Caucasus Business Week #221

BUSINESS WEEK

DISTRIBUTED FREE OF CHARGE

caucasus1

December 25, 2017 #221

December 25, 2017, Issue 221 - www.cbw.ge

econo-mix

2

December 25, 2017 #221

Georgian Economy in International Ratings in 2017

merab janiashvili

Key Issues in 2017

Economic Recovery In November 2017 net profits of commercial banks rose by 48.1 million GEL. Consequently, in January-November 2017, net profits of commercial banks constituted 717.2 million GEL, up 26.5% year on year (up 150.6 million GEL). In JanuaryNovember of 2016 net profits of commercial banks constituted 566.5 million GEL.

5

According to Geostat, national statistics service of Georgia, averaged economic growth in January-October constituted 4.9%. The 2017 state budget planned economic growth at 4%. Consequently, this indicator exceeds the government-determined forecast growth by 0.9%.

The highest economic upturn in 2017 was recorded in October, the lowest was registered in April: January – 5.2%, February – 4.4%, March – 5.3%, April – 2.1%, May – 5.3%, June 4.6%, July 3.8%, August 4.3%, September -5%, October – 5.7%.

After 2-year low economic growth, in 2017 Georgia’s GDP growth pace exceeded the planned indicator. It should be noted that in 2015-2016, along with currency crisis, economic growth in our country was under 3%.

To be precise, GDP upturn in 2015 marked 2.9%, while the figure hit 2.8% in 2016. Economic growth pace in January-September of 2017 constituted 4.7%, up from the government forecast made at the beginning of 2017 (4%).

Growing exports has considerably accelerated economy, as well as foreign direct investments, rising volume of money transfers and record revenues from tourism sector. At the same time, the year of 2017 recorded instable GEL exchange rate and this factor has grown into tradition over the past 3 years, along with high inflation index.

Economic Growth According to Geostat, national statistics service of Georgia, averaged economic growth in JanuaryOctober constituted 4.9%. The 2017 state budget planned economic growth at 4%. Consequently, this indicator exceeds the government-determined forecast growth by 0.9%.

The highest economic upturn in 2017 was recorded in October, the lowest was registered in April: January – 5.2%, February – 4.4%, March – 5.3%, April – 2.1%, May – 5.3%, June 4.6%, July 3.8%, August 4.3%, September -5%, October – 5.7%.

29% upturn in exports has made positive influence on growth, as well as 17% upturn in turnover of commercial organizations. The private sector’s turnover in October made up 5.8 billion GEL. In early October IMF raised Georgia’s economic growth forecast for 2017 and 2018. This year the IMF forecast 3.5% upturn, while revised forecast is 4.3%. The 2018 revised forecast is 4.2%, up 0.2% as compared to the previous forecast of IMF. Inflation General price level was growing throughout the year. In November 2017 Georgia’s inflation level marked 1.1% compared to the previous month, while annual inflation level constituted 6.9%. It is worth noting that this year National Bank of Georgia (NBG) had planned annual inflation at around 4%, however, after February the general price level exceeded the target indicator and the figure was not dropped below 4%.

Over the past months the general price level exceeds 4%, however, National Bank of Georgia (NBG) had stubbornly repeated that it was not necessary to tighten monetary policy. It is interesting that through the whole autumn NBG was saying it had no plans to tighten monetary policy or make currency interventions to stop GEL exchange rate depreciation. NBG was saying that the process did not make influence on growth in general price level. And in November we received an absolutely different result, when annual inflation hit 6.9%. At the same time, the averaged inflation level has been growing YTD and it is unclear why NBG had such an optimistic approach to this issue.

Foreign Trade and Exports-Imports According to Geostat, in January-October 2017 Georgia’s foreign trade turnover (excluding undeclared trade) made up 8566.1 million USD, up 12.7% year on year; including exports marked 2203.1 million USD, up 29.4%, while imports constituted 6363 million USD, up 7.8%. Georgia’s negative trade balance made up 4160.0 million USD, that is 48.6% in foreign trade turnover. In the same period, exports without re-exports totaled 1700.6 million USD, up 27.6% as compared to the same period of 2016.

However, the current exports potential does not enable to make serious achievements, because our exports mainly consists of agriculture products and semi-finished goods. To expand exports, ensure lower negative trade balance and attract more foreign currency to the country, it is necessary to arrange powerful domestic production.

Foreign Direct Investments and Money Transfers In January-September 2017 Georgia received 1.34 billion USD FDI, up 2.9% as compared to the same period of 2016. According to Geostat, transport sector ranks first in terms of investments, where 447 million USD was invested.

According to Geostat, Georgia’s top three investor countries are as follows: Azerbaijan – 378 million USD, down 12% year on year, Turkey – 259 million USD, down 44% and United Kingdom – 175 million USD, down 30%.

As to money transfers, in January-November 2017, money transfers made up 1.241 billion USD. According to NBG, in November money

BUSINESS WEEK caucasus

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 1 Director: Levan Beglarishvili Sales: Mob: +995 591 01 39 36 WWW.CBW.GE Email: caucasianbusiness@gmail.com

inflows constituted 122.1 million USD, that is 326.3 million GEL, up 24.8% (up 24.3 million USD) as compared to November 2016.

Free Trade with China and Iron Silk Road On May 13, 2017 in Beijing Ministry of Economy of Georgia and Ministry of Commerce of China signed a document on free trade.

After enactment of the free trade agreement with China (on January 1, 2018), a huge market opened for Georgia-made products and services. The market records about 1.4 billion consumers. Georgian entrepreneurs are able to export products to Chinese market without additional customs tax. According to the agreement, 94% of Georgian products will be exempted from customs tax on Chinese market. On October 30, Baku-Tbilisi-Karsi railroad was officially opened in Baku. The railroad connects South Caucasus and Central Asia with Europe and it is considered to be Iron Silk Road. BakuTbilisi-Karsi railroad construction started in 2008.

Before, on February 7, 2007, President of Azerbaijan Ilham Aliev, President of Georgia Mikheil Saakashvili and Prime Minister of Turkey Recep Tayyip Erdoghan signed a trilateral agreement on a new railroad. Total length of Baku-Tbilisi-Karsi railroad is 826 kilometers, including 254 kilometer section in Georgia. The Georgian section of the Baku-Tbilisi-Karsi railroad includes 22 bridges, 13 stations, 24 flyovers and 4 snow protection galleries. The project will connect Europe with Asia with far cheaper and faster ways and our country will receive huge benefits, because many countries will be interested to have stable environment in Georgia, along with economic benefits – we will receive investments and more employed citizens.

Georgian Economy in International Ratings in 2017 International Rating companies Moody’s, Fitch Ratings and S&P conferred a new credit rating to Georgia in 2017. Moody’s improved Georgia’s credit rating from Ba3 to Ba2, and appraised the condition level of the country as Stable. According to Fitch Rating, the credit rating remains unchanged and it stands at BB minus, while economic development outlook is Stable.

Georgia’s credit rating BB minus is a low rating that is characteristic to developing low-income countries. According to Fitch, this indicator was preconditioned by a high deficit in the tax balance of the country. According to S&P estimations, Georgia’s sovereign rating remains at the level of BB- and the rating outlook is Stable.

The 2017-2018 Global Competitiveness Index by World Economic Forum describes competitive capacity of 137 countries and Georgia ranks 67th, down from 59th position in the 2016-2017 rating. The country has lost 8 positions. Georgia’s summarized score has not changed and remains at 4.3 point, but the rating has worsened after other countries improved their positions. As to Georgia’s whole position, it should be noted that since 2012 the country was improving indicators. For example, Georgia ranked 88th in the 2011-2012 Global Competitiveness Index. By 2016 the country advanced positions to the 59th place, but this year we lost 8 positions.

The World Bank Group’s annual report Doing Business 2017 names Georgia to be 16th among 190 countries in terms of business doing simplicity. In the 2016 rating, Georgia ranked 23rd and the country advanced positions by 7 places. Currently, the rating leaders are New Zealand, Singapore and Denmark. Libya, Eritrea and Somali occupy the last positions. From the former Soviet countries Only Estonia (12th) and Latvia (14th) run ahead of Georgia.

According to the research results, in Europe and Central Asia region Georgia ranks third after countries with the highest scores – Macedonia and Latvia.

Moreover, Georgia is among 10 advanced countries, which have considerably improved their indicators on the global level.

Commercial Banks Make Record Profits In November 2017 net profits of commercial banks rose by 48.1 million GEL. Consequently, in January-November 2017, net profits of commercial banks constituted 717.2 million GEL, up 26.5% year on year (up 150.6 million GEL).

In January-November of 2016 net profits of commercial banks constituted 566.5 million GEL. At the same time, commercial banks also grow interest profits. According to January-November indicators, the figure marked 2.4 billion GEL. In January-November 2016, interest profits of commercial banks was 2.1 billion GEL. Like previous years, in January-November 2017 commercial banks received a major part of revenues from retail loans. The figure marked 1.4 billion GEL in January-November period, which is 52.1% of total revenues from loans. Volume of revenues from corporate loans are about twice lower and it amounts to 776.3 million GEL. Commercial banks also receive significant benefits in the form of interest-free revenues. The sector’s benefits in January-November 2017 marked 1.3 billion GEL. It is worth noting that over the past several years net profits of commercial banks are growing and they beat new records in almost all years.

2012 -134.2 million GEL 2013 – 389.1 million GEL 2014 - 474.8 million GEL 2015 - 537.3 million GEL 2016 - 631.8 million GEL

Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Reporters: Nina Gomarteli; Merab Janiashvili Technical Assistant: Giorgi Kheladze;

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

December 25, 2017 #221

publicity

3

PR Person

4

December 25, 2017 #221

The 40 Best PR Quotes of the Year

D

uring the whole year, we had interviewed PR specialists of 40 Georgian companies; It is the end of the year so, we’ve taken the time to put together a list of our favorite PR quotes of the year.

“PR is Complex of Human Features – Interpersonal Skills+ Management Talent”.

Meko Abramia - brand manager for Corporation Georgian Wine “In Georgia, PR is Often Used to Put out “fires”, Which is a False Assumption”.

Nodar Kanchaveli - director for Silknet PR and Marketing department “Successful Woman Should Balance Career With a Family” Sopo Khachapuridze - PR Manager for Albatross, window and door installation service company “A Good Work Atmosphere Leads to More Success” Nino Zarkua - PR Manager of Kvareli Eden Hotel “Never Stop Seeking Novelties, Never Stop Examining!”

Katia Absandze - head of Lopota lake resort & spa PR and Marketing Office

sociation of Ferroalloy Product Manufacturers and Manganese Miners “Limits Like Fears are Often Just An Illusion” Teona Dumbadze, Hilton Batumi, Marketing Executive / PA to GM “Creative Capacity And Inner Culture Are Important Features in Public Relations Field” Nino Khurodze, marketing and sales director for WorldClass “Sense of responsibility, teamwork skills, interpersonal skills and purposefulness. Overcoming difficulties and finishing undertaken business are crucially important factors” Noka Baindurashvili, PR consultant for ElitElectronics and Tegeta Motors “PR’s importance is Changing, It has Become the Most Effective Way to Build a Brand “ Ketevan Bubuteishvilil, head of TechnoPark Marketing and PR department

“Devotion to Job, First of All, Brings Success” Irina Kometiani, Senior specialist for Georgian State Electrosystem (GSE) PR office.

“You Should Always Feel Customer’s Pulse to Attain Success” Tornike Guruli - head of PSP pharmacy network’s marketing department

“Everyone Could Study PR but Hardly Can Use it” Tata Morchiladze - PR and Marketing Manager for inndesign.ge

“PR Becomes an Important and Valuable Direction for Business and Society” Eldar Pirmisashvili - Founder of Peritus Group Strategic Communications Agency

“Successful Company Brings Benefits to Society” Sako Tsotsoria - PR and Marketing Manager for Radisson BLU Tbilisi and Radisson BLU Batumi hotels

“I would not say there is a classical model of PR in contemporary world, because everything I was personally taught disappears stage by stage and new approaches are coming to frontline” Nino Jibladze - head of GULF Oil Company’s marketing department.

