Caucasus Business Week #194 by Caucasian Business Week

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May 29, 2017 #194

May 29, 2017, Issue 194 - www.cbw.ge

Econo-mix Commercial Banks Grow Profits at the Expense of Population Pg. 4

Agro Solutions Government to Suspend State Subsidies on All Grape Varieties

Maia Takashvili: PR makes focus on shaping image of sales promotion

Pg. 11

Whether Demand for Suburban Life in Tbilisi Grows

Pg. 8

Billions of USD Investments Coming to Georgia - Why Country Still Remains in Crisis? Surging inflow of investments has not improved the living standards in Georgia. Over the past years investment inflows to the country has been ranging from 1.5 to 1.7 billion USD, however, all these funds are sedimented in hands particular group of people, the country and Georgian citizens do not benefit from these investments. Specialists assert that the exiting plan of distribution of revenues is the main reason of ineﬃciency of investments. People remain in poverty and financial resources are less directed to production development. According to preliminary indicators of Geostat, national statistics service of Georgia, foreign direct investments (FDI) in 2016 made up 1.645 billion USD, up 5% compared to 2015. We had better indicators in 2014 in this respect. Pg. 6

The Reasons Government Fails to Regulate Financial Pyramids Last week the damaged depositors held protest rally in front of the Parliament’s building. They accuse the Authorities of indiﬀerence to their problems. At the same time, the parliament’s group that was created to protect the depositors’ rights and work on improving the legislative gaps has made no progress in any direction. Association of Young Financiers and Businessmen (AYFB) has also released a special statement over the issue and urged the Government to take eﬃcient steps. AYFB makes focus on activated operation of financial pyramid companies and urges Georgian citizens to show caution. AYFB vice president Paata Bairakhtari pointed out that over the past period the market has seen several new companies following financial pyramid principles, which mislead ignorant clients.

Pg. 9

2 GOVERNMENT

NEWSROOM Georgia and Turkey enhance transport ties Particular attention was paid to shipping permits. Both oﬃcials agreed it was desirable to increase the number of shipping permits to boost transport cooperation between Georgia and Turkey.

Partnership Fund to Hold 24 million USD Stake in National Fund of Revival of Georgia The new fund will make investments in infrastructure, power sector, agriculture, industry, tourism and other fields. The Fund will launch operation in autumn 2018.

ECONOMY

Georgia’s Unemployment Rate at 11, 8% According to Sakstat, in 2016 the unemployment rate in the country decreased by 0,2% compared to the same period in 2015 and amounted to 11, 8%. Economically active population makes up 67.5% which is 0. 3% less than in the same period of 2015.

Georgia Implements 146 New Renewable Energy Projects About 50 projects out of the list are expected to be launched by the end of 2020.As much as 47 projects with a total capacity of 1,659 MW are at licensing and construction stage.

BANKING

Bank of Georgia Issues GEL 500 million 11% Notes Due 2020 BGEO Group PLC’s banking business subsidiary, JSC Bank of Georgia successfully priced an inaugural GEL 500 million oﬀering of 11.00% notes due June 2020 (the Notes).

Chinese Commercial Bank with 300 million USD Capital to Obey Government Chinese commercial bank with announced 1 billion USD capital will be directly subdued to the Government and will be based on an absolutely diﬀerent concept on the market.

BUSINESS

Russia Becomes Georgia’s Major Exports Market In January-April 2017 Georgia’s exports to Russia made up 125 189 800 USD. This volume of exports has made Russia Georgia’s number one exports market.

Georgia Looking for Export Markets for its Meat Levan Davitashvili speaks about improvement of the slaughter infrastructure noting that some slaughterhouses operating in the country meet all modern requirements. In his words, several projects are under consideration.

COMPANY

May 29, 2017 #194

Natura Tea Company to Launch Georgian Tea Into the EU Market It has been declared that it will take few months to gain the certificate and it will be followed by active negotiations with the EU countries concerning tea export.

Georgian, Turkish Prime Ministers discuss strategic partnership

urkey supports Georgia’s membership in NATO, says Turkish Prime Minister Binali Yildirim who is paying an official visit to Tbilisi. Yildirim is accompanied by a delegation consisted of seven prominent Cabinet Ministers. This is the highest level delegation from Turkey that has ever visited Georgia. Standing beside Georgian Prime Minister Giorgi Kvirikashvili at a joint press conference earlier this afternoon, Yildirim said that Turkey keeps supporting two main principles – territorial integrity and sovereignty of Georgia. “No one has a right to violate these two principles”, Yildirim said, adding that the problem surrounding breakaway Abkhazia and Tskhinvali regions must be solved with these two

principles in mind. Kvirikashvili and Yildirim chaired the second meeting of the Georgia-Turkey High-level Strategic Cooperation Council. This is the format of cooperation between the two countries which was introduced last year with its first meeting held in Turkey. During the event several important bilateral documents were signed to further diversify the legal framework between Georgia and Turkey. These included: A cooperation document between the Georgian and Turkish Justice Ministries; A declaration about creating a joint economic and trade commission between Georgia and Turkey; A cultural cooperation program between the Georgian and Turkish governments;

A cybersecurity cooperation memorandum between the Georgian Justice Ministry and the Turkish Transport, Maritime and Communication Ministry. Talks also involved the trilateral Georgia-Azerbaijan-Turkey format designed to promote political dialogue and deeper result-oriented cooperation in diﬀerent directions. Special emphasis was placed on close cooperation on the implementation of the Baku-Tbilisi-Kars railway project scheduled to be inaugurated in the foreseeable future. The parties paid special attention to the further deepening economic cooperation, also emphasising the Tbilisi Silk Road Forum as a successful platform for discussing ways of enhancing transport, trade, and economic cooperation.

Georgia, Turkey, Azerbaijan agree to widen defence cooperation

efence agencies of Georgia, Turkey and Azerbaijan will widen cooperation in bid to ensure regional security and stability, following a three-way meeting between defence ministers in Tbilisi earlier. The high-ranking oﬃcials announced a planned increase in the scale of joint defence exercises between the three states, as they met in Georgia’s seaside city Batumi. Minister of Defence of Georgia Levan Izoria, Minister of National Defence of Turkey Fikri Isik and Minister of Defence of Azerbaijan Colonel General Zakir Hasanov also stressed the importance of their ongoing cooperation for regional peace. Our joint exercises have been widened this year, with our operational forces set to

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commence joint drills in two weeks’ time. Joint exercises for digitalised staﬀ work will also be carried out in September, and we discussed the subject of widening of this format further for the future,” Izoria told reporters at the ministerial. The Georgian defence minister also noted the talks with his counterparts had also been aimed at increasing the “quality of cooperation” for enabling “global projects” in the South Caucasus. Hosted in Georgia for the second time, the event also saw comments by the visiting defence oﬃcials. Turkey’s defence minister Isik stressed the “exemplary relations” between the three states, while Colonel General Hasanov said the aim of the trilateral format was regional security and stability.

The fifth edition of the ministerial also saw preview of the upcoming meeting between chiefs of general staffs of the three countries, set to be hosted in Georgia later this year. The meeting was concluded with a signing of an official statement on the three countries’ continued participation in efforts aimed at regional and international stability and peacekeeping. The Batumi ministerial was announced by Izoria during his visit to the 2017 International Defence Industry Fair in Istanbul, Turkey earlier this month. Involving meetings with Isik as well as Turkey’s chief of general staff General Salih Zeki Colak, the visit saw Izoria invite his counterpart to Georgia’s annual defence and security conference, to be held in October.

