Caucasus Business Week #190

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May 1, 2017 #190

May 1, 2017, Issue 190 - www.cbw.ge

Agro Solutions Georgian Walnut has the Export Potential in EU, Near East and Asia Pg. 11

#Naturelovers IDS Borjomi Georgia Initiated Planting of 1000 Seedlings

PR Person: Irina Kometiani: Devotion to Job, First of All, Brings Success Pg. 6

Pg. 8

Whether Actions by KaztransGas and Inter RAO Damage Reputation of Georgia

Georgia Comes behind 100 Countries in terms of Living Standards According to International Monetary Fund (IMF), in 2016 averaged annual income per capita in Georgia made up 10 044 USD, based on purchasing power parity (PPP). This indicator makes Georgia 108th worldwide among 190 countries. The country ranked 108th in 2015 too. According to IFM forecasts, in 2017 income per capita in Georgia will rise to 10 645 (PPP).

Annual averaged income per capita is the widespread indicator for estimating country wealth and economic development. When we compare various countries, the so-called international dollar (PPP) must be used to measure incomes. This instrument implies factor that the Dollar has various purchasing power in various countries.

According to 2016 IMF report, the highest income per capita (PPP) is recorded in Qatar – 127 660 USD. Luxembourg is second with 104 000 USD. Pg. 4

Commercial Banks Grow Profits by 150%

Pg. 7

According to National Bank of Georgia (NBG), in January-March 2017 profits of commercial banks constituted 257 785 000 GEL, up 148 million GEL compared to the same period of 2016 (109 889 000 GEL in January-March 2016).

This signifies profits of commercial banks rose 1.5 times (+150% year on year). The banking sector’s profits in March increased by 32 million GEL compared to February 2017. Currently, there are 17 commercial banks in Georgia, however, amalgamation of TBC Bank and Bank Republic will be finished in the near future. As of April 1, revenues of commercial banks marked 1.071 billion GEL, up 514 million GEL compared to February, and up 300 million GEL as compared to the same period of 2016. Interest returns of commercial banks also grow in stable way and the amount currently totals 647 million GEL. It should be stressed that commercial banks receive major revenues from retail loans – 365 million GEL. Pg. 6

2 GOVERNMENT

NEWSROOM Hungary and Georgia Build Economic Cooperation Hungary’s Eximbank has opened a pool of 90 million USD to provide loans aimed at promoting further ties, PM Orbán said, adding that the initial fund could be increased if necessary.

Georgia Formally Ratifies EU Energy Treaty A treaty for accession to the energy community notes that Georgia isn’t directly connected to the energy networks in the EU and solutions are necessary, mainly as they relate to natural gas moving through territory in the Black Sea country.

ECONOMY

SOCAR Ready to Increase Natural Gas Supply to Georgia SOCAR shows readiness to increase daily supply of natural gas to Georgia by 3 million cubic meters from current 7 million cubic meters, Deputy Head of Natural Gas Exports Department of SOCAR, noted.

Georgia seeks to increase export of agricultural goods to Saudi Arabia Saudi Arabia is considering importing livestock, meat, dry fruit, honey and water from Georgia, while Georgia sees Saudi Arabia as a promising market in the Persian Gulf for Georgian agricultural products.

BANKING

Assets of Commercial Banks Rose by 20.3% Total assets of commercial banks marked 29.8 billion GEL as of April 1, 2017. Year on year growth marked 20.2%.

According to NBG, bank sector’s own resources account for 4.3 billion GEL, 14.5% in total assets of commercial banks.

Consumer Loans Interest Rates Grow According to National Bank of Georgia (NBG), averaged interest rate on short-term bank credits made up 19.4% (17.6% as of Q1/2-16). The interest rate marked 8.1% on foreign currency denominated short-term bank credits (7.4% in Q1/2-16).

BUSINESS

Excise Tax Structure Changes on Alcoholic Beverages Excise taxes will be imposed on alcoholic beverages due to alcohol content – percentage of alcohol for beers and pure alcohol ratio in drinks with ethyl spirits.

Georgian Made Pipes to Export to the US Georgian made pipes will be exported to the United States.

Rustavi Metallurgical Factory will send the sample quantity to the US in the near future. The company already implements export to the EU.

COMPANY

Coca-Cola Intends to Relocate Production to Mtskheta Coca-Cola plans to launch works in 2017 and move production to our region. There are tens of facilities that are being opened or constructed.

May 1, 2017 #190

Georgia decriminalises certain economic crimes, liberalises tax code

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eorgia’s economic team is working on modifying the country’s Tax and Criminal Codes, with the main goal to decriminalise economic crime and liberalise the tax code in order to further develop the Georgian economy.

Georgia’s Prime Minister Giorgi Kvirikashvili stated the decriminalisation of economic offenses was one of the key promises under the economic component of the Government’s four-point reform plan.

In this regard Georgia’s economic team has created a legislative package for amending the Tax and Criminal Codes which was discussed by the Government members at yesterday’s Government meeting.

This package increases the amount for criminal liability from 50,000 to 100,000 GEL. In addition, criminal liability is abolished for tax offenses related to waybills, excise stamps, and others,” said Kvirikashvili.

The package also includes signifi-

cant incentives for individual sectors, such as aviation, for instance.

To this end, we will exempt excise duty aviation fuel intended for domestic flights from the VAT, also exempting different air transportation services,” he added.

The PM said the amendments seek to boost tourism because domestic aviation is a largely subsidised industry, and special incentives are necessary in this direction to simplify travel as much as possible.

As the Head of Government emphasised, special incentives will be introduced to apply to owners of micro power stations.

We will spare no effort to encourage green energy, so that excess energy generated by individuals’ micro power plants may be sold without taxing revenues. As you know, today many countries actively use solar power roof panels, and we want to encourage this practice here. The Ministries of Environment Protection and Energy are coordinating their work in this direction. Besides tax-related incentives, we want to have

particular financing mechanisms in place to use innovative micro power stations of this type, especially in our mountainous areas where the protection of cultural heritage is of the utmost importance,” Kvirikashvili said.

The amendments also involve the construction industry. In particular, the tax incentives period for delayed construction will be extended to two years.

The PM said by the end of 2017, it is planned to complete the construction of sites with a total amount of investments up to $65 million, and said incentives will encourage the resumption of incomplete construction work and this way will meet citizens’ expectations and needs.

The PM pointed out that the amendments without exception were developed in close cooperation with the business sector. He also thanked everyone involved in the process of work on the amendments, especially representatives of the private sector and associations.

Tourism in Georgia to grow 40% in 2017

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eorgia has emerged as one of the world’s fastest growing air travel markets in the world, driven by a booming tourism industry and a liberal aviation policy, says the recent report from the CAPA Centre for Aviation.

This small country at the crossroads of Europe and Asia recorded passenger traffic growth of 26 percent in 2016 and expects even faster growth of approximately 40 percent in 2017,” says CAPA, which offers independent aviation market intelligence, analysis and data services.

CAPA Centre for Aviation published a two part report on the Georgian aviation market, providing a case study on how a liberal approach to aviation can have a significant positive impact.

The report highlighted some positive developments for 2017 and pointed out the most successful achievements of 2016.

Several airlines are adding capacity of launching services to Georgia in 2017. For example, three Russian airlines are launching services to Georgia at the end of May-2017 or early June 2017 – Nordavia, Severstal and Red Wings (based on OAG data).