“PR Shapes Company’s Positive Image “ Irine Khizanishvili - PR manager for As-

“Globally PR Creates Processes and Events Covered by Media Free of Charge, However Georgian Reality is Different” Maia Takashvili - media manager of GEPRA “Interpersonal Skills Matter Most of All in the PR Field” Nino Subeliani - GEPRA Senior Consultant “PR is The World of Persuasion, Moreover it is an Art” Nino Asatiani - PR manager of Trans Electrica Georgia “Demand for Business and Political PR Dominate Most of the Industry” Ketevan Galumashvili - GEPRA Senior Consultant “PR is Simplified Way to Obtain Contacts and Sources” Lali Galumashvili, expert-consultant in public relations issues of Social Service Agency “PR is Wider Concept than Ordinary Advertisement” Natalia Khatiashvili - head of RIXOS Borjomi Sales and Marketing Department “Timely and Correctly Delivered Message will Always Be Effective” Natuka Asatiani - Crowne Plaza Borjomi digital marketer in charge of public relations “When negative PR crashes on a company the rightest thing to do is, not to wait for anything but, to act and react immediately” Keti Bakhturidze, head of Marketing and PR Department at Tiflis Palace “PR field never Lets you Stop Developing Yourself” Ninia Apkhazava, Public Relations Manager of the Axis Company

Television Remains Leading Media Despite Attachment to Social Networks” Tinatin Stambolishvili, head of marketing communication department of GPI Holding insurance company “While We Pay for Advertisement, PR Can Be Done For Free” Nika Kamushadze, Head of Marketing and Public Relations Department of National Agency of State Property “PR is Moving Along Time and Develops With It” Lika Chokheli, Head of the Public Relations Department of the Co-Investment Fund of Georgia “PR in Georgia Can be Seen As at the Stage of Development Today” Tatiana Gvenetadze, Head of Public Relations Department of Medical CompanyVivo Medical Group “Never Be Satisfied with Something That Does Not Surprise You Everyday” Giorgi Avaliani, Head of Public Relations Department of Agriculture Projects Management Agency “You Should Be Ready For Any Challenge When You Work In PR Department” Tata Khvedeliani, Head of Public Relations and Marketing Service of the MIA Police Security Department “PR is a Stream of Opportunities, Innovations and Creativity” Victoria Zhizhko, head of PR offices of Tskali Margebeli and Marneuli Food Plant “Public Relations Specialists are the Most in-demand Jobs in Georgia”

Tamar Dumbadze, Public relations manager at Techno Boom ’It’s a Great Pleasure to Promote Literature’’ Nino Kusrashvili, public relations of publishing house Diogene. ‘’Communication is Not Helpful Without Result’’ Tamar Diasamidze, Head of Human Resources Management and Public Relations Devision of the Ministry of Finance and Economy of Ajara. ‘’New challenges has appeared in Public Relations’’ Khatia Moistsrapishvili, Head of Public Relations and Marketing Department of Revenue Service “PR and Marketing is Like a Living Object, that constantly pulses” Teona Akhobadze, Marketing and Communications Manager of Global Real Estate company “Colliers International Georgia “PR is a Non-Ceasing Process and it is Getting More and More Innovative” Nutsa Gedevanishvili, Public Relations Manager of Insurance State Supervision Service “PR is to Think of Your Customers Constantly” Tamar Nibladze, PR Manager of sweets producer company ‘’Barambo’’.

“Self-development is the Main Passion of Developing Brand” Tinatin Lomtatidze, the manager of coffee company “Cherie”

December 25, 2017 #221

banking

5

2018 - Year of Financial Education

In 2018 Government of Georgia expects that the reforms will justify, while business sector and consumers expect their revenues to grow. At the same time, all social groups want that an inflow of investments rise in the country. The banking sector represents a cornerstone for everybody, because both corporate and retail sectors get access to financial resources through commercial banks.

The banking sector’s assets exceeded 34 billion GEL in 2017. Net profits constituted 700 million GEL and the capital totaled 5 billion GEL, including the ratio of two major commercial banks, TBC Bank and Bank of Georgia, accounts for 4% (15 billion GEL).

Zurab Gvasalia, president of Association of Banks, appraises the year of 2017: «Reforms of crucial importance were carried out in the banking sector in 2017. These reforms comply with tendencies of the coming decade and are to minimize risks and expand access to credit resources. As a result, these reforms should become a base element of fast economic growth. Government has introduced a new instruction for protection of consumer rights. All lending organizations will be subjected to supervision. The Parliament has already discussed a due bill».

Larization Zurab Gvasalia expects Larization effect to strengthen in 2018. This year the campaign brought 10% result. Restrictions set by the regulator on foreign currency crediting has increased Larization ratio in the portfolio by 10%. The banking sector finished the year of 2017 with 22.4 billion GEL crediting portfolio.

Despite skeptical position towards Dedollarization (because only economic growth generates long GEL), depositors should make savings in GEL. This is a natural process and it cannot be regulated artificially.

Bankers assert that the GEL resource extension instrument is an important product of the year.

They also approve an enhancement of consumer rights protection. They express readiness to join financial education campaign for clients. The year of 2017 has altered priorities. Along with profitability, satisfaction coefficient of consumers have become also very important.

TBC Bank Vakhtang Butskhrikidze (director general) “The main thing is that our clients should feel that we are their bank. The main thing is to maintain direct relations with any our consumer, despite our size, in other case, we will reap disastrous outcomes.

Ratio of Georgia’s biggest bank in state economy accounts for 25% (2.7 million consumers, 70% of our population). Sizes matter, but it is of second-

ary importance anyway. Individual approaches and maintaining of partnership relations matters more than even benefits received from positioning of TBC Bank at London Stock Exchange (LSE). The bank’s capitalization exceeds 1 billion USD. TBC Bank’s image is of crucial importance.

All 7 000 employees of TBC team represent the bank’s image. 25% ratio in state economy and the status of a system player implies huge responsibility before our country.

As of December 1, 2017, the bank’s assets are estimated by 12.5 billion GEL and the ratio in total portfolio accounts for 36.2%. The Bank is leader in loans portfolio (8.527 billion GEL) and deposits portfolio (7.897 billion GEL) with 38.4% and 39.7% ratios in total portfolios, respectively.

January-November net profits exceed 238 million GEL. Bank of Georgia Kakha Kiknavelidze (director general) We appraise the year of 2017 positively. We hope the existing stability will further strengthen in 2018.

Bank of Georgia is a system bank and its success depends on favorable economic environment.

Stability matters. We have introduced many innovations this year, including transformation in retail sector. This implies an entirely different approach. Previously, bankers were divided due to products, now universal banker serves clients and they provide all types of offers. Mobile services were expanded.

We have important plans for the corporate sector too. In 2018 we will maintain focus on financing business sector, including small and medium companies.

GEL-denominated bonds represent an issuance of the year. In this way the Bank has made important contribution to the long-term campaign of Larization.

The Bank aspires to make significant contribution to financial education of clients. In this component Bank of Georgia and National Bank of Georgia (NBG) follow shared values.

National Bank of Georgia Koba Gvenetadze, NBG President «Banking system of Georgia has withstood difficult times, because NBG pays due attention to prudence policy that ensures the system stabil-

ity. Liquidity coefficient has been introduced in the banking system along with instructions on important indicators, such as loan guarantee and service coefficient to help commercial banks maintain a healthy practice of crediting. The next move was compatible with Bazel III principles, creating capital buffers for commercial banks stage by stage. NBG also renovates bank recovery and resolution management framework document and works on corporate management guidebook for commercial banks.

Larization long-term project has already brought certain results. In 2017 dollarization of total loans declined by 9% to 56%. Deposits dollarizaion has also shrunk.

Crisis and GEL depreciation has not ceased economic growth. Georgia has responded to the shock with floating exchange rate and this instrument turned out an efficient mechanism for absorbing external shocks.

Capital Buffers/ Prudence Norm of 2017 The concentrated market with domination of two commercial banks reduces risks for investors and attracts them, but it also generates threats. Policy tightening is related to theoretical presumptions of bankruptcy and it aims to protect financial resource of taxpayers.

At the end of 2017 NBG instructed commercial banks to introduce additional buffers in 2018.

The new prudence norm with corresponding coefficient is specific and different, taking into account positioning of the bank and scales of its influence.

According to the new decree of the NBG President, amendments were made to the decree on Approval of Provisions on Requirement for Capital Adequacy (28/12/2013 100/04) . The new decree sets obligations for growing capital adequacy coefficient and introduces various buffers, including concentration, counter-cycle and combined buffer.

TBC Bank, Liberty Bank and Bank of Georgia were recognized as system banks.

The system buffer for TBC Bank, Bank of Georgia and Liberty is +2.5%, +2.5% and +1.5% respectively. This obligation should be performed in 4 years. But major commercial banks do not care.

TBC Bank vice president Paata Ghadzadze noted that the system banks have no problems with capital and will not have ever, despite the scales of restrictions by NBG. The first stage comes at the end of 2018. TBC Bank and Bank of Georgia are obliged to add 1%, while Liberty Bank must add 0.6%.

In the rating of major commercial banks, Liberty Bank ranks third, but its assets are 10 times less as compared to other commercial banks beyond the top three positions. The bank has the largest network with 2 million consumers. However, the bank’s portfolio consists of mainly retail loans (97%).

hpp

6

December 25, 2017 #221

Aziz Saltik is the deputy CEO of Clean Energy Group Georgia LLC (CEGG), co-owned by the internationally recognized Turkish company ENKA and Norway’s Clean Energy Group. His company is planning to own, finance, construct, commission and operate one of the largest energy projects in Georgia’s history, the Namakhvani Hydropower Plant (HPP) cascade. Ever since ENKA and Clean Energy Group came together to develop the Namakhvani HPP project, Mr. Aziz has been spending a lot of time in Georgia with his newly-formed team.

Prior to joining CEGG, Mr. Saltik worked as a power plant project manager for ENKA, the largest independent power producer in Turkey.

He has years of experience in construction, development, permitting, land acquisition, environmental and social impact assessments, contract management, and the operation and maintenance of power plants.

- Mr. Saltik, you represent ENKA in Clean Energy Group Georgia.

When did your company first become interested in Georgia?

We have been successfully operating in Turkey as well as in 45 countries of the world for more than 60 years.

Name of ENKA is connected to 504 projects worldwide with historic value of 43.7 billion USD by having undertaken the challenging projects in the Middle East, North Africa, Central Europe, Central Asia, East and West Africa.

Since 1982, ENKA has continuously been named one of the Top 250 International Contractors by Engineering News-Record (ENR) magazine and ranked 72th in 2017. Also, ENKA is awarded by ENR to the “Global Project of the Year 2017” in the Best Global Project in Power/Industrial Category.

ENKA is also the largest private Independent Power Producer (IPP) with its 4000MW installed capacity in Turkey and meets over 12% of Turkish annual electricity demand with an annual

generation capacity of 32,000 GWh since 2002.

In Georgia, ENKA is currently constructing the USD 500 million BP gas pipeline and would like to take its interest further long-term by investment in the Namakhvani HPP Project - How stable do you believe the Georgian energy market is for foreign investment?

Georgia has proven itself to be a place to invest. Naturally, as potential investors we have studied the risks before making the investment. We believe that as a result of consistent support from the Georgian government we will be able to develop the Namakhvani HPP cascade successfully.

The Georgian energy sector in particular, though, faces some rather significant challenges. The country needs to ensure reliable energy and sustainable development in its energy sector and create a competitive environment.

We have been following this process and believe that Georgia will achieve significant progress by improving legislation, reducing dependence on imports, utilizing energy resources effectively, and strengthening its transport chain.

- In your opinion, how possible is it for Georgia to achieve energy independence?

Georgia has vast hydropower potential. It has significant water resources, which are crucially important to devel-

op in the process of pursuing energy independence. Namakhvani HPP will be increasing the country’s electrical generation by approximately 15%.

At the same time, the country is developing other sources of renewable energy. If all of these projects are carried out, it is a perfectly realistic result to expect that Georgia will gain energy independence.

- Will ENKA will be handing the construction aspect of the project, and when will this phase start?

Yes, ENKA will be constructing the Namakhvani HPP cascade. The project is well advanced with a basic design developed by the leading Italian engineering firm Studio Pietrangeli.

The construction and environmental permits have been obtained.

Construction is estimated to start in 2018 under an Engineering, Procurement and Construction (EPC) contract with ENKA. The project will be implemented by a talented team of professionals, most of whom are Georgian.

- What economic benefits will the Namakhvani HPP project bring to the region during and after construction?

Building the Namakhvani HPP cascade will result in sustainable economic development for the Tskaltubo and Tsageri municipalities. We will contribute tens of millions of laris in tax payments to the budgets of these

Aziz Saltik:

Namakhvani HPP will be increasing the country’s electrical generation by approximately 15% municipalities and create more than 3000 jobs, with priority given to hiring local residents. Meanwhile, our social responsibility program will support long-term sustainable development in the region.

Our company, Clean Energy Group Georgia follows IFC’s Performance Standards on Environmental and Social Sustainability and EBRD’s Performance Requirements where appropriate and seeks to be a leading player in the sphere of Corporate Social Responsibility.

- You said earlier that the majority of your project team are Georgians. How easy it is to find professional talent for such an energy project in Georgia?

We’ve met many Georgian professionals over the last l months, and I believe that those who have been selected to join our project will be vital

in helping us implement this important project. In addition, we are planning a scheme to involve students in our working process by cooperating with leading universities. Our goal isn’t just to build a hydropower power plant – we also hope to contribute to the development of future generations of Georgian engineers and professionals.