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 29, 2017 #194

PUBLICITY

ECONO-MIX

Commercial Banks Grow Profits at the Expense of Population

Jun Yao I Head of the Georgian-Chinese Chamber of Commerce

The Georgian wine accounts for 1% of the Chinese wine market

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Merab Janiashvili Economic Analyst

The banking sector’s profits grow on monthly basis. Georgian banks are recorded in top 10 banking sectors in terms of profits margin and this aspect would be acceptable in case of crediting of the real sector of economy.

Retail Crediting Surpasses Corporate Portfolio in Growth Pace

he Georgian bank sector earns record profits every year. Despite Georgia’s economic growth pace is 3% on average over the past 5 years, profits of commercial banks grow by more than 100% every year. Bankers assert that such high profitability indicators are preconditioned by the sector’s success. However, it should be noted that the banking sector is a field of services and its success is determined by not profitability volumes, but the level of clients content. In this respect, it is diﬃcult to find even separate legal or physical bodies that would be content with Georgian commercial banks. If the banking sector is an engine of state economy, then how the engine’s growth pace surpasses the economy 10 times. According to National Bank of Georgia (NBG), in January to March 2017, profits of commercial banks constituted 257 785 000 GEL, up 148 million GEL year on year (109 889 million GEL in January-March 2016). Thus, profits of commercial banks have increased 2.3 times, by 135% year on year. Only in March, as compared to February, the banking sector’s profits constituted 32 million GEL. In January to April 2017 profits of commercial banks made up 295 356 000 GEL, up 114 896 000 GEL (up 63.6%) compared to the same period of 2016. In January to April 2016, net profits of commercial banks marked 180 460 000 GEL, while net profits of commercial banks in January 2017 made up 58. 813 million GEL. Bankers frequently declare that high profits margin is necessary because of high risks. Naturally, Georgia cannot be compared with Great Britain, Germany or/and Sweden in terms of stability or low-risky financial market, but the situation is not as catastrophic as the bank’s profits margin could indicate. The banking sector’s profitability is determined by two indicators: Return on Assets (ROA) and Return on Equity (ROE). Georgian commercial banks are leaders in both aspects as compared to other countries. The Georgian bank sector is among top 10 banking sectors worldwide in terms of profitability. To be precise, according to International Monetary Fund (IMF) indicators, Georgian commercial banks rank 9th worldwide in terms of profitability beside countries of Africa, Asia and Latin America. * In 2012 ROE marked 7.9%, today (first quarter of 2017) ROE is 27.6%. The figure has increased 3.5 times. * At the end of 2012 ROA made up 1.3%, today ROA is 3.8%, up 2.8 times (The first quarter of 2017). Only Lesotho, Argentina, Gabon, Namibia, Nicaragua, Honduras, Congo and Seychelles are ahead of Georgia in terms of Return on Equity, while Swaziland, Argentina, Ghana, Maldives, Kenya, and Papua New Guinea are ahead in terms of ROA. It is not arguable that Georgia’s ranking besides low-

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In recent years, Georgian wine is actively exported to China. In 2017, it grew by 280%. What is the reason for this trend? There are several factors. The first is the activity of the Georgian government in this direction. The Georgian Embassy in China and the National Wine Agency are working very actively to increase the recognition of Georgian wine in China. The second factor is the attention of the Chinese government to Georgia, in particular, the interest in its participation in the Great Silk Road project. Proceeding from this, the Chinese government is interested in deepening relations with Georgia. There is the third factor - the growing interest of Chinese business in Georgia, which in turn leads to an increase in interest in Georgian products. Houses of Georgian wine have already been opened in China, ads are shown on TV and other media in order to increase sales in China. But all this is just the beginning - now Georgian wine occupies only 1% of China’s wine market. Imagine what will happen if we increase this figure up to 10%. Can we say that the goal of promoting Georgian wine on the Chinese market is fulfilled? I think that soon the Georgian wine will be one of the leaders in the Chinese wine market, but this requires time and a very active advertising company. In China, little is known about Georgia, and first of all it is necessary to increase the recognition of the country. Apart from that, Georgian manufacturers should study the Chinese market which is very different from both Russian and European ones. All Chinese people prefer to buy cheap and at the same time quality goods. Therefore, many companies are trying to keep low prices by reducing quality, and this is a very big mistake. This can forever shut down the Chinese market for the Georgian wine, since the Chinese do not need anything of poor quality. There is one problem – many Georgian companies enter the Chinese market to get a one-off benefit from cheap and very low-quality wine. This greatly spoils the image of Georgia, especially in a situation where the Chinese consumer has just begun to show interest in Georgian products. The Georgian government must tighten the laws on the quality of the wine. The Chinese market is a completely different world which needs a different approach. If the Georgian wine loses the trust of Chinese consumers, then the market will close fot it. A considerable amount of falsified Georgian wine is supplied to China from some Chinese regions, as well as from Kazakhstan. They spoil the reputation of Georgian wine, that’s why exports to China should be tightly controlled by the Georgian government. Wine from which countries is the main competitor of Georgian wine in the Chinese market? Mainly French and Spanish wines that have been sold in China for many years, and its recognition is much higher. In general, the Chinese market is 90% designed for an average price level. 10-12% of the population are either very rich or very poor. As a rule, the quality of wine is higher than its price, and this is the best way to provoke consumer interest and win the market. The most important thing is that the Chinese people start drinking Georgian wine, and we do everything necessary for this. How many houses of Georgian wine are currently open and what are the plans for the future? To date, there are 25 Georgian wine houses in China, in the near future it is planned to increase their number to 100. We every day hold talks, and the interest in Georgian wine is quite large. However, the Wine House is not only a wine shop, but a house of culture, where you can get acquainted with Georgian culture, which is closely connected with winemaking. Such objects are precisely aimed at increasing the recognition of Georgia in our country.

May 29, 2017 #194

developed countries signifies nothing positive. It should be also noted the Georgian banking sector grows its profitability at the expense of population, not entrepreneurs. * In 2013-2016 commercial banks rose retail crediting in foreign currency by 891 million USD, while domestic corporate crediting increased by 163 million USD, 5.5 times less. * In 2013-2016 retail crediting in national currency rose by 2.462 billion GEL, while domestic corporate crediting increased by 1.177 billion GEL, twice less. * In 2013-2016 retail crediting in national and foreign currencies rose by 46 million USD on average a month, while domestic corporate crediting rose by 16 million USD, triple times less. As a result, population falls in debts more and more and the banking sector further grows profits in record figures every year, while crediting of entrepreneurs have further declined. As a result, the economy cannot receive benefits from credit institutions. «Over the past period a growth in profits of commercial banks is related to excessive indebtedness of population. According to International Monetary Fund (IMF) report, Georgia ranks second in terms of indebtedness of its population. Every 676 residents of 1000 ones owe debts to commercial banks in Georgia. This problem should be resolved so as the banking sector actively join economic development process», economic expert Mikheil Dundua said. Moreover, retail loans service burden in relation to total revenues is the heaviest among the region’s countries and is as follows: - Turkey - 16,6 %; - Armenia - 6,7 %; - Russia - 18,5 %; - Georgia - 24,6 %; - The USA - 10 %; - Europe - 11 % . The banking sector’s profits grow on monthly basis. Georgian banks are recorded in top 10 banking sectors in terms of profits margin and this aspect would be acceptable in case of crediting of the real sector of economy. Today commercial bank grow retail crediting portfolio that cannot create benefits in economy. As a result, commercial banks earn record profits at the expense of Georgian citizens, while all influential international institutions stress that main challenge consists in the fact business sector has no access to financial resources. When commercial banks constitute 90% of financial sector in the country, entrepreneurs have to apply only way for drawing finance – take bank credits, but they either cannot do this or loan conditions are so heavy that their financial condition worsens further.