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Ukraine’s Dniproavia and FlexFlight and Greece’s Ellinair are planning to resume seasonal services to Georgia this summer (based on OAG data). Air Arabia has just expanded in the Georgia market with a new route from Amman which was launched in early April 2017 by the group’s Jordanian affiliate.

Georgian airports handled 2.84 million passengers in 2016, according to Georgia Civil Aviation Agency data. Total passenger traffic increased by 25.6 percent in 2016, making Georgia one of the fastest growing aviation markets in the world.

Georgia relies heavily on tourism In 2016 Georgia recorded 1.067 million visitor arrivals by air. Inbound visitors therefore accounted for approximately 75 percent of total passenger traffic at Georgia’s airports.

The number of visitor arrivals by air increased by 40 percent compared to 2015, when visitors accounted for approximately 68 percent of total Georgia traffic.

In 2013 visitors accounted for 64 percent of total traffic.

The outbound market (Georgian

citizens travelling abroad) has grown only slightly over the past five years. The outbound market declined slightly in 2016 – likely the result of a relatively sluggish economy; Georgia’s GDP grew by less than three percent in 2016, said the report.

Tourism is an increasingly important industry to Georgia’s economy. Tourism accounted for 7.1 percent of Georgia’s total GDP in 2016. In 2013 tourism accounted for less than six percent of the country’s total GDP,” said CAPA Centre for Aviation.

Georgia picking up Turkish tourism decrease Georgia has benefitted from instability in Turkey as tourists who would be holidaying in Turkey look for other alternatives, said the report. In the most recent month, March 2017, Georgia reported a 68 percent increase in visitor arrivals by air, to 101,000.

The rate of growth will probably not be as strong in the peak summer season but the volume increases will be more significant.

Georgia typically has twice as many visitor arrivals in July and August than in March,” said CAPA Centre for Aviation.

Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Reporters: Medea Samkharadze; Mariam Kopaliani; Merab Janiashvili Designer illustrator: Ilia Chrelashvili. Technical Assistant: Giorgi Kheladze

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

May 1, 2017 #190

PUBLICITY

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ECONO-MIX

Georgia Comes behind 100 Countries in terms of Living Standards

EBRD Initiates Firstever Eurobond Issued in Georgian Local Currency

Georgia Ranks 108th due to Income per Capita

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Merab Janiashvili Economic Analyst

According to information of International Monetary Fund, in 2017 global economy rose by 3.5%, economy of developed countries increased by 2%, while economy of developing countries rose by 4.5%.

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ccording to International Monetary Fund (IMF), in 2016 averaged annual income per capita in Georgia made up 10 044 USD, based on purchasing power parity (PPP). This indicator makes Georgia 108th worldwide among 190 countries. The country ranked 108th in 2015 too. According to IFM forecasts, in 2017 income per capita in Georgia will rise to 10 645 (PPP).

Annual averaged income per capita is the widespread indicator for estimating country wealth and economic development. When we compare various countries, the so-called international dollar (PPP) must be used to measure incomes. This instrument implies factor that the Dollar has various purchasing power in various countries.

According to 2016 IMF report, the highest income per capita (PPP) is recorded in Qatar – 127 660 USD. Luxembourg is second with 104 000 USD. Central African Republic is the poorest country with annual 684 USD. In our neighborhood, annual income per capita is 26 490 USD in Russia, 24 900 USD in Turkey, 17 440 USD in Azerbaijan, 8 621 USD in Armenia and 8 305 USD in Ukraine.

According to IMF information, the list of countries with the highest income per capita in 2016 is as follows:

‘‘

The European Bank for Reconstruction and Development (EBRD) has marked a historic milestone by issuing its first-ever Eurobond both denominated and settled in Georgian lari (GEL).

This development has been made possible by a recent establishment of a link between Clearstream and the Georgian domestic market which not only allows GEL to become a settlement currency in the international central securities depository, but also should encourage more international investment in the domestic market.

The 5-year bond totalling GEL 120 million (€46.7 million equivalent) was lead-managed and underwritten by JSC TBC Bank. The coupon on the EBRD’s inaugural GEL-settled Eurobond is linked to the three-month rate on certificates of deposit (CDs) issued by the National Bank of Georgia (NBG). The EBRD will apply for the bonds to be listed on the London Stock Exchange, following which an application will be made to the NBG for the Eurobond to be eligible for sale and repurchase operations carried out by the NBG. The EBRD has played a leading role in the development of the local currency and capital markets in Georgia, working with the Georgian government, the NBG and local financial institutions over many years, including throughout the recent global economic crisis, both to encourage borrowing in local currency and to develop and strengthen local capital markets.

Archil Mestvirishvili, Vice Governor of the NBG commented: “The NBG actively supports the issuance of GEL-denominated bonds by IFIs which is of great importance for Georgian capital market development. It is notable that the EBRD was the first IFI to issue GEL-denominated bonds in the local market in 2014, and now the EBRD again pioneers issuance of Eurobonds in Georgian lari. We hope that increased availability of GEL-denominated AAA-rated bonds will increase the attractiveness of the Georgian capital markets for local and foreign investors alike.”

Vakhtang Butskhrikidze, CEO of JSC TBC Bank, remarked: “We are delighted to have completed another successful transaction with the EBRD. Issuance of GEL-denominated Eurobonds under the EBRD’s Global Medium Term Note (GMTN) Programme that will be listed on the London Stock Exchange is an important achievement for the Georgian financial sector that will further support the liquidity of the local currency and attract international investors to the domestic market.”

This transaction is in line with the EBRD’s strategy in Georgia to deepen financial intermediation and develop local currency and capital markets to enable the local private sector access to finance. To date, the EBRD has invested a total of €3.1 billion in 205 projects in various sectors of the Georgian economy.

Its first loan in Georgian lari was signed in March 2010.

May 1, 2017 #190

Country USD (PPP) 1. Qatar 127 660 2. Luxembourg 104 000 3. Macau 95 151 4. Singapore 87 855 5. Brunei 76 884 6. Kuwait 71 887 7. Norway 69 249 8. Ireland 69 231 9. United Arab Emirates 67 871 10. Switzerland 59 561 It should be noted that Georgia comes behind almost all European countries in terms of GDP per capita, excluding Moldova and Bosnia Herzegovina. At the same time, Armenia and Ukraine are behind Georgia in the same category, however, it is also worth noting that several African countries are richer than Georgia.

As noted above, according to IMF indicators, in 2016 annual averaged income per capita in Georgia marked 10 100 PPP Dollar and this figure brought Georgia behind 11 African

countries.

According to the 2016 IMF report, Equatorial Guinea is the richest African country with 39 699 Dollar income per capita. Guinea is rich of oil. Seychelles come second with 28 148 Dollars. Seychelles is a small country on island with about 100 000 residents. Before 1976 it was a colony of France and today it is one of the best places for nautical tourism. Mauritius is third with 20 5252 Dollar. It is a small country on island that was a British colony before 1968. The country has high-developed tourism sector.

African countries richer than Georgia in terms of income per capita due to PPP Dollar are as follows: Equatorial Guinea – 38 699; Seychelles Islands – 28 148; Mauritius – 20 525; Gabon – 19 252; Botswana – 16 948; Algiers – 14 950; Libya – 14 236; South Africa – 13 179; Egypt – 12 137; Namibia – 11 756; Tunis – 11 657.

According to IMF forecasts, in 2017 in Georgia income per capita will rise to 10 645 (PPP). Developed economies will grow by 2% and developing economies will rise by 4.5%. Several weeks ago IMF reduced Georgia’s economic growth forecast for 2017 to 3.5% from 5.2%.

