sectors and is pledging to share its experience with the country as Georgia works to advance these fields.

Germany’s Minister of Education and Research Johanna Wanka met a Georgian delegation in Berlin yesterday, led by Prime Minister Giorgi Kvirikashvili, where he spoke about Germany’s support for Georgia’s democratic development.

Kvirikashvili briefed the German Minister about the Georgian Government’s Four Point Reform Agenda and intended education reforms, which were part of the overall reform plan.

Kvirikashvili stressed Georgia wished to implement the German model of vocational education, which meant producing and supporting professionals based on mar-

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

June 20, 2016 #150

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

ket demand. Wanka responded very positively to this and said Germany would help Georgia implement this.

Towards the end of the meeting Georgia’s newly appointed Education Minister Aleksandre Jejelava and his German counterpart signed a Memorandum of Cooperation that outlined how the two countries would work together to develop vocational education in Georgia.

The Memorandum included a range of exchange programs for students and teachers and outlined the importance of joint seminars, conferences and meetings between the sides.

Kvirikashvili, accompanied by several ministers and officials, is on his second day of an official visit to Germany.

Kvirikashvili attended several high-level meetings, including with German Chancellor Angela Merkel, and participated in a Georgia-German business forum.

www.cbw.ge <<

All points of the EU Association Agreement Enters into force form July 1

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Georgia Is One of the Cheapest Country To Live In

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Producer Price Index for Industrial Products in Georgia May 2016

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Georgia’s External Debts Declined by 28 million USD in May

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Gambling Business at Casino Forum Batumi

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Winery Khareba to Implement a Project of 2 mln in Samegrelo

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

June 20, 2016 #150

PUBLICITY

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NBG

The national currency should be strengthened

BIDZINA IVANISHVILI

Ex-Pm

National Bank for Protection of Consumer Rights

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As Bidzina Ivanishvili said, there is a high dolarization in Georgia and to lower the current rate the country should enhance its economic performances.

Answering the media representative’s remark that all major investments in the country are carried out in dollars, Ivanishvili noted that the banks insure themselves and prefer transactions in dollars but the population does not realize this. Former Prime Minister said that in the near future the country’s economyand the national currency should be strengthened.

President of the National Bank of Georgia made a statement about high dollarization rate in the country as well.

In Koba Gvenetadze’s words, the National Bank is taking steps to reduce the current rate. According to the central bank’s data, the rate of dollarization of bank deposits reaches 70% in Georgia.

Government to Toughen Regulations for Microfinance Organizations and Online Loans

MERAB JANIASHVILI Economic Analyst

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Gambling Business at Casino Forum Batumi Everything about gambling business at Casino Forum Batumi. Laws, investments, new areas. Casino Forum Batumi, the event for representatives of gambling business and relating industries, will take place on August 18.

Participants’ tasks: share experience of working in Adzharia, learn more about legislation of this country as well as learn about new gambling areas and ways of attracting players. Adzharia is attractive for gambling business due to liberal laws, simpler document management, flexible tax system and absence of corruption. Guests from Turkey, Russia and other neighboring countries annually spend 1.7 billion dollars here. Country’s authorities encourage foreign investors and create conditions for comfortable work. Administrators of gambling venues successfully working in Batumi will tell in detail about it.

Casino Forum Batumi = conference + demo zone + party The conference is dedicated to the following topics: - History of Batumi’s success as the gambling zone.

- New gambling areas: which of them are prospective in Georgia.

- Everything about gambling business taxation in the region.

- Investments in the gambling business in Georgia: are they worthwhile?

- Quality management for your business: how is it supposed to be and how much does it cost?

- How to increase offline and online casino profitability.

- Blockchain technologies as the future of gambling: advantages and disadvantages.

- How to establish business from scratch: licenses, equipment, and software.

Presentations will be made by investors, successful entrepreneurs, government bodies’ representatives, marketers and lawyers.

Demo zone is the platform where developers of software and equipment will present both time-proved and new gambling products.

The online segment will include: platforms for establishing online casinos and betting shops, social and mobile games, payment services.

The offline segment will include: tables, roulettes, slot machines, furniture and casino decorations.

A pleasant Casino Forum Batumi conclusion will include the VIP party in one of the best restaurants of Batumi.

Guests will be able to enjoy Caucasian hospitality, communicate with conference speakers and VIP guests in an informal setting. The party will provide an opportunity to taste Georgian wines and traditional dishes of the country.

Join Casino Forum Batumi and become our media partner!

The organizer – Smile Expo – focuses on conducting gambling conferences in Georgia and the CIS countries. It is only 2015 when we established 6 professional platforms for gambling industry representatives.

Place of the forum: Batumi. http://batumicasinoforum.com/en

June 20, 2016 #150

“

It should be also noted that everything started with an ordinary term “May the God Bless You”

”

n the previous week, Koba Gvenetadze, the new president of the National Bank of Georgia (NBG) held his first meeting with heads of commercial banks. At the meeting the Parties discussed the existing situation in the bank sector and state economy, in general. The NBG readiness for improving protection of consumer rights should be emphasized. The NBG President noted that active measures should be carried out for protection of consumer rights.

“We believe that protection of consumer rights is important for commercial banks too, because the more content borrowers they have, the higher confidence they will gain. Our position is that commercial banks should show more openness and provide more information to their clients. We also plan to add changes to the regulations that ensure delivery of necessary information to clients”, the NBG President noted.

It should be noted that protection of consumer rights is one of the challenging issues in the bank sector over the past years. In the previous years, several important efforts were carried out in this direction (the commission fee for early payment of the loan must not be over 2%, commercial banks have become obliged to indicate the effective interest rate on the frontpage of credit agreements and so on), but bank clients still remain discontent. It is unclear what steps the NBG will take to protect the consumer rights, but the fact is that the sector faces real problems in this direction and they should be resolved. Therefor, the abovementioned aspirations of the National Bank provide encouraging and inspiring signals in the society. Today the consumer rights protection department functions at the NBG that carries out monitoring of the bank clients’ appeals, but this office is less efficient in real life.

At the meeting the Parties also discussed the issue of introducing additional regulations for microfinance organizations. The National Bank has prepared a full package of regulations for the microfinance sector, Gvenetadze said. This package, to a certain extent, broadens the NBG functions in relation to microfinance organizations. It should be noted today the NBG only issues licenses to microfinance organizations and no special regulations govern this sector. Nevertheless, Mr. Koba Gvenetadze has not put forward any specific plans for regulating the microfinance sector.

At the meeting the Parties also discussed the Larization issues.

“Today we will mull over the priority issue: First, this is the Larization issue. We have a very high level of dollarization in the country and we are taking active efforts to reduce this indicator. Our objective is to make long-term GEL-denominated loans affordable and accessible”, Mr. Koba Gvenetadze said.