We need institutionally independent, strong and eﬀective National Bank and all these should be guaranteed by Parliament of Georgia-said The Chairman of Budget and Finance Committee of Parliament of Georgia. “2016 report of National Bank was presented in a very interesting way and there are lots of issues which are analyzed deeper and thoroughly. As you know, the reports of National Bank has not been discussed over the passed years in The Parliament of Georgia. This is a renewal of the tradition which means that the report of National Bank should be heard and evaluated by the Parliament. Last year , showed us that we have main challenges in two directions, these challenges are: monetary stability and steadiness of financial-banking system. In banking system situation is stable, as regards the inflation we have some problems. Accordingly, it is important to know, that all attempts to refrain inflation somehow, should not be an obstacle for economic growth. It is natural that the Members of the Parliament had some questions, among them were critical ones too, I think that it was a very interesting discussion. The Budget and Finance Committee will have some recommendations and with foreseeing it, we support the presented report to be approved”.

Irakli Kovzanadze The Chairman of Budget and Finance Committee of Parliament of Georgia

May 29, 2017 #194

PUBLICITY

INVESTING

May 29, 2017 #194

BILLIONS OF USD INVESTMENTS COMING TO GEORGIA Why Country Still Remains in Crisis?

SURGING INFLOW OF INVESTMENTS HAS NOT IMPROVED THE LIVING STANDARDS IN GEORGIA. OVER THE PAST YEARS INVESTMENT INFLOWS TO THE COUNTRY HAS BEEN RANGING FROM 1.5 TO 1.7 BILLION USD, HOWEVER, ALL THESE FUNDS ARE SEDIMENTED IN HANDS PARTICULAR GROUP OF PEOPLE, THE COUNTRY AND GEORGIAN CITIZENS DO NOT BENEFIT FROM THESE INVESTMENTS. REZONANSI

Specialists assert that the exiting plan of distribution of revenues is the main reason of ineﬃciency of investments. People remain in poverty and financial resources are less directed to production development. According to preliminary indicators of Geostat, national statistics service of Georgia, foreign direct investments (FDI) in 2016 made up 1.645 billion USD, up 5% compared to 2015. We had better indicators in 2014 in this respect. In the mentioned period, specified amount of FDI inflows made up 1.7 billion USD. It is frequently said that 2 billion USD investments are required for economic advancements. Over the past years investments volume is striving for this indicator, but instead of progress, the economy remains in crisis. Specialists also prove this tendency. Academician Avtandil Silagadze noted that several sectors of economy are demonstrating recovery signs, but our citizens cannot enjoy benefits of this process.

«We have a growth in statistical indicators, but conditions of our citizens are not improved anyway, because revenues are not distributed proportionally in the country. Investment inflows has not created new job places. As a rule, distribution of revenues are calculated under Gini coeﬃcient. According to this method, the revenue distribution indicator is good if it is about 0.25, while in Georgia this figure is over 0.40. This signifies revenues are not shared to wide circles of our society, like other countries. Investments are sedimented in a small group and our citizens cannot receive benefits. A tiny part of our society receives huge revenues, while an absolute majority of our citizens have very low revenues or they do not have revenues at all», Silagadze said and added that despite a growth in investment inflows, a major part of our citizens remains dependent on low salaries and pensions. «When capital is invested, but the project does not work, naturally, national wealth cannot be created. We should try to put our revenues in production, but if the economic policy does not change, we will have neither job places nor revenues. When buying imported goods by our revenues, this signifies that we create job places abroad, not in Georgia. Therefore, I say that economic policy should change. We should care for development of national production. In other case, we will have always to wait for assistance from abroad», the Academician noted. As to specific fields, where investments are made, power sector is one of them, where projects were developed and the working process is continued even today, Silagadze said. «Communications sector is devel-

oped and this requires additional investments. We have progress in development sector, while in 2015 the situation was hopeless, in practice. If investments grow in this field, this is only comparative eﬀect and no essential changes are recorded. A growth of investments is more noticeable in transport field, because railroad works to the direction of Turkey have come to a finish line. We do not have serious diﬀerence in investments as compared to previous years, but some job is performed anyway, but the country does not receive real benefits», Avto Silagadze said. Analyst Merab Janiashvili overviews the existing problems with distribution of revenues. Investments made in Georgia serve major business interests and are not directed for economic recovery of the country. Therefore, this tendency makes negative influence on economic condition of our citizens, he said. «The fact is that investments do not create job places in the country. We remember the expression by former Prime Minister Nika Gilauri — every 50 000 GEL creates one job place. This was his opinion and he was right. In 1990s South American countries recorded facts an inflow of huge capital, but unemployment level increased, on the contrary. Research works have showed that investments had not been used for improvement of production in those countries. Investments in Georgia are directed to power sector and finance sector. The ratio of investments in agriculture sector, where 50% of Georgian citizens are involved, accounts for about 1% every year. Consequently, we cannot receive profits from investments. All these funds are directed to major business sector», Janiashvili noted.

Over the past years, the misbalance in distribution of revenues grows — only several persons have an access to investments and this money is not spent on creating national wealth. «Nobody can say what benefits our citizens have received from the fact the banking sector’s profits have risen by 20%. Naturally, this is related to a growth of specific business and is not reflected on welfare of our population. Economic policy should be revised evidently, but nobody think of this — neither current government and nor the previous Authorities did. Meanwhile, major business enlarges further, while medium business bears losses», Janiashvili noted. Over the past period, specialists are not content with investment indicators, despite their growth. They think accents should not be made on statistics, because there are many problems in state economy and the existing situation remains unchanged, in practice. Lack of export goods is one of the reasons of the mentioned problem, analyst Giorgi Ghaghanidze said. «In reality, we turn around 1.5 billion investments. Therefore, nothing will change if investment inflows are about 1.6 billion-1.7 billion USD. We have not surpassed the 2007 indicator, when investment inflow marked 2 billion USD. Currently, the country has a deficit of export goods and this is the most painful challenge. Investors do not feel safe. Georgian government has not shaped environment, where investors would feel comfortably. There was an interest in finance sector, but we do not have a breakthrough over the past period. Only small corrections and changes cannot ensure economic growth», Ghaghanidze said.