In 2016 Georgia ranked 98th worldwide with 2.7% economic growth, while the country occupies 75th place due to the 2017 forecast (3.5%).

According to IMF forecast, Georgia’s planned economic growth forecast in 2017 comes behind economic growth forecast for averaged developing countries. Under IMF prognosis, economic growth will record 3.5% in 2017, down as compared to Georgian Government’s forecast.

Today Georgia’s GDP per capita is 7-8 times smaller compared to averaged European level. Provided EU economy grows by annual averaged 2%, our economy must increase by at least 7-8% every year.

Even amid 5% averaged economic growth, Georgian economy will be twice smaller than averaged European economy after 50 years. To come up with EU level in 50 years, our country needs at least 7% and higher economic growth.

7% Economic growth will enable us to come up with European living standards in 40 years, while 10% growth will take only 25 years.

We remind you that government’s economic growth forecast is 4%. In January 2017 GDP growth constituted 5.2%, February – 4.4% and March – 5.3%.

“We have made a lot of my statements about returning Kazakh management to KaztransGas. Regretfully, this turned out impossible. I would refrain from making comments on other issues, because similar comments may be used at arbitration court.

This was an unexpected decision, because we have made a lot of statements on their return to the management. At this stage, negotiations are continued and this issue may be taken out of the agenda.”

Kakha Kaladze Minister of Energy

May 1, 2017 #190

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BANKING SECTOR

May 1, 2017 #190

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COMMERCIAL BANKS GROW PROFITS BY 150%

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ccording to National Bank of Georgia (NBG), in January-March 2017 profits of commercial banks constituted 257 785 000 GEL, up 148 million GEL compared to the same period of 2016 (109 889 000 GEL in January-March 2016). This signifies profits of commercial banks rose 1.5 times (+150% year on year). The banking sector’s profits in March increased by 32 million GEL compared to February 2017. Currently, there are 17 commercial banks in Georgia, however, amalgamation of TBC Bank and Bank Republic will be finished in the near future.

As of April 1, revenues of commercial banks marked 1.071 billion GEL, up 514 million GEL compared to February, and up 300 million GEL as compared to the same period of 2016. Interest returns of commercial banks also grow in stable way and the amount currently totals 647 million GEL. It should be stressed that commercial banks receive major revenues from retail loans – 365 million GEL, while profits from corporate loans marked 214 million GEL. At the same time, non-interest incomes made up 424 million GEL. 150% profits indicator is a genuinely impressive figure and it additionally reaffirms that Georgian banking sector is being developed dynamically and its growth scales are very impressive. In general, banking sector is a locomotive of the economy and similar large-scale profits of commercial banks were to make effect on Georgian economy

too. However, in January-February economic growth marked 4.8%, while GDP upturn constituted 2.7%. Specialists permanently talk about growing profits in the banking sector, high interest rates and existing problems in the sector. The Banks&Finances has tried to compare current situation in the bank sector, difference between loans and deposits, correlation of profits of commercial banks to GDP, with countries with the most developed banking sector, for example, China, the USA, Japan, France, Canada, Australia, Great Britain, Span, the Netherlands and Sweden.

The analysis is based on the 2015 indicators, because the 2016 indicators have not been fully published. We also stress that starting 2015 profits of Georgia-based commercial banks have been growing in stable regime.

First of all, we have made accent on the spread, that is, difference between interest rates on loans and deposits. In Georgia the spread indicator totaled 9.4 and this figure exceeds the averaged indicator of banking sector of the world’s developed countries – 6.3. This factor proves that Georgian commercial banks have quite high interest rates on loans and despite continuous growth, the existing tendency remains unchanged. Specialists frequently stress that high interest rates on loans ensure high profits for Georgian banks. If we analyze the correlation of profitability of commercial banks to GDP, we will see that it accounts for 1.7% and

this is quite high indicator and this indicator constitutes only 0.5% in banking sector of European countries. At the same time, correlation of loans to GDP accounts for 90% in European countries, while in Georgia the figure is only 49%.

Naturally, it would be inappropriate to make direct comparison of profits of Georgian banking sector with banking sector of the most developed countries, because these countries have far bigger economies and their economic conditions are absolutely different.

Therefore, we have decided to compare banking sector profits and banking sector loans to GDP and finally, compare profits of commercial banks of various countries of the world to GDP, provided the size of commercial banks in relation to economy are equal in all countries.

This chart shows that correlation of profits of Georgian commercial banks to GDP accounts for 1.7%, while the figure constitutes 1.1% in the USA, 1.4% in Japan and 0.9% in Great Britain. Moreover, if we admit that the size of commercial banks in relation to economy is equal in all countries, we will see that Georgia surpasses all countries with the most developed banking sectors in terms of profitability. This signifies that Georgia-based commercial banks receive so huge revenues and these revenues exceed GDP so much that these indicators surpass countries with the strongest banking sector such as the USA, Japan, China, France, Great Britain.

Whether Actions

by KaztransGas and Inter RAO Damage Reputation of Georgia MARIAM KOPALIANI

INTER RAO has launched an investment dispute against Georgian Authorities to claim a compensation after GEL exchange rate depreciation.

Moreover, KaztransGas has also sued Government of Georgia to London Arbitration Court.

Businessman Fady Asly, president of International Chamber of Commerce – Georgia (ICC Georgia), also argues with Georgian Authorities.

The Caucasus Business Week (CBW) has prepared an analysis whether the existing reality can harm Georgia’s investment environment.

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GAS

May 1, 2017 #190

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octor of Economics, professor Rati Abuladze explains that today in Georgia there are many organizations founded by foreign capital. Moreover, Georgian economy operates stakes of foreign investments, various projects are implemented by foreign specialists (including state projects), he said.

It should be noted that Georgia is recognized to be an investment-friendly and safe country, where interests of any investors are protected. In Georgia, for many years, competitive advantage of foreign companies were posing serious challenges to Georgian companies, while today Georgian politics is facing significant challenges.

Over the past period, disputes by KaztransGas Tbilisi (claiming 180 million USD from Georgian government at International Arbitration Court) and the Dutch branch of Inter RAO (threatening to appeal to the court) have caused certain embarrassment in Georgia. Moreover, Georgian Office of International Chamber of Commerce (ICC) has also expressed protests and British American Tobacco Ltd has submitted an action to Constitutional Court against Parliament of Georgia. It should be stressed that the country respects interests of any foreign company and reacts to their complaints based on state interests. «It should be stressed that position of foreign companies in relation to environment and Authorities is one of the key indicators of a strong country. Amid the existing situation, regretfully, it should be noted that: • Foreign business «has fixed eyes» on Georgian State Budget, which owes 15.5 billion USD. Consequently, additional debts of several tens of millions of USD will strip many citizens of financial resources.

• There are conditions arisen in the country, when the state may become a field of struggle for foreign business (traditionally, business sector becomes such a field). Similar scenario may be developed because of the existing political and management factors, as well as political skills that have direct relation with strength of the state system and in this case, conduct of foreign companies; • Amid a lack of global politicians, expected processes have not been foreseen and steps taken by international business organizations turned out «unexpected».

• Georgian political establishment has not given due reaction to this grouping of foreign interests and assessments made by them in relation to Georgian court system; • The ongoing developments will be reflected on Georgia’s investment attractiveness, shaping of global and local reputation of the country. As a result, the society will analyze and appraise outcomes and activities of the governing chain.

Rati Abuladze explains that Government should carry out adequate legal measures in relation to foreign organizations that cannot be integrated within domestic system, including, at the expense of investment attractiveness and expected changes in global reputation.

