Caucasus Business Week #157

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August 8, 2016 #157

August 8, 2016, Issue 157 - www.cbw.ge

Tourism Revenues From Tourism Sector Keeps Growing Pg. 4

Government Universal Internetization comes for Rural Areas

Gender Gender discrimination and inequality in Georgian labour market Pg. 3

Pg. 7

Why Georgian Greens Fail to Succeed on Russian Market

Dualism Of The Economy

Pg. 5

Georgia is a very small country with very big opportunities for business—this is what any newcomer will confirm who has had a successful entrepreneurial experience in another country. It would not matter, by the way, whether this person is an ethnic Georgian or came to Georgia by chance, as a tourist or as someone’s guest. In any case, a first-timer in Georgia is doomed to experience an immediate feeling of euphoria from emerging opportunities, especially against the background of impressive achievements of the last decade: only very lazy ones did not keep praising the results of institutional reforms in Georgia during the 2000s. And it is well deserved!

Indeed, almost four years have passed since I had come to live and work in Georgia, but I am still carried away with enchantment every time when I come to the House of Justice in order to resolve some issue.

Pg. 11

Targeting for Life - BluforPink Campaign has started The campaign against breast cancer is ongoing in Georgia. It is important that starting from 2016 the state provides countrywide financing of pharmaceuticals for patients with the first, second and third stages of cancer, for which purpose GEL 9 million has been allocated. Despite this, the issues related to treatment of patients with metastatic cancer are still unresolved. Therefore, Europa Donna Georgia addressed the Ministry of Healthcare and Tbilisi City Hall to provide assistance and finance medical treatment of such patients.

Europa Donna Georgia organized a press conference at the Radisson Blue Iveria Hotel.

The goal of this event was to inform and once again remind the public about the campaign that promotes effective targeted therapeutic treatment of breast cancer and improvement of its accessibility.

Pg. 13

2 GOVERNMENT

NEWSROOM Iran Signs Deal to Export 40 mcm of Gas to Georgia Iran has signed a deal with the Georgian International Energy Corporation to export gas to the country within a 4-month period, Ali Reza Kameli, managing director of the National Iranian Gas Company (NIGC), said.

Georgia stands against counterfeiting within DCFTA Georgia is making efforts to further strengthen protection and enforcement of intellectual property rights (IPR) and raising awareness with small and medium enterprises (SMEs) of the importance of IPR.

ECONOMY

July 2016: Inflation reaches 0.2% in Georgia The cost of several basic food items was lower in July 2016 however prices were substantially higher for transport services, said the National Statistics Office of Georgia (Geostat), which today published its latest inflation data.

Georgia’s Kakheti region welcomes vast Iranian investments An Iranian investor is building a Green Village in Georgia’s historic region Kakheti, creating a unique destination for tourists and tourists that will bring money into the region and benefit the country’s economy.

BANKING

Liberty Bank Announces Agro Loan Resumption Liberty Bank has resumed issuing an agro loan. The bank has smoothed procedures and increased the loan maturity period to 7 years. Simplified procedures are determined on individual basis, due to the borrower’s credit history.

Commercial Banks Lent 30 million GEL to Government Deals worth 30 million GEL were made on 2-year bonds of the Ministry of Finance of Georgia. Four commercial banks took part in the auction. The demand (56 million) exceeded the supply twice.

BUSINESS

Chinese Jacket Manufacturer Factory to launch in Georgia During the visit of Georgian Delegation in China a memorandum on trade and economic cooperation between Partnership Fund and the factory of jackets of Zhejiang Province of China has been signed.

Start-up Georgia: 726 new business ideas compete for funding The Government established an initial fund of 11 million GEL that will be shared between chosen business projects, however the amount of funds available is set to increase to 35 million GEL.

COMPANY

Georgian Beer Company Started Rad Rain Production American energy drink “Rad Rain” has appeared at Georgian market. The drink is produced

by JSC “Georgian Beer Company” in Georgia.

Gov’t outlines plans at Economic Development Forum

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eorgia’s capital Tbilisi is hosted the Economic Development Forum of Georgia – an event that aims to deepen the partnership between the state and the private sector for Georgia’s further economic development.

The two-day forum brings together people from all over the country as well as invited international guests including world renowned economists Dani Rodrik from Harvard University and Charles Sabel from Columbia University to present their visions and ideas of the country’s development of economic policies.

At the event Georgia’s Prime Minister Giorgi Kvirikashvili assured participants that Georgia was a country with an open economic system. He remembered back to when Georgian Dream won the last elections and recalled the idea of how the Government’s four-point reform agenda was born.

“Four years ago, when I took the position of Minister of Economy and Sustainable Development, I had outlined universally recognised theories as a blueprint for ensuring rapid economic development of the country,” said Kvirikashvili.

“I asked my old friend Nugzar Kakhuchashvili, who graduated from Harvard University, to join our team and create a new direction of industrial development. We were interested in Rodrik’s development theory, which as a result of correct assistance, certain directions become increasingly important and

unutilised capacities are fully used, therefore the whole chain of values becomes operative. Nugzar’s team studied several directions and we elaborated serious plans for action and successfully implemented several projects,” he noted.

This way the Georgian Government developed the four-point reform plan, which includes new tax benefits, infrastructure plans, governance reforms and an overhaul of the education system. This was the Georgian Prime Minister’s plan to increase economic development in the country.

“First of all, this includes systemic reforms in the education system. It will ensure alignment of the education system with demands of the labour market to avoid students spending four years studying professions that may not be in demand in Georgia,” he said.

The second most important direction is economic reforms. We decided that mobilisation of our investment resources would be crucial for Georgia and suggested abolishment of corporate income tax,” he added.

Thanks to the Government’s efforts, corporate income tax will be abolished in Georgia starting from January 2017 following the Estonian model that envisages exemption of reinvested profit from taxation and taxing only distributed income.

We’ll kill two birds with one stone by increasing mobilisation of internal investment resources and promotion of Georgia as an economically liberal state in the international are-

na,’ Kvirikashvili noted.

Georgia’s Prime Minister also outlined the importance of amending the capital market and reforming the pension system, which will be based on mandatory payments. These reforms will begin to be implemented next year.

He also elaborated on the state model that is concentrated on provision of services and emphasised the importance of creating a unified frontoffice.

“At the same time we are creating a digital space that ensures provision of services to all interested legal entities following the e-governance model. By the end of the year and at the beginning of next year we will start its implementation,” said the PM. An important direction of the third bloc of governance reform covers the component of involvement, which implies that the business community as well as the NGO sector is engaged in the decision-making processes,” Kvirikashvili said.

“The fourth direction that we’ll concentrate on is the spatial arrangement and rapid infrastructural modernisation of the country, and this is also important. We suggested putting more emphasis on engagement of the private sector in the implementation of infrastructural projects, by achieving the correct balance between stakeholders, the quality of infrastructural projects will be improved while the burden on sovereign balance of the country will be decreased,” the PM concluded.

PM: Georgia’s international recognition is increasing

I

nternational recognition of Georgia has increased and our country is becoming more popular among foreign tourists”.

These words were spoken by Georgia’s Prime Minister Giorgi Kvirikashvili when he led a Governmental meeting this morning.

He mentioned concrete numbers, saying throughout the last seven months more than 3.4 million people visited Georgia. This was 11 percent higher than in the same period of last year.