May 29, 2017 #194

REAL ESTATE

Whether Demand for Suburban Life in Tbilisi Grows A certain part of our citizens prefers to move to suburban areas for living because of traﬃc jams, polluted air and ecological problems in the city center. According to real estate agencies, over the past 4-5 years, number of citizens seeking houses and land plots in Tbilisi outskirts has considerably increased. Tskhvarichamia, Tskneti, Kiketi, Tsavkisi, Saguramo and other settlements are among popular locations. According to World Health Organization indicators, every 9 persons out of 10 ones in the world live in the environment with a high level of air pollution. Air pollution is a problem in Georgia too, especially in the capital city. As a result, number of diseases catastrophically grows every year. Therefore, ecologists assert that it is better to live in suburban areas than in Tbilisi. Because of a growing number of transport and glass structures, the city lacks for ecologically clean environment. Experts explain that suburban life tendency has been long established in various European countries and it will be established in Georgia too. According to statements by environmentalists, there are several locations near Tbilisi in terms of ecologically clean residencies, including Kiketi, Tskhvarichamia, Natakhtari, Tserovani, Tsavkisi, Tskneti and so on. Rusudan Simonidze, co-chairperson of Georgian Greens Movement, says that living in the capital city has become unbearable in terms of ecology and it is better to live in Tbilisi surroundings. According to Nikoloz Kevkhishvili, head of Valuation and Research department at Colliers International Georgia, Land sales transactions for single family housing developments1 in Tbilisi occurred mainly in the following districts: Village Dighomi, Dighomi 7, 8, 9, Kodjori, Tabakhmela, Tsavkisi, and Tskneti. The mentioned districts are spread over the three municipalities of Georgia – Tbilisi, Mtskheta and Gardabani. The total

number of registered sales transactions in these districts during 2016 amounted to 924, a figure 9% higher than the same indicator for 2015. Registered sales transactions increased by 6-20% in all price segments. Number of registered sales units increased in Village Dighomi, Tabakhmela and Tsavkisi. The slight decrease in transactions was observed in Tskneti and Kojori. The highest selling prices were achieved in Dighomi 7, 8, 9 and Tskneti, accounting for USD 84 and USD 56, respectively. Average selling price decreased in Dighomi 7, 8, 9 and Tskneti. The figure increased in Village Dighomi and Kojori. In the first quarter of 2017 registered sales transactions of the lands for single family house development did not change significantly in Mtskheta, when compared to the same figure of 2016. At the same time Tbilisi and Gardabani municipalities showed around 20% increase. Tengiz Gadelia, head of Georgian Association of Realtors, says that Saguramo, Kiketi, Tskneti directions are most in-demand locations because of several factors: 1) vicinity to the capital city; 2) unlike previous years, infrastructure has been developed and 3) ecologically clean environment. Unlike previous years, the number of real estate transactions has increased in Tbilisi suburbs. Old residents of Tbilisi are bored with noise, a great number of vehicles and this category shows much interest in suburban real estate, Gadelia said. In most cases, people buy property

Therefore, ecologists assert that it is better to live in suburban areas than in Tbilisi. Because of a growing number of transport and glass structures, the city lacks for ecologically clean environment.

in Tbilisi outskirts for building cottages, he added. According to his forecast, the demand will further grow if development projects continue overloading Tbilisi central zones and the capital city is not freed from automobiles. Professor Rati Abuladze, doctor of economics, explains that vector of premium class’ demand and change in structure have made influence on shaping Tbilisi outskirts. All these factors have enlivened the capital city surroundings and intensified apartments market. «Suburban zone belongs to a resort zone and their importance are known historically. Consequently, current tendency comprises a revival of the process and certain demographic inversion», Rati Abuladze noted. Development of Tbilisi surroundings are inspired by such factors as: • High air pollution level (causing serious diseases for the center residents), level of noise; • shaping the city, deficit of space and high density; • lack of plants and green zones; • Urban details: social-space, economic and institutional aspects of the city; • social segregation process; • culture impact and tendencies; According to Abuladze, the new narrative drives «suburbanization of highincome segment» and modification of suburban settlements. The fact is that Tbilisi surroundings create an organic wholeness that is represented by: • Healthy climate of Suburban resort zones (Tskneti, Kojori, Kiketi, Betania); • Individualization, isolation and comfortable living conditions; • Social-space structure, low density and control over huge spaces (that reduces living diﬃculties). • Feeling of beauty of nature and landscape, revival of settlements and

perception of configuration of premium environment; According to Abuladze, in heterogeneous environment Tbilisi Government is obliged to: • prevent deepening inequality of dicotomy of Tbilisi and its surroundings and shaping segregated city. • Prevent social-economic isolation and division by classes; • Concentration of premium segment in Tbilisi surroundings is expected to shape business and viable environment. Irakli Rostomashvili, head of Association of Georgian Developers, explains that it is wrong assertion as if Tbilisi surroundings are developed. According to Rostomashvili, the development process is of unimportant scales. «Building process was intense in previous period, because similar zones did not exist in Tbilisi surroundings earlier. Tskneti, Mukhatskaro and Tsavskisi were undeveloped zones earlier and these locations were developed several years ago. No new settlement has been arranged. Development process is not large-scale. These zones were shaped earlier», Rostomashvili noted. Real estate agencies also prove that the demand for real estate has risen in Tbilisi surroundings. Tbilisi Central zones are overloaded in terms of development projects and automobiles and Tbilisi residents prefer to move to cozier environment, they assert. Several months ago Ilia Inashvili, director for Bonus real state agency, explained that the demand for real estate has risen in Tbilisi suburbs. «Land plots near Tbilisi were in much demand in new districts. Lack of communications was only problem, but after improvement of these aspects, the demand will grow further. As to real estate sales, over the past 4-5 years real estate sales grow on annual basis in Tbilisi outskirts”, Ilia Inashvili noted.

PR PERSON

May 29, 2017 #194

PR makes focus on shaping image of sales promotion PR Creates Process and Events Covered by Media Free of Charge, However Georgian Reality is Diﬀerent

In her interview with the Caucasus Business Week (CBW), media manager of GEPRA, Maia Takashvili describes key tendencies in contemporary media space of Georgia, analyzes whether Georgian media satisfies international standards, outlines factors that hinder Georgian media agencies to enjoy public confidence, names advantages of content marketing, emphasizes process of integration of media and PR directions and formulates the difference between PR and advertisement campaigns. - Media is considered to be reflecting public tendencies. Do you agree with this opinion? - Let’s imagine the world without media! Have you imagined? This is unimaginable! Media is a trend of the society, where it is shaped and then “tasted”. Only society decides whether media “tasteful” and “useful”. The key principle is – nobody should be “envenomed” by it. In the course of time journalistic requirements will change. Namely, professional journalists should hold multimedia skills – ability to create materials for media outlets, newspaper, network editions and TV channels. Those, who produce information of universal character that entirely meet individual needs – starting from a purchase of food products, clothes, search system (where, what and when) and ending with satisfaction of the demand for security, actual information and self-fulfillment – will grow into a “Global Manager”. In practice, this may be expressed in a joint search interface – website for searching everything without leaving home, including interesting, relevant, important information items. Several years ago media industry launched development in this direction and this process will be continued for several years. - Which media outlets do you follow every day? - I have been working as a media manager for GEPRA for 12 years. Therefore, it is necessary to examine what is written, what is offered and what happens in society, because all the mentioned information helps you in your business. I mainly look through Internet portals, watch news programs, economic talk-shows. We should know very well how media agencies cover this or that issue, what is interesting for them, how and what information they deliver to the society and so on. - Talk about the difference between PR and advertising. - It is famous that PR technologies were established in the USA in XIX-XX centuries, when business started developing and it became necessary to care for consumers and meet their interests and demands. It became also necessary to develop and sell new products and obtain public trust. In the period, «when we were asleep», business sector representatives decided to develop a new system of management that would make influence on public opinion. Later, PR development in Georgia started at the end of XX century, when the demand for new business activities arose and only advertisements were not efficient. Consequently, the country started introducing new systems, because PR requires a knowledge of various disciplines such as marketing, advertisement, social psychology, management and so on. Even today, frequently PR is erroneously identified with advertisements. Theoretically, difference is simple: you pay money for ADs, while PR creates process and events that are covered by media free of charge. Georgian reality is different. Namely, Georgian media perceives this moment in a different way or in a wrong way and it is very difficult in Georgia to cover PR campaigns free of charge.