Situation arisen around KaztransGas and Inter RAO may damage Georgia’s invest-

ment environment, but this factor cannot be a determinant factor», economic expert Gia Khukhashvili noted regarding two legal disputes instituted by two major foreign companies against Government of Georgia.

Khukhashvili explains that this incident will not make positive affect on investment environment, but we should realize that the mentioned problems were accumulated for many years.

“In due time Government of Georgia made due reaction to this factor. There are no absolutely right or wrong parties in the history with TbilGas. There are many ambiguous aspects in terms of investments. The Problem is that our government has not paid debts so far. Finally, it turned out that the Authorities have set endless control over the company without any perspective.

And this fact caused discontent of Kazakh party”, Khukhashvili noted. This is a problematic issue and this fact may complicate situation with Kazakhstan, he said.

Moreover, if Georgia intends to be a hub connecting East with West, the country should keep intense cooperation with Kazakhstan, he added.

“Everybody understands very well that this is not business and this is business on the verge of politics. Similar factors may damage Georgia’s investment environment, but this cannot be a determinant factor”, Khukhashvili pointed out.

The history with Fady Asly is an absolutely different case, because this issue can bring real damages to the country, Khukhashvili added.

Expert of economics and lawyer Akaki Chargeishvili explains that there are many questions around these two companies.

Namely, there are many issues that should be substantiated and analyzed. We should cast light on claims by KaztransGas against Government and only after that we will be able to conclude whether the existing circumstances may affect investment environment, he said.

KaztransGas should submit substantiations and after this we will be able to make due analysis, Chargeishvili noted.

«We need due substantiation. Maybe they just try to frighten the country. They argue that Government has failed to sell the asset, but this cannot be a real pretension. All claims must have legal grounds and substantiation», Chargeishvili pointed out.

Before applying to arbitration court, domestic legislation could have been applied, he explained. And Georgia has adopted legislation for protection of investments, under which, first of all, domestic jurisdiction must be used. This signifies that the mentioned issue was to be discussed by domestic court. In the event the issue remained unresolved on domestic level, the company could apply to other international arbitration court after that, Chargeishvili said.

This step should not be directed to defaming the reputation of our country. Otherwise, our government should institute opposite legal dispute, Chargeishvili said.

«I believe our Government should provide due explanations over the issue. There are

many questions in this case for not only Government, but also private business.

Explanations must be made by the private company too», Chargeishvili noted.

As to Inter RAO, in this case the affairs seem easier, because the case does not refer to bankruptcy, he noted.

«I think there are certain faults and misunderstandings. In these relations, it is upon GNERC, as an independent regulatory company, to set tariffs. Consequently, if TELASI company has applied for growth in tariffs, we do not have any information about this.

Consequently, GNERC should make explanations», Chargeishvili said.

We realize that GEL depreciation causes growth in tariffs, but we have certain tax preferences in the part of profits. Therefore, we should cast light how TELASI has taken into account these aspects and so on.

«In this case it is also necessary to immediately involve GNERC and make explanations, based on privatization agreement, about the essence of the case and about TELASI demands. At the same time, TELASI should also make a statement about its pretensions against Government of Georgia», Chargeishvili noted.

It is a bad coincidence that KaztransGas has submitted an action to arbitration court in parallel regime with the action of INTER RAO, while there were no due preconditions from either Government or these two companies, he noted.

We remind you that KaztransGas has sued Georgian Authorities to court. According to Kazakh media agencies, the company failed to sell its subsidiary in Georgia and now it is trying to take back the company. KaztransGas Tbilisi director general Sanjar Shokataev told Commersant that KaztransGas Tbilisi will argue against Government of Georgia at London Arbitration Court. However, submission of an action to London Arbitration Court does not signify the negotiating process has been finished and we are ready to continue a dialogue with Government of Georgia in the future, he said and added that the company will recall the action in case the parties reach an agreement.

The Dutch branch of INTER RAO also plans to launch legal dispute against Georgia at an arbitration court and claim millions of USD as a compensation for losses after GEL exchange rate depreciation. According to Russian media agencies, the company has evaluated the losses by tens of millions of USD. Businessman Fady Asly, president of International Chamber of Commerce, also talks about existing problems with investors in the country. Last night frontier guards made several top investors wait at the state border and humiliated them, while these investors were going to meet with the Prime Minister. And they let investors enter the country only after my interference. As a result, the country will lose investment projects they were bringing to this country!

And we have similar results when ignorant people set regulations.

Do you seek foreign investments again?

Trust me, you should forget them!» Fady Asly wrote on his own Facebook page.

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PR PERSON

May 1, 2017 #190

Devotion to Job, First of All, Brings Success

Interview with Irina Kometiani, PR specialist.

- What is your profession?

- I have graduated from humanities faculty with specialization in German and Georgian languages. I hold a MA degree in PR management and I am also a postgraduate student in business administration.

- Your first job place.

- I would remember my working experience in studentship years – private lessons for pupils, I used to give lessons in German language. I used to work in bank sector, private business. I have worked as a project manager for a Latvian company and an administrative manager for an energy company.

- Current job and position.

- I have been working as a senior specialist for Georgian State Electrosystem (GSE) PR office.

- Your first success.

- In my school my team won intellectual game among secondary schools of Georgia. Before, I had taken part in various contests, but in that case I was a team leader and, consequently, I had much responsibility. I believe this was a good experience.

- Business, project that you take pride in even today.

- I put all my efforts and energy in any project. Consequently, all projects, in which I have taken part in my studentship and on various posi-

“

I graduated MA studies in PR field at GIPA. We have professional specialists, who give lectures at various higher institutions.

Anyway, it is necessary to care for permanent selfdevelopment at all stages.

tions, are very important for me.

- Field, where you would never work in.

- New challenges are always very interesting and I have never considered them as obstacles. Consequently, as a PR specialist, I would take efforts in any field that do not contradict my moral principles. As to profession, I would not be a doctor.

- What makes a person successful in your field? Besides knowledges, whats special features are required?

- Devotion to job and business, first of all, precondition success in any field.

Proper interpersonal communication skills and care for self-development are necessary features to attain success.

- Is it possible in Georgia today to study PR profession at high level or international knowledge and experience are necessary?

- I graduated MA studies in PR field at GIPA. We have professional specialists, who give lectures at various higher institutions. Anyway, it is necessary to care for permanent selfdevelopment at all stages. It is necessary to actively get to know updates and literature on newest tendencies in field of specialization.

- How easily can you settle emergency situations and take decisions? Do you think crisis situa-

tions harm working process?

- In critical situations I always try to maintain peaceful mood and this strategy helps me in self-concentration and taking right decisions.

- Interesting episode from your life that has changed your life.

- Interesting cases have preconditioned changes at all stage of my life and every time everything was changing for the better.

-If not this profession, which field would you work in?

- I suppose I would be a psychologist.

This is a very interesting field for me.

I independently receive information from various literature on social psychology and this practice assists me in my current job.

- What are your strong personal features and characteristics?

- I think my positive thought and optimism is one of my positive features and this aspect assists me very much in both business and personal relations.

- What factors make major discomfort in working process?

- I think it is difficult to work with irresponsible people.

- Where do you see yourself after 20 years?

- It is useless to talk about what may happen after 20 years. The life is full of surprises, but I definitely know that I will have my own favorite business.

EDUCATION

May 1, 2017 #190

Georgia is a transition economy, with massive structural changes in the first decade of the transition process that significantly worsen a socioeconomic situation of the country. After wars, unsuccessful institutional reforms, hyperinflation, inefficient taxation system and permanent budget sequester, building sound education system became a low priority for the Georgian governments.