“A record number of international visitors entered Georgia in July.

Namely, 764,022 international visitors travelled to our country - as compared to last year, the number of visitors increased by 26,124,” Kvirikashvili said.

He welcomed that the number of tourists was increasing both from

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August 8, 2016 #157

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neighboring countries and European Union member states.

“In the first quarter of 2016, tourism related income was $354.5 million USD, which is 15.7 percent higher than last year’s similar indicator,” the PM noted.

“I consider that this trend is very important since it implies growing income for all individuals engaged in the tourism industry - starting from the owners of family-type hotels and ending with large touristic complexes.”

The PM highlighted that a greater number of tourists meant more employed people in Georgia, which was “vitally important”.

Kvirikashvili believed this result was possible thanks to the efforts of Georgia’s Economy Ministry, Administration of Tourism and Culture Ministry, whose events attracted in-

ternational visitors to the country.

The PM added next year’s event calendar would be developed this autumn and the public and private sectors would partner up to create a diverse and interesting program.

Kvirikashvili believed this would result in an even greater number of tourists next year.

The Governmental meeting was the first time the new Ministers of Defence and Reconciliation and Civic Equality attended the Cabinet gathering.

The PM wished success to Levan Izoria and Ketevan Tsikhelashvili and said: “It is important that our team will remain consolidated. Two highly qualified new members have joined us and I am convinced that both agencies will be successful and many activities will be performed in these two directions.”

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

August 8, 2016 #157

3

GENDER

Gender discrimination and inequality in Georgian labour market EKATERINE GAMAKHARIA Consultant in Gender issues, Master in Human Rights Law from Indiana University Robert H. McKinney School of Law

T

his article is a summary of a larger policy paper written within the framework of the project “Gender Policies and EU Integration – “Experience of Visegrad for Eastern Partnership Countries”, implemented by the Fund of Women Entrepreneurs of Georgia.

Despite the fact that gender equality and prohibition of discrimination in labour relations are enshrined in various national legal acts, as well as in internationally binding legal documents, which Georgia acceded to, the reality on the ground is quite different. Women compared to men, are less active in labour market, and more likely to be employed in lower-paid occupations and sectors, where they have much lesser opportunities to progress in their careers.

Gender equality within a society is strongly defined by how men andwomen position themselves in the labour market. Persisting gender stereotypes, cultural and traditional attitudes within the society have significant impact on women’s and men’s position and role at every stage of their life, including in labour market. Different models of upbringing of boys and girls, gender-stereotypical expectations and the role society chooses to assign them, further reflects in the gender-segregated labour market. It is noteworthy, that according to the findings ofa2013 UNDP gender perception report on Georgia, 88% of the Georgian population think that “men should be a breadwinner in the family”, 66% of the respondents share the idea that “it is always better when a man works and a woman is at home” and79% think that “woman should prioritise her family over her career.”

Only 11% of the interviewed believe that “women should be equally contributing to the family welfare”.

Such attitudes toward women, largely contribute to women’s subordinated position in society.

Furthermore, woman’s ability to get a decent job that corresponds to her qualificationsin the labour market is closely correlated with the division of the workload within the family. Women more often

than men have to choose between their careers and family lives.They bear disproportionate responsibility for unpaid care work (cleaning house, cooking, taking care of sick family member, taking care of children etc.), which negatively affects their career development and empowerment in the society.According to official statistics, in Georgia, economically active men outnumber the women by20% (77.4% vs 57.1%).This is despite the fact that the enrolment rates in primary, secondary and higher education practically equal for both genders or in some cases exceed by women (for instance, women make up 56% of students in higher education institutions, while men – 44%). This proves that women have much less opportunity for realisation of their educational potential than men.

Women are also more likely to be victims of gender-based violence, especiallywithin their families.According to the statistics by the Ministry of Internal Affairs of Georgia (MIA), out of 2,638 officially registered victims of domestic violence 87.3% are women.Such treatment devastates women, stalls their development and ambitions, and diminishes their competitiveness and productivity at work.

A variety of statistical and research data shows that the labour market in Georgia is characterised by high gender inequality,in terms of labour force participation and employment rate,gender-based employment segregation, and disparities in the average salaries. According to official statistics, in 2014, the average monthly nominal salary equalled GEL 980 for men and GEL 618 for women (-37%).

Some occupations are traditionally perceived as “male” or “female” that leads to horizontal segregation. Available data shows, gender disparity in labour division by types of activities is more significant in education, healthcare, and social services.

For instance, according to 2014 national statistics, women constitute over 85% of employees in the education, 72.5 % in healthcare and social assistance sector and 61% in hotels and restaurants. At the

same time women are lesser represented in so called “masculine” occupations, namely, in construction – 6.5%, manufacturing – 26.7%, and in the real estate market – 32%.

The vertical segregation is even more visible, especially in decision-making positions.According to the Global Gender Gap Report in 2015, the share of women among legislators, senior officials and managers in Georgia was only 34%.Inother words, there are almost 3 times more men than women in top decision-making and managerial positions.

Government policies often do not adequately reflect the challenges faced by the women. This is largely due to lack of political will, but also due to weak institutional capacity and lack of gender-sensitivity. Government programmes and budgets do not go through a gender expertise before being approved and implemented. The government bodies collect only a limit number of gender-disaggregated data.

Such practices result in gender-blind state policies.

In order to bridge the gender gap in labour market of Georgia, it is very important to consolidate actions and response of all stakeholders including the government (central and local), donor organisations, the private sector and civil society organisations to strengthen the supply of and demand for policies and programmes favouring women’s access to the labour market. There is a need to create full, decent productive employment opportunities for women and access to finance, as well as continue to provide social support services, and importantly, promote

and value women as a source for economic development and growth. Putting more money in the hands of women issignificant, because women tend to spend a greater portion of their incomes on their families. Increasing women’s income and their control over family spending can lead to improvements in child nutrition, health, and education, and work to break the cycle of intergenerational poverty.

As women are a majority of the poor in Georgia (55% of women are subsistence allowances beneficiaries), improving their economic circumstances can also directly reduce female poverty and improve women’s well-being. In addition, key for economic growth is the promotion of women’s economic rights, which entails promoting a range of women’s rights such as rights to education, their reproductive rights, rights to voice and make decisions, and to live free from violence.

Project if funded by the International Visegrad Fund (www.visegradfund.org) and implemented by the Fund of Women Entrepreneurs. (Project # 31550123).

Fund of Women Entrepreneurs Kutaisi, Mgalobslihvili Street #6 Tel.: (+995 0431) 27 29 02;

TOURISM

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August 8, 2016 #157

Revenues From Tourism Sector Keeps Growing

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he pleasant tendency of the past years goes on in 2016 too and Georgia is hosting more and more foreign tourists every year. Tourism is one of the fields, if not only one, that has been growing over the past 10 years in constant regime. This year the tourism inflows made a new record. In January-July 2016 the quantity of international tourists made up 3 400 335, up 10.6% compared to the same period of 2015.

According to the National Tourism Administration, this is an unprecedented

3.4 mln Foreign Tourists Visit Georgia in 2016 figure. The quantity of tourism visits made up 1 401 914 (visitors who spent 24 hours and more in Georgia), up 208 436 compared to the same period of 2015 (growth +17.5%). in January-July 2016 a major inflow of tourists was

recorded from Azerbaijan (+15.1%), Turkey (+1.6%), Armenia (-0.8%), Russia (+10.3%) and Ukraine (+24.3%).

