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February 11, 2019 - www.cbw.ge
#270
WEEK
Georgia Ranks 8th in Europe in Economic Freedom Rating
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Where and What Volume – Georgia-Armenia Power Potential and Perspectives
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Banking Sector Regulations Halve Sales – Microfinance Organizations to Develop New Installment Schemes
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Fighting the Future
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Mariam Kvrivishvili to Head National Tourism Administration
Investor to Put 8 million USD in Solar Panels Plant
Mariam Kvrivishvili has been selected to lead the National Tourism Administration of Georgia. The Minister of Economy of Georgia announced the assignee of Giorgi Chogovadze on February 4.
Eight million USD will be invested in the Kutaisi solar panels plant, Soso Nibladze, executive director of Kutaisi Free Industrial Zone, told BM.GE.
Six New Directions Available in Kutaisi International Airport
Clay Processing Plant to be Built in the Village of Perevi The clay processing plant will be built in the village of Perevi, Sachkhere Municipality, for which at least 250 000 GEL will be invested and at least 30 people will be employed.
From August 1, 2019, the Wizz Air’s third aircraft of the AIRBUS A 320 type will start operating at the Kutaisi David Agmashenebeli International Airport with regular flights to Basel, Copenhagen, Brussels, Tallinn, Eindhoven and Bar. It should be noted that at this point, there are no direct flight from Georgia to Switzerland, Denmark and Estonia.
Mikheil Batiashvili: The Hospitality School will be Opened in Zugdidi Multimodal Loading Terminal Officially Opens in Batumi Seaport Thanks to joint efforts by Batumi International Container Terminal and Medlog Georgia, a storehouse infrastructure will be arranged on 2 hectare territory, as well as closed customs storehouse on 3000 square meters.
Minister of Education, Science, Culture and Sport, Mikheil Batiashvili shared the information that the hospitality school will be opened in Zugdidi. The Minister stated about it at the presentation of the reform planned for vocational education.
Guitar Legend Pat Petheny to Perform at Tbilisi Jazz Festival
Boeing Buys First Products of Airplane Composite Spares Manufactured in Georgia Aero-Structure Technologies Cyclone (ATC), a joint venture by Partnership Fund of Georgia and Israeli Company Elbit Cyclone, has signed the first deal for sales of its products. The airplanes spares manufactured in Georgia will be purchased by Boeing.
State Budget Subsidizes Anaklia Electronic Festivals by 10 million GEL The state budget has financed electronic festivals in Anaklia by 10 million GEL. Several days ago, the Government announced that Anaklia festival will not be funded from the state budget in 2019.
Tbilisi is preparing to host the 22nd Jazz Festival. Tbilisi Jazz Festival will take place from February 28 to March 2. The main guest of the 22nd Jazz Festival will be the legendary American jazz guitarist and composer Pat Metheny.
Russia Ordered to Pay 10 Million Euros to Georgians It Harassed Russia has been ordered to pay at least 1,500 citizens of neighboring Georgia 10 million euros ($11.5 million) for subjecting them to a coordinated policy of arrest, detention and expulsion in a case that goes back more than a decade.
The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili WWW.CBW.GE Address: Aleksidze Street 1 Sales: Mob: +995 591 01 39 36 Email: caucasianbusiness@gmail.com Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Copy Editor: Ellie Rambo Reporters: Nina Gomarteli; Mariam Kopaliani; Merab Janiashvili, Economic columnist: Andria Gvidiani; Technical Assistant: Giorgi Kheladze;
Bari, Basel, Brussels Charleroi, Copenhagen, Eindhoven and Tallinn – New routes from Kutaisi International Airport Starting 1 August, Kutaisi International Airport will introduce six new European destinations, announces Georgian Prime Minister Mamuka Bakhtadze. Bakhtadze said that a $100 million investment will be made in the Georgian economy “as a result of the deal” and this investment will allow to open new routes to six new destinations from Georgia. The deal was signed by George Chogovadze, CEO of United Airports of Georgia and George Michalopoulos, CCO of Wizz Air. One of the best European low-cost airline Wizz Air will carry out flights from Georgia’s Kutaisi International Airport to six European cities. Eindhoven (Netherlands), Bari (Italy), Copenhagen (Denmark), Basel (Switzerland), Tallinn (Estonia) and Brussels (Belgium) are the new destinations where travellers from Georgia can arrive at an affordable price starting in August. All routes will be flown twice-weekly except for Eindhoven which sees a three times weekly rotation. The result of the investment means that for 2019, the carrier will operate one million seats from the airport, supported by a network of 27 destinations across 18 countries, with new routes to Gdansk (launching in April) and Krakow (September) also scheduled to begin in 2019. Ticket price starts from €19.99. “Our continuous growth in Kutaisi further
strengthens Wizz Air’s commitment to Georgia, the city and the airport of Kutaisi, as well as stimulate the tourism and hospitality sectors in Georgia,” commented Johan Eidhagen, Chief Marketing Officer of Wizz Air on the news of the company’s decision to base a third aircraft in Kutaisi. Wizz Air has been carrying out flights on the Georgian aviation market since it opened its first Caucasian base in September 2016. The airline based its second aircraft at the airport on 17 May 2018, with the third aircraft following just over 12 months after.
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The news of the based aircraft comes as the Georgian aviation market continues to thrive. Kutaisi Airport alone in 2018 transported 617,342 passengers based on data United Airports of Georgia, with this representing an increase of 52% versus the traffic throughput of 2017. The result also means that Kutaisi overtook Batumi to become the second busiest airport in Georgia. As for Kutaisi Airport, a new terminal is being built that is expected to triple the capacity of the airport. Construction of a new terminal is due to be completed by the end of 2019.
