Caucasus Business Week #199

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July 3, 2017 #199

July 3, 2017, Issue 199 - www.cbw.ge

Education Internationalization of Higher Education: Why is it Important?

Pg. 9

Interview Germany’s NO.1 Business Location- New Opportunities in North Rhine-Westphalia Pg. 6

Natuka Asatiani: Timely and correctly delivered message will always be effective Pg. 8

New Model of Financial Reporting

Honor for Business?

Role of Electronic Governance in Regional Development Regional governments perform multiple public tasks and act as the nearest government institutions for citizens, offer state services and fulfill functions with focus on the society. In our age, digital technologies are required for conducting regional economic activity, shaping economy, integrating regional markets into global economic systems.

Today, regional development structure is based on: digital economy, digital development strategy for regions, electronic management environment, target programs and specific projects, technologies and resources, people and IT specialists, amalgamation and integration, environment and sustainability, justice and unanimity.

Digital governance system for the region is: • New source of replenishing state budget; • precondition for economic stimulation and long-term economic growth.

Pg. 11

Violent Drug Policy Harms State Budget

Pg. 7

Over the past months government members started active discussions on revision of current drug policy in the country. Prime Minister Giorgi Kvirikashvili and vice Prime Minister Kakha Kaladze made emphasis on necessity of revision of the current drug policy and urged the Parliament to accelerate process of adopting legislative amendments. It is interesting how much government spends today, as part of the existing drug policy, to fight this problem and what results the country receives. According to Interior Ministry information, 37 503 persons were tested on drug in 2015, and 14 138 of them were identified as drug users. This signifies that suspicions of law enforcers justified only in 37% of examined citizens. A total of 12 742 facts were registered in 2014.

The statistics of drug tests due to years is as follows: 2012 – 21 749 facts, 2013 – 60 196 facts, 2014 – 50 865 cases.

Pg. 4

2 GOVERNMENT

NEWSROOM Georgian-Armenian Business Forum urges investors to boost trade Soon a special group will be created which will help Georgian and Armenian companies to solve any problem which might be created at the border crossing points of both countries.

Afghan Finance Minister pays official visit to Georgia Besides trade-economic relations between Georgia and Afghanistan, Hakimi is also interested in deepening cooperation in the field of transport. Also, the interest is in those successful reforms that Georgia has been implementing in various directions.

ECONOMY

Exports up 25.0 Percent y/y in May 2017 Eexports increased 25.0% y/y to US$ 215.2mn, imports were up 3.8% y/y to US$ 633.2mn and the trade deficit narrowed 4.6% y/y to US$ 418.0mn. Overall in 5M17 exports were up 28.7% to US$1.0bn, imports increased 10.8% to US$ 2.9bn.

Details of Free Trade Agreement with China were Announced The agreement envisages abolishment of tariffs on a part of the commodity nomenclature from the very first year. Customer tariffs will gradually decrease for some commodities and will reach 0% on the fifth year.

BANKING

Liberty Bank Joined National Teaching Awards Supporters Liberty Bank is involved in the campaign for the third time in the frame of social responsibility. National teaching award is organized by coalition “Education for everyone -Georgia”.

TBC Bank Announces about New Issuance at London Stock Exchange The statement reads that TBC Bank has already submitted 102 121 new ordinary shares to LSE. The bank has requested a placement in the premium-segment of securities.

BUSINESS

Real Estate Registration Transactions Increased in May According to the National Agency of Public Registry, in May 2017 the number of real estate registration transactions has increased by 51.0 % compared to the same period of previous year and amounted to 70 532.

New Regulations for the Dairy Industry According to the new rules, only products that are made from natural milk can be recognized as cheese and butter. Producers will not be able to write on the labels “cheese” or “oil” for the products made from the powder.

COMPANY

Leading US company to operate Georgia’s Anaklia Deep Sea Port SSA Marine will operate Georgia’s future port in Anaklia, a Black Sea city near Georgia’s breakaway Abkhazia region. The project began before the end of 2016 and will be completed by 2020.

July 3, 2017 #199

Construction Completion of the Shuakhevi HPP

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djaristsqali Georgia LLC (“AGL”) celebrated the Construction Completion Ceremony for its 187 MW Shuakhevi Hydro Power Project on 24th June 2017 at Shuakhevi Power Plant site.

The Shuakhevi Hydropower Plant (HPP), one of the largest investments in Georgia’s energy infrastructure. The event was presided over by the. Prime Minister of Georgia, Giorgi Kvirikashvili, Vice Prime Minister and Energy Minister Kakha Kaladze. From the sponsors side, Mr. Anil Sardana, CEO & Managing Director, Tata Power, Mr. Bard Mikkelsen, Chairman- Clean Energy Invest, and Mr., Jan van Bilsen, IFC Regional Manager for the South Caucasus spoke on behalf of the sponsors to the project, while the lenders were represented by, EBRD Associate Director, Senior banker David Managadze and Mr. Samareendra Singh from ADB. Adjaristsqali Georgia CEO Prashant Joshi acted as moderator for the event.

The construction of Shuakhevi HPP launched in the fall of 2013.

As part of this project, two weirs with their respective reservoirs and dams were constructed, along with diversion tunnels to channel the water. The total length of the Shuakhevi HPP tunnel system, the second longest structure of this type in the world, is 37. 700 kilometers, which is twice as long as the combined length of all HPP tunnels built in Georgia. The Project investment cost exceeded USD 420 million. 730 Georgian citizens

were employed in construction activities. The Shuakhevi HPP is the largest hydropower plant to be built in Georgia over the past fifty years.

After the launch of operations, the Shuakhevi HPP project will significantly contribute to Georgia’s path toward energy independence. The power generated by the project will be exclusively sold within Georgiathroughout the winter, a period of energy deficit.

The Shuakhevi HPP is the first hydropower project in Georgia to have been certified by the UN Framework Convention on Climate Change to reduce carbon emissions. The Shuakhevi HPP will generate about 470 GWh of clean energy while lowering greenhouse gases emissions by more than 200,000 tons per year.

The Shuakhevi HPP project has played a crucial role in the development of Georgia’s energy sector and in nurturing young Georgian engineers. Ninety percent of the company’s staff consists of young Georgian engineers. Most of the project’s former interns from Geor-

gian Technical University are now company employees.

Since the launch of the Shuakhevi HPP project, Adjaristsqali Georgia has actively worked to improve the living conditions of the population within the project area and to promote the region’s long-term development. As part of its corporate social responsibility program, the company has implemented over 70 social projects, most of which were planned as publicprivate partnerships. Over 10,000 local residents have been engaged in the company’s infrastructure, education, and community development projects. For example, Adjaristsqali Georgia is currently financing the construction of Georgia’s largest alpine botanic garden in the Goderdzi tourist area in order to promote tourism in the area. The company is also helping to set up a garment factory in Khulo which will employ up to 300 local residents, in addition to several other large infrastructure projects implemented with the active participation of the local population.

Tbilisi Hosts Women in Business Forum

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USINESS GEORGIA and Bank of Georgia organized Business Forum “Women in Business”. The event’s main goal is emphasizing the role of women in business, their achievements, difficulties and challenges. Providing required access to resources, and support of female entrepreneurs is key to ensuring women’s economic participation, and closing the gender gap. Therefore, forum presents the exchange of knowledge, experience, and connectivity among women business owners, setting the stage for new opportunities and promoting social dialog among women entrepreneurs and business leaders..