Positive tendency is maintained in the direction of EU countries too, including Slovakia (+32.8%), Latvia (+25.1%), Hungary (+21.4%), Czech Republic (+19.5%) and Italy (+16.5%). Particular growth was registered from the following countries: Jordan (+472%), Iran (+457%), Pakistan (+455%), India (+347%), Sri Lanka (+239%), Syria (+190%), Philippines (+186%), Egypt (+176%) and Oman (+163%).

As to July 2016, a total of 764 022 international visitors arrived in Georgia, up 26 124 ones compared to the same period of 2015 (+3.5%). The number of tourists made up 390 234 ones, up 53 368 compared to July 2015 (+15.8%).

“Positive tendency is maintained in relation to the EU countries too, including Germany (+18%), Lithuania (+17%), Greece (+14%) and the United Kingdom (+12%). Particular growth was recorded from the following countries: Iran (+575%), Syria (+453%), India (+368%), Egypt (+263%) and Saudi Arabia (+112%)”, the tourism administration reports.

It should be noted that the developments in Turkey, several acts of terrorism and coup attempt considerably damaged Georgia too, because instable situation in the region made many visitors cancel ordered flights. The coup attempt of July 15 tensed political situation in the Region. Because of political tensions and border restrictions, a part of international visitors suspended their visits to the Region, including to Georgia. As a result, Georgia lost roughly 30 000 international visitors in July 2016, Giorgi Chogo-

Ten countries from where a major number of visitors arrived in Georgia in January-July 2016 1. Azerbaijan – 0.85 mln (+15%); 2. Turkey – 0.77 mln (+1.5%); 3. Armenia – 0.71 mln (-0.8%); 4. Russia – 0.53 mln (+10.3%) 5. Ukraine – 92 000 (+24.3%); 6. Iran – 61 000 (+82%); 7. Israel – 46 000 (+69%); 8. Kazakhstan – 27 000 (+35%); 9. Poland – 23 000 (+5%) 10. Germany – 20 000 (+4%).

vadze, head of the national tourism administration, said.

Despite instable situation in the region, as noted above, more than 3.4 million foreign citizens visited Georgia in January-July 2016, up 11% compared to the previous year. Due to the countries, the region’s countries occupy leading places. The number of visitors particularly increased from Iran after Georgia removed visa regime regulations. Moreover, the tourist inflows is also growing from Israel.

As to financial revenues, according to the national tourism administration’s final report, revenues from international tourism made up 1.94 billion USD (+8.3%), up 149 million USD compared to the previous year’s indicators.

According to the first quarter of 2016, revenues from foreign tourism made up 354.5 million USD (+15.7%), up 48 million USD compared to the same period of 2015.

It should be also noted that over the past years, the tourism sector has grown into one of the leading fields of the Georgian economy. For example, the tourism sector’s ratio in total GDP made up 6.7%, under the 2015 final indicators, up 16.2% compared to 2014.

In the first quarter of 2016 the tourism sector ratio in total GDP made up 6.8%. The year on year growth marked +11.5%.

It is interesting that over the past 10 years the tourism sector growth pace exceeded 10% in most cases. In 2012 the inflow of international visitors increased by 56%. In 2013 the tourism sector upturn made up 21%, 2014 – 2.3%, 2015 – 7%. And in January-July 2016 the tourism sector growth returned to two-digit figure – 11%.

August 8, 2016 #157

PUBLICITY

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BANKER

August 8, 2016 #157

What should you know about deposits?

A deposit is a widely used banking product that offers customers monetary benefits in exchange for saving their money in a bank for a certain period of time. TBC Bank’s regional director, Levan Diasamidze, explains what you should know about how deposits work and what benefits they offer.

- What is a deposit and why is it important to keep savings at a bank?

- A deposit is money that we place in a credit institution (bank) for a certain period of time, in order to gain interest. Deposits enable us to securely save our funds and, at the same time, benefit from the interest that is earned on the deposit. The advantage of the deposit lies in that the depositor can claim the deposit and the interest accrued on it anytime (unless the contract states differently).

Saving money at a bank is very important for all of us, as no one is ensured against unforeseen circumstances or expenses.

- What types of deposit are there and what is the difference between them?

(For example, demand deposit vs term deposit) - Despite the numerous deposit products offered on the market, there are two major types of deposit: term deposits and demand deposits.

In the case of term deposits, the deposit holder predetermines the term of the deposit (the market usually offers deposits ranging from 3 to 24 months) and the deposit contract is valid for this period. The benefit (accrued interest) is relatively higher in term deposits, compared with demand deposits.

A demand deposit has no predetermined term, i.e. the customer does not know exactly when he or she will need the money saved on deposit and therefore does not enter into a long-term contract with the bank. Such a deposit offers a lower interest rate and it is mainly used for saving money for a short period of time.

If the demand or term deposit agreement is terminated prior to the agreed date, you will receive the full amount of your original deposit. The amount of interest ac-

crued, however, might be reduced based on the conditions of the deposit agreement.

- What should be considered when placing a deposit? What should we pay attention to when choosing a deposit type?

- It is very important to pay attention to the following details when placing a deposit: - Choose the right financial institution to entrust your saving to. In addition to popularity and the ranking of the institution, the customer should also consider the interest rate offered because the higher the interest rate, the riskier the investment.

- It is very important to choose the type of deposit that properly suits your financial income and needs. You should also select the right term of the deposit, as this determines the income you will receive.

- Also, it is also important to choose the correct currency. As deposit implies saving money for a certain period of time, choosing the wrong currency can result in significant losses so try to save your money in a stable currency.

- How should we teach our children the habit of saving money and how important is that for the future generation?

- We should start developing a savings culture for our children from an early age. Our children should have a savings box where they save money.

The second stage is the spending process. What is important here is to encourage our children to make logical decisions and teach them proper spending habits.

This process should also continue into adulthood and eventually become a habit.

- What would be your advice on deposits for customers?

- All of us need and want to have savings, even if it is a small amount. This often seems impossible, however, if your salary is low. With the exception of some special cases, it is likely possible to have some savings, even just a small amount, which will help you solve problems in the future.

According to experts, it is desirable that the deposit amount be three times one’s monthly income.

The psychological factor is also important. Saving brings peace of mind and confidence.

August 8, 2016 #157

7

GOVERNMENT

Universal Internetization comes for Rural Areas A long with arrangement of opticalfiber network, additional infrastructure will be developed at local level.

The Government has approved a broadband infrastructure development state program. Prime Minister Giorgi Kvirikashvili noted that the program comprises an action plan on how to create optical-fiber internet network in more than 2000 cities and villages of Georgia. The state program is based on the private sector interests, the Prime Minister said.

“Several months ago we adopted a strategy.

The whole territory of Georgia was identified and divided in several zones. The state program has determined various interest zones and this project does not confront with the private sector interests. On the contrary, the program fosters the private sector’s entrance into Georgian villages and cities, due to various interest zones. The places, where less interest is recorded or the interest absents at all or it is unreasonable to arrange the internet network from the economic point of view, Cartu foundation will finance similar places. This is an absolute charity, without any business interest.