Currently, the deposits dollarization coefficient is around 70%.

A major part of economic experts talk about the necessity of narrowing the dollarization coefficient.

Government officials also emphasize this issue. The former president of the NBG Giorgi Kadagidze had also prioritized the issue of dedollarizaton. However, the dollarization coefficient has increased over the past 7 years. The time will show how effective steps Mr. Koba Gvenetadze will take to boost the sector Larization.

At his meeting with commercial bank managers, Mr. Koba Gvenetadze also discussed one of the challenging issue of the past years – regulation of online loans.

The NBG is developing norms for regulation of online loans sector.

The NBG is studying practices in various countries and Georgia will introduce the most matching model, Mr. Koba Gvenetadze pointed out.

“We are studying the experience of various countries and we will implement this project for protection of consumer rights.

There are various models – there are countries where this issue is regulated by central banks and there are countries where this issue is regulated by the Government. In this situation our goal is to establish the best practice”, Gvenetadze said.

It is worth noting that at his first meeting with the bank sector’s top managers, Mr. Koba Gvenetadze made focus on introducing new mechanism for consumer rights protection. We expect Georgian consumers to welcome our initiatives for regulating online loans, introducing additional regulations for microfinance organizations and taking specific efforts for consumer rights protection. However, as noted above, the NBG has not unveiled specific plans and projects. Therefore, we have to just wait for efforts that the NBG new president may take to the benefit of Georgian consumers.

www.cbw.ge <<

Orange Wine Has Finally Arrived as the World’s “Fourth Wine Color”

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American Movie Producers to Visit Georgia in Late June

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Georgian-Swiss Company Invests more than 18 million GEL in Racha Region

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TBC Bank and Bank of Georgia Hold 65% in Bank Sector’s Profits

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New Discoveries – Georgian Archaeology

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Hostel “Fabrica” will be Opened in August

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Meiburg to Host Asia Georgian Wine Festival

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Construction Works of Alpine Coaster to be Done in Mid of June

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Top 10 Georgian Dishes for Gourmand Vegans

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Wine Used in Ritual Ceremonies 5000 years ago in Georgia, the Cradle of Viticulture

June 20, 2016 #150

5

ECONO-MIX

be a good signal for investors. Significant volumes of capital is taken away from our country every year – hundreds of millions of USD. Tax preferences on turnover of this money is of crucial importance so as the country maintain this capital, Avto Silagadze noted.

Investors Withdraw All Capital They Invest in Georgia 376 million USD – this is the investments volume that Georgia attracted in the first quarter of 2016. After the 2015 crisis period, investors have intensified investment activities in the country. Georgia has not seen such a high volume of foreign direct investments over the past 8 years.

BANKS&FINANCES

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first quarter’s ever investment record was registered in 2008. In that period, investors injected 537 million USD in Georgia. Since then, foreign investors have reduced their efforts in this direction. In the next years, the Government of Georgia could not draw even 1 billion USD despite tireless endeavors worldwide. In the first quarter of 2009, investment inflows fell to 114 million USD and the annual FDI inflows marked only 658 million USD. A first quarter’s investment inflows exceeded 300 million USD in 2014, but the national currency depreciation in 2015 and related economic collapse frustrated investment activities again.

Unexpectedly, in 2016 foreign direct investments jumped up by 103% and reached 376 million USD, as noted above.

Most FDI inflows are directed to transportation and communications fields, traditionally. This year we have received 200 million USD in these fields. 58 million USD was directed to the finance sector and finally, the power sector received 40 million USD investments. The agriculture sector and the processing industry still rely on domestic investments. Foreign investors have directed only 3-3 million USD in these fields.

Country Loses Significant Capital The statistical report published by the national statistics service of Georgia contains one interesting detail. The record volume of capital was withdrawn from the country in the first

quarter of 2016 – 955 million USD. A major part of these funds were to serve foreign liabilities.

It should be noted the volume of capital leaving the country grows year to year. Basically, profits repatriation is carried out in enterprises created by foreign investments or these investments are taken back after a certain period.

Consequently, the difference between investment inflows and outflows becomes narrower gradually. According to the 2015 report, over the past 5 years, capital of 4.5 billion USD was withdrawn from Georgia, while the country has attracted only 6 billion USD. Actually, investors withdraw almost all capital they bring to the country. They seem to be less interested in making reinvestments in Georgia.

In 2015 Georgia’s net investments made up 1.351 billion USD. Capital of 1.136 billion USD was withdrawn from the country.

Soso Archvadze, doctor of economic science, noted that if we compare investment inflows to total amount of investment profits and the capital that residents have withdrawn abroad we will see very alarming situation. We will see that the country loses more money than attracts. Namely, over the past 5 years Georgia received 6 billion USD investments, while 6.5 billion USD was withdrawn from the country. According to the statistics prepared

by Soso Archvadze, which is based on pay-

ment balance, in 2010 the country attracted 815 million USD, while 872 million USD capital was withdrawn (investments return and capital). This is 107% of investment inflows.

In 2011, foreign direct investments in Georgia made up 1.117 billion USD, while 1.320 billion USD (118%) was withdrawn from the country.

The situation worsened in 2012, when the country received only 912 million FDI and 1.535 billion USD capital was withdrawn (168%). In 2013 this correlation diminished slightly. The country received 942 million USD and 1.315 billion USD capital was withdrawn. In 2014 the situation cardinally changed after the national statistics service of Georgia published a final investment report.

In 2014 the country received 1.758 billion USD investments, while capital outflows marked only 1.265 billion USD (71.9%). Economic experts assert that when discussing economic state and volume of resources in the country, we should take into account not only investments attracted from abroad, but their performance too, namely, whether profits received from these investments remain in Georgia or are withdrawn abroad, at the next stage of production.

Academician Avto Silagadze noted that abolition of profits tax on reinvestments will

Major Investor Countries According to the first quarter of 2016, Azerbaijan is major investor country in terms of FDI injections in Georgia. Azerbaijani FDI inflows, in the reporting period, made up 137 million USD. Turkey ranks second with 57 million USD, the United Kingdom is third with 44 million USD. Korean investments marked 32 million USD.

According to the reports by the Banks&Finances newspaper, Korean investors have made a major portion of investments in the energy sector.

The Netherlands was recorded as Georgia’s fifth major investor. Offshore investments are enlisted among Georgia’s top ten investor donors, including Virginia Islands (12 million USD), Luxembourg ( 11 million USD), Cyprus (7 million USD).

Georgia cooperates with more than 15 free zones. Offshore investment inflows particularly increased since 2006 – the period of rush privatizations. It may be said that a major part of state-owned facilities were bought by questionable companies from offshore zones. Offshore investments always seem questionable.

Economic experts say that Georgia mainly attracts fortune-seeker businessmen, because the country encircled by Russia is associated with huge risks for investors. Therefore, any investor is welcomed to put money in the country and less attention is paid to origins of these investments.