- A new year will begin in just a few days. Is there anything that you would like to wish for our country in 2018?

I would like to wish Georgia and all of its citizens a prosperous and successful 2018.

Georgia has been moving steadily forward towards to achieving energy independence, we are dedicated to start the construction of the Namakhvani HPP with a significant contribution to this process in 2018.

December 25, 2017 #221

Energy Sector in Review

The current year was very important for power sector. Like previous years, the current year was full of challenges. Despite Ministry of Energy and Ministry of Economy merged in 2017, the Authorities prioritizes to develop the power sector.

Consequently, the current year was special in the power sector in terms of development of generation and infrastructure.

It should be noted that Georgia’s hydro-potential is a strategic resource for power sector development. When talking about state resources, we should remember that there are 26 060 rivers in Georgia with a total length of 60 000 kilometers. Total reserves of spring water in Georgia, which consists of water resources of glaciers, lakes and water reservoirs, constitutes 96.5 cubic meters.

From all rivers, about 300 ones fit for power generation with 50 billion kilowatt/hour annual generation on average. However, regretfully, today about 20% of total resources are employed that is about 3000 megawatts in total installed generation.

Electricity consumption analysis also confirms the necessity of maximal use of hydro power resources of the country and construction of new hydro power stations.

Over the past 9 years (2007-2016), annual electricity generation rose by 38% from 8.346 million kilowatt/hours to 11.573 million kilowatt/hours. It should be also noted that in the mentioned period domestic consumption (2007-2015) rose by 60% from 7.815 million kilowatt/hours to 12.435 million kilowatt/hours, including by 31% on Georgia-controlled territory and by 43% in Russia-occupied Abkhazia. Electricity holds about one fifth of Georgia’s power consumption (20% in 2016).

Moreover, if we take into account electricity consumption forecast indicators due to the base scenario, electricity annual generation in Georgia will rise by 5% and the demand will hit about 17.51 billion kilowatt/hours in 10 years. It should be noted that the demand for 17.51 billion kilowatt/hour consumption may be satisfied from two various sources: imported power and steam power, which is generated of imported raw materials. The first variant, that is electricity imports, is very expensive, because electricity price permanently grows and prices reach the peak in winter period.

Moreover, another important problem enhances dependence on the neighboring country and this is quite serious burden on Georgia’s power and political safety. As to the second variant, which implies a maximal charging of steam power stations, naturally, many problems will arise in this direction too. On the one hand, power generated by steam power plants is very expensive and on the other hand, we have problems with energy independence and safety in this case too and naturally, these factors make negative impact on the state development.

Hydro Power The above-mentioned statistics reaffirms that employment of the mentioned resources is the most important task. Therefore, the current year was very interesting in terms of construction of new hydro power plants.

Namely, four hydro power plants were put into exploitation in 2017: Khelvachauri 1 HPP (47.48 megawatt installed generation), Maqsania HPP (0.5 megawatt installed generation), Nabeghlavi HPP (2 megawatt installed generation) and Shuahkevi HPP (187 megawatt installed generation).

The last one is the biggest hydro power plant built ever in Georgia after Enguri HPP. Total length of the tunnel is 37 kilometers and it is the world’s second biggest hydro power plant tunnel. The project’s investment value exceeds 420 million USD. The year of 2017 is very interesting because of building the mentioned HPP, because this year the biggest HPP was switched to the power system in the history of independent Georgia.

Currently, 44 power station projects are passing various phases of licensing or construction and total installed generation is 1643 megawatts and presumable investment value is 3 billion USD. Moreover, research work is being carried out for more than 100 projects are at the stage, including for wind and solar power station projects and their supposed installed generation exceeds 3700 megawatts, while total investment value is about 6 billion USD. Steam Power Besides employment of hydro power resources, for the purpose of developing the joint power system, it is of crucial importance in terms of technical issues to accumulate efficient reserve powers in the network. It is worth noting that currently Georgian power system lacks for equipment for reserve powers. As a result, regulation of frequencies is complicated. At the same time, the system switches off, when power aggregates are disrupted and this factor causes serious discontent in the society. To improve this situation it is necessary to en-

7

sure power reserves through construction of regulatory hydro power stations, powerful combined steam power plants and/or rehabilitation of the existing steam power stations. The government policy for removing the mentioned problems may be appraised as consecutive and reasonable. In 2016 Gardabani combined-cycle steam power plant of 230 megawatts was put into exploitation and this fact has considerably improved the network’s valuable operation. In this respect, the year of 2017 was also special one. Namely, this year a foundation was laid of the second block of 230 megawatt combinedcycle steam power plant. At this stage, the facility is waiting for obtaining due licenses and negotiations are underway on loan agreements. The steam power plant is expected to launch operation in 2020. The project’s investment value is 159 million USD. Moreover, we are also constructing Tkibuli-based coal-based steam power plant with 150 megawatt installed generation. Its investment value is 180-200 million USD. The project implementation will be finished by the end of 2021.

Natural Gas Market Natural gas market stability is of crucial importance for Georgia’s power security.

Natural gas consumption in 2016 constituted 2.261 billion cubic meters. Natural gas averaged consumption due to the base scenario grows by annual 7%. Moreover, the natural gas sector embraces extreme seasonal factors. Namely, in winter season (October-March) the consumption constitutes about 75% of total consumption.

Naturally, based on the existing consumption structure and for improving power security system it is necessary to build a gas storage tank.

Consequently, in terms of gas storage system development, the year of 2017 was very important.

Namely, in September 2017 a pre-qualification stage of open international tender for purchasing of designing, purchasing, installation and exploitation (EPIC) works for Samgori field underground gas storage tank were finished. The selected companies will introduce detailed technical proposals in the second phase of the tender, at the beginning of 2018, as well as EPIC works price. Gas storage tank construction works will start in the first half of 2018 and will end by 2021. According to preliminary estimations, total value of the project will exceed 250 million USD and the storage will hold about 300 million cubic meters of gas.

Underground gas storage tank construction will considerably strengthen Georgia’s power security. The project will regulate seasonal misbalance between gas supply and consumption and peak consumption will be satisfied in winter period. Moreover, if supplier countries cease gas supply to Georgia, Georgian consumers will receive natural gas from the gas storage tank.

Infrastructure As to measures for electricity infrastructure construction and development of the network reliability, it should be noted that very important projects were implemented in this segment in 2017. Namely, in April 2017 Georgia and KfW signed a 125 million EUR project agreement for implementing the open program II for Georgian electricity transmission network expansion. This agreement calls for constructing TskaltuboAkhaltsikhe-Tortum 500 kilowatt transmission line, Guria Transmission Lines Infrastructure Enhancement and Northern Transmission Line (the first phase). Moreover, construction of the first phase of 220 kilowatt transmission line of Akhaltsikhe-Batumi was also finished; currently, the 19 kilometer section of Tsiteli Khidi-Gardabani 700 mm diameter gas pipeline of East-West main route is being reconstructed.

European Perspective European Energy Community is one of the most powerful power organizations worldwide. Key objectives of the organization is to create integrated power markets, merger with EU markets, attracting investments and ensuring continuous power supply, enhancement of Europe’s power security and improvement of environment. European Energy Community was founded in 2005 with the aim to unite EU nonmember countries in South Europe and Black Sea Region.

On July 1, 2017 Georgia became a plenipotentiary member of European Energy Community and this fact should be appraised as one of the important events in Georgian power sector. Negotiations on membership started in 2014, while protocol on Georgia’s connection to the Energy Community founding agreement was signed on October 14, 2016. It is worth noting that the Energy Community was recognized by European politicians as a certain waiting space for the countries aspiring for integration into EU. Andria Gvidiani

tourism

8

December 25, 2017 #221

Today tourism sector is gaining a momentum. Government of Georgia is actively involved in the sector development and promotes an implementation of various projects.

2017 was fruitful year for Georgia’s tourism sector. A record number of tourists arrived in the country and the sector earned unprecedented revenues.

In 2018 National Tourism Administration plans to intensify efforts to increase Georgia’s perception and attract more tourists. Giorgi Chogovadze talks about the work that the tourism administration performed in 2017 and the plans of the organization for 2018.

“

-How would you appraise the 2017 tourism season? Are you content with the current indicators? What are the current challenges before the country in 2018?

- 2017 has show nimpressive outcomes for the tourism sector, and we have achievedrecord results. In January-November period of the year, we hosted about 7 million international arrivals, up by 1 081 031compared to the same period of 2016. Annual growth reached 18.4%. But this is not only the growth in numbers; this shows that 2017 is a successful year for the tourism sector and this will be reflected in the international revenues that the Georgian economy will receive.

The sector revenues in 2017 will amount to about 2.7 billion USD. The sector’s contribution to GDP, according to the January-June indicators, constituted 6.7%. In 2018, National Tourism Administration will actively work on growing Georgia’s perception, attracting more international tourists, improving quality of services and enhancing cooperation between various stakeholders. Active work will be under taken for the fulfillment of Georgia’s tourism strategy 2025.

-Private sector stages criticism that marketing campaigns are delayed on markets. Have you performed preparatory works for carrying out marketing campaigns and do you plan to enter new target markets in 2018?

-National Tourism Administration follows the long-term strategy 2025, which was developed with the support of World Bank Group (WB). We have determined the 2018 target markets and the 2019 plans accordingly. Two years ago, we also begun an intense cooperation with Google, which has appraised the last campaigns as successful. We have met with managers of Google’s offices in Dublin and Kiev to receive information about the results and plan our future cooperation.

Google has taken active part in planning and monitoring of the 2017 summer marketing campaign. The Tourism Administration has been carrying out the 2017-2018 winter campaign in cooperation with Google as well. The campaign covers 19 countries: Germany, Italy, Great Britain, Poland, Lithuania, Latvia, Estonia, Ukraine, Belarus, Japan…

As to new target markets, in 2017, Georgia started marketing campaigns in Great Britain, Estonia, Saudi Arabia, Bahrain, Kuwait, with the aim to highlight Georgia’s tourism potential on these markets.

We have to of course wait for the results of these campaigns, but we are already witnessing very encouraging signs;for example, to airlines have started directflight toGreat Britain, as well as flights between Estonia and Georgia look to be promising.

Georgia’s perception, as a City Break Destination, grows in Saudi Arabia, Bahrain, Kuwait and other countries of theMiddle East. We are witnessing positive trends of tourist inflow from all of the mentioned and othercountries. We believe these indicators will grow further as a result ofmarketing campaigns.

We have active advertising campaign on

one of the world’s biggest tourism portal – “Expedia”. We are continuing our cooperation with tourism portal – “TripAdvisor”, which among other markets, also covers Scandinavian countries. TV advertising and clips about Georgia are broadcast by the world’s influential TV channels: Discovery, Channel, Euronews, BBC. -In 2017 you started working on shaping a business tourism promotion strategy. Why have you decided to develop this direction and what is Georgia’s potential in this direction?

-In 2016, the Convention and Exhibition Bureau begun operating as part of the National Tourism Administration. The bureau aimsto support the development of business events tourism(MICE – Meeting, Incentives, Conferences and Events) to Georgia. The Bureau has already achieved considerable success, with Georgia winning the bid to host the 18th congress of World Federation of Tourist Guide Associations in 2019.

Business events tourism is one of the mostlucrative segments of the industry.

Although, marketing and customer relations for this segment also differ. Consequently, development of separate strategy and action plans for this direction has become important and a priority. With the support of GIZ, an Austrian company ENITED has undertaken the project According to international experts, Georgia has real potential for business events tourism and they have highlightedpositive market components.

-The country is working on improving service quality, but there are numerous pretenses anyway.

What steps should the country take so as Georgia come up with the neighboring countries in terms of service level? What is the problem solution?

-Small infrastructure and tourism products development is one of our main priorities. Improvementof service quality is an inseparable part of tourism strategy and significant steps will be taken for the upcoming years to support this sectors. It is essential to train corresponding service providers and staff, and we as the Administration have been conducting various training and capacity building activities for the private sector. In 2017, we trained about 1300 representatives of tourism industry (guides, hotel staff…).

We have alsohostedinternational experts toshare successful models and train various groups.

-What is Georgia’s potential on tourism markets of various directions, for example, medical, adventure…?

Georgia is a four-season destination, and we strive to exhibit each segment on the international market, although there are key directions which the strategy has outlined as focus points, these are:

nature-based tourism (adventures, mountain, eco….); culture tourism (archaeological, religion…); wine tourism combined with Georgian cuisine; as to medical tourism, Georgia is able to compete with the regional countries by offering lower prices.

Beginning in 2018, we plan to intensify work on development of medical tourism. It is necessary to identify perspective, competitive medical fields jointly with theMinistry of labor health and social affairs.

-Does Tourism Administration work on outlining new tourism directions?