This program presumably will cost roughly 100 million USD. This is a genuinely historical project, because access to information is a key precondition for formation of free society. We believe this program is of strategic importance for both formation and development of civil society.

It is wonderful that in such a short period we have managed to structure this project in the way that it is maximally efficient in many aspects”, Giorgi Kvirikashvili noted.

The project is being implemented by Cartu foundation and the Innovations and Technology Agency of the Ministry of Economy, the Prime Minister said. The Agency has established a special company OPEN Net, through which the private and state sectors will cooperate.

“It is important that the network will be arranged based on the free admission principle.

This signifies that the main infrastructure will have not only technical compatibility, but any provider wishing to join this main infrastructure will be admitted to it. Therefore, this is a clear sample of charity, on the one hand, and on the other hand, this is an evident sample of partnership between the private and state sectors’, Giorgi Kvirikashvili said.

Naturally, the question arises – what benefits will the universal internetization program bring to rural areas and how will local residents make use of the state project?

The business sector and government officials have serious expectations from the government program. The project consists of several stages and voucher financing is one of the components.

Kakha Bekauri, member of the National Communications Regulatory Commission, noted that having arranged the Internet network in regions, the government should stimulate the product by use of voucher system.

“The voucher system introduction for population will last for 3 years and more. At the first stage, the government will issue vouchers to the population under certain principle and local residents will be able to purchase the product”, Bekauri noted.

The voucher system will be financed by about

9 million USD out of 40 million USD allotted by the World Bank (WB).

“We have already received 40 million USD from the World Bank (WB) and one part of this loan will be spent on opening technological clusters and innovation centers in regions, where local residents will be able to have access to the Internet. Nine million USD will be directed to the voucher system introduction process”, Bekauri said.

“Funds allocated by the education ministry will be expanded for the project that calls for computerization at secondary schools and transmitting gadgets to pupils”, Bekauri added.

The voucher model is not specified, but the decision has been taken. All these issues will be discussed publicly and a final decision will be taken jointly with due structures in autumn 2016, Bekauri said.

The businessmen that have direct relation with rural areas and agriculture sector positively appraises the universal internetization state program.

The internetization program will defeat information vacuum in regions. Local residents will receive information on state programs and will try to use the offered opportunities, Mindia Kavtarardze, head of Tapli Sachino agriculture cooperative, noted.

The internetization program will also enable young people to stay in highland regions.

“Why do young people abandon villages?

Because they do not have internet, roads, schools, kindergartens. If these problems are resolved, road infrastructure will be arranged, several enterprises will be constructed and people will be employed”, the cooperative

manager noted. The universal internetization will facilitate business activities of small enterprises and they will be able even to easier find business partners through the Internet, Irina Gaprindashvili, the Marneuli food factory director, noted.

“Today it is impossible, in practice, to do business without internet. Therefore, small business representatives will easier perform their job, because the Internet provides huge information resources and its is an instrument for communication with foreign partners. Small business representatives will receive information on innovations and new tendencies and will be able to establish modern standards in practical life in Georgia”, Irina Gaprindashvili noted.

The universal internetization project will create infrastructure that will cover the whole territory of Georgia, all settlements with more than 200 residents. As a result, by 2025, when the demand will increase, regions will receive 30 mb/sc connection.

Donor organizations are expected to allocate 70-100 million USD for the project implementation, Minister of Economy Dimitri Kumsishvili said.

“The Donor organization allocate a grant directly and transfers funds to Open Nest company. The donor organization gives a grant, but it does not remain in operation, management or anything else. Moreover, even the government does not participate in the mentioned chains and it wholly belongs to the private sector”, Kumsishvili said and noted that the state budget funds will not be used for financing the universal internetization project.

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BUSINESS

August 8, 2016 #157

Sheraton Batumi Hotel Appoints New General Director Apostolos Papatolios Sheraton Batumi hotel appointed Mr. Apostolos Papatolios to the position of the General Manager.

As of 24th of June 2016 Mr. Papatolios is overseeing the hotel’s operations which include 202 guest rooms, 4 outlets, conference spaces for 1,000 delegates and Shine Spa for Sheraton.

A passionate Greek hotelier, Mr. Papatolios with over 25 years experience in hospitality industry has worked at several reputable city and resorts hotels in many regions, including Starwood Hotels and Resorts, Marriott International and InterContinental Hotels & Resorts in Greece, Germany, Egypt and Jordan. Prior to his appointment to Sheraton Batumi, Mr. Papatolios spent nearly 3 years as General Manager of Le Meridien Amman, Jordan- another hotel within the Starwood Hotels and Resorts’ operating portfolio. During his tenure at Le Meridien Amman Mr. Papatolios played a key role in positioning the property as one of the leading hotels in the region.

BANKING NEWS GEORGIAN WINE

Dugladzes Wine Conclude Agreement with Chinese Company on Sales of 1 million Bottles of Wines

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he Georgian Wine Summer was held on the territory of Shanghai wine exchange by support of LEPL National Wine Agency of the Georgian Agriculture Ministry. The event was hosted by Dugladzes Wine Company, Silk Road Chamber of International Commerce, Wine Exchange of Shanghai Free Trade Zone.

As part of the Georgian Wine Summer event, three memorandums were signed. According to one of the memorandums, under agreement between Dugladzes Wine Company and Silk Road Chamber of International Commerce, Dugladzes Wine Company

products will be the first Georgian wine and at the same time, the first Georgian product on E-Silkroad.

Based on the mentioned agreement, 300 000 bottles were purchased and the parties hope the figure will reach 1 million bottles by the end of 2016.

First Vice Prime Minister of Georgia and Minister of Economy and Sustainable Development of Georgia Dimitri Kumsishvili signed a memorandum with Silk Road Chamber of International Commerce and Xinhua Net. As part of ESilkroad – One Country One Product, the joint projects of Silk Road Chamber of International Commerce

NEWS

HOTEL

MagtiCom has Launched Cable Internet and Internet Television

First 6-Star Hotel Biltmore Opened in Tbilisi

From August 1, MagtiCom shall be providing the customers with cable internet, internet television, fixed telephony and hosting services of Caucasus Online. The process of integration has commenced and is planned to be concluded by the end of this year.

As a result the customers will receive versatile and innovative products and services.

New Internet Portal Connecting Businesses Created in Georgia RR Trade is platform for global trade. Their mission is to help people to expand their businesses and let them make it as easy as possible, anywhere in the world.

Through this platform you can find products, suppliers and buyers quickly and efficiently.

By giving to users necessary tools to make their investments as much secure as possible, the company gives them comfort and trust.

and Xinhua Net, Georgia as one country, on the Chinese market will be represented among 40 other member countries of the Silk Road by one product, Georgian wine. It should be noted that E-Silkroad is considered one of the major online platforms, where products of Silk Road member countries will be sold in online regime all over China.

Memorandum was signed between the Georgian Agriculture Ministry, Shanghai Free Trade Zone Wine Exchange and Silk Road Chamber of International Commerce. Under the agreement, Georgian wine exposition center will be arranged at Shanghai

Biltmore Hotel officially opened in Tbilisi with a special ceremony. Attended by Georgian and international officials, hundreds of people were gathered to watch amazing laser show.

Arab investment company Dhabi Group, which is Dhabi Group is the leading business group in the UAE and operates in many business sectors, including tourism, construction, real estate, development and management, production, sea wells, banking and financial service and more, invested $250 million USD in Georgia.