Forum will be divided into three section. In first section – Women in Society will be discussed the role of women in Georgian society’s economic growth, also social and economic empowerment of women at the community level;

BUSINESS WEEK caucasus

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 3 Director: Levan Beglarishvili; Mob: +995 591 013936 Sales: Mob: +995 558 36 61 07 WWW.CBW.GE Email: caucasianbusiness@gmail.com

Second section is designed for Women as Entrepreneurs. Despite of facts & statistics, will be disputed factors about reducing risks during starting new business; Also will be presented a guide for startups to obtain financial resources; In third part – Women as Top Managers, will be reviewed the role of women in managing businesses; Every part includes inspiring success stories of women, that may become additional motivation for presented audience. Participants in the conclusion will have opportunity to engage in panel discussion, ask questions and get useful information.

“The forum is an important platform for the Business women in Georgia, because on the event regardless of introducing inspirational role models, participants will receive useful information about such programs, grant opportunities and governmental initiatives, that will help and empower

delegates with the knowledge and skills to grow their business and develop their career. We hope to be facilitators in helping women to achieve their ambitions regardless of what sector or size of business they are in”, said Ana Gogishvili, General Director of BUSINESS GEORGIA. The forum will represent more than 300 participants, including high level government officials, nongovernmental organizations, commercial and international sectors, women entrepreneurs and successful start-ups.

By conducting similar business forums, BUSINESS GEORGIA intends to show the situation and business environment existed in Georgia, provide all the interested parties with the relevant information and support the ones that are involved in the process of forming business climate for strategic business development in the country.

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

July 3, 2017 #199

PUBLICITY

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ECONO-MIX

Violent Drug Policy Harms State Budget

Tsotne Zhghenti PhD Candidate at Tbilisi State University

A Unified Government Space in Georgia

Treatment of Drug Addicts is 9 times Cheaper than Imprisonment

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Merab Janiashvili Economic Analyst

Every year the government treats less than 5% of drug addicts.

Prison sustenance costs are 9 times higher compared to treatment costs.

Punishment policy does not bring efficient results.

O

ver the past months government members started active discussions on revision of current drug policy in the country. Prime Minister Giorgi Kvirikashvili and vice Prime Minister Kakha Kaladze made emphasis on necessity of revision of the current drug policy and urged the Parliament to accelerate process of adopting legislative amendments.

It is interesting how much government spends today, as part of the existing drug policy, to fight this problem and what results the country receives.

According to Interior Ministry information, 37 503 persons were tested on drug in 2015, and 14 138 of them were identified as drug users. This signifies that suspicions of law enforcers justified only in 37% of examined citizens.

A total of 12 742 facts were registered in 2014. The statistics of drug tests due to years is as follows: 2012 – 21 749 facts, 2013 – 60 196 facts, 2014 – 50 865 cases.

It should be noted that number of citizens, who were tested on drugs and identified as drug users, decreases year to year. According to Interior Ministry information, in the first half of 2016, only 27% of tested citizens were identified as drug users.

As to statistics of imposing fines for drug consumption, according to information of Supreme Court of Georgia, over the past years, a major part of citizens were fined for this administrative violation in 2013 – 13 572 persons.

This indicator fell to 9 142 persons in 2014.

Number of detainees for use or/and buying, storing and sales of drugs considerably exceeds all sorts of crimes.

In 2016, 37% of registered crimes were recorded for drug crimes.

According to indicator of Supreme Court of Georgia, in 2014, the most number of convicts were judged for drug consumption (4003), of which 24.3% were imprisoned, 52% were sentenced to conditional judgment and 20.1% were fined.

According to the 2014-2015 report prepared by Council of Europe, 30% of inmates were sentenced to imprisonment for drug consumption and this is the most widespread crime in the country.

According to Ministry of Corrections, in 2015 the Ministry spent 31.28 GEL to sustain one inmate a day. This signifies the Ministry spent annual 11 417 GEL to sustain one inmate throughout the year. As a result, the Ministry was to spend 30-40 million GEL on 30% of inmates imprisoned for drug crimes.

The Authorities spend more than 15 million GEL on drug tests and urine analysis. About 2 tons of urine are tested a year and we pay 6 000 GEL for testing a liter of urine.

To put simply, the authorities spend about 50 million GEL on drug tests and imprisoned drug users a year, excluding costs on law enforcers. Moreover, annual 5 million GEL is spent on assistance of drug addicts or/and prevention of this problem.

According to the 2014 budget of Ministry of Labor, Healthcare and Social Protection, 4 388 500 GEL was allocated for state drug program. In 2014 this sum was spent on supply of drug substitute methadone for 3000 beneficiaries, while 286 beneficiaries applied inpatient detoxification and rehabilitation component.

As to social campaigns against drug consumption, similar campaigns do not exist in practice. According to Interior Ministry website, Interior Ministry has conducted

‘‘

Interesting novelty, the government of Georgia is going to build unified government space in Ortachala district in Tbilisi.

Firstly, let us define what is meant by the term “government size.” This term has both a broader and narrower meaning. In the broader sense, this refers to the state and everything that comprises the state sector, be it healthcare, education, sport and so on. In the narrower sense, this refers only to state management. Correspondingly, when we speak about definition of the size of government, we also include the costs borne by the economy to manage the governing of the state. Herein, we will focus our discussion on the narrower meaning; that is, the concept of state management.

Determining the volume of expenses incurred by a state for is management is the most popular method for defining a government’s size. In 2016, the share of state management in the whole domestic product was 6.9%. When we consider a unified government space, however, other expenses are also included which are hidden from the top and in official statistics.

Douglas North, an economist and Nobel Prize laureate in economics says that role of institutions is important. He explains that we create institutions in order to regulate everyday relationships with events happening around us, make the future more predictable and “simplify life.” Therefore, the role of state institutions is to simplify the performance of state functions for an efficient realization of relationships between the state and individuals. This said, however, there is the counter argument – in Georgia and in other countries, too – that institutions make events more complex and they “complicate life.” An illustrative example can be seen in the existence of bureaucratic problems.

What expenses are incurred from state institutions?

First, there are expenses which are necessary for their existence; that is, activities of state management require a budget.

Second, there are transaction expenses which are necessary in the process of conducting and maintaining relationships with different state institutionsand making decisions. The term “transactional expense” in economics was introduced by Roland Coase and it refers to the expenses created in the process of economic exchanges. One of the most important transactional expenses within bureaucratic processes is connected to is time because time is needed for overcoming bureaucratic barriers. In business, time is an important determiner of success.

The location or the placement of a government is another important component of state management. From ancient times, kingdoms were concentrated around the palace and the throne and this facilitated the required contacts and relationships. Today, in the era of modern technologies, the world has shrunk in that less than a second is needed for making contact with anyone in any place as a result of the internet and telecommunications. In Georgia, the first attempt to concentrate the government was expressed in the amalgamation of a number of ministries and transferring the parliament from Tbilisi to Kutaisi.

For various reasons, however, this was not followed by the transferring of different governmental institutions to Kutaisi with parliamentary committees, in fact, returning to Tbilisi. As result, we have government stuck between two cities today where transactional expenses are growing instead of being reduced.

What advantages can a governmental city and a business house have in Georgia?

First of all, an obvious advantage is a reduction in their current budget expenses. On the other hand, however, the construction of a governmental city needs important capital expenses. Of course, we are not speaking about the construction of a new city per se but only about the creation of a new governmental space in Tbilisi.

This would need much less expenses.

Although, as we have noted, the idea for a unified government space still remains at the the level of an idea. Positive and negative issues will arise, but the only way for truly effective state management from our point of view is in government concentration and reduction of the government size.