-Looking at global trends, adventure tourism is gaining more and more popularity. Our nation has high potential, but detailed analysis of the sector have shown factor which hinder development According to the world market tendencies, adventure tourism becomes popular. The country has much potential, but analysis has showed factors that hinder development of this sector: To resolve these issues, we have planned to develop joint footpath-adventure routes network. Routes were divided in

three main categories: internal routes of the each region of Georgia; routes connecting regions with each other and routes surrounding main tourism destinations or resorts.

As part of the project, based on international experience, we have prepared an unified standard for planning and marking the first national footpath-adventure routes; We have examined 6 regions of the country and identified footpath-adventure routes; footpaths were marked under new standards in 3 regions and total length constituted more than 600 kilometers; On the routes that have been marked there also were trainings for the local guides. Mountain guides underwent training courses in abrupt cliff environment, management of avalanche situations and so on; We started cooperation with government entities and nongovernmental sectors to developa network of paths.

Donor organizations operating in the regions are interested in marking the pathsselected by us. In the future we plan to perform the same type of work in all regions, create and mark paths; For the purpose of network expansion we will add new paths; popularize network of paths; organize events to popularize various adventure or extreme tourism fields(hiking, canyoning, and so on); prepare printed materials. At this stage, we have prepared catalogs for canyoning and climbing. We plan to prepare cliff climbing catalog and so on.

December 25, 2017 #221

tourism

9

To improve quality of services in Tourism, we need to have more educated and qualified staff Tamar Kaikatsishvili, head of Tourism Department office for service development, talks about current situation in the region in terms of services and the future plans.

Ski resorts are more than ready to meet the new season Mr. Aleksandre Onoprishvili, Director of Ltd “Mountain Resorts Development Company”, talks about the new components at ski resorts for this winter season.

- What are the ski resort novelties for the 2017 winter season? Do foreign investors show much interest?

- In summer 2017 was started Mestia-Hatsvali cable way construction. The works were finished in a record time and cable way will be opened on December 23, 2017. The six-pack detachable chairlift is constructed by the world’s leading manufacturer Doppelmayr. The total length of the cable way is 1200 meters. This project has a crucial importance, as it will connect mountains and the center.

It is also important that small cable ways so called platter lifts were built in Svaneti, namely in Mazeri, Ushkhvanari, Etseri, Ushguli and Lentekhi to popularize skiing among local residents.

For the first time in the history of Bakuriani, KokhtaMitarbi connecting ski piste was made.

Several new ski pistes have been added to Mitarbi and Didveli resorts.

In Bakuriani a public space will be arranged in Didveli Movie Theater, where costumers will be able to receive detailed information about the ski resorts and all the innovations.

Two small cable ways were added to Goderdzi Resort, children space will be also arranged.

- How the booking component has changed at

resorts as compared to the previous years? What is the visitors’ statistics at ski resorts?

- We have active communication with hotels. For example, in Gudauri all the places are 100% booked for the end of December and January, while bookings for the late January accounts for 60%. We have the same situation in Bakuriani and Svaneti. The last season was the best one in the history of Gudauri. In 2016-2017 the resort recorded 276 634 visitors. As compared to the previous year, the number of visitors increased by 37%, while sales of multi ski tickets increased by 59%.

The 25% growth was also recorded in Bakuriani. We want to improve the 2017 season in Svaneti as well and we are working hard for this.

- Which ski resort is the most attractive one for foreign visitors and which ski resort is preferred by local tourists?

- Our ski resorts differ from each other. Gudauri is near Tbilisi, which easies transportation. There are 14 ski lifts and 20 ski pistes in total 70 km.

These trails are attractive for all categories of skiers. As for Svaneti, there are two ski zones, Hatsvali and Tetnuldi. Those, who like skiing in nature, who are thrillseekers and who love powder snow, Svaneti is a wonderful destination for them. In case of Bakuriani, there are three ski zones Didveli, Kokhta and Mitarbi, which are adapted to all categories of skiers/snowboards. There is high-quality snow at Goderdzi ski resort, which gives us a chance to open the season very early and that makes it more attractive for the tourists.

- As we know, you have been actively concentrated on development of Goderdzi Ski Resorts. It is quite a new mountain destination and nowadays how many tourists can the resort host during the season and how many new hotels will be constructed according to the already signed contracts and how many rooms will be added to the resort?

- Resort development regulation plan was created, according to which the new stage of economic development of Goderdzi Ski Resort began. At this stage, 6 high-

level hotel complexes are being constructed, with an investment of about 80 million GEL. These new projects will add 500 new work places and 435 beds.

On December 10, 2017, the Ministry of Finances and Economy of Autonomous Republic of Ajara signed an agreement with the four companies on the initiation of 4 new investment projects on the resort. In total, 15 790 000 GEL will be invested in those new projects, which will add 254 rooms to the resort, during the constructions 400 and afterwards 75 local people will be employed.

- Which ski resort is the most highly demanded one among the investors and why?

- The private sector is actively involved in all four ski resorts. Investments are made being implemented both on the construction of the hotels and cafes. In case of Gudauri, Red-co, MagiStyle and many other companies are involved in its development. As for Bakuriani, here you can find Orbi, Mgzavrebi and so on. Many new family houses are built in Svaneti Region. Active communication between the state and the private sector is the result of which investments are growing on mountain resorts day by day.

- What kind of marketing campaigns do you plan to make together with Georgian National Tourism Administration to grow workload of ski resorts in summer period?

- Georgian National Tourism Administration promotes Georgia at international tourism exhibitions and actively offers summer packages of ski resorts, organizes presentations and meetings with international tour operators and representatives of different airlines. Georgian National Tourism Administration together with Google Corporation carries out active internet marketing campaigns on target markets and introduces the potential of Georgia’s ski resorts in both summer and winter periods.

Ltd “Mountain Resorts Development Company” organizes various types of events during the summer season.

For example, in 2016 we had a motorcycle competition in Gudauri, which is already traditional and we will definitely organize it next year. As for additional marketing campaigns, we will take very active steps in digital media both during winter and summer seasons. Together with our partner companies we will offer our customers a variety of information about the life style and relaxation in mountains, interesting blogs and photo reports. Well, we just promise you many interesting things.

-What is current situation in Adjara in terms of development of services and which segment records the major problems?

-in 2017 Adjara Tourism Department has performed huge job for improving services. First of all, I would name educational projects. We have organized a tourism development school and intense training process is underway as part of this project. Moreover, new tourism products will be created to offer seaside recreational places to our guests, visitors, tourists, as well as ski resorts with unique opportunists. Consequently, they will be able to see Adjara highlands. For improvement of services, we are developing tourism products in the form of marked routes with signs, information desks, printed maps. We have tried to involve accommodation and food facilities located along this routes into this mentioned project and to draw the routes nearer to these facilities so as tourists be able to get due services and to alleviate their passage on the routes.

To increase perception, we have hosted important events in 2017. First of all, we held Gandagana Festival for popularizing tourism activities in rural areas. We also held Birds Festival, which is conducted on annual basis. This year, for the first time, we hosted International Festival for Village Tourism. The conference was attended by representatives from several countries and we have outlined cooperation perspectives. Moreover, in active tourism season Batumi International Airport was receiving about 300 flights a week on average and this is an unprecedented figure in the history of Batumi international airport. A great number of direct flights were performed to Batumi and this activity has brought very good results. According to the January to November indicators, number of foreign visitors to Batumi International Airport has risen by 62%.

As to services, we have certain problems in this segment.

Key problem is that service staff is not proficient in service standards. We are trying to work in this direction jointly with educational facilities. This year we had novelty as part of tourism development school – we held intense activities jointly with guides. We have trained more than 70 guides for both rural and urban routes.

-Do you think that guides should be certified? Is it right to call everybody a guide, who have read the mentioned book or any other books and decided to work as a guide? Is it right that various guides give various information about the same attraction to tourists? This may damage the image of the region and the country, in general, because this problem does not exist only in this region.

-We have quite open and transparent policy in tourism sector. There are no regulations. This was very good initially to stimulate the sector, but certain type of regulations became necessary later. For example, the institute of guides is strictly controlled in Turkey and the guides certification process is a quite complicated and long process.

However, if we do the same in our country, we will not have a sufficient number of guides to serve the growing inflows of tourists.

We have problems and we have taken measures to resolve these problems. As noted, we have already published the book for guides with the existing routes. In the second part, in 2018, this book will embrace a full network of routes and guides will have full information on what to talk about with tourists when following the mentioned routes.

Maybe you will ask how we control all these components and I will answer: this field is not regulated, but these regulation are necessary anyway. Therefore, we should prepare the market, develop the database of operating guides. At least 100 guides are required to satisfy the current demand in the Region. We have started creating the database. As noted, 71 guides have already passed training courses in six directions. We plan to carry out the same projects in 2018 too and we will have a good starting base of guides in Adjara.

- What directions do you plan to improve in terms of services in 2018 and, in general, for the coming years?

-Education is the only and key mechanism for problems resolution, as well as maximum involvement of the employees in educational issues and reception of information from practitioner managers, who successfully work in this or that branded hotels or famous restaurants. Educated and qualified staff is required for improving service quality in tourism field.

Moreover, we will pay attention to training hotel representatives in safety issues. The recent fact in Batumi has re-actualized the issue of intensification of similar trainings.

The Tourism Department had conducted many trainings, but these efforts turned out insufficient and the private sector has to provide huge job in this direction. Moreover, the Service Monitoring project will be also active and about 200 hotels and restaurants will be examined. The results will be discussed to outline specific directions for trainings.

Agriculture

10

December 25, 2017 #221

Georgian Agriculture Sector

Industry Representatives Evaluate The Sector’s Performance in 2017 Georgian Dream coalition, having won the 2012 parliamentary elections, announced agriculture sector as one of the priority directions. Bidzina Ivanishvili has pledged to invest 1 billion GEL in agriculture sector.

Several state programs were implemented in this sector over the past 5 years. Some of them do not function today, while another part continues running.

The Caucasus Business Week (CBW) has inquired how efficiently state programs were implemented in 2017 and how successfully the agriculture sector was developed in 2017.

According to the state budget, 11 state programs have been financed by 628 892 000 GEL since 2013.

The state budget has financed the preferential agro loan program by 48 900 000 GEL in 2016, while the 2017 plan constituted 47 000 000 GEL. Agroinsurance 7.200 million GEL – 2016 7.000 million GEL – 2017 Vintage Support Programs: 36.000 million GEL in 2016 16.000 million GEL in 2017 Plant the Future 6.861 million GEL in 2016 7 million GEL in 2017 Georgian Tea 67 000 GEL in 2016 400 000 GEL in 2017 Agriculture Cooperatives Support Programs 2.500 million GEL in 2016 4.870 million GEL in 2017 According to the information of Agriculture Proj-

ects Management Agency of Georgian Agriculture Ministry, the office has been implementing various large-scale projects of Joint Agro Project. Today the current state projects are as follows: preferential agribusiness credit, co-financing of agriculture products processing and storehouse enterprises, agro insurance, plant the future, agro production support program, Georgian Tea. Objective of these projects is to promote development of chain of agriculture values.

State financial support has given additional stimulus to entrepreneurs for development and expansion of production and this is confirmed by the statistics.

At this stage, as part of Joint Agro Project program, more than 750 enterprises and 165 new enterprises have been financed, gardens of perennial plants have been arranged on more than 3700 hectares and tea plantations were rehabilitated on more than 529 hectares, they noted.

According to Agriculture Projects Management Agency, financial resources should become maximally attainable for farmers and entrepreneurs. New enterprises have stimulated agriculture sector development and production of exports products was expanded. As a result, since 2013, more than 27 000 loans have been issued and the portfolio exceeds 1 billion GEL. Number of those wishing to arrange gardens of perennial fruit trees is growing in significant volumes, they said. «This year the program beneficiaries have picked the first harvest from apple gardens. Year to year the mentioned indicator will grow further; Since the program inauguration gardens of perennial plants have been arranged on more than 3 700 hectares. State co-financing hit 19 million GEL, the

agriculture projects management agency representatives said.

Georgian Tea program is being implemented successfully too. Tea plantations were rehabilitated on 529 hectares. It is important that a major part of the program beneficiaries were cooperatives.

«Support by state and donor organization is of crucial importance for valuable and efficient development of agrarian sector and Agro Production Support Program is an evident sample. The program is being implemented with the support of agriculture modernization, market access and resilience (AMMAR) project. The program finances both primary production and processing enterprises. Since the project inauguration, 93 beneficiaries received cofinancing component of more than 1.4 million GEL», the Agency representatives said.

Establishment of international standards remains a key direction, namely, this support is of crucial importance for exports-oriented companies, they said.

All enterprises financed under the program of processing and storehouse enterprises projects, will introduce ISO-22000 or HACCP international standards.

The agency finances 80% of costs for standards introduction, including 30% is financed by state budget and 50% by donor organizations. Beneficiaries have to pay only 20%.