The Biltmore Hotel Tbilisi is ideally situated within the historic and cultural district of the Georgia’s capital city.

Close to the east bank of the Mtkvari River, this hotel is suitable for both business and leisure travellers. The grand lobby echoes the nostalgia of a bygone era, with an immaculately restored grand lobby that resonates the glamour and prestige of the social elite and transports guests into an envelope of luxury, unseen or experienced by others before.

Our 214 luxury rooms and suites provide free high-speed wireless Internet, upscale bathroom amenities and beautiful views over the city.

With seven distinct lifestyle and dining venues, a sensational spa and a one-of-its-kind entertainment arena, this property promises to be the only address for glamourous lifestyles.An urban retreat for the privileged few or the ideal partner for those conducting business in the city, Biltmore Hotel Tbilisi is the ultimate address for discerning travellers.

Wine Exchange and this space will be transmitted to LEPL National Wine Agency of the Agriculture Ministry of Georgia. The mentioned event was attended by the Georgian government delegation led by Dimitri Kumsishvili, Minister of Economy and Sustainable Development, as well as by Chinese officials.

Shanghai Wine Exchange represents the world’s one of the major wine professional dealer organization with 75% ratio on China’s market of imported alcoholic beverages. Therefore, placement of Georgian wines on Shanghai Wine Exchange will bring very effective results.

TBC Bank Wins Multiple Awards for Corporate and Consumer Digital Banking from Global Finance Magazine TBC Bank has received the “Best Integrated Corporate Bank Site in Central & Eastern Europe 2016” award by Global Finance Magazine for the fourth year running. At the same time, TBC Bank was once again named the “Best Consumer and Corporate Digital Bank in Georgia 2016”. “The most successful retail and corporate banks in the world are those that have effectively transformed themselves into fully-integrated digital banks, with a strong focus on user experience,” says Joseph D. Giarraputo, publisher and editorial director of Global Finance. “The winners of this year’s awards are those banks that understand that both corporate and retail clients expect their financial partners to provide easy access to a suite of financial products and tools that are fully-integrated into their broader digital life.” According to the editorial press release of the publication, the winning banks were selected based on the following criteria: “strength of strategy for attracting and servicing digital customers; success in getting clients to use digital offerings; growth of digital customers; breadth of product offering; evidence of tangible benefits gained from digital initiatives; and web/mobile site design and functionality.”

“We are extremely proud to continue to receive such important recognition from Global Finance Magazine. These prestigious awards are validation of the Bank’s efforts to develop exceptional multichannel capabilities with a special focus on digital channels,” commented Vakhtang Butskhrikidze, CEO of TBC Bank.

August 8, 2016 #157

GREENS

Why Georgian Greens Fail to Succeed on Russian Market MARIAM KOPALIANI

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trolled. You cannot enter there and place greens on the counter. You have to give bribe to everybody. If we cannot make profits, the business and exports becomes useless. Therefore, this is useless and I do not try to launch exports to Russia», Beltadze said.

His company carries out growing exports to Ukraine, Moldova and Poland. In the future, exports volume will increase in these directions.

Qvitiri Greens Goderdzi Shavgulidze, head of Qvitiri Greens, noted that the situation is heavy in the sector, because Georgian businessmen failed to find a niche on the Russian market and they bear losses. Iranian greens are far cheaper compared to Georgian greens and therefore, Georgian products face problems with sales. Similar situation is on other markets too.

Therefore, the company has to sell products only on the domestic market, Shavgulidze noted.

Qvitiri cooperative was founded in Kutaisi at the end of 2014. The cooperative employed 5 persons. After foundation of the cooperative, they wrote a grant project and won the ENPARD program and received 80 000 financial support component. The company purchased refrigerator aggregates, generators and other equipment through the mentioned financial component. Investments made by the farmers totaled 55 000 GEL. “The European Union program has bought all equipment that we needed in that period. If the business goes well, our cooperative will be expanded and we will grow melons and bell peppers”, Goderdzi Shavgulidze noted.

After the 2006 embargo, negotiations on exports of vegetable products to the Russian Federation resumed in 2013. At the end of May 2014 the Russian market was reopened for Georgia fruits and vegetables. At the first stage, citrus exports was resumed, later fruits, garden plants, including greens, were also admitted to the Russian market. In that period greens production companies were going to penetrate the Russian market through other mechanisms, even more so, the Russian market is famous for its instability. Several months have passed since then. What has changed?

Have Georgian entrepreneurs returned the Russian market and what are perspectives of Georgian greens exports perspectives?

Herbia – Greens Production Company The company has passive period in summer season and exports will be resumed in October, Zurab Janelidze, head of Herbia company, noted. Currently, only Bulgaria is recorded in the list of exports countries. This year huge volume of greens was exported to Bulgaria. As to the Russian market, in parallel regime negotiations are underway with other countries, including Russia and in case of agreement, Georgian greens will be exported. Negotiations with Russia is being conducted for a long period, but the company could not export greens so far. However, at this stage specific proposals were submitted by specific partners and Herbia company will launch greens exports to Russia in autumn, Janelidze noted.

Besides greens, the company also produces several varieties of vegetables and is able to add new varieties in the event of consumer demand. Herbia has managed to succeed on the market thanks to highquality products, Janelidze noted.

Since summer 2015 the company launched production of cucumber, tomato and bell peppers. In 2015 the company constructed a packing enterprise in Tskaltubo, the Imereti Region, through the Cheap Credit project and employed about 20 persons in addition. The selling price of Herbia products at markets starts from 0.40 GEL. Georgian Greens company Georgian Greens company could not enter the Russian market either. The company head Jumber Beltadze said that there are many difficulties with greens exports to the mentioned country. The Russian market is huge, but Georgian companies have already set control over shops, districts and new ones are not let enter the market. «All places are con-

Association of Farmers of Georgia Greens business is profitable, in general, but in a number of cases problems arise with sales, Nino Zambakhidze, head of the association of farmers of Georgia, said.

“In winter season restaurants have shortage of Georgian greens, including of mint and tarragon, while these products are not produced. There are another party assuring that they have problems with sales.

Therefore, I think there is a problem with communication. There is no information about which greenhouse produces this or that greens in this or that region.

Currently, 13 000 greenhouses have been identified, but activities of farmers are not identified. Lack of information is one of the main challenges. Frequently hotels and restaurants call to us and seek for greens suppliers”, Zambakhidze said.

As to exports, Georgian greens are exported to Europe without problems, Zambakhidze said, but added that she has certain information on problems before exporters. As to Russia, no legal body has expressed pretenses on problems in the direction of the Russian Federation.

-Is Georgian greens business connected with the criminal bosses?

Over the years mass media and social media have been actively discussing that Georgian criminal bosses control Georgian greens business in the Russian Federation.

It was said that in 2011 on the Moscow Pokrovski greens market the so-called Black Greengrocers appeared, that is, thieves-in-law (including Tariel Potskhveria), who decided to make money by appropriating the greens business.

In that period the Pokrovski greens market with annual 9 billion USD turnover was a serious stake for not only the Georgian criminal world. Even Chechen field commanders (including Shamil Basayev) and Moscow Militia high-ranking officials were fighting to control it. Up to 2012 Azerbaijani thieves-in-law used to control the greens market.