IN GEORGIA EDUCATION MATTERS But Probably Will Not Make You Rich DAVIT KESHELAVA

www.iset-pi.ge “Education is what remains after one has forgotten what one has learned in school” – Albert Einstein It is widely recognized that education is the key to the future.

In general, educated people have higher earnings and lower unemployment rates and highly-educated countries grow faster and innovate more than the other countries. Therefore, in the recent economic literature, education is considered as an investment good and look for the other investments, there is the costs and benefits of the investments in the education. The cost of the education is the value of the time (opportunity cost) and money (tuition fee and other fees) people spend to acquire a secondary school certificate, professional education certificate or university diploma. While the benefit of gaining an education is premium in earnings for graduate people (there are other benefits as well like better working conditions, recognition and achievements at work). Empirical Literature suggests that there are two channels from which education affects earnings.

First, it improves workers’ skills that, in turn, raises productivity of labor and lead to higher wages. Second, higher education provides the credentials that signals employers that the candidate has appropriate skills for a certain job.

The human capital approach is based on the idea that individuals have to compare these costs and benefits and decide in which degree to stop. If benefits are not large enough to compensate costs, the individual might think that it is not worthwhile to gain additional degree. Therefore, while we are considering the decision of the ordinary people how much to invest in the education, it is important to determine what is the earning premium of the additional degree. However, the world is not that simple and there are plenty of other socioeconomic factors that play an important role in the decision to continue studying or dropping out (Lemieux, 2001). This blog-article will try to measure the effect of the education on earnings in Georgia by controlling main socioeconomic factors that might have a significant influence of the wage distribution.

Georgia is a transition economy, with massive structural changes in the first decade of the transition process that significantly worsen a socioeconomic situation of the country.

After wars, unsuccessful institutional reforms, hyperinflation, inefficient taxation system and permanent budget sequester, building sound education system became a low priority for the Georgian governments. Therefore, before the Rose Revolution, there were three main problems in the education system: corruption, low access to education and low quality of education.

Despite such a poor condition in the education system, there was high demand on the higher education. After Rose Revolution, corruption and affordability problem was successfully solved, while the quality of education still remains one of the most challenging areas.

Much of the economic literature on the effect of education on earnings has been inspired by the seminal work of Mincer (1974) and Becker (1975) on human capital. Mincer (1975) captured the return to education by estimating simple OLS regression, where log earnings is considered as a dependent variable that is explained by the number of years of education, potential experience and squired term of potential experience. This blogarticle considers modification of the classic Mincer equation by controlling large number of the socioeconomic factors that also contributes to the people’s earnings. As a dependent variable, we used log of earnings, where earnings are defined as: wage of the hired worker based on the written or oral agreement, the income of the entrepreneurs working on their enterprises and farmers’ income, earnings of the people working without hiring in the non-agricultural sector (manufacturing, trade, transportation, construction, handcraft, repair or professional activity – a reporter, a medical diagnostics, treatment and consulting).

Moreover, the main interests of this research are two dummy variables that represents professional education and higher education (other lower levels of education is considered as a base). We controlled experience of people by age, gender of the individuals, ethicality, and rural-urban distribution of people, marital status and sectors of employment. This simple OLS analysis is based on the yearly data of the Integrated Household Survey (HIS) from 2008 to 2014 provided by Geostat.

EDUCATION PREMIUM First of all, among all the people presented in the sample 20% to 24% have any form of the tertiary education, while the same

9 number for the employed people who earn any income is much higher 42%. In addition, the proportion of people with any type of professional education is 20% to 22% in the whole sample and around 25% among employed people. Georgia is distinguished by low levels of illiteracy, as only 0.5% to 1.15% do not know how to read and write. Corresponding statistics again indicate that gaining higher education is very popular among Georgians.

However, the main question is how professional and higher education helps people to earn more income.

People with the higher education earns 40% to 51% more compared to those with general education. However, earning premium is fluctuating over time and do not reveal a clear pattern of increase or decline. While higher education is a big driver of earnings, professional education is shown to contribute relatively little 4% to 6% and again reveals no clear trend with time.

Despite the fact that tertiary education has a significant earnings premium, rate of return on the additional year of schooling is still low compared to the other countries (Jugheli, 2012). If we decompose earnings into the four groups for different levels of education (0-150 lari low earnings, 150-435 lari lower than medium earnings, 435-1000 higher than medium earning, and 1000 and above high earnings), we will discover that as education level increases, the people concentrated in the low earning groups shrink significantly, while high earning groups increases.

This finding again supports the idea that education has earnings premium. However, the share of individuals with comparatively high earnings is higher in Bachelor’s or Master’s degree group, but the indicator itself is low even for these groups, showing that only 5% and 10% of individuals, who have Bachelor’s and Master’s degree respectively, earn income above 1000 lari. Despite the fact that IHS underestimates earning, this distribution still gives us the information that wage level in the country is low even for individuals, who have higher education. Therefore, we can conclude that people without a diploma of higher education have difficulties to compete with the people with tertiary education for highly paid jobs, but diploma itself does not guarantee high earnings.

Furthermore, it is important to estimate earning premium for the higher education in different cohorts. Therefore, we divided the total sample into three cohorts. The first cohort represents people with soviet education. The second cohort represents people who gained higher education after the collapse of the Soviet Union and before Rose Revolution. The third cohort is the new generation that gained an education after Rose Revolution.

As there is a huge amount of the retired people among the first cohort, we decided to focus on the other two. People with higher education in the second cohort earn 40.6% more compared to those with general education in the same cohort. While, the same measure is slightly higher 43.4% for the third cohort. Therefore, we again see that there is no significant difference between earning premiums among the generation. This finding again indicates that the third problem in the educational system – low quality of the education is still relevant.

WHAT ARE THE OTHER FACTORS AFFECTING THIS RELATIONSHIP? In addition, there is a significant gender gap in Georgia, as male earns 26% - 45% more compared to the woman with more or less similar characteristics. Despite the large figures, the gender gap is closing over time. There are two main reasons of the high wage gap: low salaries in the sectors that are dominated by the women, such as education, health and social security, and restaurants and hotel service (horizontal segregation) and lack of women in the leading positions (vertical segregation) (Sefashvili 2011). Furthermore, the wage premium from the higher education differs with gender. Male with higher education earns 39% to 41% more compared to the man with general education. The same measure is higher 49% to 52% for female workers. This phenomenon can be explained by the fact that men without higher education are highly concentrated in the sectors with higher earnings than women without higher education.

In addition, earnings in the rural areas are 2.5% - 18% lower than the earning in the urban areas rather than the capital of the country. The average earnings of the people living in Tbilisi are 25% - 34% higher than the other urban areas. However, it’s worth mentioning that the cost of living in Tbilisi is much higher than other areas and much of the high productive and highly paid sectors are situated in the capital. Furthermore, earnings premium of the higher education in Tbilisi, other cities and rural areas are much closer, amounted to the 46.3%, 42.8% and 41.9% respectively.