«Agriculture projects management agency will also support beneficiaries of Plant the Future and Georgian Tea program in establishment of Global Gap primary production standard. In case with Global Gap, 50% will be financed by the beneficiary and another 50% will be financed by donor organization (USAID/ REAP). More than 50 beneficiaries have already en-

joyed the mentioned program opportunities», the agency said.

AgroInsurance program budget in 2017 is 7 million GEL. The program involves 5 companies: Aldagi, GPI holding, IC Group, ARDI, Alpha.

A total of 20 680 policies were issued in 2017, including October,the agency reports.

Today Georgian Farmers are able to become competitive actors thanks to international standards and modern technologies, produce top quality products and find their niche on both domestic and international markets, the agency officials said.

Irakli Chikava, founder of Agro Solutions agro consulting company, noted that the year of 2017 was full of agro innovations. Namely, there were several important events, which have determined a general situation.

1. Appearance of marmorated stink bugs, which have brought serious problems to Georgia and which is expected to worsen situation in 2018. Marmorated stink bug has inflicted serious damages to nuts exports.

2. Restrictions on land sales to foreign citizens – this radical decision will be reflected on foreign direct investments in the agribusiness sector.

3. Abolition of vintage subsidy – very positive step for the sector recovery.

4. Georgia’s recognition as a homeland of winemaking – this fact will also make positive effect on wine exports growth and incentivize Georgia’s agro tourism.

5. Merger of Ministry of Environment protection with Ministry of Agriculture – this decision will make these sector more flexible, because these two Ministries had substantial connection earlier too.

December 25, 2017 #221

The Georgian insurance market registers 16 operators. The industry representatives assert that competition is sharp. As a result, customers have access to various insurance products and services. At this stage, the 2017 financial indicators remain unknown. However, according to the official statistics of the Insurance State Office, in January-September insurance companies attracted 345.72 million GEL premium. In the same period paid insurance losses constituted 174.09 million GEL. Attracted insurance premium due to insurance forms: medical (health) insurance – 161.42 million GEL; property insurance – 56.77 million GEL, land transport insurance (excluding railway transport) – 55.79 million GEL, life insurance – 16.95 million GEL, civil responsibility insurance – 15.34 million GEL. Attracted insurance premium in medical insurance and market ratio due to companies: GPI Holding – 49.54 million GEL (31%), Imedi L – 41.05 million GEL (25%), PSP Insurance – 23.42 million GEL (15%), ARDI – 16.92 million GEL (10%), Irao – 9.82 million GEL (6%).

Insurance Premium attracted in Property Insurance Sector and Market Ratio due to companies: Aldagi – 24.59 million GEL (43%), GPI Holding 12.67 million GEL (22%), Unison – 5.95 million GEL (11%), Irao – 5.03 million GEL (9%), ARDI – 2.37 million GEL (4%); Land transport insurance premium and market ratio due to companies: Aldagi – 21.36 million GEL (38%), GPI Holding – 11.98 million GEL (21%), TBC Insurance – 9.71 million GEL (17%), IRAO – 3.14 million GEL (6%), Alpha – 2.55 million GEL (5%).

Life insurance premium and market ratio due to companies: Aldagi – 6.39 million GEL (38%), TBC Insurance – 5.29 million GEL (31%), PSP Insurance – 2.72 million GEL (16%), Imedi L – 0.82 million GEL (5%), GPI Holding – 0.48 million GEL (3%).

Civil responsibility insurance premium and market ratio due to companies: Aldagi – 8.18 million GEL (53%), GPI Holding – 2.79 million GEL (18%), Unison – 2.23 million GEL (15%), Irao – 0.78 million GEL (5%), ARDI – 0.64 million GEL (4%).

The Caucasus Business Week (CBW) has inquired the current situation and tendencies on the insurance market in 2017, appraisals made by the private sector representatives, the field specialists and the existing expectations for the year of 2018.

Association of Insurance Devi Khechinashvili, head of Insurance Association, says that the year of 2017 has not brought especially positive results for the insurance sector. The existing problems remain unresolved and they are still sharp, he said.

In 2017 the sector recorded a growth in indicators, but this is not the result of a growth in insurance coverage and development of insurance relations. In 2017, the number of insured beneficiaries do not differ from the number of people insured in previous years. This growth is expressed in inflation tendencies. «First of all, this is inflation of medical prices, government decisions, which have raised expenditures in private health insurance. Insurance market was insured a little faster, compared to economy. However, this growth does not suffice to say that our economy, society, insurance market, government is covered well in terms of insurance and key expenditures will be remunerated in case of risks», Khechinashvili said.

insurance properties», Gigolashvili noted. Changes have taken place in universal health program in 2017. Namely, according to government decision taken in February 2017, universal health and private insurance packages were differentiated. «in that period the government noted that negotiations were underway on creating 25-27 GEL policies. I have not seen similar policy so far. I hope the working on this issue will be continued and similar policies will be created», Gigolashvili noted.

GPI Holding GPI Holding insurance company states that in 2017 the company held the second employment forum and 365 persons were employed in addition. This is one of the unprecedented offers on labor market, he noted.

«This Forum has brought very positive reaction, because we have given a chance to hundreds of our citizens to make a career in our company. We had set minimum requirement for the position of sales specialist – we paid key attention to the desire and aspiration to take up a new profession, because we requested no specific experience or educational background. We had set no age restriction either. The program included a paid job during the 6-month training period and we developed not only education program, but also support program – a combination of mentorship and coaching to create the best environment for training and developing people with various age and experience. We are happy that many talented, motivated and respected persons of middle age dared and accepted our challenge and now these people are members of our team and they successfully continue working for our company», GPI Holding representatives noted.

We should also mention social campaign for insurance of business risks. This campaign was introduced after conflagration in Children World complex, they added.

Georgia is one of the undeveloped countries in terms of property risks market penetration and this is a key problem that frustrates a development of small and medium businesses.

«One unforeseen banal conflagration may leave companies in hopeless condition, as it happened in case with Children World. Several similar facts took place throughout the 2017. This factor has preconditioned that in February 2017 we started a large-scale social campaign with focus on spreading information and demonstrating insurance service benefits entrepreneurs. As part of the campaign, GPI Holding was financing business risks insurance premium with 50% for two months. At the same time, we developed a policy created specially for this segment, which called for insurance of buildings, machineries and reserve situations. This instrument enables to restore the damaged property and unreceived property and bank interest rates.

The compensation limit was determined by 50 000 GEL, while monthly premium totaled 15 GEL as part of the campaign.

It should be noted that during the campaign we reached many entrepreneurs and their application rose by 300%. As a result of this activity, after conflagration at Eliava Fair, we saw that 80% of enterprises operating in the burnt space had insurance policies and insurance sector cares for compensation of their losses. However, the statistics

Georgian Insurance Market Key players of the industry evaluate the performance of the sector

This year companies started publishing reports on quarter basis and this is a good practice to cast light on the market tendencies.

For many years Government of Georgia was rejecting an idea of introduction of an obligatory insurance instrument. This year we have a breakthrough in this direction. The first obligatory insurance bill has been submitted to the Parliament and the document has passed the second hearing. The documents refers to civil responsibility insurance for unregistered vehicles. «We appraise this document as the first stage», Khechinashvili said.

In 2017 Government was entitled to introduce mandatory insurance instruments in civil safety responsibility. For example, initially, mandatory insurance will be applied to faires and refueling stations. «The main thing is that this right was granted to Government to introduce mandatory insurance for civil safety responsibility», Khechinashvili noted.

As to the 2018 expectations, mandatory insurance mechanisms will be introduced in 2018, Khechinashvili said. This move will stimulate the insurance market. «I hope that in 2018 we will have progress in access to universal insurance services at both parliament level and Ministries. We hope the current problems with private insurance and universal health program will be completely eradicated», Khechinashvili noted.

Insurance Institute Giorgi Gigolashvili, President of Insurance Institute, positively appraised the 2017 performance.

Georgian insurance market is stable and this is very convenient for the insurance market, he said. This year we had not shocks and no company has withdrawn from the market, Gigolashvili pointed out.

Number of beneficiaries has not increased in any direction, however, number of beneficiaries has increased in the direction of vehicle insurance and property insurance, Gigolashvili said.

Several conflagrations took place in 2017, he said. «In the case of Children World, no enterpriser had insured property, while in case with Eliava Fair, 17 entrepreneurs of 30 ones had insured their

shows that property insurance indicator is very low and naturally, this is not sufficient that this segment have financial guarantees in similar unforeseen situations», GPI Holding representatives said.

In 20127 GPI Holding added new products Cancer risks insurance is the first and most remarkable product. This was a key novelty on the market.

«Onco Care policy enables to buy the limit at affordable price and it is compensated during the cancer diagnosis. We know that huge expenditures are required to treat oncology disease and therefore, people visit doctors too late or they lack for money to finance the full course of treatment. In this case we have fatal outcomes, while early diagnosis grows chances for healing the cancer and in similar cases people should be protected in terms of finances.

To say differently, this is a certain relief in similar extreme situations. Key advantage of this product is that the money is issued in the form of compensation and the beneficiary is free to manage it.

This component makes this policy different from health insurance, when money is compensated on the ground of documents that are necessary for treatment. Another moment is that preliminary examination is not carried out for the beneficiary and oncology disease existing before insurance is an only exception. Simple procedures are required to sign the policy and in case of insurance of adult, the same limit automatically insures adolescent children of the beneficiary.

High limits should be also mentioned – tariff is attached to the age of the beneficiary. For example, annual payment for the 50 000 GEL insurance package for 35-year old person is 50 GEL. We aim to popularize this product, especially amid the current social environment. Moreover, we transfer 5 GEL from each sold policy to HERA foundation to expand support to the people who have to defeat this disease», GPI Holding representatives noted.

Changes to universal health programs represent another important novelty for the company and insurance market, in general. Naturally, these changes have affected both insurance companies and their strategies and each citizen, they noted.

11 GPI Holding has set a limit for participation in the universal program due to revenues. This signifies the higher revenues of this or that able-bodied person, the less benefits he/she receives from the state, while persons with more than 40 000 GEL incomes a year cannot receive the state universal program benefits.

«On the one hand, this creates opportunities for insurance companies, however, on the other hand, restricts access of people to private insurance system, because holding or non-holding of insurance remains one of the separation lines. Based on this reality, we have developed a model for individual and corporate insurance that maximally reflects this reality and we have managed to considerably increase our portfolio – according to the January-September indicators, this figure totaled 45%. It is worth noting that the above-mentioned restrictions forced a major part of companies to cease offering individual health insurance products. However, we have followed other strategy and offered several novelties to the market. At the beginning of 2017 we introduced a new product – GPI exclusive that offers a radically different and market-adapted insurance product. The product similar to corporate insurance may be bought by our consumers in individual regime. This product is very popular. Advantage of GPI exclusive is that it includes higher limits for treatment and covers almost all expenditures without exceptions. Free choice of clinics and opportunity for enjoying our distance services. Insurance price depends on the age of beneficiary and package and monthly fee is about 50 GEL», GPI Holding representatives said.

As to the 2018 expectations, GPI Holding says that, according to the 2017 public opinion poll, GPI Holding is perceived as the provider of best insurance services and this is key priority in the company.

«Naturally, we have achieved this result thanks to simple and comfortable compensation process. In 2016 a major part of our consumers started using our online platform – mygpi.ge for compensation and other services. In 2017 this was one of the evident improvements

for our clients – compensation by mobile application or website is carried out within 1 workday and this is a genuinely unprecedented fact on insurance market.

Improvement of services and simplification of insurance and expansion of access – this is our objective for 2018. Introduction of digital technologies is one of the important factors for our digitalization strategy and this is not only our local strategy line, but Vienna Insurance Group also determines it as a priority direction. In this respect out consumers will learn about many innovations in 2018, GPI Holding representatives said.

Aldagi Insurance Company Giorgi Baratashvili, Aldagi insurance company director general, explains that the year of 2017 should be positively appraised for the company.

«There were several big losses, I mean conflagrations. Previously one big conflagration was recorded every 3 years. Regretfully, now we see that at least one big conflagration takes place every year. This signifies conflagration insurance has risen in the country», Baratashvili noted and explained that in 2017 the company expects at least 15% upturn. This is not a big figure, because unemployed market is quite extensive. Small and medium business is especially passive, he noted.

The company expects that mandatory insurance instrument will be introduced in 2018 and this component will ensure the sector development, Baratashvili noted.

The sector development is unimaginable without obligatory insurance mechanism. «We provide active job with the Government. This first step implies a mandatory insurance of vehicles moving with foreign signs. This is a key event we expect to take place in 2018.

This mechanism will expand the insurance market. Without health insurance, according to the 2016 indicators, total insurance market is worth 200 million GEL. This is a very small figure, while there are 16 insurance companies on the market», Baratashvili noted.

Insurance market cannot be developed without mandatory instruments. International experience suggests that insurance component is a key instrument for risks management and Europe realized this factor 50 years ago, he said.