July 3, 2017 #199

only campaign over the past years – campaign against Bio Drugs. In all developed countries drug addiction is considered to be a disease and governments spend huge funds to heal drug addicts, but in Georgia drug users are just imprisoned.

Volume of funds for healing drug addicts depend on condition of patients, however, doctor narcologists explain that rationale detoxification that lasts about 1 month costs about 2000-2500 GEL. Moreover, drug addiction is healed by drug substitutes, the so-called methadone. Monthly cost of this substitute is 220 GEL and the course duration ranges from 2 months to 2 years. To put simply, treatment of one drug addict costs from 2000 GEL to 5000 GEL, while inmate sustenance in prisons exceeds 11 000 GEL. These people lose chances for having normal job and achieving success in life after imprisonment. In prisons they are not healed and outside of prisons they become drug addicts again.

Every year the government treats less than 5% of drug addicts. Prison sustenance costs are 9 times higher compared to treatment costs. Punishment policy does not bring efficient results. 89% of convicts for illegal consumption of drugs return to using drugs again, after imprisonment, while 11% resumed drug consumption in 11 months. The stricter state policy, the higher the number of injection drug users.

In 2010, number of injection drug users was 40 000, in 2012 – 45 000 and in 2014 - 49 700.

Portugal has created the best history of revision of drug policy. This country was leader in number of drug addicts in Europe. The country ranked first in terms of overdose death toll.

The country was populated by a great number of drug addicts. For many years, the Authorities fought against drug addiction by fines and other punitive measures, but in vain. Number of drug addicts was not declining.

Starting 2002 Portugal radically changed drug policy and replaced violent attitudes by liberal and education-concentrated drug policy. The country directed budget funds to constructing rehabilitation centers and their valuable operation. As a result, number of drug users halved in Portugal and the former leader in drug consumption moved to the last position after Romania.

It should be also noted that experience of developed countries of Europe and the world suggests that drug policy liberalization brings only positive effects for countries. Drug policy with focus on problem prevention, not on punishment, is more efficient.

Drug policy liberalization reduces number of drug consumers, reduces overdose volume, crimes and so on.

A major part of developed countries do not punish drug users and try to help them through social workers.

A major part of our society agrees that Georgia’s drug policy cannot withstand criticism. Georgian Dream talked about necessity of drug policy revision during the 2012 election campaign. Four years have passed since then and nothing has changed since then, in practice.

Despite violent drug policy is inefficient and number of drug users grows every year, Parliament and Government do not take specific steps. As a result, state budget spends considerable funds on identification of drug users and their imprisonment compared to costs for their treatment.

“Georgia’s economy has a good chance of exceeding an official 4 percent growth projection in 2017 thanks to private sector developments and the government spending on infrastructure projects, the country’s economy. I think that economic growth will exceed the projected 4 percent by the end of this year. Private sector is developing well and the government’s capital spending will increase.”

Giorgi Gakharia Economy Minister

July 3, 2017 #199

PUBLICITY

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INTERVIEW

“We are here in Georgia, because we are interested in cooperation with the Caucasus region. One reason is the ONE BELT - ONE ROAD strategy from the Chinese central Government” and “we know that Georgia is participating in this initiative and I think many projects will be created in Georgia. Such as a massive new port called Anaklia that is poised to become a gamechanging gateway between Europe, Central Asia, the Middle East, and China. This is very interesting for companies from Germany to take part in this process.”

“NRW is one of the logistic hubs in Europe.

With Duisport we have the largest inland harbor connected to Rotterdam”

Petra Wassner CEO of NRW.INVEST

The economic development corporation, NRW.Invest, which conducts international marketing of Germany’s No.1 investment location North RhineWestphalia (NRW), has paid visit to Georgia’s capital city Tbilisi.

Aim of the visit is Georgia’s participation in the “One Road – One Belt” initiative of the Chinese government which creates new challenges and opportunities for foreign and local investors to implement range of development projects.

NRW.Invest serves as the central contact point for location projects and investments in North Rhine-Westphalia. It provides potential investors from Germany and abroad with a onestop service ranging from locational information and business premises searches to arranging and guiding through negotiations and approval procedures. NRW.INVEST works closely with the state government and regional and local economic development organizations in North Rhine-Westphalia. Investors who have already set up business in NRW receive special support with regard to expansion, start-ups and spin-offs.

Parallel to this, NRW.INVEST conducts international marketing on behalf of North Rhine-Westphalia as a business location in Germany and abroad with the aim of acquiring investments.

Caucasus Business Week had a chance to talk with CEO of NRW.INVEST MS.Petra Wassner.

Q: MS. Petra, tell us briefly about NRW.Invest, and about North Rhine-Westphalia as Germany’s most significant investment location?

“NRW.Invest is the economic development agency ot the German State of NRW, one of the sixteen federal states in Germany. NRW is the economic powerhouse of Germany. In former times North Rhine-Westphalia was dominated by coal and steel.

However our state has successfully managed structural changes in the last century, and now we are a diversified high-tech location. Our leading line among all industries is the chemical industry, followed by machinery, automotive suppliers and IT. And NRW is the leading logistic location in Europe”.

Around 160 million people live within a radius of 500 kilometers around the state capital Düsseldorf – this rep-

July 3, 2017 #199

Germany’s NO.1 Business Location- New Opportunities in North Rhine-Westphalia resents almost one third of all EU consumers. No other location in Europe can reach so many people with such high purchasing power within such a short distance as NRW. 22 percent of Germany’s purchasing power is concentrated in the state. Every year, the inhabitants of NRW spend more than 340 billion euros on private consumption.

“These are some reasons why foreign investments are made in NRW. We have the density of industry, we have IT and a perfect logistic infrastructure.

This encourages foreign companies to start their business”, Wassner says.

NRW has become increasingly attractive for foreign investors for several years. At 28.5 percent (189.8 billion euros) the state recorded the highest

direct investment share of all 16 federal states in Germany (666 billion euros) at the end of 2014.

“It is worth to mention that nearly 1/3 of all the Foreign Direct Investments are concentrated in NRW and a quarter of all international companies in Germany are also based in our state.

So you see, NRW is a very international business location with an excellent infrastructure and also a high quality of life”.

Q: What are your plans in Georgia at this stage?

NRW is one of the logistic hubs in Europe. With Duisport we have the largest inland harbor connected to Rotterdam. The transcontinental rail freight train line “Yuxinou” between the Cities of Duisburg and Chongqing

in China is an important trade route and part of the “New Silk Road”.

“We are here in Georgia, because we are interested in cooperation with the Caucasus region. One reason is the ONE BELT - ONE ROAD strategy from the Chinese central Government” and “we know that Georgia is participating in this initiative and I think many projects will be created in Georgia. Such as a massive new port called Anaklia that is poised to become a game-changing gateway between Europe, Central Asia, the Middle East, and China. This is very interesting for companies from Germany to take part in this process.”

Q: How well-established is the practice of looking for investors in developing countries, which are currently attracting foreign in-

NRW.INVEST one-stop agency for investors A good start is the best way to ensure that all stages of your investment project will succeed. NRW. Invest helps to make this happen in two ways. Firstly, they provide entrepreneurs with all the support they need from the most reli-

able source – the state’s very own economic development agency, NRW.INVEST. Secondly, this expert guidance is packaged in an exclusive “welcome” to investors.

As a one-stop agency, company offers a comprehensive range of

proven services to ambitious individuals and companies.

NRW.Invest provides investors with expert know-how and guidance from trusted contacts in local and regional economic development agencies.

vestments for themselves? How do you approach a valuation of right investors?