Major investments are registered from Luxembourg and Netherlands offshore zones.

Cyprus was one of the leading directions in due time. However, after change in power, 118.5 million USD Cyprian investments were withdrawn from the country. In 2015 Georgia drew about 400 million USD investments from offshore zones. Luxembourg, Netherlands, Malta, Virginia Islands, Belize, Tainan and Panama Islands are leading zones.

By the way, first offshore investment inflows to Georgia was registered from Virginia Islands in 1997. The investment inflows marked 6.424 million USD. Cyprian investments paved way to Georgia in 1999, while Maltese investments reached the country in 2010. Bahamian investments were drawn in 2011 in small portions. Belizean investments appeared in the country in 2003.

Marshall Islands are considered to be one of the important offshore zones for Georgia in terms of investment portfolio, from where capital streams reached the country in 2006 and initial volume recorded only 3.391 million USD.

www.cbw.ge <<

Tbilisi is the Leader by the Internal Visits

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A New Film to be Shot With Participation of Merab Ninidze

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One Year on From Tbilisi Flood, Natural Disaster That Killed 21

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ISET ECONOMIST BLOG

June 20, 2016 #150

Patience, Genatsvale!

NINO DOGHONADZE, KARINE TOROSYAN AND NORBERTO PIGNATTI

One of the first things tourists in Georgia notice is how crazy that drive from the airport to the city is.

Jumping red lights, breaking rules to take over the jeep in front, the Georgian taxi driver risks his (and not only his!) life to deliver his passenger to the destination. As a distraction from the dangerous ride, the driver might offer the famous “dzhigit” (a brave equestrian) joke: a dzhigit passes on red light, but stops on green – in case another dzhigit is crossing the road.

Dzhigit-style driving is not the only example of Georgians acting in a shortsighted manner. Prevalence of early marriages, young age at first birth, poor business ethics and low saving rates are some of the most obvious manifestations of Georgians underestimating the importance of farsighted behavior.

Earlier on this blog, Florian Biermann and Robizon Khubulashvili hypothesized that Georgians are very impatient. New evidence by Thomas Dohmen and his colleagues supports this claim by providing patience measures for 76 countries by asking interviewees to choose between a certain amount of money today and a larger amount one year later. The amounts were set to imply the same purchasing power in each country. Georgia turns out to be the #3 most impatient country, after Rwanda and Nicaragua!

Well, then, what’s wrong with being impatient? Isn’t it just part of the rich Georgian culture, something that distinguishes Georgian temperament from other nationalities? Indeed it does, but not always in a good way…

Patience Matters!

Dohmen et al. offer a detailed discussion of how patience ultimately fuels growth and development by encouraging the accumulation of human and physical capital, investment in new technology and design of more future-oriented institutions. Consequently, the logic goes, economies dominated by patient individuals grow faster.

This is a credible theoretical argument, but do we really observe this complicated relationship in practice? The answer is yes. The same paper, based on the data from 76 countries and 80 000 observations, posits that 40% of growth in national wealth might be due to patience. Moreover, patience strongly correlates with education

and savings both at the aggregate (comparing countries) and at the individual (comparing individuals within the same country) level.

Given the key role of patience in economic development, it is essential to understand what can be done to foster farsighted behavior in the population. There is no point in alleviating the symptoms of an illness without identifying and tackling its root causes.

Drivers Of Shortsightedness William Ascher, the author of “Bringing in the Future: Strategies for Farsightedness and Sustainability in Developing Countries”, identifies four broad drivers of shortsighted behavior: the time preference (or “pure” impatience), selfishness, analytic limits, and vulnerability.

In general, people have a preference for benefits to come earlier rather than later and for negatives or costs to come later rather than earlier.

This happens because the present value of future benefits and costs is discounted to some degree. The higher this degree of discounting (or, the “discount rate”), the lower value one attaches to future costs and benefits. “Pure” impatience is not something only peculiar to Georgians, it is a personality trait present in all humans. But, of course, time preferences might differ across cultures or geographic areas due to context or historical reasons. For example, in places where food was difficult to produce and/or store (for example, due to hot climate, frequent droughts or wars), consuming today rather than tomorrow might have been a better survival strategy.

So “impatience” genes would be more likely to be passed to future generations, leading to selection in favor of more impatient people.

Selfishness is another driver of shortsightedness as illustrated by the famous phrase by Louis XV, “after me, let the deluge come” (“Après moi le déluge”). According to some historians, having indulged in his hobbies of hunting and womanizing, Louis XV “accelerated the general decline that culminated in the French Revolution in 1789”.

Just like with pure impatience, also in this case, all humans have some selfish-selfless balance in themselves, which could be affected by history and geography.

Analytic limits and vulnerability are also common drivers of impatience, but are especially pronounced in developing countries, as argued

by Ascher. Analytic limits become particularly influential in uneducated societies and societies with distorted images about the future, including excessive optimism.

Judging by data on adult literacy and the share of labor force with tertiary education, we cannot blame Georgians’ shortsightedness on a lack of (formal) education.

Leaving quality of education issues aside, according to these standard indicators Georgia is quite comparable to most EU countries and the US. On the other hand, according to ISET-PI’s Consumer Confidence Index, Georgians are incorrigible optimists. People’s expectations about the future (as described by our Expectations Index) have been higher than their evaluation of the present (measured by the Present Situation Index) in every month since the survey’s launch in May 2012. One can think of this as a widespread phenomenon but, if we look at other countries, for example Russia and the USA, this does not appear to be true.

How could this optimism explain Georgia’s position in the international impatience ranking? A typical question used to measure impatience is whether people prefer a certain amount today or a larger amount at a later date (for example one year later). An optimist, who expects to be richer one year from now, is more likely to accept a smaller amount now, because it will add a lot more utility today (when

the individual is “poor”) compared to the utility generated by the larger amount tomorrow (when the individual will be “rich”).

Vulnerability is another important impediment to farsighted thinking. According to the World Value Survey, out of 60 countries engaged in wave 6 of the survey, Georgia had the lowest share of families (2%) able to save in the previous year and the largest percentage of families (55%) who had to borrow. This means that, in case of negative shocks (at the country or even at the household level), Georgians are significantly more likely to be concerned about their immediate survival rather than long term planning.

Lessons Learned How important are these four “ingredients” in explaining Georgians’ impatience? Understanding the weight of each contributing factor to impatience will be very useful for designing policies that combat shortsightedness and, as a result, promote development.

For example, if the problem is analytic limits (including excessive optimism), it is important to help the shortsighted subjects raise their self-awareness. Thus, the government and media could provide information about current and future developments in the country to prevent people from building excessively optimistic expectations (e.g. related to availability of government subsidies or the immediate impact of closer integration with the EU).