Government of Georgia is taking certain steps for introduction of mandatory insurance, Baratashvili pointed out.

«Insurance culture grows step by step. In 2016 property risks insurance market rose by about 10% and this is a very small figure for the developing market», Baratashvili said.

business

12

Challenges, Success and Plans

$2.5 billion

Anaklia city project consists of 9 phases and total investment value is 2.5 billion USD.

1.5 million

Businessmen assess business sector in 2017 and unveil plans for the 2018

Annual sales of Schuchmann Wines

23 percent

What was the year of 2017 like for business sector and Georgian economy, in general? Despite the comparatively pessimistic forecasts by World Bank and International Monetary Fund (IMF), in January-September 2017 Georgian economy grew by 4.7%. This indicator makes Georgia one of the leading countries, but the fact is that nominal GDP is 3 855 USD and this indicator leaves the country behind many other former Soviet countries.

A

mong former Soviet countries Georgia ranks 9th in terms of GDP per capita. We should also note that top three countries are members of EU and NATO, while the next four countries are oil and gas exporters.

In January-November 2017 Georgian foreign trade turnover rose by 12.9% year on year. It should be noted that exports rose by 27%. The upturn is recorded to the direction of EU market and traditional exports markets of Russia and other former Soviet countries.

The year of 2017 was successful for winemakers. As compared to the previous year, exports volume rose by 63%. Negative trade balance creates a serious problem, which constitutes 49% in foreign trade turnover, that is 4.684 billion USD. As compared to the previous years, foreign direct investments (FDI) inflow is growing. In January-September 1.346 billion USD investments were made in Georgia.

The country has advanced positions in international ratings too. According to January-September indicators, Georgia ranks 20th in the report published by European Chamber – Best European Countries for Doing Business. Georgia runs ahead of such European countries as Spain, Italy, Czech Republic, Slovakia, Bulgaria, Hungary and Greece.

Georgia ranks 16th in the Doing Business rating of World Bank, 44th in Corruption Perception Rating by Transparency International. According to the Doing Business 2018 report

by World Bank, Georgia has won 7 positions and entered the list of top 10 countries.

Specialists assert that the profits tax abolition, that is Estonian model, was an advanced step for the business sector in 2017. Economic experts assure that the reform results will become evident at the end of 2018.

Amendments to the Insolvency Law, namely, simplified procedures for business closure, has considerably

improved the business environment and this factor was also reflected in international ratings. Introduction of free trade regime with China and EU may be appraised as a success of the country and business sector. Inauguration of Baku-Tbilisi-Karsi railroad was appraised as a huge infrastructural success, as well as inauguration of Anaklia deepwater seaport construction works. As to the year of 2018, Minister of Finance Mamuka Bakhtadze noted that an important reform will be implemented in 2018.

The new project calls for introduction of more simplified and fastest automatic system for return of surplus VAT payments. Significant infrastructure development projects will be implemented in 2018. More than 1.3 billion GEL will be spent on construction of new roads. There are serious expectations in tourism sector too. Number of foreign visitors has exceeded 7 million persons.

Government of Georgia hopes that in 2018 the mentioned figure will rise by about 2 million persons. In short, if we trust the Government, the year of 2018 will be more successful thanks to the 2018 state budget, which is oriented to economic growth and development, according to officials.

Keti Bochorishvili, Anaklia City executive director: «I believe that the year of 2018 will be important for Anaklia seaport and the city. Important and strategic partner SSA Marine has joined our project.

This is an American seaport operator.

It is important that all works satisfy international standards and based on this factor we have developed a master plan, which has become a precondition and the company has obtained a building license. The 24th of December is the date of crucial importance, because the construction works of this century have started.

Very interesting preliminary works were finished in 2017. We will have

December 25, 2017 #221

GeoPlant market ratio exceeds 23%

$2 million

Kula company plans to expand plant and invest additional $2 million in expansion plan many challenges and opportunities in 2018 too.

We started working on the Anaklia city concept in 2017. This is the city of the future and, along with the deepwater seaport, it will enable the country to become a powerful player on global level and attract multinational companies.

Nutsa Abramishvili, Schuchmann Wines director general: The year of 2017 was interesting.

Many important events took place in the sector, where Schuchmann Wines Georgia operates. Wine, winemaking, agribusiness is our key direction. As to other projects, they include gastronomic and tourism directions: travel operator known as Schuchmann Travel. Gastronomic direction is our modern precedent on Georgian gastronomic market such as Molekula – advanced cuisine. It may be tasted at our Qarvasla bar.

Georgia has made important achievements on foreign markets. Namely, Georgia was introduced at Wine Civilization Museum in Bordeaux.

For several months Georgian wine, agriculture, history and culture were represented at the Museum. Consumers got to know Georgia. Our country has obtained a respective place on the world wine map. The year of 2017 was successful for Georgia in terms of marketing and growing perception.

Wine sales have also grown.

We should make emphasis on our success – we have replaced the Russian marker by China. There were permanent problems with Russian market because of various risks (political and currency devaluation). In general, it is not expedient to be de-

pendent on former Soviet countries space. We have already diversified exports markets and we export products to 35 countries.

Our annual sales account for 1.5 million GEL, of which 15% are sold in Georgia. Our sales are growing. Annual growth pace is at least 10%.

It is important that Schuchmann Wines will mark its 10th anniversary in 2018. Our winemakers are working on creating and bottling a special jubilee wine dedicated to this date.

As one of the important events in 2017, we obtained ISO:22 000 quality certificate. Our chateaux is a place for important meetings. 90% of our guests are foreign citizens. When they hear the German appellation, they have higher degree of confidence and therefore, we introduce new services and tastes on a constant basis. We do business that brings happiness and that is based on tastes and feelings.

Vladimer Meskhi, GeoPlant administrative director: I would not complain about the year of 2017. Our company is oriented on novelties and we had certain difficulties that, as a rule, accompany innovations.

We introduced Gurieli tea on Georgian market in 2010. In about 2 months we managed to take control on 13% of the market. At this stage, our market ratio exceeds 23%. In 2017 we introduced several new products on the market. We pay serious attention to the market of raw materials. This is a difficult case, but our development is impossible without this component.

We have issued Christmas tea – Prince Gurieli. It is an attractive and efficient product. At this stage, we have about 50 varieties of tea and we cover all

segments. We also take steps in the exports direction. We supply products to European market, Central Asia market. Our ratio on Russian market is unimportant because of many risks.

We plan to develop the direction of bio tea. Therefore, we pay special attention to plantations. We will start developing this segment in 2018. It is not ruled out to launch white tea production too. In 2015 we organized a new tea packing enterprise in Ozurgeti. We put considerable investments.

We have bought high-level production equipment in various countries.

Two-month currency markets fluctuations should be considered as one of the key challenges in 2017.

Vano Goglidze, Kula company director: The year of 2017 was quite complicated for us, on the one hand, because of Georgian currency devaluation, on the other hand, frosts started in spring. In Shida Kartli fruits froze and the product price hiked. Despite this, we managed to maintain prices and quality. In 2017 we built a new enterprise, which started production of meat products. We intensified exports too and these operations brought currency to us. We launched production of sugar-free products (sauces, juices, jams, stewed fruit …)

We produce 220 varieties of products and export them to 25 countries. The USA and Germany are major exports markets for us.

In 2018 we plan to produce bio juices.

To this end we plan to expand our plant and invest additional 2 million USD in expansion plan. We will employ 50 persons in addition. Currently, our company employs more than 300 citizens.

December 25, 2017 #221

healthcare

13

healthcare Industry Review State budget allocations for health sector grows every year. Despite similar growth, the answer to the question: who spends more on healthcare – government or citizens, does not change. The issue of valuable services remains unchanged too.

According to the last indicators, the government’s ratio in total health expenditures accounts for 40%, while the ratio of citizens is 60%. The research has showed that 60% of expenditures of citizens are spent on medications. Those, who cannot buy medications, reject to pass treatment courses because of lack of finances.

According to the report – Cooperation for Budget Transparency: Civil Monitoring of State Expenditures in Georgia prepared as part of European Fund project, 74.2% of the respondents cannot buy medications prescribed by doctors or they buy only part of them.

Only 25.8% of the respondents are able to buy all necessary medications. In this situation specialists assert that the problem solution consists in introduction of Health system. The system formation will enable to shape timely and precise payment system in the health sector and improve control and supervision system for diseases and health expenditures. Digital prescription system is one of the components of the system, and Health Ministry plans to move to this system in 2018.

Akaki Zoidze, head of parliament committee for health and social issues: We carried out very important reforms in health system in 2017, first of all, we have introduced the model adjusted to the existing needs, when the rich part of our society has limited access to universal health program benefits. In turn, this package was broadened to socially vulnerable citizens. Namely, on September 1 Government launched the program for supply of medications to patients with chronic illness. This is huge relief for the poor, who have four chronic disorders – arterial tension or diabetics (insulin-dependent or insulin-excluding diseases), thyroid gland disease, asthma … these diseases are widespread and a major part of similar patients are poor. They need expensive medications every day and their prices rise following the GEL exchange rate changes. The program will be continued in 2018 too and the poor will be able to save a half part of their pensions.

We will move to the so-called selective contracting mechanism and this implies a selection of the facility, which will provide better quality and qualified services. Consequently, only these facilities will remain in universal health program. Medical facilities will have enough time to satisfy the due standards. If they fail to do so, they will not be able to participate in the universal health program and their contract agreements will not be continued.

The works for introducing digital prescriptions is of crucial importance. Restoration of the institute of prescriptions was a right decision. It was expedient to establish the digital system immediately, because

paper carriers cannot fully reflect the real situation and ensure valuable analysis. And this system enables to cast light on details related to prescription of extra medications (how, whom, where). Divulging these results will ensure rational use of medications. The current practice is unacceptable – frequently patients need one medication, but doctors prescribe 5-6 medications, because some doctors have business interests in certain pharmaceutical companies.

Program for chronic disorders is also very important.

The issue is of about 700 000 persons with 0-100 000 scores (100-150 thousand persons have chronic disorders). In the future we plan to direct existing reserves to expansion of coverage and contingent in this direction, expansion of the list of medications. We plan to introduce this system in 2018, if we fail to do so in 2018, this system will be established definitely in 2019-2020.

The medications project will enable to enhance primary health role. Primary health system is the backbone of primary health system, where we should resolve, treat and manage 80% of the health problems without hospitals and expensive interventions. We can achieve this through healthy lifestyle, primary health services, prevention mechanisms and we will make accent on this direction in the coming years.

Jointly with the Ministry, we have prepared a longterm vision through involvement of wide society and determined the target direction up to 2030 in the direction of social, labor relations, healthcare issues.

Our action plans will be based on these directions.

We have improved immunization program, programs for mothers and children. This signifies a referral program will be launched that has reduced death toll.

This is a huge achievement.

I would also name the parliament-performed job for public health issues and adoption of tobacco control law.

Excluding rare exceptions, everywhere in the world the health market is regulated in this or that form.

This is an asymmetric market, where supply determines the demand, not on the contrary. There are many other problems – all these factors substantiate state involvement in the market, including in terms of medical services, price regulations, including in terms of regulation of medication prices. We do not regulate prices. Only the God knows on what principle it depends. They do not know themselves how much the supplied service costs. All prices are conditional and depend on individual preferences. We have access to global experience. It is important to introduce just pricing depending on resource capacity. Introduction of this principle will take a certain time, because big volumes of statistical indicators should be processed, many people should be trained.

This system should be established in not only state health system, but, in general, and in this case prices will be identical and transparent for private insurance companies and individual patients. At this stage, tariffs are determined only in universal health system

and this approach will be general for everybody. For example, we can refer to the sample of Germany, where prices are revised every three years.

As to medical business, it genuinely flourishes today.

Commercial banks issue loans for expansion of medical business or other needs without problems. In 2.5 years 57 clinics opened in the country. Similar paces in development, excessive commercialization grows expenditures and enables to supply excessive services that may be unnecessary for patients. I believe this sector should be regulated to a certain extent.

Nikoloz Gamkrelidze, head of Georgian Health Group (GHG): GHG is a major actor on this market and is represented in all segments of this market – hospital, insurance or pharmaceutical. Various challenges exist in each of them and there are various types of opportunities too. The year of 2017 was rather transient in terms of changes.

Universal Health Program was launched in 2014 and Government started active efforts in 2017 to enhance the program efficiency. As a result, the market rules were revised, specific criteria were determined for inclusion of a person in the program. The program has outlined target programs and this was very important.

This decision has redirected rich citizens to private insurance sector, while poor citizens will receive improved packages with a wider list of medications.

This was a transient year for state programs.

As to GHG, this was one more dynamical year for the company. We opened hospitals and this process continues. At the beginning of 2018 we will open 2 major hospitals with 700 beds. We continue making investments in the sector. We are major investor in health sector and we have made 180 million GEL investments in 2016-2017. We plan to make 50 million USD investments in 2018. In general, we have optimistic moods for the coming 2018 year. We expect more changes on the market. Universal Health Program is a vivid organism and changes will take place on permanent basis. We expect more changes for differentiating valuable and invaluable medical facilities. I hope a classification system will be introduced in this sector, because those who care, should be appreciated more.