“Our strategy is to analyse which target countries are important for North Rhine-Westphalia for attracting new investments. We have a clear strategy to acquire new companies which fit in our value chain. At this stage we have a great Chinese business community.

More than 1000 companies from China are located in NRW. Apart from this NRW has also dynamic business communities from USA, Europe, Japan, Poland, Russia and Turkey.”

More than 18,000 foreign companies have already established business operations in NRW. This equates to approx. one quarter of all multinational enterprises in Germany as a whole.

For example, Cologne has a broadbased Chinese infrastructure (medical professionals, service providers, lawyers etc.). Over the past 150 years of economic and cultural exchange with Japan, Europe’s third largest Japanese community has emerged in the city of Düsseldorf.

A strong economic structure provides ideal market conditions The traditional industry of North Rhine-Westphalia is in the process of transition to the digital world.

Q: What about startup development and promotion projects? Do you assist startups and grownups?

“In Germany, industry and government are making great efforts towards digitization. North Rhine-Westphalia plays a key role as the state offers ideal conditions for the digital transformation of the entire value-added chain.

NRW offers great market potential for companies from Germany and abroad with strong industrial structures and a broadly based ICT sector”.

These prospects also accelerate the development of the ecosystem for startups. Startups find important prerequisites for growth In NRW: In addition to customer proximity at the location, these also include support from the political community, numerous networks and above all a considerable pool of qualified specialists. The classic economy and young digital companies are jointly driving digital change. New business models, services and products are being created. In NRW, promising investments present themselves to foreign VC companies. NRW has put everything in place to become the leading location for the digital economy in Germany and Europe in the future.

Nutsa Galumashvili

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FINANCE

July 3, 2017 #199

New Model of Financial Reporting

Honor for Georgia has signed an association agreement with EU and assumed obligation to harmonize the national legislation with the EU requirements. One of the EU instructions obliges the country to introduce new standards of financial transparency into the private sector.

T “

«This should be prestigious for businessmen», businessman Temur Chkonia commented on European instructions that oblige business sector to publish financial reports starting October 2018. I am ready to start publishing financial reports even today.

he Government has shaped a new office to increase transparency of Georgian business sector and adjust it to European standards. The project calls for developing a joint electronic portal, in which private companies will publish annual financial indicators.

Under the changes, companies will be obliged to conduct quality audit of IFRS international standards and publish them.

The mentioned reform will be controlled by the Service for Accounting, Reporting, and auditing supervision, which is a subdivision of Ministry of Finance of Georgia.

Financial reports submitted by auditor companies to the mentioned office will be published on specially developed webportal – Reportal.ge The Caucasus Business Week (CBW) has inquired the purpose of the mentioned reforms, expected results and whether these changes are acceptable for private sector.

“One of the strategic objectives of the reform is to promote capital market, financial market and improve investment environment”, the office Chief Iuri Dolidze said.

«Financial reporting is important for not only capital market development, but also direct investments, credit organizations, banks, nonbank financial sector. Access to reliable financial information on the market is important», Dolidze noted.

This requirement is embodied in the law on bookkeeping, reporting and audit, which was enacted in June 2016. Under the mentioned law, companies are divided in categories and each category is adapted to the due standard, he said.

The legislation obliges companies with more than 100 million GEL revenues and over 250 employees to publish detailed reports.

The legislation differentiates the fol-

Business?

lowing groups of companies: Category 1 – annual revenues exceed 100 million GEL, assets value exceeds 50 million GEL and companies employ more than 250 persons.

Category 2 - Annual revenues total 20-100 million GEL, assets value is 10-50 million GEL and companies employ less than 250 persons.

Category 3 – annual revenues total 2-20 million GEL, assets value is 1-10 million GEL and companies employ 10-50 persons. Category 4 – annual revenues make up about 2 million GEL, assets value is about 1 million GEL and companies employ about 10 persons.

Category 5 – Public Interest Body, commercial banks, insurance compa-

Businessmen and trading facilities do not have more confidential information than the banking sector.

I do not think these standards will harm business sector. nies, companies playing at stock exchanges, microfinance organizations.

Major companies are obliged to submit financial reports prepared by auditor companies to the mentioned new office until October 1, 2018, Dolidze said.

Medium and small companies are obliged to submit financial reports to the supervisory office and then to publish them until October 1, 2019.

The reformation package also calls for introducing an obligation of auditing only first and second category companies. Medium and small business sectors are not obliged to carry out auditing services, Dolidze noted.

«This requirement does not refer to companies with less than 20 million

GEL turnover, less than 10 million GEL assets and about 50 employees.

This segment implies third and fourth category companies», Dolidze said.

In response to the question whether the mentioned reform will make business sector take certain costs, Dolidze explained that major companies (about 250-300 ones) have gained huge experience of auditing services for many years. This requirement implies companies without the mentioned practice. This category will have to take insignificant costs, Dolidze said.

Private Sector – Major Business Businessman Temur Chkonia «This should be prestigious for businessmen», businessman Temur Chkonia commented on European instructions that oblige business sector to publish financial reports starting October 2018. I am ready to start publishing financial reports even today, Chkonia noted.

All businessmen should be interested to keep their business activities transparent. At the same time, the Authorities should realize the huge role of business sector in state economy development. The Authorities will more respect businessmen, when economic process grows transparent, Chkonia said.

«All businessmen should divulge their revenues, the way they act and the role they play in the economy. This should be mandatory and prestigious for businessmen. After declaration, the Government will have more respect to people, who determine economic condition of the country. If Georgia is a rich country, this is the merit of businessmen», Chkonia noted.

When competitor businessmen see the competitor company’s indicators, they become more motivated

to surpass competitors. «There will be much jealousness, but you should win by hardworking, not by envy», Chkonia noted.

Businessman Lasha Papashvili «Businessmen and trading facilities do not have more confidential information than the banking sector. I do not think these standards will harm business sector», businessman Lasha Papashvili commented on the European instructions.

Transparency brings only positive results for business sector, he said and hailed an introduction of the mentioned obligation.

«I have not analyzed this issue in details, but we used to publish these indicators for our bank, the whole period of operation. I started working in the banking sector in 1995 and since then nobody was harmed by these procedures. Even more so, small and medium businessmen and trading facilities do not have more confidential information than the banking sector.

I do not expect these instructions to bring negative results. On the contrary, these instructions will assist consumers, competitor companies, young people who plan to take efforts in business», Papashvili said.

Small Business – LLC Imeri tobacco manufacturing company Tamaz Turmanidze, head of LLC Imeri welcomes the EU instructions that oblige companies to publish financial reports.

«We have always kept our working process transparent and we will follow this practice in the future too. I see no problem to upload an annual financial report onto a specific website», Turmanidze noted.

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PR PERSON

July 3, 2017 #199

Timely and correctly delivered message will always be effective

Interview with Natuka Asatiani, Crowne Plaza Borjomi digital marketer in charge of public relations -Which PR Companies inspire you?

- This year I would name: McCann Worldwide campaign - “Fearless Girl” stands facing iconic sculpture “Charging Bull,” created decades ago by artist Arturo di Modica; she was conceived by State Street Global Advisors, the asset-management business of State Street Corp., and its advertising agency, McCann Worldwide.

- Which media outlets do you follow?

- Nowadays internee has replaced television.

Therefore, I read everyday news items on websites of various media agencies. I also receive information from live programs of EuroNews or CNN. - Talk about the difference between PR and advertising.

-These two directions absolutely differ from each other. PR builds company reputation, raises positive attitude to products and acts as a mediator between brand and consumer, while advertisement works for only product sales and rising product perception.