Moreover, it is important to determine the effect of the sectorial distribution of workers on their earnings. In our model the base sector is agricultural sector and all the other sectors are compared to it (some sectors are not presented in the table not to overload it). It is clear that agriculture and education sectors are characterized by the lowest wage premium. The agricultural sector has the highest concentration of people without high education (65% have maximum upper secondary education) that partially explains lower productivity and relatively lower wages in this sector. However, in case of the education sector, more than 75% of people have higher education and 14.57% professional education, but the earnings premium is still extremely low. In addition, according to the recent statistics of Geostat, education sector was the lowest payed sector in the fourth quarter of 2016, where the average salary of the hired workers was only 589.2 lari that is 71 lari lower than the average salary of the second lowest agricultural sector, 476.7 lari lower than the average salary of the country and 3.43 times lower than the average salary of the highest paid financial sector. This statistic again gives us a reason to concern, as low paid teachers and lecturers lose motivation to teach students better and young talented undergraduates have no incentives to become teachers or lecturers. Furthermore, lower motivation and lack of qualification lead to low quality of education. In addition, only relatively less skilled part of undergraduate students (of course, with the exceptions of the talented enthusiasts) will choose this profession that further reduces motivation and qualification of future teachers and lecturers.

Therefore, we are in the vicious circle and should try our best to find a way out of it.

This blog is based on the research performed by ISET-PI team for the Asian Development Bank “Good Jobs for Inclusive Growth” project.

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Kakhetian Traditional Winemaking to Introduce New Honey Product under Nena Brandname In May Nena, a new brand of Honey, will appear on the market.

KTW Agro-Keda company, member of Kakhetian Traditional Winemaking (KTW), will purchase honey from local farmers, process, pack ans sell. Nena executive director Aleksandre Dadiani told BusinessPressNews that initially the company will buy honey from local population and in the coursed of time KTW Agro-Keda will lunch honey production itself.

“Initially, we will buy honey in highland regions of Guria, Ajara. Then we will launch our own production. Initially, our honey will be sold in glass containers. We also plan to produce honey for hotels in 20-gram plastic and other containers too”, Aleksandre Dadiani noted.

#NATURELOVERS

BANK

PASHA Bank - Partner of International Business Forum in Batumi

On May 22-23rd International Business Forum takes place in Batumi. The event is organized by consultancy company “IBF” and supported by PASHA Bank.

The main topic of discussion will be Leadership; therefore experience in this area was the main criterion while choosing the right speakers for the event. Each of the six presenters is a leading authority in the field they represent: - Pierluigi Collina – Six times

FIFA’s “Best Referee of the Year” and member of the UEFA Referees Committee - Marshall Goldsmith An American leadership coach, the author of several management-related books, one of the world’s most-influential business thinkers for the past ten years by Thinkers50 - Kevin Gaskell - Former CEO at Porsche and Lamborghini - Sean Fitzpatrick - Rugby legend, former captain of the New Zealand national

NEWS

BRAND

Aric Group Constructs Vinichio Valley Green Tourist Center in Sagarejo Partnership Fund and Aric Group signed a common memorandum.

Aric Group is an investment company created with foreign capital which implements projects in the field of agriculture, food industry and tourism. According to memorandum, the companies want to develop a common business, Vinichio Valley. They want to produce wine and pistachio on the land owned in Sagarejo region.

Executive director of Partnership Fund, Davit Saganelidze, minister of Agriculture Levan Davitashvili and Deputy Minister of Economy took part in the event of signing the memorandum.

Zanduki.ge – Brand of Handmade Things Plans to Launch Its Own Production Line Zanduki.ge plans to launch its own production line, Sopo Balanchivadze, founder of Zanduki.ge online store of handmade things, told Commersant radio station.

The brand unites products of only Georgian designers.

The idea of founding Zanduki.ge arose in 2016. As to partners, we choose professionals, who create very beautiful things, but are lessknown. We place only high-quality works on our website. We also pay attention to time of preparing this or that accessory, because consumers do not wait for a long period.

We have determined standards that our products must meet.

rugby union team All Blacks, founder and CEO at Front Row Leadership - Dananjaya Hettiarachchi The 2014 World Champion of Public Speaking, HR expert and trainer - John King – The coauthor of #1 New York Times bestseller “Tribal Leadership”, motivational speaker Attendance of up to 800 delegates from 14 countries is expected, among them representatives of small, medium and large enterprises, startups, government and media.

“We are happy to see the increasing number of business events held in Georgia that bring together local and international delegates from various sectors. PASHA Bank always tries to support projects of this kind. The invited speakers will share

Publicis Becomes New Media Partner of H&M in Georgia Information about H&M plans to enter Georgia has been confirmed. Inauguration details were kept secret till today, but now we have learnt that Publicis Georgia has become a new media partner of H&M in Georgia.

The Marketer has interviewed Ekaterine Ebanoidze, Publicis account director, and Rostislav Rudzinsky, regional director for strategic issues in Caucasus, about selection process and criteria.

-First of all, I congratulate our agency on this new challenge. What way have you passed to become media partner for H&M? -Thank you very much! Our team is happy to have media partnership with H&M. All of us know that H&M is a brand that offers refined style and quality at affordable prices. Selection of media partner was a long, complicated and very interesting process. I would like to stress that this challenge has brought inestimable experience to us.

-What criteria had you to satisfy and what factors have helped you reach a final agreement with H&M? -When developing media strategy, we have made emphasis on analysis of competitive insights to make sure that ideas of our team would be original, create special message and successfully identify specific groups of target audience.

Initially, we have spent much time and energy to arrange valuable presentation for H&M team.

Then we explained why our agency is a special, interesting and good partner.

Finally, everything depended on a final meeting. From the very beginning they demonstrated kind attitude to our team and our presentation ended in success.

H&M representatives admired team spirit in our company most of all. At the end of meeting our companies grew into a single team.

-How would entrance of H&M on Georgian market affect domestic advertising industry?

Rostislav Rudzinski: -Georgian economy is in the phase of development. Naturally, entrance of such a big international brand signifies that this process proceeds successfully and the consumer’s solvency grows. Advertising field more and more gets closer to its analogues from developed countries in terms of complexity and changes.

Products and communication channels have multiplied, potential of new digital platforms also grow. Naturally, customers become more active and this makes positive effect on development of advertising business. I can confirm that, thanks to cooperation with H&M, our team members gained special experience and knowledge. Now we have good knowledge of AD tendencies in world fashion and our competitive capacity has also increased on Georgian market.

their most interesting and relevant experiences with the attendees. We are glad to be one of the partners of the forum.” – said Anano Korkia, Head of PR and Marketing at PASHA Bank.

“This unique forum will bring together world class speakers, business leaders, government officials, startups and representatives of media. With the leadership being the main topic, we did our best at the selection process of each speaker and we hope that they will share the best knowledge and practices with the delegates.” – said Guga Kobakhidze, founder of “IBF”.

International Business Forum will take place on May 22-23rd in Euphoria Hotel Batumi. Detailed information and tickets are available at the web-page: ibf.ge.

Company IDS Borjomi Georgia Initiated Planting of 1000 Seedlings Volunteers from all over Georgia joined the project “Borjomi #Naturelovers”. In the frame of the initiative of company IDS Borjomi Georgia, 1000 seedlings of oak, maple and pine-tree were planted. The event was organized to celebrate Earth Day and aimed to involve community members from different regions in the campaign of Borjomi plateau reforestation. “We started reforestation process on this territory last year and now it is possible to see the results of our work. It is a very nice initiative that IDS Borjomi Georgia organized such an event which will help for the sustainable development for local territories. It is important that society is actively involved in the process and this event helped to engage many people in the campaign. 22 of April, Earth Day was announced as a week of activities for environmental protection. We hope that Georgian business will join our campaign and support it. We will always support these initiatives from our side and change the attitude towards this issue both from population and government”- declared the minister of Ministry of Environment and Natural Resources Protection, Gigla Agulashvili. “Borjomi” Corporative Social Responsibility projects include three basic fields: Environmental protection, education and sport. With the aim of Borjomi reforestation, we have been implementing a lot of campaigns of planting seedlings in accordance with Ministry of Environment and Natural Resources Protection. This year, the minister himself joined the campaign as well as volunteers from different regions of the country and our staff with Borjomi Training Center students. We do the job all together to preserve a healthy environment for future generations”- noted general director of IDS Borjomi Georgia, Zaza Kikvadze. The campaign had a positive feedback from social network. Many facebook users changed their profile with a #Naturelover application to support the campaign in the social network.