“ Content article differs from an advertising text, while today content marketing is one of the important tendencies of global marketing. Caring for shaping themes and creative supply of messages to customers is also very interesting.

And again, what is the difference… Theoretically, based on Samblack matrix, it is evident: you buy media time and space for advertisements, while for PR you apply a coverage instrument. Advertisement is mainly oriented on market or sales, while PR is oriented on relations and moods and attitudes. Advertisements are oriented on short-term perspectives, while PR follows both short-term ans long-term goals. As to Gudarini Matrix, advertisement is oriented on a growth in sales, while PR makes focus on shaping an image of sales promotion. Advertisement gives a short-term effect, while PR brings long-term effects. This difference is hardly perceived in Georgian reality. - What challenges do you face when seeking media coverage? - When communicating even with traditional media agencies, PR managers mainly use news, as an instrument for raising the interest of media agencies and ensuring coverage. And we seek media coverage, because it spreads information rapidly and the audience trusts it more. Media has access to a wide circle of society and this coverage is free of charge. This «free of charge» sounds quite unbelievably. Anyway, media agencies have evident desire to cover developments in media, while PR consultants or media managers have to pass quite difficult way to reach this goal: «I will tell the producer anyway, but this is for advertisement and I cannot promise»…- reporters give such answers in relation to invitation to events. It is very difficult for any PR manager to hear similar phrases, because this signifies that the news of your client or important event will not be covered and spread without taking additional efforts. Therefore, we follow strange, Georgian standards when communicating with media. Producers, editors of the issue or editors-in-chief of internet news agencies are another issue. Consequently, along with the mentioned disciplines, we also need to know other skills and human resources – circle of friends in media. We should be able to persuade them that this or that event is important and they are not of advertising character and so on. - What would you consider to be your most creative or effective campaign? - I am proud of media editions published by GEPRA. The Real Capital’s 8-page insert for the 24 Hours newspaper was one of them. The edition used to fully reflect the developments on Georgia’s real estate market. It was a new player on the market giving assessments by experts on existing situation, advises on where and how to buy apartments. The edition used to describe tendencies, new projects and so on. This was a very interesting project. I have learned very much from that project. I realized that not only content was necessary for creating high-quality products. Visual aspects also mattered. In practice, I was taking part in working process and we used to create highquality products thanks to joint efforts. Those, who remember this edition, will agree, that various corporate editions came out after that. As to specific media placements, this was in 2004, pre and

post campaigns of inauguration of Mardjanishvili branch of TBC Bank. To be precise, I created about 100 articles and news items on the mentioned issue in that period. This was my first project when working in GEPRA. - What about your best project or period which you take pride in? - I am proud of this 12-year period. Each day is different in GEPRA and you have to work in various directions and this is very interesting. As to projects, I would name the Forest Week that we have implemented by order of WWF Caucasus. As part of the week, we also founded Association of Environmentalist Journalists and I am also very proud of this fact. - Working for GEPRA. Is this fact worth to take pride in? - Certainly. It is genuinely much pleasure to enjoy positive attitude everywhere. - How does PR support content marketing? - Content marketing is very favorable for communication with media and companies. Media also supports content marketing. Content article differs from an advertising text, while today content marketing is one of the important tendencies of global marketing. Caring for shaping themes and creative supply of messages to customers is also very interesting. This is our responsibility. Content marketing creates and spreads valuable, timely and necessary information for drawing attention of specific target audience to make impression on it and to shape behavior. Today, in this direction, info graphics and video infographics are one of the most important components, because they visualize the content. As a result, the content draws the attention and the customer simply perceives information and remembers it for a long period. Today, consumers give preference to the brands that are maximally oriented on needs of consumers, their interests or entertainment aspirations. Content marketing creates valuable and interesting event for consumers. This is a very interesting «invention». - What would you consider to be your most creative or effective campaign? - I will repeat that the Forest Week was a very creative one, as well as Marneuli Jams Festival, both in Tbilisi and 10 other regions. - What would you do if a client or manager disagreed with your PR strategy? -I have never shared the opinion that the clients are always right. I always try to confirm correctness of my strategy and to make client or manager revise their attitudes by 80%. - Describe a time you trained or mentored a colleagues What personal features are required in similar situations? -I have been communicating with GAU Tbilisi PR school students for several years and I am their mentor. This is a very interesting process. You help them and learn from them simultaneously. It is a certain passion to implement a project jointly with them and then to introduce this project to society.

FINANCE

May 29, 2017 #194

The Reasons Government Fails to Regulate Financial Pyramids Former depositors of Georgia financial company continues their protests. BFM.GE

Last week the damaged depositors held protest rally in front of the Parliament’s building. They accuse the Authorities of indifference to their problems. At the same time, the parliament’s group that was created to protect the depositors’ rights and work on improving the legislative gaps has made no progress in any direction. Association of Young Financiers and Businessmen (AYFB) has also released a special statement over the issue and urged the Government to take efficient steps. AYFB makes focus on activated operation of financial pyramid companies and urges Georgian citizens to show caution. AYFB vice president Paata Bairakhtari pointed out that over the past period the market has seen several new companies following financial pyramid principles, which mislead ignorant clients. “Financial pyramid is the form of an operation, when financial resources are attracted from population by offering far higher yields as compared to the market yields. The legal status of similar organizations is a limited liability company (LLC) and they, as a rule, do not have any material assets and their operation are predominantly related to serious risks. Similar organizations attract a major part of population by offering high-rate yields. There are several types of financial pyramids: 1) Companies working with classical financial pyramid scheme. They are registered as a limited liability company, under the law on entrepreneurs, and start issuing promissory notes with high interest rates. Chances for withdrawal of these fuforce-majeurends in certain force-majeure situations are very low. Another, a comparatively complicated scheme of financial pyramid, implies companies working with network marketing principle that attract financial resources from population through sales of various things or services. It should be noted that in all other cases it would be very difficult to sell those things and services in ordinary legal way”, Paata Bairakhtari said. Bairakhtari has also discussed legislative shortcomings and noted that under current legislation it is very difficult to provide legal measures against financial pyramids with the aim to prevent a violation of consumer rights. “Under the current legislation, National Bank

“

Another, a comparatively complicated scheme of ﬁnancial pyramid, implies companies working with network marketing principle that attract ﬁnancial resources from population through sales of various things or services.