If vulnerability is a major driver of impatience, it can be dealt with by strengthening safety nets (unemployment or disability benefits, for example) and by promoting other mechanisms to insure the most vulnerable against risks.

As for pure impatience and selfishness, there is no way other than to start building patience and selflessness traits from early childhood.

This could be done by emphasizing how postponing benefits brings ever greater benefits in the future and how important it is to do a costly task today rather than leaving it for the future. Also, playing games that encourage selfless behavior and reward children for altruism could be a great way to educate a more farsighted generation.

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Whatever is the source of impatience of the Georgian public, there are, of course, those who benefit from it. Take for example the casino/gaming businesses that have been thriving in Georgia.

Other examples are the thousands of consumers who are ready to pay higher prices (e.g. exorbitant interest rates on consumer/pawnshop loans for the privilege of showing off the latest iPhone model) or even offer a bribe to get something sooner rather than later. Regulating business practices and designing public policies so as to reduce the opportunities for taking advantage of other people’s impatience should be another important policy priority for Georgia.

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EDUCATION

June 20, 2016 #150

How Much is Tuition Fee at Private High Schools in Georgia?!

NINO KUPARASHVILI

How much does it cost to carry a child to a fee-paying high school and what do they offer to parents and their children in exchange for so high fees?

ATI ON

British-Georgian Academy

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How much is tuition fee in US and Great Britain High Schools?

As to Foreign countries, in Great Britain averaged tuition fee makes up 12 000 GBP a year, about 40 000 GEL, under the current exchange rate. It should be noted in Great Britain averaged annual wage makes up 27 000 GBP. In the USA, the annual tuition fee for 4-11 year old children is 8 000 USD and for 11-19 age category – 11 000 USD.

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cr mi pi pu pp lv s n s a ils ui de an eas nis ls w pil ort enc sign enjo re en tion my th d ed tra ith s w to y o ifi y tre joy fe st ad e c the by 3 tion fu ho tal f all es w fina ated fin e m arts Th sc mi on de 0 no ll fi pay en fa e nc o an ak fro ou e E Bu hoo nis trar ma 00 ted nan 3 0 ted mili tak ial n in cial es m G t y u e ur p A s cia 00 pu es. vi ck ls ra , t nd el . i re di pr p fro mer sec ope iti li S swo als tion he ha com The l su -50 pils We nto fer vidu eft o on ch o s on m ica or an p a en a t p 0 . a d Sc fe ool d I inc sse yna no par uiti por 0 G For rov cco ces l on cl 4 0 n. s: es , B nt lu rt m t ed on t” E e id un Al di ass 00 Th Geo hoo in ri ern de s. ics de to fe , th L a xa e c t e l sc l t ffer es) E th tis at th Th gr cre th e e nd mp oa rg c es h C io e e ow as e ha Ac th le se hoo hree ent . Th UR nn ian, om e s e na Ca lis s ed pr s ad e , eg cto l a se , in e a to 8 ual in pris ch nte l S uc t o ye a evi bee em re or r a dm c te ca 0 t te e o i oo r – ch as f n a n s y als y, w ttra in tors rna de 00 uiti rna s th oo us ex r to yw us y in ls a S o n t m r i p a st t. ch d o n ho cts i stra are ion ic EU n tion ee ar Ni l, Ia Fre en yea y. ear fe a va u p t t f ch ko n siv r, On a A R p i t s l t i i l m l d l m r e o n h a ro o b ch e th o ( r p m las G S h e “T ese ren eri ero ns t wn n n hu rog oces dep ra an in d he co w ca us o o 5 5 S og ch igh e g r s s s g t n . co eg te e am is nd e 00 cho eb oo str udy Eu urse ho se The nti me d. T dem s. ba ing s T r r GE ol. ash l, i u e c s se n th c g ope , th sid tor y a nue nt, w he an m he t d e L. Tu u su re r p a e e s tt G d s is ake ann on ch is n e. I roce n S sch in . M end tud hile eor , th a s u f l o c e c i g o G o t a rie ly r I stan up al t bo o si an ss. ho ol eo re int es he ian f o o a 4 u is s t f ra m sa W ol ad rg ov er b ca Ou r I-X IV g dard 90 itio pa safe rain exh tori ilar y w e h pro min ia a er, nati road tr r 0 n i I p a n h e s I ea ren gu ch ibi s a ig ith av vi ist lso fo on , to clu cho gra de rice GE fee p fir ch ts. ard ild tor nd h sc ful e ex des rati at reig al d d De tak ed ol’ e p up . Th L, d at th st g clas No ed ren cha cab ho l co ce en on ten n s e o f p spit ex in t ad upi ils, v is p esp New no e V rad s. T mo an , ho rac ine ol in nfi llen han said d v l r i n e h t u d d e r w t g r t t t o po ed ra . T o e pi th a c e f ant s. ario ice te c ton th ld er. s. A Ge en in ced . p t l e i e d h l r h l in ta . T e” e lan a is es Th nd or ce fra us nc las S ac s g tu ost e age es ro it s. an va tio he E th gu n 1 is v so es t gia th clu lud ses cho i d s rio n ar ws ion tu uro ird l ag 5 p ery ns. e l his wi at b es . T ol p s t e us er iti pe an es up i T ab is th ev fe ar ha ac m hi l e h n v m e o a t e e gr ic n an gu re ils ft. ry a tiv ea s e ora ot nt al p ou es fe S a s m o a iti ls sd lc ye o ps an e i ch ge tau re u rta cho toes l o ub ar un . d e nc oo is i ght n nt ol no s . S t, om th ng lud l ad ntr fro ited for t h ar ag es m od m in av e et e q em m ini uc th i e u m e a s e e en al tra d a es nt , e ity t s, t tio t ve ra n n ns -

The British-Georgian Academy consists of two schools: British-Georgian Academy and British International School.

British-Georgian Academy is a Georgian school and the teaching process proceeds in Georgian. At the I-VIII grades, the annual tuition fee makes up 4 600 USD, while the fee grows to 4 900 USD for the IX-XI grades. As to the British International School, the teaching process fully proceeds in English and invited foreign teachers carry out the academic process. The annual fees are as follows: 7 500 USD for I-II grades, 9 500 USD for III-IV grades and 10 500 USD for upper grades.

The school administration says that the advantage of the British-Georgian academy is that the school graduates receive international diplomas like Cambridge’s one and this is one of the highest level diploma worldwide.

Despite the high tuition fee, the demand for the school grows on annual basis. For example, the demand has considerably increased this year compared to the previous year, the school administration noted. There are several reasons that make the interest in our school grow, first, the curriculum that is a unique one in the Georgian reality and second, the infrastructure in the school.

“This September the British-Georgian Academy moved to a new campus at the Lisi Lake. This is a top-level infrastructural building and even this factor adds extra advantage to our school compared to other ones”, the administration noted.