May 1, 2017 #190

Outcomes of State Program for Support of Smallholders This is the first spring over the past years, when Government refrained from implementing the tillage universal program.

In previous years, the government used to issue vouchers to village residents for cultivating their land plots.

BFM.GE

W

e will introduce several indicators from the smallholders support program to emphasize scales and effectiveness of this program.

According to official information: 2013: A total of 710 479 beneficiaries received 190.4 million GEL. As a result, 208 375 hectares of agriculture land plots were cultivated.

2014: a total of 757 145 beneficiaries received 69.9 million GEL and 220 466 hectares of land plots were cultivated.

2015: a total of 767 017 beneficiaries received 56.8 million GEL and 212 141 hectares of land plots were cultivated.

The project was continued in 2016 too. Ministry of Agriculture published the 2016 statistics a couple of days ago. According to the 2016 preliminary report, space of spring and autumn sowing made up 239.2 thousand hectares, down 69.2 thousand hectares year on year.

According to Geostat, national statistics service of Georgia, space of autumn sowing (grain, barley), according to preliminary indicators, made up 59 000 hectares, down 0.9 thousand hectares com-

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pared to the previous year’s indicators. Space of other spring plants sowing made up 180.2 thousand hectares, down 68.3 thousand hectares as compared to 2015.

Consequently, despite the program was continued, in 2016 space of cultivated land plots started declining. As to harvest: According to the 2016 indicators, among non-perennial crops, highest productivity was registered for potato (251 thousand tons). Maize is second with 232.2 thousand tons and autumn cereal is third with 119 thousand tons.

As to perennial crops production, highest productivity was registered for fruits (189.9 thousand tons), including the major ratio is recorded for Apple with 63.5 thousand tons. The national statistics service separately mentions grapes and citrus production among perennial crops.

In 2016 grapes production made up 153.7 thousand tons, while citrus production totaled 68.6 thousand tons.

According to 2016 early report by Geostat, as compared to 2015, fruits production rose by 43.3 thousand tons, but grapes production declined by 114.1 thousand tons and citrus production shrank by 16.9 thousand tons.

Based on the statistics, as

one of key factors, in 2017 the Authorities ceased assistance for growing non-perennial crops, because this practice had rather social importance and it was less oriented on production growth.

We remind you that, under the 2017 budget bill, agriculture sector financing declined by 82.210 million GEL. 321.3 million GEL was allocated for the Ministry this year, while the 2017 2013: A total of 710 479 beneficiaries received 190.4 million GEL. As a result, 208 375 hectares of agriculture land plots were cultivated.

2014: a total of 757 145 beneficiaries received 69.9 million GEL and 220 466 hectares of land plots were cultivated.

2015: a total of 767 017 beneficiaries received 56.8 million GEL and 212 141 hectares of land plots were cultivated.

budget assignments totaled about 238 million GEL. As a result, financing of programs has also decreased: agriculture development program has decreased by 75.430 million GEL; financing of food safety, plants protection and epizotic reliability reduced by 3.930 million GEL; financing of winemaking decreased by 450 000 GEL, support of research projects in agriculture sector went down by 3.400 million GEL. The 2017 statistics will show whether this slowdown will be reflected on production scales.

AGRO SOLUTIONS

Georgian Walnut has the Export Potential in EU, Near East and Asia Business Consulting Company

IRAKLI CHIKAVA Commercial director of Consulting Company “Agro Solutions”

B

y the initiative of Ministry of Agriculture from the end of February, 2015 the Agricultural Projects Management Agency has started implementation of program “Plant the Future” within the two independent components: 1. Co-financing component of perennial gardens; 2. Co-financing component of nursery farms.

Within the framework of the program “Plant the Future”, the volume of state co-financing in case of orchard’s cultivation amounts 70% of cost of plants and 50% of cost of drip irrigation system; and-50 % of the cost of farming value-in case of nursery farming.

Based on sources of Projects Management Agency, within the scope of implemented project “Start the Future”, there has been cultivated 1372 ha of walnut orchards.

Among them 223 ha of orchard was planted in 2015, 661 ha in 2016 and as for 2017, in winter and spring there has been already cultivated 488 ha of walnut orchards. Most of the cultivated orchards are met in 2 regions, 580 ha have been grown in Kakheti and 344 ha in Kvemo Kartli.

It should be noted, that in 90 % cases of cultivated orchards there has been planted Chendler variety of walnuts, but so far none of them are in breeding.

We should assume, that the trend of walnut cultivation will continue.

Although, there is a risk, that after stopping the state program “Plant

the Future”, the pace of orchards cultivation will be suspended. At this stage the project “Plant the Future” is being implemented and the Ministry of Agriculture does not speak about the cessation of the project so far.

The current pace of walnut cultivation increases the opportunities of export. The Georgian Walnut has the Export Potential in EU, Near East and Asia. However, in order to enter these markets the price must be competitive. It is also important, that the food safety and product quality requirements must be protected.

Georgia can become the leader in producing walnut throughout the Caucasus, although nowadays the leader is Azerbaijan and our country is on the second place.

SCHEDULE #7: The areas of cultivated orchards within the scope of project “Start the Future”

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May 1, 2017 #190

WORLD NEWS

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Quotes

“ Natural gas can be carried and used in Turkey’s domestic market as well as in neighboring countries

The people who have taught me the most in my career are the ones who pointed out what I didn’t see.

”

Sheryl Sandber

Israel’s gas ‘can be transferred to Turkey in 2 to 3 years’

T

he best option to carry Israel’s natural gas to Europe is the route from Turkey to Europe, which is possible within two to three years, the director general of the Israeli Energy Ministry said April 27. During the “Boosting Regional Energy Partnerships and Trade in the Eastern Mediterranean” session at the Atlantic Council Istanbul Summit, Shaul Meridor confirmed Israel’s large-scale natural gas discoveries in recent years, saying they need to be transported to European markets.

“To carry natural gas to Europe, there are three routes for consideration by the state of Israel, the Turkish route; the eastern route and through LNG terminals in Egypt,” he said, adding that the Turkish option is the best. “Natural gas can be carried and used in Turkey’s domestic market as well as in neighboring countries,” he said.

Deputy Undersecretary of Turkey’s Energy Ministry Alparslan Bayraktar noted that three main principles should be considered in any new gas development project in the Eastern Mediterranean.

“These principles that govern gas transmission assert that any project should be mutually beneficial to all concerned, that Turkey’s security of supply should be taken into account and lastly, security of supply for Europe is achieved,” he said.

He said peace, prosperity and stability in the region from Israel to Turkey, through Turkey to Europe,

are possible with the proposed gas projects.

Bayraktar reiterated the key issues in Turkey’s energy policy. “Security of supply, localization and the expansion of a predictable energy market structure,” he said.