I believe this is a key challenge in this health sector.

In this case I mean that Government has contracts with all facilities and they do not satisfy quality criteria and I believe higher-quality selection should be carried out. This factor will provide more quality guarantees. We expect these changes and we have positive mood.

As to the pharmacy market’s major players, we are represented by two brands – GPC and Pharmadepo.

These two brands will operate on the market separately. GPC makes focus on personal care things and will maintain this direction. As to introduction of new brands, we will activate efforts in the future and offer more novelties to the consumer.

14

real estate

December 25, 2017 #221

By Property Georgia Editorial Director Kate Tabatadze

A

ccording to NBG’s official statistics, as of 1 September this year, 5.705 billion Gel has been taken out by individuals The GDP figure for the in mortgage loans, of which 1.7 billion is in national curthird quarter of 2017 rency. The Larization coefficient is 29.1% (compared to 26% in March 2017), meaning that 71% of the portfolio is dollarized in current price terms (compared to 81% on 01.09.2016). The coefficient has fallen by ten was percentage points year-on-year (-14%). A total of $78.7 million within the sector has been converted into the national currency within the framework of the Larization programme (17.01 – 25.03).

Based on the National Bank’s monetary policy report for November, Compared to the same the Lari’s exchange rate against the US dollar in the third quarter period a year earlier, of 2017 fell by 0.1% compared to the previous quarter. During the same period, the Lari’s nominal effective exchange rate deprecithe GDP grew by 4.4%, ated 2.4% m/m and 1.8% y/y. The real effective exchange rate in while the GDP deflator the third quarter of 2017 depreciated 3.4% m/m and 1.7% y/y. grew by 6.6%.

Under the circumstances of Larization, there has been an impressive growth in real estate transactions. Based on the official data from the National Agency of Public Registry, the number of real estate registration transactions in October 2017 increased by 47.8% compared to the same period a year earlier, and amounthas been taken out by ed to 84 710 units across the country. The equivalent figure for individuals in mortgage October 2016 was 57 329 units. The number of primary regisloans tration transactions increased by 76.4% compared to the same month of the previous year, while the number of secondary registration transactions increased by 37.4%. The number of Based on the data for primary registration transactions in October 2017 was 26 817 the third quarter of units, of which 20 104 were for the registration of rights within 2017, the construction the framework of the state project. The number of secondary sector accounted for registration transactions was 57 893, of which 10 062 were for 19.5% registration of changes within the framework of the state project, while 5 901 were for termination of registrations within the framework of the state project. of direct foreign inThe monthly index of primary and secondary registration transvestment, which conactions was 2.423 and 1.867, respectively (December 2010=100).

The share of primary transactions within the total number of regisstitutes an increase of tration transactions increased compared to the same period a year $89 million compared earlier: in October 2017, 68.3% of registration transactions were to the same period last secondary transactions and 31.7% were primary transactions, while year ($505.5 million). the figures for October 2016 were 73.5% and 26.5%, respectively.

The number of registration transactions in October 2017 revealed the top ten of territorial units, as well as the rising/falling trends in these numbers compared to the previous month and the same month of the previous year.

Against the background of constant challenges, the hotel and restaurant sector – currently one of the most active in Georgia – has been developing dynamically. According to preliminary data from the National Statistics Office of Georgia, in the third quarter of 2017 the hotel and restaurant sector accounted for 2.6% of the country’s GDP, ranking 9th with a total of 273.7 million GEL, which constitutes a 12.6% growth compared to the same period in 2016 (224.8 million GEL). Real estate transactions, leases and customer service, which represent 7.1% of the GDP and rank 13th, have registered a 6.3% growth. The construction sector ranks 6th, accounting for 10% of the GDP with 195.0 million GEL, which constitutes a 9.3% decrease compared to the same period in 2016 (208.7 million GEL).

The GDP figure for the third quarter of 2017 in current price terms was 9 941.6 million GEL. Compared to the same period a year earlier, the GDP grew by 4.4%, while the GDP deflator grew by 6.6%.

Based on the data for the third quarter of 2017, the construction sector accounted for 19.5% ($594.5 million) of direct foreign investment, which constitutes an increase of $89 million compared to the same period last year ($505.5 million).

Another significant challenge for the construction sector has been presented by the new regulations. The technical regulations on construction safety in their previous form stipulated general principles and norms regarding the construction site, while the new technical regulations (№477) stipulate the principles in greater detail. The new regulations aim to substantially reduce the number of accidents on construction sites.

9 941.6 million GEL.

5.705 billion Gel

$594.5 million

Challenges Faced by the Real Estate Sector in 2017

D

e-dollarization has been one of the main challenges for the Georgian real estate market in 2017. Following the devaluation of the Lari in 2016, the government of Georgia and the National Bank of Georgia (NBG) jointly designed a plan of ‘Larization’ of loans. The relevant legislation came into force on 1 January 2017.

It aims to reduce the dependency of the financial sector and the wider population on the US dollar. Based on the legislation, the price for each item or service sold or advertised must be stated in national currency. If it was the case earlier that customers paid for property or related services in foreign currency, they now pay in the same currency that they receive their salary in, ie. the Lari.

This significantly reduces the risk of dependency on the exchange rate of the dollar. However, the pricing of real estate in local currency has also had negative assessment from some quarters, as it created the expectation of artificial price hikes due to the Lari’s instability.

Property owners are creating financial cushions to insure themselves against currency fluctuations.

December 25, 2017 #221

wine

15

In order to popularize and increase recognition of Georgian wine, Georgian wine was presented at more than 200 events (exhibition, tasting, presentation, seminar and so on). In the following countries: China / Hong Kong, Singapore, France, Netherlands, Great Britain, Germany, Baltic States, Japan, Poland, USA, Belgium and others. Dozens of wine professionals visited Georgia and tasted Georgian wine at the place, got acquainted with Georgian wine culture and traditions.

National Wine Agency of Georgia evaluated 2017 year in wine and its highlights with CBW. The recognition of the world scientific community that the ancient trace of winemaking is found on the territory of Georgia, from which it spread throughout the world. On November 13, the PNAS published an article entitled “Georgia’s Early Neolithic Wine from the South Caucasus”, which deals with the newly-based multidisciplinary research of archeological findings found on the territory of Georgia, which confirmed that the inhabitants of the region produced wine In 6000-5800, meaning 8000 years ago. The research was carried out in the framework of ‘’Georgian Vine and Wine Culture Research’’ implemented by National Wine Agency since 2014.

Along with Georgian scholars, the staff of Pennsylvania, Montpellier, Milan, Copenhagen, Toronto, Israel’s Weisman Institute and National Institute of Montpellier Agrarian Research (INRA) were involved. The above-mentioned scientific conclusions attracted the attention of world media: The New York Times, BBC, CNN, The Guardian, National Geographic, WashingtonPost etc.) It was published in all leading news and scientific publications, which led to the recognition of Georgian wine at a new level.

Exhibition ‘’Georgia – Cradle of Wine’’ was held in the city of Bordeaux, France at “Cité des Civilisations Du Vin” taking place for almost four months. This exhibition was opened on July 31 of the current year and ended on November 4. On September 14, the Georgian Qvevri was installed as a permanent exposition at the entrance of the center to celebrate “UNESCO” including it on the list of world intangible cultural heritage in 2013. Georgia was the first country to open a cycle of viticulture and winemaking in the Bordeaux Museum. Within the scope of the exhibition there were presented unique archeological and ethnographic samples from the Georgian National Museum confirming that Georgia is the cradle of ancient wine. 60 thousand visitors have visited the exhibition, which is very important to increase recognition and popularize Georgian wine.

In 2017 record number of wine exported in the history of independent Georgia -70,2 mil. bottles (0,75l) of wine have been exported to 52 countries worldwide, that is 54% higher than the similar data of the last year. In the period under review, 154,8 mil. USD worth of wine have been exported, that is 49% higher than the data of the previous year.

“According to the export data of January-November 2017, wine export has exceeded 70 mil bottles. This indicator will increase by the end of the year, which means, that for the last 30 years, record amount of wine will be exported from Georgia. Export growth is remarkable in the countries of European Union, Asia, USA and other countries, which is a result of coordinated work and well planed marketing activity of the National Wine Agency and wine sector”- stated the Head of the National Wine Agency, Giorgi Samanishvili.

Successful Vintage - 2017. 125 thousand tons of grapes were processed in Kakheti region, revenues of viticulturists reached 144 million GEL. In Racha-Lechkhumi 769 tons of grapes (Aleksandrouli and Mujuretuli) have been processed and the income of vineyards exceeded 5,4 million in the region. More than 130 thousand tons of grapes summed up in Georgia. The current state of winemaking - the growth of wine export, diversification of export markets, expanded wine enterprises, the development of cheap agricultural credits and the agro-insurance system provided a possibility that the subsidy on the quality and condensed grapes in the Kakheti region of 2017 was not issued. The price of grapes was determined in terms of quality and origin, without the government interference, the grapes have almost completely assimilated by the private sector. Over 16 thousand vendors have put grapes in commission to wine companies.

The Parliament of Georgia adopted the draft law “On Change to the Law on Vine and Wine”, according to which the amendments were made to the law. The adoption is important for the development of viticulture and winemaking in the country as a historical, culturally and economically priority sector. The Law on Vine and Wine was adopted in 1998 and significant changes have not been made since 2002. The terms added to the law were refined in terms of content and technically elaborated, which allowed for double interpretation of the separate provisions of the law. Amendments to the existing law will facilitate the implementation of state policy in the field.

The Agency continued to create the Georgian viticulture department cadaster this year. This process was implemented in the vineyards of Akhmeta municipality, where about 6 thousand vineyards were recorded.

2018 - The National Wine Agency will continue to promote Georgian wine and support the growth of export potential. Georgian wine will be presented at all important international exhibitions worldwide. Laboratory studies of wine are also important activities that have significantly improved the quality of the final product, which will be further intensified since 2018. Our aim is to make Georgian wine even more popular worldwide, which is directly reflected on strengthening the wine industry. As it was noted, this year exported the largest amount of wine in the history of independent Georgia. The aim of our work is to reach 100 million bottles in the next few years, which is achieved through the agreed field of wine industry and relevant government agencies.

Successful Year of Georgian Wine

interview

16

December 25, 2017 #221

Service Offices Provider, International Company “Regus” is already in Georgia, and offers customers a perfect work environment in Tbilisi’s most prestigious, active and dynamic part of Freedom Square (Leonidze street # 2, business center “Tabidze 1”, 4th floor). “Regus” was founded in 1989 in Brussels, Belgium. Its head office is located in Luxembourg. The company network comprises more than 3,000 business centers located in over 1000 cities of 120 countries.

R

egus” is presented at the London Stock Exchange.

According to the company, “Regus” is essential for every business. Flexible and easy-to-use A-class offices, flexible and simple conditions of payment, modern and protected IT infrastructure, meeting rooms, common work space, administration services, access to 3,000 branches around the world, these are important services that require small, medium and large businesses’ success.

CBW had an interview with Rusudan Chakvetadze, Representative of ”Regus” in Georgia about specific services, company’s products and its uniqueness.

- ”Regus” operates on the world market for 30 years, what is the experience that these years brought?

Our global network is expanding annually. Any business person needs an ideal environment and a favorable location, with flexible and simple payment terms. ”Regus” cares to make their work space more comfortable, without losing time and additional payments. For more than 30 years, we have been trusted by multi-million companies, small and medium businesses, independent consultants and more than two million loyal customers around the world. Among our customers are: Google, Microsoft, Lincoln, Facebook, Samsung, Uber, Amazon and others. Years have brought trust, experience and high quality service. When big companies plan to acquire new markets, they ask whether there is ”Regus” in the country. It is very important for investors ”Regus” to be operating in the country where they are to enter, because they are aware of our service, what quality and standards we meet.

- The center has opened in Georgia’s capital Tbilisi as well…

The “Regus” service center in Tbilisi is located in the center, surrounded by prestigious hotels, cafes, restaurants and shops and there is a perfect environment for business people. The Center fully meets the requirements of the Service Office, which is the best solution for foreign business visitors who want to enter the Georgian market, without additional administrative procedures and investments, at a simple price and the terms of payment. This is a center where business companies and business people will benefit from Regus’s international standards,

Regus Unique Services Provide Comfortable Work Environement The “Regus” service center in Tbilisi is located in the center, surrounded by prestigious hotels, cafes, restaurants and shops and there is a perfect environment for business people. The Center fully meets the requirements of the Service Office, which is the best solution for foreign business visitors who want to enter the Georgian market, without additional administrative procedures and investments, at a simple price and the terms of payment.

which our company offers worldwide.