Since 2012 the Kutaisi clan of the criminal world (Tarieli Oniani) took efforts to control the market and the market was assigned to Merab Jangveladze, i.e. Sokhymski. Soon the market was closed and Jangveladze was arrested in Europe. After the market moved to a new place, the war between the Black Greengrocers resumed. In 2013 twenty ordered murders were committed in Moscow. More than 100 persons were killed as a result of bloody clashes.

The Caucasus Business Week (CBW) has tried to clarify whether there is real connection between Georgian greens and criminal bosses. No supplier has made comments on the issue. «This is the issue which is not discussed», they said.

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CULTURE

August 8, 2016 #157

September 22 - October 8 INTERNATIONAL PROGRAM INTERNATIONAL PROGRAM NEW GEORGIAN SHOWCASE

International Program Kari Hoaas Productions

Be Like Water

Author of the Play Kari Hoaas

With Elegant Touch of Reality‌

Theater history: Kari Hoaas Productions was established by the Norwegian choreographer Kari Hoaas in 2005, upon her return to Oslo after more than a decade working in New York City. She is known to create physical and complex performances that allow for ambiguity and contradiction, while retaining a profoundly human quality connected to our broader culture. Be Like Water is her seventh evening length production, and the first in a planned cycle of new works exploring our relationship with nature. Her work has been produced and presented by major venues all over Norway and the Nordic region in addition to international coproductions and tours to the USA, Europe, Caucasus and the Middle East. Additional information: www.karihoaas. com www.tbilisiinternational.com www.facebook.com/ TbilisiInternational

ECONO-MIX

August 8, 2016 #157

Dualism Of The Economy

Dr. Andrei Maximov Maximov&Partners LLC am@maximov.com www.maximov.ge

Georgia is a very small country with very big opportunities for business—this is what any newcomer will confirm who has had a successful entrepreneurial experience in another country. It would not matter, by the way, whether this person is an ethnic Georgian or came to Georgia by chance, as a tourist or as someone’s guest. In any case, a first-timer in Georgia is doomed to experience an immediate feeling of euphoria from emerging opportunities, especially against the background of impressive achievements of the last decade: only very lazy ones did not keep praising the results of institutional reforms in Georgia during the 2000s.

And it is well deserved!

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ndeed, almost four years have passed since I had come to live and work in Georgia, but I am still carried away with enchantment every time when I come to the House of Justice in order to resolve some issue. There is a maximum of 10 minutes there to enter any changes in the registry, only some more time to file papers for registering a new business or a business transaction. Also a well-developed banking system is there, with individual international bank accounts (IBAN) for all residents, with payboxes and ATM machines everywhere; plus a steadily growing proportion of non-cash electronic payments, a sparing fiscal system (as compared to most of Georgia’s neighboring countries), especially when considering the upcoming introduction, in 2017, of the Estonian model with its zero tax rate for the reinvested profit. There is no corruption and no criminality, the success of a business is determined not by those factors that are outside of the economic playfield (which is characteristic for most of the postSoviet economic realm), but by the business’ competitive advantages. The Georgian Lari is getting ever stronger (too much, in my view, but it is a different topic), while national currencies of the neighboring countries (those in Russia, Azerbaijan and Kazakhstan) are falling down like card towers.

It is not surprising that Georgia, even under the conditions a deep economic crisis all over the post-Soviet realm as well as in other neighboring countries, keep attracting impressive (for its size) amount of investment,

mainly to transport and other infrastructure, financial and energy sectors. In 2016 only under 1% of investment, unfortunately, (which is under 3 million US dollars) went towards agriculture and food processing industry that are, in my opinion, the main drivers of socioeconomic growth.

It is not in any way my intention to underestimate the role of infrastructure and power industry in the country’s economic advance, but I assume that they are only prerequisites for Georgia’s economic breakthrough in the future. Today’s Georgian economy is characterized by a strongly-pronounced duality, with two of its parts mostly isolated from each other and existing on their own. What one can see on one pole is a modern economy based on Western technology and on human resources that have received adequate education and that are interested both in continued economic reforms and in the fast-paced development of Georgia’s infrastructure.

On the other pole, however, traditional economy still exists which is based on staid, long-outdated technology and on personnel that know very well how to do their job in agriculture, tourism, construction and some other sectors, but have a minimal grasp of the importance of business planning, marketing, branding and other tools of the market economy.

As long as these tow parts of Georgian society and Georgian economy will stay apart, separate from each other, Georgia will keep slowing down, and the massive growth of the

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middle class, which is a basis for economic prosperity in any democratic country, will remain a vain wish for both the state and the population. Generally speaking, if the process is not controlled at all, the question remains open who will be able, in the end, to overwhelm and to “digest”: it is no secret that a traditional society is always out to augment populism in the state budget policy and that is exactly what carries with it many risks for creating an effective economy and for continuing successful reforms.

During the last four years of my life I happened to have stayed, together with my family, in Western Georgia, in Ureki, while doing business in Poti, Kutaisi, Khobi and in other rural areas. This gave me a very clear understanding of the enormous potential available here plus of the results that can be achieved if the disadvantages of the patriarchal society were cured while its competitive advantages are still kept intact.

For the traditional Georgian economy it is much more important to attract small- and medium-scale investors rather than inviting strategic investors: the former bring with them not only money, but also their expertise, experience and understanding of the market economy. We should understand as “investment” not only investing in the real sector, but also buying an apartment for own needs, or a house, or, perhaps, a plot of land for private construction. There is a plenty of such investors, even in the years of economic crisis.

As far as I know, in the first two years of their

activities in Georgia they all tread, unfortunately, the same path of disappointment.

The first stage of the venture is usually quite euphoric, taking into account the nature and traditional local hospitality: this provides a great motivation for an immediate purchase of some real estate to cater to the needs of one’s family plus for opening, along the way, a small, but invariably a very promising business (in the eyes of a local partner).

The second stage starts when going through a renovating or building process—with very low-quality services while going higher-thanthe-sky over the agreed budget and perennial cheating, unless the customer personally controls the process. Simultaneously, some hidden defects get revealed in the business, and lack of transparency in business together with the partner’s financial ignorance (and sometimes straight dishonesty) opens the road to unavoidable losses or even to a final loss of the previously obtained property.

The third and final stage begins when the disappointed investor gets rid of all of his assets selling it with a big discount and leaves Georgia…

In the last three years I could meet dozens of such disappointed investors from Germany, Russia, Iran, Turkey, Poland and other countries. Each of them shared his heart-rending story, they were all different in their details, but essentially the same in their essence. One got a quarry with no road leading to it, but they sold it to him at triple the market price.

Other had his business property wrested away due to lacking legally correct registration paperwork. Someone else was lead to participate in a construction venture with a hopeless outcome while his “pals” were making their money on supplying construction materials, etc. I could not find even one happy investor: at best, I got to meet only truly stubborn ones, those were ready to continue their quest while taking into account their preceding negative experience (I am taking the liberty here of counting in myself and my partners).

We were initially acting along the above scenario, but a year later we got off the track that was offered to us while paying for the lessons learned with the money that we had lost in several business projects. We took it quite calm: there is no good education without paying for it! On the plus side we have got an understanding now how one should live, work and do business in Georgia—something we have already realized in practice. Something that we deserve enjoying and get satisfied with the results.