- Which media placement do you take pride in?

- We have made a lot of media placements in Georgia and abroad over the past years.

However, I would name the visit by Russian National Geographic’s team to Crowne Plaza Borjomi, as well as the article about hotels that deserved special approval.

- Name your best project or period you take pride in.

- Over the past years I have been working in PR/marketing direction of hotels. Today HoReCa industry is a leading direction on the market. Consequently, projects that grow perception of the country and attract more tourists is the most important ones.

Over the past period, I would name Extreme Railway Journey’s. This project is very popular in Great Britain and it has one of the most distinguished and popular hosts – Chris Tarrant.

It was much honor for us to host them and we have made our contribution to the project implementation. The project still continues and the group keeps traveling around the world. And we are waiting for a series of programs about Borjomi beautiful resort.

“

Thought Leadership is simply about becoming an authority on relevant topics by delivering the answers to the biggest questions on the minds of your target audience.

- How do you integrate social media with PR? - Social media and PR are inseparable parts - delivery of the simplest information to target audience. This enables to choose such parameters as: age, gender, place of residence, interests and so on. Now you can manage social network so as information be delivered to the audience in a simple and direct way.

- How does PR support content marketing?

- The company has to produce content that meets its audience in the middle by answering questions and explaining why its product or service is best for them.

- How would you present the results of your work?

- At this stage, we have attained the initial objective for growing the brand’s perception and increasing quantity of guests. I have been providing active job in the field of digital marketing. Activity in social networks also grows, as well as interest in various companies. We also keep everyday feedback with the hotel guests and we take into account their suggestions and recommendations.

- Which of your campaigns was the most creative and efficient?

- International hotels have their own guidelines to plan PR campaigns, arrange posters and implement any other PR and marketing activities. Therefore, I would not call it creative, because we follow our guidelines.

I would name New Year PR campaign as he most efficient one. We were first to release announcement in late November and we started active PR and marketing campaign and we received a lot of reactions. Only in social media for several days we received many messages, while our reception service was answering tens of calls every day for a month. I believe timely and right messages always bring desirable effect.

- What would you do if a client or manager disagreed with your PR strategy?

- In general, I believe that it is upon management to develop PR strategy to prevent splitting the sphere of interests and frequent changes in strategy.

- How would you describe the Thought Leadership?

- Thought Leadership is simply about becoming an authority on relevant topics by delivering the answers to the biggest questions on the minds of your target audience.

- Talk about your experience in negative media attack that you have overcome.

- Fortunately, I do not have such experience.

There were several incidents, but we neutralized them simply and I would not call those cases as media attack.

- Have you ever had periods, when target audience misinterpreted your PR communication? How have you settled the situation?

- I have not had such a situation in my practice.

- How do you overcome PR crisis situations in the company?

- There is no unresolvable situation. Cases that may be solved in several days should not be perceived as crisis situations.

- What would you say about your team members? What is their role?

- Our team (marketing and sales) consists of professional staff with huge experience in HoReCa field. Everyday activity consists of relations with guests, making offers, making bookings, planing events, management and many other activities.

- Describe a time you trained or mentored a colleague. What personal features are required in similar situations?

- Mentoring does not mean only sharing knowledge. Experience should be also shared. Errors and positive sides should be also outlined. As a result, working in this field goes simpler. Good interpersonal skills, flexibility and contacts are one of the key components for successful operation in this field.

- What’s interesting about our current PR work? What would you improve?

- Communication is the most interesting component, shaping relations that are improved year to year. I would wish that projects be finished within deadlines without wasting time. I think this problem exist in many companies in Georgia.

July 3, 2017 #199

EDUCATION

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INTERNATIONALIZATION OF HIGHER EDUCATION: WHY IS IT IMPORTANT? A strong higher education system is one of the key indicators for every profoundly developed society. Along with the advancement of the level of teaching and research in the country, a well-established education system focuses on the internationalization of its higher education.

Attracting talented and intelligent individuals both internally and externally, building competitiveness at the regional level, enhancing teaching curricula, stimulating the development of infrastructure and integrating universities into global networks are some of the few aspects comprising the internationalization process.

Accordingly, this practice is divided into domestic and global tiers. The former suggests encouraging a system at home to integrate a more intercultural and multidimensional environment while the latter takes the domestic system to the international level through mobility, double degrees and exchange programs for students, academics and non-teaching staff.

Several decades ago, in countries like the UK, the USA and Australia, internationalization of higher education became strongly connected to a source of direct income. This brings rise to the question of whether or not there is a thin line between the concept of internationalization as a policy for enhancing science, research and intercultural communication and its power to generate a fair amount of profit. In the free world, where private and public higher education institutions enjoy the autonomy to choose their strategies for student recruitment and academic life, the boundaries become tight. Where should the state stand? Can it prioritize internationalization for the sake of the increased attractiveness of the country or lay out merely economic aspect of the process? In fact, in most of the countries engaged in the internationalization course, these two approaches are strongly interconnected.

Brain drain has been a commonly disputed concept in the post-Cold War world. The cure for the disease was found in building up an attractive environment for bringing scientists back home and importing foreign scholars to increase competitiveness. It naturally created competition which ultimately improved the quality.

Internationalization in Europe A massive internationalization process in Europe started with the Erasmus program, the creation of the European Association for International Education (EAIE) and the institutionalization of the Bologna Process on the entire continent.

The results of a study conducted by the International Association of Universities in 2014 the European region is leading with the most universities engaged in the process or on the way to preparing respective strategies. Indeed, internationalization is a very compelling instrument that eventually enhances the nature of teaching, learning and research. It is not a sole process conducted by a single ministry or a particular university but, rather, a result of a complex institutional change.

According to the EAIE barometer European universities value the quality of the education and the interests of their students more than direct financial benefits. Indeed, a better reputation guarantees a firm position in the world rankings and assures a substantial ability to market the institution and attract high-level scholars and strong students. Ultimately, the country benefits from the contribution to science, innovations and the job market with highly qualified workers.

ALEXANDER CHANADIRI International Marketing Unit of the University of Tartu

Estonia’s Experience This small European nation with a population of 1.3 million reached remarkable success in the past decade. In the period of 2006-2015, the country’s higher education strategy included crucial components for reforming the system and preparing it for a broader internationalization of higher education.

Recognizing the science and research-based higher education as international phenomenon, the state implemented extensive legislative initiatives for quality assurance and immigration policies as well as supported increased academic mobility, the creation of joint programs, the development of fulltime degree programs in the English language and offered scholarships. Following the trend, Estonian universities invested significant resources into the

internationalization of their institutions and study environments.

As a result, besides a dramatic contribution to science at home, such policies substantially increased the number of highly qualified workers at the European and global levels. The number of students recruited from the target countries to international degree programs in Estonian universities. Later, the 2015-2020 strategy was developed to evaluate the successes and problems of the previous years and move forward towards more internationalization.

Thanks to these short-term five year programs, Estonia established its firm place in the world of international education, hitting top rankings and increasing the number of foreign students by 20% every year.

In 2015, a survey conducted by the International Student Barometer found that 89% of international students enrolled in Estonian universities were satisfied with the education they received.

Potential in Georgia?

Georgia’s efforts to return to the European family largely comprise increasing the overall attractiveness of the country. In past decade, the country observed a milestone of major investments in infrastructure projects, the business environment, recreation, entertainment, services and tourism. However, little was done to develop and implement national policy for the internationalization of higher education. On the other hand, Georgian universities have been actively establishing international ties and engaging in European projects, academic exchanges and mobility programs. At this point, the intervention of the state and defining a broader goal is vitally important.