The tuition fee includes meals for pupils of beginner classes, transportation services for all pupils, extended programs and all sorts of culture and sport activities.

Gu Am ivy in er Za Tb ica ld T th he a as i n 22 e IX cad l i e er 0 si Ac tan g m ba enc 00 rad ic at sis es GE e a pr ad is in ou . “M too L. H nd oce s c r em hv fin om s an an ow th s th an es cho y c d a ev e an in t ili ar ere cin an ol. hi ll er, nu he y ad e p are g su d so Th ldre case pu al Aca u p t i

The summer season always actualizes one of the most important issues – high schools.

Today, Georgia-based private educational institutions could be divided into three categories. The first category embraces expensive schools (5000$-20000$), the second category comprises mediumpriced schools (3000-5000 GEL) and the third category unites low-cost high schools, where monthly fees start from 100 GEL and constitute about 2000 GEL a year.

The main advantage of the first category schools is that they provide various exchange programs and perspectives for continuation of studies abroad.

These schools provide top-level infrastructure and comfortable education environment.

All these preferences are included in the education fees.

The second category of high schools attract pupils and their parents thanks to good infrastructure, high-paid professional teachers and diverse comprehensive curriculum.

Private schools of the third category face the same problems: invaluable infrastructure and inappropriate buildings (naturally, there are exceptions too). However, classrooms with a small number of pupils and individual working with pupils make them advantageous compared to public schools.

This category of private schools may be unable to hire professors, but they oblige teachers to take maximum efforts. As a result, this approach brings beneficial results for pupils. High schools, as a rule, are selected due to residential places.

8

REAL ESTATE

June 20, 2016 #150

June 20, 2016 #150

9

INTERVIEW Nino Subeliani: PPP Center Starts Monitoring of Private Partnership Projects

Andre Weismann: Doctor who Has Healed over 23 000 Patients from Drug Dependence Over the past years the modern biotechnology has enabled doctors to more evidently determine the role of receptors in the brain that participates in regulation of opiates (alkaloids of morphine group).

Drug addiction is a disorder of central nervous system as a result of continuous reception of opiates. Based on this factor, Doctor Andre Weismann has developed the modern ANR method of treatment, i.e. active neuro-regulation method to heal opiates dependence, based on excessive receptors.

By invitation of neurosurgeon Giorgi Maghalashvili, Andre Weismann arrived in Tbilisi and shared his experience to Georgian colleagues. We publish an interview with Mr. Andre, who, thanks to his special method of treatment, has healed more than 23 000 patients from drug dependence.

-Mr. Andre, what has raised your interest in Georgia? What is the objective of your visit to Georgia?

-Over the past 10 years a lot of Georgian citizens arrived in Israel for treatments. Moreover, the interest in my method of treatment is growing in Georgia and I was invited to this country to share my experience to Georgian doctors. I could not arrive so far, because treatments require due medical equipment and staff.

At the beginning of 2016, a specific group of doctors contacted me. They have ensured all conditions and I have decided the appropriate time had come for my visit to Georgia.

- What makes your method of treatment special from other methods? To put simply, what specific way do your patients pass for treatment?

- The main objective of treatment is to restore balance between endorphins and receptors that enable patients to get rid of drug dependence and mental hunger that is called as Lomka (Breakage) in slang.

At the final stage of treatments, patient regains the sense of balance. They lose demand for drugs and do not suffer from psychological hunger.

Patients have to spend 36 hours on average at inpatient clinics, while they spend 4-6 hours under anesthesia, which helps overcome the most difficult period in easy way. Drug addicts suffer from this so-called Lomka (breakage) in this difficult period.

Therefore, they remain under supervision of doc-

tors. In the period of anesthesia, we block excessive receptors that cause demand for drugs. Patients must receive medications every day for several months for blocking receptors. Medication intervention depends on the condition of individual patients. This period lasts several months on average. Medications do not cause dependence and any side effect.

- According to my information, you have treated patients as part of your visit to Tbilisi.

How would you assess their condition?

- Sure, you are right. I will tell you about one patient. We have conducted the treatment procedure and 4 days later he left for holidays jointly with his spouse. Both of them looked happy and joyful. I remember very well that they wanted to wish the same chance to everybody.

- How would you appraise the visit? What are your plans in relation to Georgia?

- At this stage it is very important for me to share my experience to as many doctors as possible about this method of treatment. We should introduce it to as many countries as possible and the Authorities should provide certain support in this respect.

My visit to Georgia was very successful. Here I have met professionals who are capable to matser the ANR method perfectly. Anyway, this is a little protracted process. I would recall Bob Dilan’s famous refrain – «May you build a ladder to the stars and climb on every rung”.

“

The trend that can be a main player in economic development needs support services for effective results, such as informational support, monitoring from independent units, international relations and mediation between private and public sectors.

”

- Nino, in our previous interview we discussed the informational environment for the PPP model.

You had some initiatives regarding the topic.

What is the status of your initiatives now?

- As Communication consultant, I have to be aware about the trends in business environment that is always linked to economic situation in the country. The PPP model is an important topic that should be developed in the country for improving the economical environment, where the people reap main benefits, because the PPP’s fundamental principles are based on the People’s interests. Partnership between the public and private sectors is to develop and maintain large-scale infrastructure projects such as hospitals, schools, highways, hotels, etc. This model is based upon the principle that risks should sit with whichever party is best to manage those risks. For example, the public sector is better suited to managing a risk such as demand, whereas the private sector is better suited to managing project development risk. This model is beneficial for people, first, as country capital and budget are saved and optimized with the support of private sector.

Benefits of this model already are in focus of the government. Media outlets have published a statement by the Prime Minister that in the nearest future special company will be set up for tourism development under the PPP model.

We also know that the Partnership Fund plays a big role in PPP projects implementation in the country. The trend that can be a main player in economic development needs support services for effective results, such as informational support, monitoring from independent units, international relations and mediation between private and public sectors. Because of the needs that we see, I and my friends, who are interested in this topic, have established the PPP center.

- Which stage of development has your startup PPP Center now reached?

- The PPP Center was established by an initiative group to support the Public to Private Partnership model in Georgia through informational, educational and monitoring projects. We started working on this issue 3 months ago with zero information and financial resources, but with people who are interested in this topic. We studied PPP projects in Georgia, evaluated the model perception level and its role in educational system. Based on desk research, we revealed importance of creating the monitoring system under the international methodology, and we are in the process of fulfillment of the project that will be launched ASAP. I think establishment of PPP center was timely – this is right time and right place for this initiation. Working group consists of economic and communication consultants and it will be enlarged with local and international economical experts, including PPP experts. Mission of the center is to make focus on research, educational, editorial, monitoring work and the Center aims to initiate a dialogue between Private and Public sectors and to support new PPP projects for economic improvements in the country.