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HEALTHCARE

Targeting for Life - BluforPink Campaign has started Europa Donna Georgia Addressed the Government for Support of Metastatic Cancer Patients The campaign against breast cancer is ongoing in Georgia. It is important that starting from 2016 the state provides countrywide financing of pharmaceuticals for patients with the first, second and third stages of cancer, for which purpose GEL 9 million has been allocated.

Despite this, the issues related to treatment of patients with metastatic cancer are still unresolved. Therefore, Europa Donna Georgia addressed the Ministry of Healthcare and Tbilisi City Hall to provide assistance and finance medical treatment of such patients.

Europa Donna Georgia organized a press conference at the Radisson Blue Iveria Hotel.

The goal of this event was to inform and once again remind the public about the campaign that promotes effective targeted therapeutic treatment of breast cancer and improvement of its accessibility.

The press conference was attended by Marina Darakhvelidze - Head of the Healthcare Department of the Ministry of Labour, Health and Social Affairs of Georgia, Gela Chiviashvili - Head of the City Office of Health and Social Service of Tbilisi City Hall, Giorgi Alibegashvili – Chairman of Tbilisi City Council, Ana Mazniashvili – President of Europa Donna Georgia, oncologists, specialists working in this field, patients, campaign supporters etc.

“We would very much like the state to finance similar medical treatment – I mean treatment

of patients with the metastatic and fourth stage cancer because these are the people most in need of such assistance” – said Ana Mazniashvili, President of Europa Donna Georgia.

Mammologist Giorgi Dzagnidze talked about the necessity to provide expensive medication and therapeutic treatment to patients with terminal cancer. He believes that the treatment course will improve the condition of terminal cancer patients by 25%: “If the life expectancy of terminal cancer patients is 6 months, the treatment may increase it even up to 20 years”.

The Ministry of Healthcare stated that together with Tbilisi City Hall it already finances such patients on individual basis. “We already have the possibility to study the situation of each patient individually. Namely, we finance them through the referral program. The state is supporting them in this case as well. At the same time I believe that the future belongs to the preventive medicine” – says Marina Darakhvelidze , Head of the Healthcare Department of the Ministry of Labour, Health and Social Affairs of Georgia.

Allow us to remind you that in 2015 Europa Donna Georgia started an information dissemination campaign called “Targeting for Life” which exactly reflected this goal. The main focus was made on provision of expensive drugs which are effective but less accessible for patients. A petition was drafted in which the signatories asked the state to increase accessibility of biological pharmaceuticals specially for breast cancer patients within the healthcare program.

Later, Tbilisi City Council, City Hall and corresponding departments of the Ministry of Healthcare made an extremely important decision and financed medical treatment of 320 patients with the first, second and third stages of breast cancer. „New findings and innovations of the past 50 years significantly increased our knowledge about breast cancer. An important progress has been achieved in diagnostics, screening, surgery, radio therapy, chemotherapy, and combined and targeted therapy. During a targeted therapy

the drug is directed immediately to cancer cells and inhibits the main processes which lead to cancer development and growth. This is why the therapy was called “Targeted Therapy”.

Since targeted therapy is specifically aimed at cancer cells, it is very effective, less damaging for normal cells and has fewer side effects compared to the standard chemotherapy. Thanks to the assistance provided by the state the quality of life of 320 patients has improved significantly.

The life of these women has become less stressful and made the treatment more effective. Now the time has come to think about patients with metastatic cancer and start looking for solutions to ensure their timely treatment. The goal of the second phase of our campaign is still that of saving lives. Unfortunately in Georgia targeted therapy is inaccessible for the majority of patients” – explained Ana Mazniashvili, President of Europa Donna Georgia.

Within the framework of the campaign “Targeting for Life” Radison Blue Iveria came up with a new initiative for assisting breast cancer patients: it starts a campaign „BluforPink” in which any company and person can participate.

Every year in Georgia more than 1 500 new cases of breast cancer are identified and more than 900 women die from this disease. If diagnosed on time, breast cancer can be cured. The goal of the campaign is to find the funds necessary for preserving lives of those women who cannot afford medical treatment. All gathered funds will be fully transferred to the charity foundation Europa Donna Georgia in order to fight breast cancer”.

The charity campaign rules are as follows: 1) Take a photo – in a blue tee shirt / details / make up; 2) Upload it to Facebook or Instagram with hashtug - #BluForPink; 3) Invite 3 of your friends or partner company; 4) Transfer money – cell phone: 0 901 700 002 Bank of Georgia: GE 82 BG 0000 0001 6254 9800 TBC Bank: GE 42 TB 7168536020100002

Children Medicine Kit Value Declined by 4 GEL in July The Healthcare Platform nongovernmental organization has examined the list and prices of medications of children medicine kit in four leading pharmacy networks for the month of July.

The examination process has showed that the July value of the mentioned group has decreased by 4 GEL compared to June. In June the children medicine kit value was 93 GEL, while in July the figure has decreased to 89 GEL. The medicine kit value went down after price of the following medications decreased: The price of Panadol declined from 8.20 GEL to 7.95 GEL. The price of Cetirizine in June was 2.50 GEL and in July – 1 35. GEL. The price of several accessories has also declined. The price of cotton decreased by several Tetris (from 1 GEL to 0.57 GEL). The price of oxygen dioxide decreased to 0.51 GEL from 1.25 GEL. The price of spirits declined to 1.05 GEL from 1.40 GEL. The price of baby lotion diminished to 2.55 GEL from 3.84 GEL. The info-graphics clearly shows how total price of medications and items of care has decreased. As to the list and price of specific medications, they are given in the chart.

In July Baby Medicine Kit Value Declined by 9 GEL The Healthcare Platform continues publishing the July report for the Panaskerteli Pharmacy groups as part of the Panaskerteli Pharma Monitor project. The organization has examined and calculated the list and prices of the most necessary, recommended and in-demand medications of baby medicine kit (1-3 age category). As part of the research work, the healthcare platform has examined the price of 24 medications and items of care for babies in 4 leading pharmacy networks. The research works has showed that in July, as compared to June, the baby medicine kit value declined by 9 GEL. The medicine kit value diminished after prices of several medications decreased. Namely: The cotton price declined from 1 GEL to 0.57 GEL. The oxygen dioxide price decreased to 0.51 GEL from 1.25 GEL. The spirits price climbed down to 1.05 GEL from 1.40 GEL; The bathroom thermometer price shrank to 5 GEL from 7.40 GEL. The price of a bottle with dummy decreased to 9.95 GEL from 10.30 GEL. The price of thermometer declined to 71.5 GEL from 7.95 GEL. As to medications, the price of Panadol declined to 7.98 GEL from 8.20 GEL. The price of Fenistal decreased to 11.47 GEL from 13.31 GEL. Price increased on several items of care.

Price of ear sticks increased to 1.35 GEL from 1.15 GEL. The baby powder price rose to 4.95 GEL from 2.15 GEL. Pampers cream price went up by 0.04 GEL. The chamomile price increased to 1.84 GEL from 1.25 GEL. Detailed information on the list and price of medication are available in the

chart. As reported, the Panaskerteli Pharmacy explores the price of medications and accessories of various consumer segments and carries out monitoring of price change on monthly basis.

The Panaskerteli Pharmacy includes such groups as: baby, children, family, office, driver, tourist, first aid, cottage medicine kits.