Signals to transform Georgia into a regional hub for receiving comprehensive higher education eventually resulted in creation of the Study in Georgia initiative under the Ministry of Education and Science. The team is obliged to support and represent those Georgian universities that are interested in international marketing and recruitment of students from target countries.

Why does Georgia need internationalization?

Firstly, the concept increases the visibility of the country and goes along with the tourism strategy.

This is why it is necessary to work with the National Tourism Agency on the harmonization of promotional activities.

Secondly, Georgian universities need support at the national level. It is dramatically important to increase their capabilities to hit top rankings in the world.

Thirdly, universities in Georgia have low budgets for conducting effective direct and online marketing activities. In addition, they cannot offer a wide variety of scholarships and stipends. Accordingly, the state must provide more support for intergovernmental communication with other countries and find more funding schemes for international projects. The government should also help universities to develop infrastructure (study buildings, dormitories, online systems, etc.) and attract more experts with European experience. Eventually, the advancement of the international environment will lead to the development of a university infrastructure, strengthen the teaching level and diversify research opportunities.

The infrastructure to welcome more international students and scholars is very far from being where it should be. At the same time, the country is an attractive destination because of its affordable living costs, geopolitical location, wide variety of study programs (up to 180 programs delivered in the English, Russian, German and Turkish languages), a safe environment and increased potential for strong research (especially in technical fields) and innovation.

Indeed, Georgia is preparing for the introduction of a German model of the new education system which is part of government’s four-point reform plan. However, should a strong internationalization policy find its place as a sub-strategy of the country’s education system reform? This is a question for further debate.

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BUSINESS

July 3, 2017 #199

Tbilisi to Host GeorgiaKazakhstan Business Forum Tbilisi will host Georgia-Kazakhstan business forum. The event will start at Radisson BLU Iveria hotel at 10 o’clock on July 3. The visit of Kazakhstan business delegation will be organized by Georgian chamber of commerce and industry, JSC Kazakh-Investments and Kazakh Ministry of Investments and Development. The forum will be unveiled by Kazakh ambassador in Georgia Ermuhamet Ertisbayev. In the first part of the forum presentations of Kazakh companies will be held, while in the second part of the forum business sectors of two countries will be able to hold bilateral meetings and negotiate future cooperation details. The Kazakh business delegation is represented by several sectors: food products, construction materials, engineering sector, pharmaceutical sector, metallurgy, packing and so on. The delegation unites representatives of about 20 Kazakh companies. At this stage, about 40 Georgian companies have expressed readiness to participate in the forum.

Georgia to Manufacture Modernized Asphalt by Recycling of Tires Startup Georgia, a project instituted by Partnership Fund, has financed a used tires recycling project by 100 000 GEL. The project authors plan to manufacture plastic, raw rubber and their products through recycling of used tires.

Gia Bazghadze told Business Course that the production will start in the second half of July and modernized asphalt will be one of the main products.

“Paved and noisy road may be replaced by this asphalt.

We are working to introduce these standards. We have explored that previously 10 municipalities of Tbilisi used to apply 3 million GEL raw rubber plates. This product is mainly imported from Turkey and it is very expensive. If we move to production of modernized asphalt, the product will cheapen twice.

Airfare of Buta Airways Flights to Start from 29 Euro – From Baku to Tbilisi Final minimum airfare for all destinations of Azerbaijan’s first low-cost airline – Buta Airways will be only 29 euros one way. At the first stage, the Airline will operate flights from Baku to Moscow (Vnukovo Airport), Antalya, Kazan, Mineralnye Vody, Kiev, Tbilisi and Tehran.

Starting from the winter season (from October 29 this year), cities such as Istanbul and St. Petersburg will be added to the route network of Buta Airways.

The first flight of Buta Airways from Baku to Tbilisi will be operated on September 1.

Startup Georgia Finances Micro Greens Vertical Greenhouse by 72 000 GEL Micro vegetable greenhouse project enables to grow micro vegetable by hydroponic method in artificial environment without soil. The plant grows on substrate, not on soil.

Micro Green company has obtained 72 000 GEL financial support from Startup Georgia program and the project authors arranged vertical greenhouse for growing greens, for the first time in Georgia. The founder of Micro Green company ftold Business Course that they grow vegetables that are mainly used for visual and taste in dishes, salads. Marita Genebashvili said the company has already introduced 5 varieties of vegetables to AgroHub for sales.

Micro green is picked 1-3 weeks and they contain much more vitamins and minerals. The greenhouse is located in Dighomi, Tbilisi. Vegetables and greens are grown in special containers on 130 square meters.

Currently, the company grows 10 kilograms of greens in test regime.

Total investment value of the project is 80 000 GEL and Startup Georgia has allocated 72 000 GEL.

The BeepCar Ridesharing Debuts in Georgia BeepCar, the ridesharing service, has been officially launched in Georgia. BeepCar is designed to facilitate ridesharing for long-distance trips across the country and to other countries.

The developers believe it can increase the inflow of tourists to Georgia and become a cheaper alternative to trains, intercity buses, and airplanes.

BeepCar provides passengers with a cheaper way to travel, while allowing drivers to share their fuel costs and find company for the trip. Trip fares are paid in cash. The app is free-of-charge for both drivers and passengers. BeepCar has the potential to become a cheaper alternative means of transportation for people traveling in Georgia. Bus and train tickets from Tbilisi to Batumi cost approximately 25 lari; a taxi ride costs 250 lari, while the recommended fare for a BeepCar trip is just 18 lari.

“Tbilisi, Batumi, Kutaisi and other Georgian cities are well loved among CIS tourists. In just a single year, the number of people spending their

vacations in Georgia increased by 24% (according to the Ministry of Internal Affairs of Georgia, January-April 2017). BeepCar is growing rapidly, and we are convinced that launching the service in Georgia will promote tourism.

It is our mission to provide vacation planners with another option to reach their destination with more comfort, and at a lower cost. It is essential that the service can get you virtually anywhere in Georgia,” says Anna Artamonova, BeepCar CEO. BeepCar is a ridesharing service enabling drivers to offer vacant seats in their cars, and passengers to search for available seats on the route.

Fellow passengers share fuel expenses, which makes the trip cheaper for both the driver and passengers.

BeepCar was launched in February 2017. The service has monthly audience of more than 5 millon people (internal statistics, May 2017). The apps are available for both iOS and Android, and there is also a web version.

GEBUY – Georgian Startup of Online Outlet Store GEBUY is a Georgian startup of online store, which cooperates with German and Italian brand outlets. Every product is original with European quality and design.

Store is more than just another average online retailer. They sell not only top quality products, but give customers a positive online shopping experience.

Consumers can purchase the goods you need every day or just like in a few clicks or taps, depending on the device thet use to access the Internet.

Please tell us a little bit about your company – what is GEBUY all about?

GeBuy is the first outlet online store in Georgia that enables to order clothes, shoes and accessories of such brands of Versace, Armani, Pierre Cardin for quite affordable prices, without delivery fees.

We decided to establish this brand, because there was not similar service in Georgia, we wanted to provide this opportunity for people, who could not or did not have time to do shopping abroad. It should be

also noted that value of these brands is much higher in Europe than on our website, because we have signed special agreements with suppliers.

Please tell us a little bit about your background and how you started your company.

The brand was shaped by people with various experience. Mr. Gogi Sozashvili and Zurab Rainauli, on the one hand, who had huge experience in international business, product shipping and so on. On the other hand, there was a team of young entrepreneurs and this team had long worked on innovative products – Nika and Sandro Rostomashvilis, Andro Kikabidze, Ilia Ghlonti, Pavle Chkoidze and Giorgi Tabatadze.