- The company offers service office to its customers, what services does it provide specifically?

The service office implies hotel type service. The user’s disposal is fully equipped offices, business lounge and cafe, meeting rooms, co-working space, virtual office, video-conference space. So everything started like this… businessman Mark Dixon, the founder of the company, traveled around the world due to his business activities. Once in Brussels, he needed to use office, while he couldn’t fine one with full service that could be rented temporary. After that, Mark Dixon decided to offer customers a new service – Service Office. Company or a person had the opportunity to take office for 1 hour, day, month, year etc. in any country. At first it all started off with offices. Now the “Regus” has a lot of service, which makes the service even more comfortable. It’s important that in our cafe clients can order sandwiches, coffee, various sweets, chocolates. Churchkhela is popular in Georgia, which our foreign clients are fond of. In addition, we do the buffet lunches and launch breaks.

Today, the service office arranges an office administrator, connected telephone, internet, meeting rooms, business lounges, kitchen … all these services at one price. All of this is available in more than 3000 locations around the world. The office can be rented for any term and the most flexible conditions of payment.

- Your main customers are business people, some travel quite a lot, the company cares for them,

what are the offers specifically for mobile people?

They own ”Regus” membership cards. ”Business World” members, that are mobile people, have business trips frequently, while they’re traveling they don’t have to think which hotel or cafe offers fast internet and quiet working environment, as it’s easy to find ”Regus” branch through application, in 120 countries, 3000 comfortable and open work space.

We especially have our membership packages for business community Regus, whose members are given the opportunity to have their own business relationships from anywhere in the world. In particular, using the golden card has access to the business lounges from any place.

In addition to access to business lounges, have internet access at the airport, free coffee, tea and other services. Wherever they go, they have a place to work, which is not only convenient but also prestigious.

- What is the difference between a platinum card?

Platinum card holders in all countries enjoy personal offices unlimited. They can invite guests and have free access to the Regus meetings rooms at 3000 business centers.

Platinum allows the owner to have its own office in the world’s most prestigious business centers such as Trump Tower New York, Dubai Downtown … The owner of this card receives an individual office everywhere and whenever. The card is personal, but the owner has the opportunity to invite the visitor. The advantage of platinum is the addition of one service – meeting room.

- How did Regus simplify office search procedure for foreigners?

Their main demand is – high class business center, safe, high quality internet, easily accessible location, which should meet the standards required for the office. In addition, there is only one page agreement and you have a space in the office of Regus for as long as you need it.

Consequently, the procedures for finding office are considerably simplified.

- What does one of your services mean – virtual office?

Virtual Office – This is a virtual representation in the country. However, this commandment has been further expanded and we have given more tools to our clients. They can have a business and legal address in different countries, the postal code, to register the company, which is possible through virtual offices. One can also use the business lounge and meeting rooms.

- In particular, what kind of meetings can be planned there?

Meetings rooms are different categories. Just for 2-3 people, for a broad audience that can be rented hourly in any country, including Georgia, and it can simply be booked through ”Regus” application.

- Are you planning to launch ”Regus” in other regions of Georgia, for example in Batumi?

There is a demand for service offices in Georgia. At the end of March the business center will be opened on Vazha Pshavela Avenue in Tbilisi. By the end of 2020, there will be at least 5 locations at different levels and prices. We consider to launch it in Kutaisi, Rustavi, Batumi … There is a special demand for Kutaisi. By the end of 2020, we consider that 12 centers will be launched.

17

December 25, 2017 #221

Investments Year in Review

‘’According to the data of three quarters of 2017, direct foreign investments in Georgia amounted to 1.4 billion USD, which is quite positive, considering the existing investment environment and trends in the region. It is important that growth is stable compared to previous periods and maintaining this trend is absolutely realistic for the FDI of 2017 to make up to 1,9 billion US dollars,’’- economic expert Levan Kalandadze assessed 2017 year in investments: In which regions were investments allocated most intensively?

Given the fact that economic activity in Georgia is still asymmetric, regions are still less active in this regard and on the other hand, major investment sectors (transport, communications, and construction) are mainly concentrated in large urban centers, investment map and investor activity respectively is allocated in

Tbilisi and several urban centers.

However, the development of energy, transport logistics and tourism infrastructure creates the prospect of investment activity in the regions, especially in the Black Sea region of Samegrelo, region of Western Georgia.

Are there any changes in FDI source geographically?

The geographical area of direct foreign investment sources is practically unchanged in recent years. The main investors are Azerbaijan and Turkey. Their total share is almost 60% of total investments made in Georgia (Azerbaijan 25,9% and Turkey 23.3%). This reference is based on the natural proximity of these countries and, on the other hand, the long-term traditions of business relationships between business circles and presumably this tendency will be maintained in the nearest future. However, it should also be taken into consideration that the share of the United Kingdom and the Netherlands in traditional foreign investments is traditionally maintained third-fourth positions (10,7% and 10,4% respectively).

What are your predictions for the next year?

Future expectations and projections are again linked to the infrastructure projects of the government’s four-point plan, which provides major investments in the construction of roads and highways in 2018-2020. On the other hand, Anaklia development consortium (Anaklia Port and Anaklia City) is a few billion-dollar project for 2018-2021. And third, in terms of investment, energy, communications, construction and transport directions will be topical, especially in the conditions of free trade regime with China.

Taking into consideration this agenda, it is quite realistic that the volume of direct foreign investments in Georgia can be significantly increased (about 20% increase) by 2018-2020.

Economic expert Merab Janiashvili names top foreign investments by countries - Azerbaijan is on the top of the list of the largest direct investor countries in the third quarter of 2017. In the 9 months of this year, our neighbors invested USD 378 million in Georgia. Azerbaijan accounts for 25.9 percent of the investments, second place - Turkey with 23.3 percent, and the United Kingdom - 10.7 percent.

The inflow of foreign investment by countries is as follows: • Azerbaijan - 154 million USD

• Turkey - 138.6 million USD • Great Britain - 63.4 million USD • Netherlands - 61.9 million USD • The US - 23.4 million USD • Czech Republic 23 million USD • China 18.4 million USD • Russia - 15.2 million USD • Korea - 15.2 million USD Merab Janiashvili: The volume of direct foreign investments made in Georgia in the three quarters of 2017 totaled 1 346.5 million US dollars, amounted to 2.9 percent more than the corresponding period of the previous year. Over the last 7 years, the amount of investment in Georgia exceeds USD 1 billion, but as usual, these funds flow into non-manufacturing sector such as “transport and communications” and financial sector. As a result, large part of population doesn’t receive any benefit from investments.

The most invested fields: • Transport – 177.8 million USD • Communications – 116.2 million USD • Construction – 72.3 million USD Investments by regions: As usual, ¾ of investments in Georgia comes to Tbilisi. During the last 8

years, the total FDI (9,4 billion US dollars) in Georgia - 73.6% is allocated in Tbilisi, 6,9 billion USD. That is, the whole FDI ¾ is made in the capital of Georgia. Ajara and Samegrelo-Zemo Svaneti takes second and third places in 20092016 of the volume of foreign investments. Accordingly, by 875 million (9% of the entire FDI) and 500 million (5%) USD. Consequently, 12% of foreign direct investments comes to remaining regions.

According to Geostat, TOP-10 of Georgia’s largest investor companies in the third quarter is: • IDS Borjomi, • Energo-Pro Georgia • Magticom • BP Group • Ajar Energy 2007 LTD • China Railway • Metro Avrasya Georgia JSC • ENKA İnsaat ve Sanayi • Georgian Tourism Development Foundation LTD • Nenskra Hydro

18

publicity

December 25, 2017 #221

startup

December 25, 2017 #221

T

he startup environment in Georgia and Caucasus overall is rapidly growing, especially the tech industry is seeing a significant growth in the number of new established companies in the region, as well as amount of entrepreneurs.

Georgian Innovation and Technology Agency (GITA) has a significant role in developing innovation environment. The representatives of different departments of GITA assessed eventful year in startup: The Government is keen to develop the capacity, services, and infrastructure for Georgia to develop itself as an innovative, knowledge-based economy, while reducing the perception among individuals’ and businesses’ of the risks associated with innovation.

For this purpose, the government of Georgia is taking steps necessary to unlock key legal, regulatory, and institutional constraints for private sector growth and innovation, provide infrastructure and services to facilitate growth of innovative enterprises, and strengthen skills to ensure that workers are globally competitive.

To that end, the government established Georgia’s Innovation & Technology Agency (GITA) under the Ministry of Economy and Sustainable Development in 2014 as a main coordinator and mediator in the process of building innovation ecosystem in the country. GITA’s main aim is to support R&D development and its commercialization; facilitate infrastructure for innovation (incubators, accelerators, Techparks, etc.); promote innovation among enterprises; support startup ecosystem; penetration of internet and broad use of ICT in businesses as well among households.

Georgia is trying to enhance the innovation ecosystem, by approximating the EU standards and policies. GITA has adopted the Law on Innovation last year and made amendments to the existing laws, such as law on grants and tax code. The second phase of regulatory framework package is also elaborated by GITA, which will include the venture financing, crowdfunding and other related issues, which will simplify and incentivize innovation activities in Georgia.

As for the infrastructure for innovation, GITA creates TechParks (2), Innovation Centers (3), iLabs and FabLabs (22) in order to give

19

Year of Innovations the innovative people to transfer their ideas into real businesses also to raise awareness about modern tendencies and technologies. Innovation infrastructure attract foreign direct investments, international tech-based organizations and StartUps to open their representations in Georgia.

The facilities also incentivize local SMEs to develop their products and get the access to the international market.

As the access to the internet represents one of the core human right in the modern world, based on the Prime Minister’s initiative, GITA launched a large scale project – BroadBand for All - to increase internet and computer penetration by developing broadband infrastructure and deliver high speed fiber-optic connectivity to more than 2000 currently service deficient settlements in Georgia. Such infrastructure will increase the access to internet and modern technology, as well as enable internet service providers and telecom operators to deliver services and meet demand for broadband services in none covered areas, thus ensure competition, entrepreneurship and investment.

Skills and Capacity Development represents one of the most important direction. Government of Georgia has a number of programs to raise the creative skills in individuals and enterprises in order to develop new and innovative ideas. GITA has the target to train high skilled, export oriented IT and Innovation Specialists by 2020 and in this framework launches number of trainings and programs.

GITA also provides Access to Finance for innovative projects, supports R&D commercialization and technology transfer. In this regard, together with the awareness raising and training programs, GITA provides access to finance by different types of grant programs, such as mini grants, matching grants and grant within the “Startup Georgia” competition.

Companies raised capacitive funds - 20 Georgian startups, encompassing various industries and areas were successful in gaining trust of investors to raise 100,000 GEL each. In addition, 10 of out of those 20 startups increased capacity through funded mentorship programs that included coaching from Silicon Valley approbated professionals:

CBW’s Choice – Phage Nutraceuticals Phage Nutraceuticals, the winner of Startup Georgia, held by of Innovations and Technologies Agency of the Ministry of Economy and Sustainable Development, started inventing a safe alternative to antibiotics.

Rati Gholijashvili is a project author of biotechnological company that is involved in research and development by creating a safe alternative to antibiotics based on one-century experience.

a David-OS (Universal Electronic Medical Records System in blockchain), a InnoPhage (paradigm shifting dietary supplements), a Pawwwn (digitizing pawn industry by platform for online pawning), a QuickCash (Fin-tech Credit Scoring Platform), a OptioAI (AI powered personal financial assistant), a Surgical AR Simulation (VR simulation of surgical operating room helping medical students with practice), a BubbleStack (Fully automated and web-integrated hydroponics solution), HealthHub (Health data storage & purchasing channel for Drugs & Health Care service), a WiseKettle (Electric kettle boiling and cooling the liquid for babies), Luckstock.com (Royalty-free Stock Marketplace for music composers and producers), a Triplay (concert and flight tickets and housing in one click), a Hand4Help (advanced low-cost controllable prosthetic), a VRex (platform matching people to places using VR/AR), a Qolga (B2C e-commerce of medicines & medical goods, making prices more affordable), Lingwing.com (Fully Self-learning global website for languages), a Edvex (connecting drivers, passengers & brands for powerful advertising), a Styx (Platform Matching Trucks and Loads), Cnick (smart ring), a Verm Protein (non GMO protein form Verms for food production companies), a LaserCombat (Advanced laser-tag technology gaming device making the player feel it when they’re hit) Startups like WePark, Wifisher and Optio AI also thrived in their endeavors, Wepark (challenges car parking problem by introducing a mobile app allowing drivers to exchange parking spots across the city) have recently raised 40,000 GEL from 2 individual investors; WiFisher (advertising through public WiFi access points) accumulating funding equivalent to 500,000 USD from private American Investors and Optio AI (AI powered personal financial assistant) succeeding in taking spot at renowned Czech startup accelerator.

20

publicity

December 25, 2017 #221