-What does the PPP monitoring imply?

- To put simply, this will be monitoring of the project milestones, project phases agreed between public and private sectors in advance. Through a competitive public procurement, Government appoints a Private Sector Partner to typically Design, Build, Finance and Operate (DBFO) a major facility, by using a long-term contract, typically 25-30 years. In this way, the government successfully transfers all of the project risks to the private sector, which is better suited to managing a project and commercial risks. Once project is launched, the PPP Center starts its monitoring of Design, Build, Finance and Operate. PPP monitoring by independent center will generate transparency in this field that is also one aspect of risks management. The main outcome is that the medium and long-term objectives be clearly identified and pursued. Once the monitoring methodology will be fulfilled by the group, we will publish it on www.ppp.ge for the transparency of the process.

The second direction of PPP monitoring will be related to the PPP index that will reveal how model is being developed in the country and what are benefits in different sectors. PPP index calculation will be based on PPP ratio in GDP – totally and according sectors.

It’s important that we are cooperating with PPP Centers in different countries for knowledge sharing that means that we are not creating a new bicycle, but we work on adaptation of methodology for the Georgian environment.

10

BUSINESS

June 20, 2016 #150

Hostel “Fabrica” Opens in Georgia “Adjara Group” will open new 400-room hostel “Fabrica” at the area of old textile plant in Tbilisi, Ninoshvili str.8. The reconstruction of the building has being carried through a year, the original appearance, facade, interior are maintained. Its exterior for the most part is intact. Basically modern elements have been added to the building. According to the company, “Adjara Group” has signed a loan agreement of 5.5 million USD with “Bank of Georgia” for opening of a hostel. The sum has been spent on acquisition and reconstruction of the building. The building will have common type of housing, 2-member rooms and 6 rooms, which should be arranged in apartment style. Cost of per night will start from 12 USD at the hostel.

REGION

BANKING NEWS

Castello Mare Hotel &Wellness Resort in Batumi to Receive Clients starting July 1 million USD. The hotel is associated with the boarding house of Nauka (Science) that used to function in the Soviet period. In reality, the development of this territory started in 1900s, when a house named as Castello Mare (Tower in the Sea) was built on the rocky space penetrated within the sea, as part of the railroad construction works. The building became a favorite place for meetings of the Ajara Region intellectuals in that period.

At the beginning of the 1990s, the boardng house ceased operation because of heavy social and economic problems in the country and the facility was entirely annihilated.

A grand restaurant operates within the complex with a terrace and sunbathing zone, grill bar in pine woodland.

Tennis courts; Bowling Center;

A five-star hotel of Castello Mare Hotel & Wellness Resort in Batumi will start receiving clients on July 1. The facility is located in Tsikhisdziri, a 17-kilometer way from Batumi, at the rocky area covered by diverse plants, looking over the sea.

The complex embraces 82 suites, 1 villa , 3 Delux and 1 Presidential apartments. The complex offers a spa recreational zone to visitors with fitness hall, indoor and outdoor swimming pools, Hamams,

6 varieties of sauna, Jacuzzi, beauty saloon, cosmetology room and about 100 recreation-healing procedures.

The year of 2016 should be considered as the year of the second birth of Castello Mare. Thanks to the efforts of Austrian investment group Mosimmobilia Immobilien GmbH, the five-star hotel and wellness centers of Castello Mare Hotel & Wellness Resort has been developed. Total investment value of the project made up 25

NEWS

TOURISM

Winery Khareba to Implement a Project of 2 mln in Samegrelo

Batumi not to be Able to Take Millions of Tourists

“Winery Khareba” will implement new project of 2 million in Akhal Sopeli, Khobi Municipality, with a subsidiary company “Khareba”. Real estate, locating in the village, has been delivered to the company with a direct sale manner at 940 100 GEL. However, the management takes commitment of growing perennial plantations within 3 years term. The garden should have a corresponding infrastructure and irrigation system.

“Elvis American Diner” Closed inTbilisi The world-famous restaurant chain “Elvis American Diner” has closed its restaurant in Tbilisi. The company entered the market in 2009 and planned to open facilities across the country. However, last year the chain’s management told “Commersant” that the company refrained from expanding in Georgia. “Elvis American Diner” director noted then that the depreciation of the lari hit the customer and reduced the restaurant’s turnover.

All the problems faced by the tourist industry of Georgia acutely manifested themselves during a concert of the American band Maroon 5 in Batumi and are acknowledged both by the representatives of the sector and the state.

According to the Prime Minister of Georgia Giorgi Kvirikashvili, the city was not ready to such a large influx of tourists, and the government should help the private sector.

“The concert was very good, despite the fact that the weather was unsuitable. There were a lot of spectators, tens of thousands of people arrived in Batumi. However, it must be said that the government, both central and local, should assist the private sector, which was not fully prepared for such an influx of tourists. In the future we need more coordination between the private sector and the state, and this concerns mainly the economic bloc of the government rather than the Ministry of Culture, “- said the head of government.

Why the local business was not ready for such a large-scale event, why tourists were forced to find where to eat and where to stay?

What should be done to ensure that in the future this will not be repeated, and what should the state do in this regard?

In the words of Director of the restaurant “Laguna” Iatamze Inaishvili, Batumi is not such a big city to conduct a grandiose event without any problems, although in this particular case, the main problems were the weather and traffic jams.

She believes that it can’t be said that Batumi was not ready to host the concert, as no restaurant can simultaneously serve 100-150 people. It is physically impossible.

“About 30 000 people arrived for a concert in Batumi in one evening. Batumi is not Tbilisi. This is not a city of one million, and it can not simultaneously receive up to 30 000 people.

Merab Beridze, Director of “Adjarian House”, says that the restaurant was able to serve a large flow of visitors but not all the restaurants in the city have such a possibility.

laser shooting range; Entertainment center with karaoke bar; Owned beach; Outdoor swimming pool with sea water; Two conference halls; Multifunctional hall with 200 seats; Underground car parking place for 100 automobiles; Bent elevators to descending to beach; Both location and infrastructure of the hotel are fully adapted to representative and corporate events.

All hotel suites look to the sea and their prices start from 165 USD. The complex is widely advertised in the social network (www.castellomare.com; https://www.facebook.com/hotelcastellomare/; ). Clients will be able to book suites even on www. booking.com.

PASHA Bank Sponsors Bond Congress On June 16-17th the XIII CIS, Baltic States and Caucasus Bond Congress was held in Tbilisi, Radisson Blu Iveria. The congress was sponsored by PASHA Bank – a regional financial institution that provides a full range of corporate and investment banking services to large and mediumsized enterprises in the region. Being held since 2004 the congress is a major event for the region, which supports discussions on the development of local bond markets in Russia, CIS and Caucasus countries, as well as Eurobonds’ emerging markets and other essential topics.