of Georgia is an only body that carries out supervision over financial sector, given the legal form of the so-called financial piramid organizations is a limited liability company, it cannot ensure direct control over them and is confined by only warning statements. Naturally similar practice cannot provide efficient steps for resolving problems. Consequently, the regulator should assume more responsibility and the problem should be resolved on legislative level, under which the companies, which will receive financial funds from citizens in any form, should be automatically subdued to NBG regulations, while now this field remains unregulated, while damaged citizens demand for returning lost funds from the Government. “All financial pyramid companies follow the same working principle and they are simply recognizable if the mechanism for investing attracted financial resources is not transparent, or the company does not show signs of economic activity and there is no precise interpretation of the field of operation, the company operation is not transparent and information on its activities is not attainable. Moreover, it is almost impossible to search due information on its financial condition if the company offers much higher yields compared to the market yields and asks to involve new members into the scheme for receiving benefits or offers to buy certain products for much higher prices compared to its real value. Operation of similar companies raises serious questions and our citizens should show particular caution before they start cooperation with them”, Bairakhtari said. Akaki Chargeishvili, expert in econmics and law also emphasize legislative gaps. “Regretfully the mentioned problem remains relevant even today. We had bitter experience in terms of financial pyramids, but this turned out insufficient to protect hundreds of people from similar schemes, who were damaged by various financial pyramid schemes because of legislative shortcomings and we could not eradicate these gaps for many years. Last week we held a protest rally with the demand of returning appropriated property to damaged citizens and eradicating legislative gaps. Today Parliament of Georgia does not have the right to ignore or postpone these issues. National Bank of Georgia does not have the right either to avoid responsibility for these issues. NBG tries to justify itself as if it does not have authority for legislative initiatives, while, under the current constitution, National Bank is genuinely entitled to apply to the Parliament for initiating lawს”, Chargeishvili said.

PASHA Bank - Partner of International Business Forum in Batumi On May 22-23rd International Business Forum took place at Euphoria Hotel Batumi. The event was organized by consultancy company “IBF” and supported by PASHA Bank. The main topic of discussion was 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 managementrelated 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 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 co-author of #1 New York Times bestseller “Tribal Leadership”, motivational speaker IBF was attended by delegates from 14 countries, among them representatives of small, medium and large enterprises, startups, government and media. “ PASHA Bank always tries to support projects of this kind. The high attendance at the event demonstrated that the subject of the forum was definitely interesting for audience. We hope that similar gatherings will be organized in the future as well, ” – said Anano Korkia, Head of PR and Marketing at PASHA Bank. “This forum had a unique format which enabled local and foreign guests to attend talks of world class speakers during two days. We are glad to have received positive feedback from the participants. This will definitely serve us as a motivator for organizing future events,” – said Guga Kobakhidze, founder of “IBF”.

BUSINESS

May 29, 2017 #194

Winemaker: High Customs Tax Was Hindering Wine Exports to China

Innovative Startup Kvlevebi.geNew Platform to Conduct Research

“Previously, wine exports was impossible to China, in practice”, Paata Sharashenidze, founder of Usakhelauri Vineyards company, told Business Course. Georgian product was taxed by 58% in China and this tax was raising the product price. But now, after signature of Georgia-China free trade agreement, Georgian wine exports will enjoy tax-free regime. As a result, demand for Georgian wines will grow, especially for red wines, the company representatives noted. “We have serious opportunities on Chinese market. We have semi-dry wines and there is much demand for this wine in China. We have serious perspectives on Chinese market. China has set requirements for wine quality and packing, but we are able to satisfy these requirements. They make focus on quality of wines”, Paata Sharashenidze said.

Singaporean Investors Plan to Open Hotels in Every Region of Georgia Singaporean companies have showed interest in constructing brand hotels in Georgia, David Saganelidze, director of Partnership Fund of Georgia, told a news conference after he met with representatives of Hyland Holdings Pte Lrd and Shenzhen Futao Sheng Industry Co. Ltd in Singapore. “They are interested in building hotels in Georgia. They showed us what kind of hotels they want to build in Georgia. These hotels will be associated with Georgian culture, for example, with wine in Kakheti, with tea in western Georgia and so on”, Saganelidze noted at the news conference. Since the previous Authorities were criticized frequently because of Singaporization policy, Business Course reporter asked Mr. Saganelidze: will Georgia follow Singaporization policy? David Saganelidze answered: “I will not take objection if Georgia follows Singapore’s experience. I have visited Singapore for the first time and I grasped their philosophy of building structures in right locations. And then we started thinking for raising similar buildings in Georgia. There are fantastic buildings in Singapore, but right locations should be selected for them in Georgia”, Saganelidze said.

Imereti Region Produces 100 million USD Culinary Herbs Zurab Janelidze, director of Herbia culinary herbs production company, talks about the current problems before small and medium business sector that hinder Georgian product to increase exports scales on EU market. “In oﬀ-season period Imereti Region produces about 100 million USD culinary herbs and vegetables for exports. And we can imagine if someone supports this field, how positive results we will receive. Imports will be replaced and exports will be boosted. Similar support will enable the country to draw foreign currency and replace imports. Government may take considerable eﬀorts for exports promotion, including create logistics centers, that is unattainable for specific farmers”, Zurab Janelidze said. Key problem for exports is that Georgia cannot produce due volume of culinary herbs. European customers always demand continuous supply and this is impossible without critical volumes, the company director noted.

Recently, the first online research platform kvlevebi.ge has been created. For ones who need to conduct research, it is a cheap and simple mechanism to use, whereas for research respondents, it is a real possibility to earn money. Respondents earn certain amount of money participating in the research questionnaire. They can participate in it online whenever they are available. Manager of project development, Revaz Kuparadze talks about more details. “Your opinion is valuable”-this is the slogan and principle of our company. The amount of money research respondents earn depends on time and diﬃculty of the questions they answer. It is also possible to filter respondents according to their age, sex, workplace, status and etc.”- noted Revaz Kuparadze. It is very diﬃcult to establish yourself at the market nowadays. Considering high competition, startups often close, which is bad. For any newly established company, TBC bank support is a big luxury and we are lucky to have it”- declared Kuparadze.

Mind Map -A New Concept for Keeping a Notebook Few months ago, new startup of notebooks, Mind Map appeared on the market. The idea of startup is to help people manage their time and making decisions. There is space for ideas, aims, wishes, music schedule, interests and etc. in the notebook. Three friends: Nina Gomarteli, Tako Lekiashvili and Ani sopromadze founded startup together. One of the founders, Nina Gomarteli had an interview with Marketer. How did you come up with the idea to create Mind Map and which factor helped you implement and develop your idea? I always had a special aﬀection for notebook organizers. When you like making notes for everything and use few diﬀerent notebooks, there is a need to have something universal which unites everything in one notebook. First of all, we looked for the same idea in the internet after we found it, it made our

wish stronger to create the product. What is the concept for Mind Map and how does it help us? Mind Map helps us write down our ideas, thoughts or tasks in different pages with different design and gives us more a possibility to plan better. This attitude increases productivity and helps us with time management. What is your price policy and in which directions are you planning to develop your startup? We believe that our price is affordable. Currently, we have only one version of English and Georgian notebook and the price is fixed but in the future, we will have different developments and prices as well. We want to develop it in a certain direction which will be designed for the planning of a project, travel or other activities which will increase productivity and mobilization of its holder.