Mr. Gogi decided to implement this idea by cooperation with this team. They developed a website, planned branding details and the brand launched operation.

What are some of the projects you are working on right now?

Currently, our key objective is to popularize the brand and we are doing our best in this respect.

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July 3, 2017 #199

Rati Abuladze Doctor of Economics, Professor

Regional governments perform multiple public tasks and act as the nearest government institutions for citizens, offer state services and fulfill functions with focus on the society.

In our age, digital technologies are required for conducting regional economic activity, shaping economy, integrating regional markets into global economic systems.

Today, regional development structure is based on: digital economy, digital development strategy for regions, electronic management environment, target programs and specific projects, technologies and resources, people and IT specialists, amalgamation and integration, environment and sustainability, justice and unanimity.

Digital governance system for the region is: • New source of replenishing state budget; • precondition for economic stimulation and long-term economic growth; • Platform for creating new job places; • opportunity for outlining new markets and boosting economic activity; • Efficient economic policy; • Way for overcoming social challenges and opportunity for reduction of poverty scales; • efficient instrument for state governance and social-economic development platform.

It should be noted that digital governance system plays important role in regional development for: • increasing efficiency of government services; • employing region’s resources, public coordination, growing transparency, accountability, developing social-economic and region’s sustainability; • growth in quality of regional projects and management; • Management of process, interactive relations and cooperation with wide society, employing and implementing innovative mechanisms; • involvement of society in governance, control and auditing process; • Growth in regional business environment and investment attractiveness; • reduction of inequality and political influences; • Intensification of regional development and interregional activities; • piratical implementation of digital governance on regional level; Today main challenges in the Region: • Digital policy is not balanced, social and economic background is weak; • There is significant inequality in access to technological skills, digital proficiency, informative and communication technologies, informative resources; • The country lacks for education programs in digital governance, the propaganda is weak. The existing program for deepening digital proficien-

It should be noted that digital commerce is a global phenomenon that grows in region at fast paces. New markets arise every day and they create growing economy and attain new phases of development.

Role of Electronic Governance in Regional Development In our age, digital technologies are required for conducting regional economic activity, shaping economy, integrating regional markets into global economic systems. cy is targeted onto small segments; • Digital space has been developed unequally: regions differ from each other due to size, obligations, pricing policy, shaping digital products, access to services, Internet quality, investments attractiveness of digital market and perception of telecommunication services; • Small digital programs and initiatives for regions. There are rare cases when digital initiatives are adapted to regions, Internet projects are fragmented; • Region’s population has no opportunity to fully employ digital environment potential, employ digital governance service components, participate in digital business activity and digital

governance process; It should be noted that regional government is responsible for growing innovative and digital processes for regional development, growing region’s competitive capacity, attaining digital economic policy goals and developing the region by the existing resources.

It is recognized that digital commerce and digital market potential is one of the resources for revival of regional economy and these components considerably grow importance of this issue, including: mobile commerce (global economic potential – 10.8 trillion USD), mobile industry (economic potential – 1.57 trillion USD), digital healthcare (economic potential – 1.6 trillion USD), digital education (economic potential – 46.6 billion USD), digital tourism, social electronic commerce.

It should be noted that digital commerce is a global phenomenon that grows in region at fast paces. New markets arise every day and they create growing economy and attain new phases of development. From the most major market of electronic commerce we can mention: electronic commerce market of China. Annual online trade operations attains 672 billion USD; The USA represents the largest electronic commerce country with 340 billion USD online trade a year. Great Britain is a major player on electronic commerce market and its online trade volume reaches 99 billion USD a year; Japan is a leading country in mobile commerce. Annual online

trading reaches 79 billion USD; Germany has biggest electronic commerce market in Europe with 73 billion USD online trading a year; Annual electronic commerce operations in France accounts for 43 billion USD. South Korea is famous for highspeed internet and holds major electronic commerce market with 37 billion USD online commerce a year; Canada owns a huge electronic commerce market with low competition and 30 billion USD trade a year; Russia’s annual electronic commerce operations hit 20 billion USD, while in Brazil electronic commerce operations make up about 19 billion USD (source business.com).

It is worth noting that electronic governance system: • grows digital processes, ensures innovative and economic development in the region; • ensures taking efficient governance decisions and active involvement of region’s population in governance processes, grows digital proficiency of the society, economic activity of target groups; • Offers optimization of expenditures, grows transparency of services. Simplifies administrative procedures, grows efficiency of functions and mechanisms; • ensures economic and social integration of Government in neighboring countries and economic communities of the region; • ensures employment of region’s innovative potential and spreads components of electronic services; • convergence and integration of markets, formation of universal service system; • reduction of cyber risks and cyber threats; As for conclusion, according to region’s sustainable development policy, attention should be paid to the following directions: • Strong leadership positions and governance chain; • Developing online governance programs and support of internet industry development; • development of region’s key sectors in online regime; • Mobile commerce; • electronic healthcare; • digital tourism; • digital education; • science and researches; • digital market and social electronic commerce;

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July 3, 2017 #199

Brand History – Coca-Cola Bottlers Georgia

C

oca-Cola, a soft drinks manufacturing company, was founded in the small US city of Atlanta on May 8, 1886.

Pharmacist John Pemberton prepared a new beverage in his own house.

The former US captain John Pemberton remained unemployed after failure of the Confederates and he had to earn living somehow.

He frequently used to conduct chemical tests and he decided to open a small pharmaceutical company in Atlanta.

At the same time, he was conducting various chemical tests. One day (on May 8, 1886) John boiled a new syrup and invited his friend and the company accountant Frank M. Robinson to introduce his new beverage. Frank liked the syrup very much and suggested him to record the recipe of that wonderful beverage.

Purpose of the beverage to heal all nervous disorders, Pemberton said. The syrup was sweet and sticky. John offered his new invention to the biggest pharmacy in the city – Jacobs’ Pharmacy. On the same day, the first portion of syrup

was sold from the pharmacy (one cup for 5 cent). The name of Coca-Cola, as well as the script of the name, was created by Frank Robinson. John Pemberton could not foresee the future success of Coca-Cola and prior to his death he sold his business to several partners in 1888.

As to Georgian Coca-Cola, 24 years have passed since the first bottle left the production line. In Georgia, Coca-Cola opened on June 30, 1993, after the Soviet system collapsed in the country.

Today the company president Temur Chkonia says that in that period everybody was seeking the best way and we decided to implement our idea of foundation of Coca-Cola in Georgia.

Temur Chkonia, president of Coca-Cola Bottlers Georgia, was director of one of the lemonade factories in that period.

«I realized that our segment, tarragon and peach, could not bring success. We had to choose the way that would bring much success to the country and business would be stable and associated with global brands», Chkonia noted.

No modern communication systems existed in Georgia, when the brand was introduced in Georgia, even the Internet did not exist in the country. «Our history started in this way – Internet did not exist in that period. Even printing machines could not type in English.

Therefore, I and David Koghuashvili, my lawyer in that period, wrote a letter by hand and mailed it to the company head office. Fortunately, they showed interest in our offer, sent a group, which examined the market, saw people and held trainings», Chkonia said.

Since then Coca-Cola Bottlers Georgia has achieved much success in Georgia. The company transfers tens of millions of GEL to state budget every year.

-Key challenges in the brand establishment process – Communist mindset was the key obstacle and it was very difficult to overcome this mindset.