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WORLD NEWS Quotes

“ Those who “financed the shooters” would be treated like the coup plotters themselves

Freedom means you are unobstructed in living your life as you choose.

Anything less is a form of slavery.

”

“We ask for the community’s patience as we unravel the causes and consequences of this breach.”

Wayne Dyer

Armenian to Bitcoin Plunges, Erdoğan vows to root out Gülenists in business world have a compa- Rebounds After Hackers

T

urkish President Recep Tayyip Erdoğan has pledged to root out any businesses which are linked to the U.S.-based Islamic scholar Fethullah Gülen, who has been blamed for the July 15 coup attempt, promising “no mercy” in singling them out.

Business is the arena in which the network of Fethullah Gülen is still the strongest, Erdoğan said in a speech in a meeting with the heads of business chambers and bourses in Ankara.

“The ones who were arrested until now from this network are just the tip of the iceberg. The work for the others is underway. For sure, there is a business pillar of this organization. This may be where they are the strongest. As a rule, unless there is financing, no project can be realized.

We are determined to cut all the links of this organization within the business world,” said Erdoğan.

Those who “financed the shooters” would be treated like the coup plotters themselves, he added.

The Fethullahist Terrorist Organization (FETÖ) is accused of harnessing an extensive network of schools, charities and businesses, built up in Turkey and abroad over the decades, to infiltrate state institutions and build a “parallel structure” that aimed to take over the country.

“As I mentioned yesterday here, I feel sad that I failed to reveal the true face of this traitorous organization long before,” said Erdoğan, referring to the network which Turkey alleges is a terror group.

“I know that we have to give account both to our God and to our people.

Let my God and my people forgive us,” Erdoğan said.

“We will not forgive anyone who financed even one bullet which was shot by this organization,” he said.

Although the bulk of the purges in the wake of the coup attempt have been in the security forces, judiciary and public sector, private firms have also been affected.

Russian Weekly Prices Drop First Time Since 2011 on Food Costs

R

ussia had its first weekly price drop in almost five years as fresh produce such as fruit and vegetables helped drive down food costs.

Consumer prices fell 0.1 percent in the seven days through Aug. 1 after increases of 0.1 percent in each of the past three weeks, reaching 4 percent from the start of the year, the Federal Statistics Service in Moscow said Wednesday. It will report the annual price index for July later this week. Inflation slipped to 7.4 percent last month from 7.5 percent in June, according to the median of 17 estimates in a Bloomberg survey.

“The result stems from mixed dynamics in core food items, flat utility tariffs and accelerated deflation in seasonal raw foodstuffs,” said Dmitry Polevoy, chief economist for Russia at ING Groep NV in Moscow. The

“good performance” means there’s “downside potential for the key rate in the second half.”

The central bank has looked past the letup in prices to less than half last year’s level as inflation expectations remain elevated, pushing real interest rates to the world’s secondhighest. Policy makers have cut their benchmark once since July 2015, to 10.5 percent, and warned last week that the risks of missing their 4 percent target next year “persist.” The central bank forecasts price growth will ease below 5 percent next July.

Bank of Russia Governor Elvira Nabiullina said in June that she expected weekly price declines in August or September as a result of a good harvest, while the Finance Ministry has predicted “small” deflation this month.

ny to deal with Steal $65 Million procurement of Iranian gas The Armenian government will create a separate company to deal with the procurement of Iranian gas, the Cabinet decided on Thursday.

Earlier gas was bought through Yerevan thermal power plant which is the only consumer of Iranian gas in Armenia. From now on, Energoimpeks CJC with the authorized capital of a100 million drams (around $200 thousand), will deal with the contracts.

SOCAR production union plans to drill over 70 new wells in 2016 Azneft Production Union of Azerbaijani state oil company SOCAR plans to drill 72 new wells in 2016, said SOCAR’s message posted Aug. 3 on its website.

It was noted at the meeting on the results of the production union’s activity in the first half of 2016 that drilling has started at 34 wells.

Speaking at the meeting, deputy director general of the union on drilling, overhaul of wells and transport Rustam Zeynalov said that drilling operations have been completed at 26 wells.

“Another 28 wells have been commissioned,” Zeynalov said.

“In total, it is planned to drill 72 new wells in 2016.”

During the meeting, deputy director general of the union on construction Alimusa Guliyev noted that 204 facilities were repaired during the year and another 15 of them underwent an overhaul, the repair work continues at nine platforms.

In the first half of 2016 Azneft Production Union of SOCAR extracted 3.13 million tons of oil and 2.84 billion cubic meters of gas.

B

itcoin plunged, then erased losses Wednesday as one of the largest exchanges halted trading because hackers stole about $65 million of the digital currency.

Bitcoin was little changed against the dollar as of 10:03 a.m. on Wednesday in New York, after sinking as much as 15 percent. Prices dropped 7.8 percent on Tuesday after declining 6.2 percent Monday.

Hong Kong-based exchange Bitfinex said Tuesday it halted trading, withdrawals and deposits after discovering the security breach. The exchange said it was still investigating details and cooperating with law enforcement, but acknowledged some bitcoins were stolen from its users.

“Yes — it is a large breach,” Fred Ehrsam, co-founder of Coinbase, a crypto currency wallet and trading platform, wrote in an e-mail. “Bitfinex is a large exchange, so it is a significant short-term event, although Bitcoin has shown its resiliency to these sorts of events in the past.”

Bitfinex confirmed in a message to Bloomberg News on Wednesday that the hackers took 119,756 bitcoin, or about $65 million. While trading was halted in all digital currencies, including ethereum, the exchange said losses were limited only to bitcoin. It also said U.S. dollar deposits were not impacted.

Bitfinex Investigating “We will look at various options to address customer losses later in the investigation,” Bitfinex wrote in a blog post. “We ask for the community’s patience as we unravel the causes and consequences of this breach.”

The Hong Kong exchange was the largest for U.S. dollar-denominated transactions over the past month, according to bitcoincharts.com. Chi-

nese exchange OKCoin was the largest overall bourse for trading in the digital currency, over 90 percent of which is denominated in the Chinese yuan. The price drop was reminiscent of the market reaction after Tokyo-based Mt. Gox — then the largest bitcoin exchange in the world — disclosed it was hacked in February 2014 and filed for bankruptcy weeks later. Bitcoin prices plunged 30 percent that month.

Bitfinex last year announced a partnership with Palo Alto-based BitGo, which uses multiple-signature security to store user deposits online, allowing for faster confirmation and withdrawals. Exchanges including OKCoin tend to store the majority of deposits offline, while keeping a small percentage online and available for immediate withdrawal.

“Since we now enforce multi-institutional second factor authentication (Bitfinex will be the first factor and BitGo the second factor), attackers are required to compromise both institutions before getting funds,” Bitfinex wrote on its support page after the partnership was announced.

BitGo said it is investigating the matter also and hasn’t discovered breaches on its side.

“To date, BitGo’s investigation has found no evidence of any compromise of its servers or services,” company spokesman Joe Volat said in an e-mail to Bloomberg. “We believe that multi-sig security technology on which BitGo’s systems are based was not affected.”

The company also supplies security to other bitcoin exchanges.

“Bitfinex is in lockdown/investigation mode, so we’re not going to know anything for sure for a few days,” Peter Todd, an active bitcoin code contributor based in Toronto, wrote in an e-mail.

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