Georgian Designers Have Diﬃculties Exporting Products Due To High Taxes An organizer of the Mercedes-Benz Fashionweek Tbilisi Sopho Chkonia says that it is diﬃcult for Georgian designers to export their products because of high customs duties. According to her, the industry needs more support from the state, in particular, changes in the tax legislation to facilitate to overcome international barriers for designers. This year, the state structures- Ministry of Economy and the Tourism Administration- helped us a lot in the holding of the fashion week. However, there is still a lot to do to turn the Georgian fashion into a business,” says Sopho Chkonia. In her words, it is very difficult for foreigners to order clothes in Georgia, as they face bureaucratic barriers, as

a result lose interest in the Georgian fashion industry. “There should be a rule that provides benefits for exporters. In this part, the tax legislation needs serious revision, and the state should help us. They assist us in technical matters that is also very important. In no post-Soviet country I have seen the state so actively involved in the aﬀairs of the fashion industry as in Georgia. However, without solving tax issues, this is not enough, ” she notes. Chkonia adds that this issue is already actively discussed and there is some progress. “Decisions should be made as soon as possible, because without this Georgian designers will not be able to occupy its niche on the international market,” she says.

AGRO BUSINESS

May 29, 2017 #194

The workshop was organised by the European Union (EU) and FAO within the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD).

FAO recommends Georgia to adopt national strategy on food loss reduction

ood loss in Georgia is an issue that needs to be addressed urgently and the United Nations Food and Agriculture Organization (FAO) recommendations the country’s government to adopt a national strategy to reduce the waste. Exchanging experience and information on food loss and waste reduction in Georgia was the main objective of the stakeholders’ consultation workshop held in Tbilisi today. The workshop was organised by the European Union (EU) and FAO within the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD). Government representatives and ENPARD stakeholders attended the event. At the workshop, FAO

new technologies as well as exchange of best practices and experience at international level is the key to reduce the food losses in the country. “The aim of the workshop was to raise awareness among Georgian policymakers on the importance of reducing food loss and food waste and to investigate the magnitude of the issue in the country and the impact of food loss on the income and livelihood of smallholder producers”, Rezaei said. According to FAO, globally, 1/3 of food (1.3 billion ton) produced for human consumption is lost or wasted along the value chain. Food losses result directly in less food being available, and therefore contribute to food insecurity. Moreover, food loss and waste have negative environmental

Government to Suspend State Subsidies on All Grape Varieties Government should apply the finances on enhancement of winegrower’s knowledge, simultaneously to removal of subsidy

Business Consulting Company

IRAKLI CHIKAVA Commercial director of Consulting Company “Agro Solutions”

expert Maryam Rezaei presented her study on Food Loss and Waste in Georgia. The study was based on interviews with growers, processors, exporters and other actors within the hazelnut, citrus and potato value chains. According to the study, the interviewees in Georgia highlighted losses in various commodities as an issue that needs to be addressed urgently. Lack of awareness among farmers and processors on good agricultural practices and post-harvest management skills, as well as lack of knowledge about new technologies coupled with lack of access to technology were identified as the major causes for food losses. In Rezaei’s word, access to education, training and

impacts. To solve the issue and reduce food waste and food loss, FAO recommends to improve production planning, promote resourceeﬃcient production and processing practices, improve preservation and packing technologies, transportation and logistics management and ensuring that all chain actors, including women and small producers, receive a fair share of the benefits. ENPARD is helping the government of Georgia to deal with the food loss and waste problem in the country. Implemented since 2013 with a total budget of €102 million (2013-2019), the main goal of the ENPARD programme is to reduce rural poverty in Georgia.

In many countries throughout the world, agricultural sector is subsidized from state budget. However, the idea of subsidy is to promote the development of specific direction. Nobody is subsidizing overproduction. In such case the state finances must be mainly spent on export, in the market direction, in order to promote the product outside the country and etc. But in any case, the government should not give the money to farmers because they were not able to sell the excessively produced products for appropriate price. This goes beyond the market economy and we get a systemic problem, which finally damages the sector of viticulture and wine-growing. During the subsidy, the production of quality products decreases. The farmers have guaranteed income. Correspondingly, they do not try to improve the quality of grapes, to raise their awareness and to get more harvest on a particular area. All of these above mentioned damage this sector. In such case, the less will be the interference from the state’s side, the more healthy and viable will be the business. According to the statement of Ministry of Agriculture, this year

the state will not implement the subsidizing of the Saperavi Grape. The Government has already made a decision to cease subsidizing of Saperavi, but as for the Rkatsiteli grape, state has not made a decision yet. In 2016, all wine-growers have received subsidy, -45 Tetris on 1kg. Rkatsiteli and Green; and 20 Tetris on 1kg. Saperavi. According to the National Wine Agency data in 2016, there have been submitted 65 thousand tones Rkatsiteli and 42 thousand tones Saperavi grapes. The company Agro Solutions welcomes the decision of the Ministry regarding the removal of subsidy on the Saperavi grape. This decision of course was followed by the dissatisfaction of some farmers. However, this is a step forward in this sector. The grape subsidizing make farmers lazy, they do not feel the concurrent environment and do not work on production of the qualified products. Farmer always complains that, on 1 hectare of plot he has more expenses than benefit and in such conditions, the Government subsidy is important for him. The reason is mainly the wrong technology of maintenance and the usage of bad quality preparation. However, on the example of successful farmer it should be noted that, the income on 1 hectare exceeds 3-4 times than the expenses and there are lots examples in Kakheti. Generally, why has it become the necessity of subsidizing grape? We have overproduction and instead of using all finances in the direc-

tion of sales encouragement, we are directly giving money to the farmers. This is not a solution for the problem on the contrary we are getting stuck in the worse swamp. We are encouraging the farmers to build more vineyards, whilst, there is not requirement on his product and it is already too much. Agro Solution recommends the Government to plan the removal of subsidies not only from Separavi grape, but also from all species of grape. We advise the Government simultaneously, to the subsidy removal, to direct their finances for knowledge enhancement of wine-growers so that they could produce more products on one unit and to low down the cost price. It is also important to emphasize that, Georgia imports a huge amount of table grapes whilst, we have overproduction on other species of grapes. Government should direct its resources in this field in order to inform the farmers about the required species and the bio production prospects. By changing the direction of subsidy it will result to the determination of price on requirement-delivery bases; peasant will be able to get more harvest on one unit area; and there will be started the replacement of old vineyard into required species. The removal of subsidy from the grape is a diﬃcult political step, although if the allocated sums for subsidy will be spent on the enhancement of farmer’s knowledge, the process will move to normal frameworks.