In that period Coca-Cola was associated with unhealthy beverage. Fortunately, there was young generation that believed in Coca-Cola’s future. That young generation has brought today’s success and we rely on the same generation today.

-History that made much influence on the brand development -«Attitude of the then President of Georgia Eduard Shevardnadze was very important and interesting for me. He was brought up in the Communist system but he considered this brand as the most modern one. Huge job and tireless efforts have created this history», Chkonia said.

-Why Coca-Cola?

-Because it is number one brand and anybody wants to stay with the number one.

July 3, 2017 #199

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WORLD Gazprom may exit domestic Turkish natural gas market

Turkey’s Borsa Istanbul sets new record, hitting above 100,000 points Turkey’s benchmark index opened the day on June 13 with a new record, rising to a key threshold at 100,000 points, amid a strong inflow into emerging markets.

Borsa Istanbul’s BIST 100 index has not risen past 100,000 points before.

The index regressed to 99,135 points later in the day.

Turkey’s recovering economic indicators have also backed the rising trend in the BIST 100 index, according to analysts.

“We have been affected by a strong money flock into emerging markets. A number of key domestic data [sets] has also supported the trend. Turkey’s first-quarter GDP data showed that domestic demand has revived.

This trend will likely continue in the second quarter,” Yatırım Finansman Research Director Akif Daşıran said, as quoted by Reuters.

The gross domestic product increased by 5 percent in the first quarter of 2017, compared with the same quarter last year, and reached 641.58 billion Turkish Liras ($173.78 billion) at current prices, the Turkish Statistical Institute said in a report on June 12.

This has further supported the rising trend in Borsa Istanbul’s main index in the last six months.

The BIST 100 index started 2017 at around 78,000. It has gained nearly 28 percent of its value on the basis of both the dollar and the lira since then, with an average increase in emerging stocks of around 17 percent.

SOCAR Foreign Investments Near $4.5B As of January 1, 2017, Azerbaijan’s state oil company SOCAR invested almost $4.49 billion in projects abroad, a source in the company told Trend June 16.

The greatest share of the company’s investments – $3.334 billion – accounted for projects in Turkey, according to the source.

“As much as $414.5 million were invested in projects in Switzerland,” said the source.

“Investments worth $386.9 million accounted for projects in Georgia, $281.7 million were invested in projects in Ukraine, and $71.3 million were invested in projects in Romania.”

SOCAR includes such production associations as Azneft (the enterprises producing oil and gas onshore and offshore), Azerikimya (the chemical enterprises) and Azerigas (distributor of gas produced in the country), as well as oil and gas processing plants, service companies, and the facilities involved in geophysical and drilling operations.

SOCAR is the sole producer of oil products in Azerbaijan. It has filling stations in Azerbaijan, Georgia, Ukraine, Romania and Switzerland.

Russian gas monopoly Gazprom is expected to leave the Turkish market and will concentrate on gas sales to Turkey, reports business daily Kommersant.

Gazprombank is completing the withdrawal from Promak, a company which owns a 60 percent stake in the two importers of Russian gas to Turkey - Enerco and Avrasya, the newspaper writes.

Gazprom Deputy Chairman Aleksandr Medvedev said the company plans to sell another Turkish asset - Bosphorus Gaz. According to Medvedev, the Turkish market is “unpredictable” and loses appeal due to the weakening of the lira and regulated tariffs.

Kommersant’s sources in the industry said Bosphorus lost about €100 million in 2016.

Gazprom owns 71 percent of Bosphorus Gaz. The company will sell its share to the local Sen Group, which owns the remaining 29 percent, the newspaper says.

Leaving the market may strengthen Gaz-

prom’s negotiating position in export prices, as the company will no longer have a direct interest in maintaining the profitability of the sales business within Turkey, experts say. Gazprom has been suing Turkish state corporation Botas and private companies in a price dispute.

However, no final decision to leave the market has been made, the newspaper added.

Last month, Gazprom began constructing the Turkish Stream natural gas pipeline off the Russian Black Sea coast.

The project, with an estimated cost of €11.4 billion ($12.7 billion) was announced in December 2014. However, it was put on hold after the downing of a Russian plane in Syria by a Turkish jet in November 2015.

The pipeline could extend from Turkey to Europe, but Russia needs solid guarantees from Brussels the project will not be scrapped like the South Stream pipeline project, said Foreign Minister Sergey Lavrov last October.

Government seeks to increase release of irrigation water from Lake Sevan by 100 million cubic meters Private Sector Business Organisations from Eastern Partnership Countries Demand Better Business Climate for SMEs More than 100 business support organisations (BSOs) representatives from Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine and the EU Member States gathered in Kiev on June 21st for the final conference of the EU funded East Invest project.

Participants discussed private sector’s engagement in policymaking across the Eastern Partnership (EaP) countries and showcased East Invest success stories/ achievement for SMEs and BSOs across the region.

Business representatives notably endorsed a regional position paper with recommendations for the six Eastern partner countries’ policy makers and the wider donor community to improve the business environment for the SMEs sector. Specific topics identified by the stakeholders as having the biggest impact on the activities of the SMEs included the business climate, innovation, SMEs access to markets, finance and skills as well as taxation and customs procedures. The wider use of digital solutions in all these areas was underlined. The regional position paper will be the contribution of the East Invest2 business organisations network to the 4th EaP Business

Forum that will take place in Tallinn in October 2017.

At the opening session of the conference Mathieu Bousquet from the European Commission’s DirectorateGeneral for Neighbourhood and Enlargement Negotiations said “East invest, launched in 2010 successfully enabled the creation and empowerment of a wide network of EU and Eastern Partnership private sector representatives. This network succeeded today in the consolidation of a regional position paper which conveys to their governments but also the wider donor community, including the EU, both their concerns and their recommendations to improve the business climate.

Improving conditions for economic growth as well as market opportunities for the private sector is a key priority of the EU in the EaP region as confirmed in the last Eastern Partnership Summit Declaration as well as in the “20 deliverables for 2020“. We are confident that this position paper will provide useful guidance to policy makers on the way forward at the next EaP Business Forum, the Eastern Partnership Summit this autumn 2017, and beyond”.

The Armenian government approved today a set of amendments to the draft law “On Annual and Comprehensive Program of Measures for the Restoration, Conservation, Reproduction and Utilization of the Lake Sevan Ecosystem,’ which, if approved by the parliament, would allow to pump out 100 million cubic meters of irrigation water additionally from the lake in addition to 170 million, permitted by the law. According to the government, the volume of water in the irrigation reservoirs is now by 207 million cubic meters less than in 2016. According to Arsen Harutyunyan, the chairman of the State Water Committee, the additional release of water will save about 1 billion drams on the launch of pumping stations. He noted that the additional release of water will not affect the ecosystem of the lake since as of June 20, 2017 its level was 18 cm higher when compared to June 20, 2016. He said the additional release may decrease the lake’s level by only 8 cm. In this regard, prime minister Karen Karapetyan stressed that the level of the lake is rising more rapidly than planned by the government until 2030.

The minister of agriculture Ignaty Arakelyan added that today there is a real irrigation risk, and taking into account all natural and climatic disasters, it is necessary to take steps to support agriculture.

Lake Sevan is the main source of drinking water in the region, and is one of the largest highmountain lakes in Europe and Asia, located in the heart of the Armenian upland, at an altitude of 1914 meters. By 2030 the level of the lake is to rise to 1,903.5 meters above sea level.

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PUBLICITY

July 3, 2017 #199

July 3, 2017 #199

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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July 3, 2017 #199