He added that Turkey is firstly aiming to meet the challenge of growing demand, and secondly is addressing its reliance on imported resources. “According to International Energy Agency data, Turkey is facing fast growing energy demand in the medium and long run,” he said, adding that 70 percent of energy resources are imported, which is causing an account deficit in the economy. He stressed that to overcome this over-dependence on imports, the country is actively seeking solutions through the use of alternative domestic resources, mainly coal and renewables.

On Oct. 13, 2016, Israel’s Energy Minister visited Istanbul to attend the World Energy Congress 2016, marking the first visit by Israel after several years. Turkish Energy Minister Berat Albayrak and his Israeli counterpart agreed then to enter talks to discuss a project to allow the transmission of natural gas from Israeli waters through Turkey and onto Europe. Turkish and Israeli companies are currently discussing a possible gas pipeline to be built between Israel and Turkey to transport natural gas supplies from the Leviathan gas field in the Mediterranean Sea off the coast of Israel to Europe.

Construction of TAP’s offshore section to start in 2018

T

he laying of the first stone of the Trans Adriatic Pipeline’s (TAP) offshore section is scheduled for 2018, a source in Italy’s Saipem SpA told the Natural Gas World.

At this stage, the company is not involved in construction of TAP, said the source. “Saipem’s activities will begin when the micro-tunnel area will be available and we are interested in making the area available to organize the micro-tunnel operations. We are following this project with great care,” added the source. In April 2016, TAP consortium awarded to Saipem SpA the contract for Engineering, Procurement, Construction and Installation (EPCI) for the offshore section of the project. TAP’s 36-inch offshore pipeline across the Adriatic Sea – between the coastlines

of Albania and southern Italy – will be approximately 105 kilometers in length, down to approximately 820 meters below sea level at the deepest. TAP is a part of the Southern Gas Corridor, which is one of the priority energy projects for the European Union.

The project envisages transportation of gas from Azerbaijan’s Shah Deniz Stage 2 to the EU countries.

The pipeline will connect to the Trans Anatolian Natural Gas Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south.

TAP will be 878 kilometers in length (Greece 550 kilometers, Albania 215 kilometers, Adriatic Sea 105 kilometers, and Italy 8 kilometers). Its highest point will be 1,800 meters in Albania’s mountains.

SOCAR Still Interested to Build Carbamide Plant in Georgia Despite the construction of a carbamide plant in Azerbaijan, the issue of building a carbamide plant in Georgia hasn’t been removed from the agenda, said the plant’s director Khayal Jafarov.

He made the remarks at the ‘The 2nd SOCAR International Caspian and Central Asia Downstream Forum – Trading, Logistics, Refining, Petrochemicals’, in Baku on Apr. 27.

“We are still interested in this project and we will consider this issue,” noted Jafarov.

Iran, Armenia promote Tax Cooperation Head of the Iranian National Tax Administration and Ambassador of the Republic of Armenia discussed the most important tax issues, calling for promotion of economic and tax cooperation.

During the meeting held in Tehran, Sayyed Kamal Taghavinejad, Head of the Iranian National Tax Administration, pointed to the long-term political, economic and cultural relations between the two countries and said: Currently Iran and Armenia have good cooperation both in diplomatic relations and technical and economic cooperation.

The two countries have good relations in various trade and economic spheres and other fields, and we hope Iran and Armenia will benefit this cooperation, especially in the field of economy, by increasing tax cooperation, Taghavinejad added.

In the meeting, Artashes Tumanyan, ambassador of the Republic of Armenia, said: I hope this meeting will lay the groundwork for deepening economic relations between the two countries.

This cooperation will lead to increased trade between the two countries in the future and economic relations will be deeper, Tumanyan stated.

The two sides also discussed joint tax programs as well as tax developments and achievements of the two countries.

It is worth mentioning that the two countries expressed their readiness to review the Treaty on Avoidance of Double Taxation signed and applied several years ago between the Islamic Republic of Iran and the Republic of Armenia.

The main idea expressed during the panel discussion was that the law should not restrain the development of technologies.

Moscow Hosted Russia’s Largest Conference on blockchain and Cryptocurrencies

M

oscow-based Digital October hosted an annual, Russia’s largest conference, dedicated to blockchain and cryptocurrencies, – Blockchain & Bitcoin Conference Russia. It gathered 750 visitors and 30 speakers – blockchain practitioners and theoreticians from Europe, America, and Africa.

Blockchain & Bitcoin Conference has been held in Moscow for the fifth time.

According to organizers, Smile-Expo event company, the topic moved beyond the IT scope long ago. Now it’s a whole ideology and a giant development area for business and society.

The industry has significantly advanced in the last four years, Bitcoin capitalization has reached $17 billion, and the number of new projects is growing exponentially. It means that today it won’t be enough to gather everybody in one hall to talk about common topics, says Smile-Expo. Therefore, the conference was divided into two streams (financial-regulatory and professional), and speakers shared successes of launched projects.

Participants included some big names of the Russian-speaking blockchain segment as well as specialists from abroad, who have not presented in Russia yet.

Presentations were delivered by experts already known among constant visitors of Blockchain & Bitcoin Conference: active bitcoin entrepreneur Michael Chobanian, head of the working group of the State Duma Elina Sidorenko, representative of NRU HSE Marina Guryeva, blockchain evangelists Dmitry Starodubcev and Konstantin Goldstein, developer at Airalab Sergey Lonshakov.

A nice surprise was the participation of renowned industry speakers: founder of BitFury Valery Vavilov, engineer at Zcash Ariel Gabizon and participant of Hyperledger Fabric project Duncan Johnston-Watt.

Organizers paid special attention to the banking sector: optimization of letters of credit and internal banking processes, trade financing, as well as legal issues associated with shifting to blockchain. Representatives of Sberbank, Alfa-Bank, Sovcombank and Dubna University participated in the discussion.

The main idea expressed during the

panel discussion was that the law should not restrain the development of technologies. Whereas blockchainbased products should be introduced into the legal framework, blockchain itself should remain out of legal pressure, believes the head of the field-specific working group of the parliament Elina Sidorenko. According to her, Russia has made substantial progress in the standardization of blockchain solutions.

She also believes that elaboration of standards is even more advantageous than legalization.

As for blockchain products, concrete examples were presented by developers of payment solutions, voting systems, identification methods, and solutions for interaction with artificial intelligence. Guests of the conference learned about the project of mobile banking for people without bank accounts, and prospects of such solutions in the developing markets.

Money will flow from the traditional system to new economy, believes the representative of the Higher School of Economics Marina Guryeva. According to her, blockchain could become a base in commodity-money relations, including the ‘robot – robot’ system.

Large blockchain-based projects will be realized in 2018–2019 – that’s the forecast of Kirill Ivkushkin, technical expert at Sberbank. And today the main task of central banks is to find a competent approach to cryptocurrency regulation and create a favorable climate following the example of Singapore, the UK or Switzerland. Marco Streng, founder and СЕО at Genesis Mining, dedicated his report to mining capabilities. His company is known for being among the first to offer users the possibility of cloud mining and simultaneously gaining the status of the largest Ethereum miner.

The speaker conducted a comparative analysis of private and public blockchains and talked about the evolution of hardware for cryptocurrency mining.

He focused attention on the home mining and mining at large farms.

The conference in Moscow is a part of the project Blockchain & Bitcoin Conference, which embraces conferences in five countries. Organizers will hold analogous events in Prague and Saint Petersburg soon.

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May 1, 2017 #190

May 1, 2017 #190

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 76-g Chavchavadze Ave., Tbilisi Tel: 231-11-61, 231-14-54 E-mail: 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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May 1, 2017 #190