Among the speakers there were: Archil Mestvirishvili - Vice President at National Bank of Georgia, Nikoloz Gagua - Deputy Minister at Ministry of Economy of Georgia, Archil Gachechiladze - Chairman at Galt & Taggart, Ivan Uhlianytsia - Director of Investment Banking at PASHA Bank Azerbaijan, Shahin Mammadov - CEO and Chairman of Board of Directors at PASHA Bank Georgia. “We are happy that this year Tbilisi was chosen to host the Bond Congress and PASHA Bank had the opportunity to actively participate in the event. PASHA Bank has a significant experience in investment banking services in the region. Recently we have had successful cases of bond issuance in Georgia as well. We hope that this congress will serve the development of finance sector in our region.”

– Said Shahin Mammadov, CEO and Chairman of Board of Directors at PASHA Bank Georgia. The Bond Congress was attended by more than 150 representatives of local and international finance sectors. The event was organized by CBonds and was hosted by “Galt & Taggart”.

June 20, 2016 #150

PANASKERTELI INDEX

11

First Aid Medicine Kit Price Declines by 5.9%

Monitoring is carried out on 200 medications and prices have increased on 78 ones and slightly decreased on 6 ones.

Panaskerteli Index Rose by 17.43% in May compared to April

The Healthcare Platform continues publishing the list and prices of medicine kits that are interesting and necessary for customers of various groups. The organization has explored the list and prices of first aid medications. The research was conducted in four leading and major pharmacy networks. As compared to the previous month, in May the price of first aid medicine kit made up 127 GEL, while the price was 135 GEL in April. The month no month reduction made up 5.9%. Namely, prices declined on cetirizine. In April the price of cetirizine was 3.50 GEL, while in May the price declined to 2.50 GEL. The price of Captoprile also declined from 4.60 GEL to 4.38 GEL. The comparative picture of prices of medications in April and May is as follows: The price of accessories for first aid medi-

cine kit (phoneidoscope, gloves, tourniquet, scissors and so on) was 40 GEL. The price declined to 33 GEL in May. The price of antiseptic means (iodine (betadine), Turmanidze ointment, Oxoline Ointment, injection water and so on) made up 13 GEL. As to other medications in the medicine kit, their price in May slightly declined.

The Healthcare Platform started exploring the list and prices of medicine kits for various consumer groups 3 months ago.

The organization has explored such groups as baby, children, first aid, office, family, tourist, cottage, driver’s medicine kits. The Healthcare Platform plans to continue examining changes in prices on the Georgian pharmaceutical market and to update our citizens on all changes in constant regime.

Family Medicine Kit Price Declines by 7.8%

The association of young financiers and businessmen

The association of young financiers and businessmen (AYFB), jointly with the Healthcare Platform nongovernmental organization, continues monitoring of prices on the pharmaceutical market.

According to the latest research, the index has increased by 17.43% to 13 points. This signifies prices on the pharmaceutical market have considerably risen.

Monitoring is carried out on 200 medications and prices have increased on 78 ones and slightly decreased on 6 ones. As a result, the Panaskerteli Index has increased.

Several factors should be emphasized that have preconditioned upturn in medication prices: First of all, this is related to strategy carried out by pharmaceutical companies for maximizing profits. As a rule, profits are maximized through various marketing campaigns or rising prices. Pharmacies seem to have resorted to this last mechanism and, after 6-month declination, prices have increased again. This signifies pharmaceutical companies effectively manipulate by tariffs..

At the first stage of the research project, when a new strong market player appeared in Georgia in the face of Humanity Georgia, Georgia-based pharmaceutical companies released a joint statement that the market di-

versification was an important and inspiring fact for them. As reported, Humanity Georgia introduced generics by 30% lower tariffs. The existing companies had to significantly lower prices and launched active PR campaigns. All these tendencies were reflected in the Panaskerteli Index too. However, 5 months have passed and the effect brought by Humanity Georgia has disappeared.

Pharmaceutical companies have made a use of this situation and increased prices again.

It is also very important that over the past months the Georgian national currency has been strengthening at high paces in relation to both USD and EUR, while the list of medications that are monitored by AYFB and the Healthcare Platform are mainly imported from the Eurozone Countries. As a rule, the GEL exchange rate appreciation against EUR should have cheapened pharmaceutical products from Europe, but pharmaceutical companies do not follow this logics.

Our supervision on medication prices have drawn the following picture: pharmaceutical companies have resources to decline prices, but the past period has proved that price reduction was an adaptation strategy after the new market player appeared in the country.

The Healthcare Platform continues publishing the list and prices of medicine kits for various consumer groups.

The organization published information on medicine kits of baby, children and first medical assistance, based on information collected in four leading pharmacy networks.

The monitoring process has showed that the price of family medicine kit has declined in May compared to April. The price of the family medicine kit was 115 GEL in April and the value decreased to 106 GEL in May. This

signifies that prices have declined by 7.8% on average. In April the averaged price of accessories was 25 GEL and the figure went down to 19 GEL in May. The averaged price of medications and antiseptic means has also declined by 10 GEL. Prices declined on 6 medications in May, increased on 2 ones. The tariffs have not changed on other medications.

The Healthcare Platform will continue supervising and exploring the pharmaceutical market tendencies in the future too as part of the Pharma Monitor program.

Tourist’s Medicine Kit Price Declined by 6.8% in May

“

As reported, Humanity Georgia introduced generics by 30% lower tariffs.

”

As part of the Pharma Monitor campaign, the Healthcare Platform has introduced a new report on tourist’s medicine kit. The inflow of tourists is growing and the organization has collected information on the list and prices of medications of the tourist’s medicine kit, namely, antiseptic means, insects repellent means and sun oil (aerosol Lavanda, Ziaia Spray), analgesics.

According to the report, prices have declined on a number of medications. The price of Taicold decreased to 6.60 GEL from 9.50 GEL. Ziaia Spray price has cheapened to 10.60 GEL

from 13.60 GEL. Insects repellent aerosol Lavanda cheapened to 6.90 GEL from 7.80 GEL. Tariffs have declined on both medications and repellent and antiseptic means that are given in the infographics. In April the tourist’s medicine kit value was 73 GEL and in May the price declined to 73 GEL. The Healthcare Platform continues publishing the list and price of medicine kits of various consumer segments and reports on the existing tendencies on the pharmaceutical market and will introduce this information in the future too.

12

PUBLICITY

June 20, 2016 #150

WORLD NEWS

June 20, 2016 #150

13

Quotes

“ Opportunities Even with 80m potential consumers in a fast-moving consumer goods market estimated to be worth about $24bn a year.

don’t happen.

You create them

”

Gazprom has a monopoly on Russian pipeline gas exports to Europe, which earned it $38 billion last year.