PUBLICITY

May 29, 2017 #194

WORLD Iran, EU to build petrochemical plant in Asaluyeh

Azersky User Group Project Announced in Georgia, Kyrgyzstan and Moldova Azercosmos, the satellite operator of the Republic of Azerbaijan, is pleased to announce the Azersky User Group Project in Georgia, Kyrgyzstan and Moldova. The purpose of the Azersky User Group Project is to oﬀer opportunities to assess the utility of Azersky/SPOT6 Earth observation satellite imagery for scientific research institutes, universities, as well as professors, students, researchers, or any person engaged in scientific research in Georgia, Kyrgyzstan and Moldova, and to provide a platform for the users to exchange their feedback about the uses and performances of Azersky. Participants are welcome to submit their porjects by July 20, 2017. Azercosmos will provide Azersky/SPOT6 satellite imagery free of charge for the selected projects. The projects will be evaluated based on the criteria, such as creative use Azersky/SPOT6 satellite imagery, possibility of implementation, scientific importance and innovativeness. For more information please visit www. azercosmos.com

Persian Gulf Petrochemical Industries Company (PGPIC) and an European Company agreed to jointly build a petrochemical plant with worth 3 billion euro in Asaluyeh, Adel Nejad-Salim, CEO of PGPIC said May 22. According to Shana, he added that the plant would produce two types of polymers for first time in Iran. Without mentioning the name of European Company, he said that the memorandum of understanding has been signed already between PGPIC and European Company. However, during the last two years, PGPIC has signed 9 MoUs with foreign companies, including 2 German (BASF and Linde), a French (Total) and two Italian companies (Tecnimont and Versalis S.p.A.). Nejad-Salim said that there are other two projects worth 1.5-2 billion euro expected

Russia & Iran sign oil-for-goods trade agreement

Turkey to boost clean energy with additional funding The Industrial Development Bank of Turkey (TSKB) has committed to fund around $3.5 billion out of a total of $9.1 billion to initiate over 5 gigawatts of clean energy installed capacity in Turkey, a bank representative said on May 22. At a World Bank workshop for the International Geothermal Conference (IGC), Bahadir Kocaker, the manager of TSKB’s Development Finance Institutions Department, said the bank allows funding for 12 different themes in the country. He explained that among energy-related themes, energy efficiency, renewable energy and resource efficiency were the main areas of concern. Kocaker said TSKB started providing funding for renewable energy 12 years ago, adding that 227 renewable energy projects were being planned with the help of the bank. “Total generation capacity is to reach over 5 gigawatts, which is 15 percent of Turkey’s clean energy capacity,” he said. TSKB is one of the funders for the country’s geothermal development project, which its goal is to encourage private sector investments to develop the geothermal energy sector in the country. “The program has two dimensions. The first component is a risk-sharing mechanism of exploratory drilling phases, while the second component provides a total of $250 million loan facility,” he said. He said that no more than 60 percent of the proceeds of the loan - around $150 million would be allocated to sub-projects that have carbon dioxide emissions of more than 583 grams per kilowatt-hours. The conference, organized by the World Bank and Energy Sector Management Assistance Program (ESMAP), started on May 22 and will run for three days.

to be signed in near future and the total worth of PGPIC’s new projects would reach around five billion euro. Iran expects attracting $10 billion foreign investments in petrochemical projects in near future, Iran’s Deputy Oil Minister for International Aﬀairs and Commerce AmirHossein Zamani-Nia said Apr.26. Iran plans to inaugurate 7 petrochemical plants during the current fiscal year, started March 21. The country would inaugurate 23 plants next fiscal year and further 34 plants by 2021. For completion of the current petrochemical plants, some $20 billion and for 34 new projects, some $35 billion investment is required to increase the current 62 million tons per year nominal production capacity to 150 mn mt/yr by 2025.

TAP to Ensure More Sustainable Energy Future for Europe The Trans Adriatic Pipeline (TAP) project, which envisages delivery of Azerbaijani gas to Europe, will ensure a more sustainable energy future for this continent, said the country manager of TAP AG consortium for Greece Rikard Scoufias. He pointed out South-Eastern Europe is a region that could benefit most from the Southern Gas Corridor, Greek media reported. “That’s because many of the markets in this region use large amounts of carbon. Therefore, the implementation of the TAP project can give an opportunity to reduce carbon in their energy mix, thereby ensuring a more sustainable energy future,” said Scoufias. Regarding the process of the project’s implementation, he noted that TAP is on track. “The delivery of pipelines to the Greek ports of Kavala, Thessaloniki and Alexandroupolis continues. So far, about 66 percent of the total of 32,000 pipelines needed for the construction of TAP’s Greek section has been received,” said the country manager.

Moreover, Scoufias expressed confidence that the work on TAP in Italy will also continue in accordance with the schedule. 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). TAP’s shareholding is comprised of BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).

Moscow and Tehran have signed a deal, under which Iran will sell crude to Russia in exchange for products, according to Iranian Oil Minister Bijan Zanganeh. While sanctions against Iran have been lifted, banking restrictions on trade in US dollars remain, making it diﬃcult to sell oil on the open market. “The deal has been concluded. We are just waiting for the implementation from the Russian side. We have no diﬃculties; we signed the contract, everything is coordinated between the parties. We are waiting for Russian oil companies to send tankers,” he said, as quoted by Russian news agencies RIA and TASS. The agreement was initially reached in 2014 when Iran was under Western sanctions over its nuclear program. Russian traders were to participate in the selling of Iranian oil. In exchange, Iran wanted essential goods and technology from Russia. Russia and Iran discussed energy, electricity, nuclear energy, gas and oil, as well as cooperation in the field of railways, industry, and agriculture. When the sanctions against Tehran were lifted in 2016, Russian Energy Minister Aleksandr Novak said the deal was no longer necessary. However, in March 2017, Novak said it was back on the table with Russia buying 100,000 barrels per day from Iran and selling the country $45 billion worth of goods. Despite the lifting of sanctions, Tehran is still facing problems in re-connecting Iranian banks with global financial markets. A February report by the International Monetary Fund said that while Iran has been reconnected to SWIFT, significant challenges prevent Iranian banks fully-reconnecting to global banks still exist mostly due to remaining US sanctions. “US primary sanctions apply to US financial institutions and companies, including their non-US branches (but not their subsidiaries).

CPMPANY

“Magic Drawing” – A new Campaign of Natakhtari Lemonade

ear friends, magic drawing of Natakhtari Lemonade took start on May 20. The list of prizes, rules for their awarding and the other details are listed below: • Only 0.33, 0.5, 1, 2 and 2.5 L yellow -cap plastic bottles of Natakhtari Lemonade will take part in the drawing; • The following prizes will be awarded: 300,000 plastic 0.33 L bottles of Natakhtari Lemonade; • 100 tablets, 50 mobile phones, 50 lap tops, 1 tour to Paris Disneyland for 4 persons and one apartment in Bakuriani; • A winner will be identified instantly by opening a bottle and detecting an inscription under the cap; • Winning of 0.33 L Lemonade can be received at any supermarket; • In order to receive the other prizes - tablets, mobile phones, lap tops, tour to Paris Disneyland for 4 persons and an apartment you have to visit special centers for awarding the prizes at the following addresses: - 87 a Akaki Tsereteli Avenue, Tbilisi - #5, 18th m/d Rustavi and Aghmashenebeli Avenue; - 22 Alazani Avenue, Telavi;

- 16 Nikea Street, Kutaisi; - 7 Orbeliani street, Batumi; Prizes will be awarded every Tuesday and Thursday at these locations from 11:00 to 18:00. Other Important Details • When receiving the prize (except for 0.33 L free lemonade), you should have an ID or passport, the copy of which can be submitted by the drawing organizer to a respective government agency in case of legal liability; • Winner minor in order to receive the prize (except for 0.33 L free lemonade) shall be accompanied by a legal representative to the respective address. Minor shall present a birth certificate, while a legal representative his/her ID. • Drawing will be held in Georgia during the period from May 20 to August 20, 2017. • Any person can take part in the drawing; • An individual automatically becomes a drawing participant if he/she buys respective product (0.33, 0.5, 1, 2 and 2.5 L Natakhtari Lemonade); • For additional information related to drawing please call 2 369 193 on working days from 9:00 to 18:00.

May 29, 2017 #194

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

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 29, 2017 #194