Chris Grosser

Current account surplus of Azerbaijan’s oil and gas sector exceeds $522M

T

he current account deficit of Azerbaijan’s oil and gas sector stood at $522.5 million in January-March 2016 compared to $2.146 billion as of January-March 2015, according to the balance of payments made public by the Central Bank of Azerbaijan (CBA).

Additionally, the current account surplus of the country’s oil and gas sector covers almost 55 percent of the deficit of the non-oil sector totaling $954.6 million.

On the whole, the current account deficit of Azerbaijan’s balance of payments amounted to $432.1 million in January-March. For comparison, the current account balance of Azerbaijan’s balance of payments was positive and at a level of $108 million in January-March 2015.

Azerbaijan’s reserves decreased by $1.271 billion in January-March 2016 (reserves decreased by $4.591 billion in the first quarter of 2015).

During the calculation of the balance of payments, the average price

of oil was $29 per barrel, while a year earlier it was at the level of $51 per barrel.

The analysis of the balance of payments in various sectors shows that like in previous years, the foreign economic operations in the oil and gas sector had a positive balance, while those in the non-oil sector had a negative balance in January-March 2016.

The total volume of the foreign trade turnover stood at $4.5 billion, while the surplus of the foreign trade balance stood at $622 million.

Azerbaijan maintained trade relations with 144 countries during the reporting period. Some 11 percent of trade turnover accounted for the CIS countries, while 89 percent - other countries.

Azerbaijan was involved in intensive trade with Turkey, Italy, UK, Germany, Russia, US, Japan, France, Singapore and the Czech Republic.

Some 65.6 percent of export-import operations in Azerbaijan accounted for these countries.

Armenia’s Araratbank mulls debut IPO

A

rmenia’s Araratbank, one of the largest lenders in the former Soviet country, is considering launching an initial public offering (IPO) as it seeks to increase its capital buffers, the bank’s CEO said on Friday.

The move follows the Armenian central bank’s increase in the regulatory minimum capital requirement for commercial banks to 30 billion dram ($63 million) from 5 billion dram, effective from Jan. 1, 2017, to improve stability of the sector.

Araratbank is controlled by Armenian financial and trading company Flash. The European Bank for Reconstruction and Development holds a 25 percent stake while Rural Impulse Fund, a subsidiary of

international investment company Incofin, owns 10 percent.

“We are currently in talks with one company on a placement outside Armenia ... everything will depend on price,” Araratbank CEO Ashot Osipyan told reporters without providing further details on the size of the proposed IPO or an intended date.

Osipyan added that the company, which reported a 942 million dram net profit for 2015, also plans to boost capital after this month through the sale of new shares to existing investors.

Araratbank’s capital currently stands at 22 billion dram and Osipyan said the new share issue will raise a further 8.5 billion dram. ($1 = 476.5000 dram).

Formula 1: What Gas Glut? Russia’s Baku track Gazprom Forecasts will be fine for Growth in Europe European GP Formula 1 officials are confident they can solve the safety problem that threatened the running of second practice at the European Grand Prix. Several kerbs on the new Baku street track came loose in first practice, cutting the tyres of most cars. Officials found a temporary solution for the second session, but issues remained around at least one corner. Track architect Hermann Tilke told BBC Sport: “We will have a look at it later. We have all night to solve it.” Tilke said he was planning to tour the track with Charlie Whiting later in the evening after the FIA F1 director had completed the drivers’ briefing, during which the kerb problem and other safety issues were discussed.

Turkey tourism: an industry in crisis The group of British tourists playing water polo in the pool could shriek as loudly as they liked: there were virtually no other guests they’d disturb.

The four-star Garden Resort Bergamot Hotel in Kemer, just outside Antalya, should be 70% full at this time of year. But just 25 of the 233 rooms are taken.

“We’ve had to reduce our staff from 80 to 50 and prices have dropped by a third,” says Suha Sen, the owner.

“If it goes on like this next year, we may have to close.” Around the pool, the few guests soaking up the sun say they clinched bargains.

“We paid just over £500 (€630) for two of us for a week, an all-inclusive package,” says Diane Roberts from North Wales. “Most of the cheap deals now are for Turkey - we didn’t expect it, but people are too afraid to come here.”

It is a picture repeated across Antalya and throughout the country: Turkish tourism is in crisis. A country that welcomed 37 million visitors in 2014 - then the sixth most popular tourist destination in the world - is expected to see a drop of at least 40% this year.

The main decline is the Russian market, the four-and-a-half million Russian tourists who were coming have fallen in number by around 95%.

T

he world’s biggest natural gas exporter isn’t too concerned about a global glut that will probably last another five years.

Gazprom PJSC is counting on falling European output to boost flows to a record and cement its 30 percent market share, Deputy Chief Executive Officer Alexander Medvedev, 60, said in an interview. After crude’s 35 percent slide last year, the company’s oil-linked prices are low enough to ward off competition from sources including U.S. liquefied natural gas, which will favor more lucrative markets from Asia to Latin America, he said.

“We’ve never suffered from euphoria,” Medvedev, who once compared U.S. shale gas production with the dot-com bubble, said in Moscow.

“We’ve always based our business on analysis.”

Europe will need to source more gas to 2021 as demand rises amid slumping domestic production, the International Energy Agency said last week. While Gazprom managed to maintain its market share in the region over the past five years as North African supply declined, the period through 2018 “will be very different” as a tightening of oil markets from next year makes its fuel less attractive amid competition from “large volumes of cheap LNG,” the Paris-based agency said.

Gazprom’s analysis shows that

exports to Europe, the 28 nations in the European Union excluding the three Baltic States together with Turkey, will “undoubtedly” be more than 165 billion cubic meters (5.8 trillion cubic feet) this year, about 4 percent more than in 2015, and stay above 160 billion for at least three years, Medvedev said.

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Gazprom has a monopoly on Russian pipeline gas exports to Europe, which earned it $38 billion last year. It’s suffering from weak demand in the former Soviet Union as local rivals eat into its domestic market share, while Ukraine, once one of its biggest buyers by volume, cut gas imports amid a contracting economy and price disputes with Russia. The company won’t be able to pipe gas to China until it opens its first link there in 2019 at the earliest.

In 2009, Gazprom was forced to rethink its marketing strategy after its prices soared, reflecting a previous jump in crude in a decades-old convention that links the fuels, even as spot rates declined amid increased supplies of LNG and demand damped by the economic crisis. The Moscow-based producer included a market-based component in its formulas and retained clients by making price adjustments and easing rules on how much gas they had to accept.

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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

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

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,

LIMELIGHTTRAVELINFOCENTER Address: 13 Sioni Street, 0105, Tbilisi (at the end of Shardeni Street) Phone: +995 322 999 123 E-mail: info@limelight.ge Web-page: www.limelight.ge Facebook page: www.facebook.com/limelight.ge

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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