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Terabank Publishes Successful Financial Indicators for 2018 The year 2018 ended with successful financial indicators for terabank. The bank has demonstrated a positive dynamic of growth. The bank’s gross loan amount grew by 17.9% in 2018, amounting to a total of GEL 105.6 million. SME and microloans increased by GEL 98.1 million (42.3%) in the small and medium-sized business segment which is one of the most strategic components for the bank. Moreover, retail loans and individual deposits grew by GEL 36.5 million (24.2%) and GEL 73.1 million (35.6%), respectively. Based on 2018’s financial results, terabank’s net profit saw a 12% growth and amounted to GEL 18.1 million while ROE was 14.9%. Improvement in quality and a growth in effectivity were also achieved last year. “Two years have passed since terabank’s re-branding and we have demonstrated growing successful financial results. We are very proud of this
achievement. The doubled SME and microloans portfolio is proof that terabank is a reliable and stable business partner for consumers. Moreover, the doubled amount of retail deposits demonstrates that not only business customers but also retail consumers are showing increasing trust towards the bank,” said Tea Lortkipanidze, Terabank’s CEO. The year 2018 has also proven to be both interesting and successful for terabank in terms of a diversification of products. The bank is offering consumers a completely unique set of banking products customized to individual needs and market demands – tourist mortgages and convertible deposits, among others. Towards the end of the year, terabank presented an innovative and distinctively new personalized banking services brand – Select.In addition to exclusive and convenient services and terms, Select sets a unique standard for customer relations and extends its services
based on individual interests. In the previous year, significant steps were taken towards the improvement of remote convenience services as well. In particular, the design of the terabank mobile banking application was renewed with its interface now even simpler and more convenient to use. The year 2018 was also successful in terms of international partnerships: terabank initiated partnerships with two financial organizations— Responsibility and the German Investment and Development Society (DEG). Corporate social responsibility projects constituted a significant part of terabank’s successful work and outreach in 2018. The bank initiated several interesting projects including a campaign popularizing healthy lifestyles, the engagement of women in the tech industry and supporting youth education and outstanding individuals. Terabank has implemented a variety of projects in each of these directions: the Terabike
campaign enabled individuals to take advantage of free bikes and bike lessons last year, we supported Mariam Lomtadze as a part of our engagement with the education of Women Techmakers project and we took part in the Startup Alphabet initiative, the Ika Cultural Award and we participated in the search for interesting artists to highlight and introduce to the wider public, among others. With new banking regulations now in place, the year 2019 is off to a challenging start for terabank. However, responsible banking continues to guide its work and small and mediumsized businesses remain as a strategic component. The bank is simultaneously planning to implement numerous technological novelties for business customers which are going to make the use of terabank’s services even more convenient.
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Where and What Volume – Georgia-Armenia Power Potential and Perspectives According to general estimations, energy resources are the form of capital that primarily determines both the political and economic independence of a country. Everybody agrees that the efficient employment of energy resources is a necessary factor for gaining maximum benefits.
What is the power potential and current condition of South Caucasian countries such as Armenia and Georgia? What are the statistics we have? According to World Energy Council indicators (2018), Georgia ranks 69th of 125 countries in terms of the development level of power system. It is interesting that all neighboring countries surpass Georgia in this rating. Azerbaijan ranks 27th, Armenia – 43th, Russia – 59th and Turkey – 44th.
Deficiency of Oil and Gas Resources The negative balance of electricity generation and consumption and the growing import of electricity makes the Georgian power system vulnerable. According to electricity market operators, in 2018 imports hit record figures, and the ratio in consumption constituted 19%. The Ministry of the Economy asserts that the current situation will essentially change by 2030. The Deputy Economic Minister Natia Turnava declared that by 2030, domestic production of electricity will fully satisfy domestic market demand, and Georgia will export about 3.5 billion kw/h electricity a year. “5 billion USD for the construction of major hydro power plants, and 117 projects at various stage of implementation genuinely enable us to attain this goal”, Turnava noted. Like Georgia, Armenia also suffers from a deficiency of oil and gas and hydro resources. Consequently, Armenia mainly depends on imports, like Georgia. Armenia imports 83% of its natural gas from Russia. Russia fully supplies fuel to the nuclear power plant in Armenia. Armenia also receives natural gas from Iran, too. It is interesting that Armenia returns 3 kw/h electricity for each cubic meter of Iranian natural gas. Considering that Armenian steam power plants generates 4.5 kw/h electricity for 1 cubic meters of Iranian natural gas, Armenia receives significant benefits from this deal. Despite the lack of energy resources, Armenia manages to grow electricity generation from year to year. Electricity exports also grow. For example, according to the statistics office of Armenia, in 2017, Armenia generated 7.753 billion kw/h electricity and increased the exports by 15% (1.405 billion kw/h). It is interesting that Armenian electricity is mainly used by Georgia, Iran and Iraq. 40% of electricity in Armenia is generated by the Metsamor nuclear power plant. The country hopes that domestic generation will fully satisfy domestic market demand by 2030 and Metsamor Nuclear Power Plant will play a decisive role in this aspiration, as well as renewable energy systems (wind and solar power).
Natural gas and electricity consumer tariffs in Armenia and Georgia The Armenian internet site Iragir.am, based on the domestic statistics service, writes that the supply and generation of energy resources is more diversified in Armenia than in Georgia, but there are higher tariffs in Armenia regardless. According to the statistics service, Georgian citizens pay a 30% lower tariffs for natural gas compared to Armenia. The biggest difference is recorded in the case of electricity. Citizens of Armenia have to pay 50% higher tariff. Compared to Armenia and Georgia, consumers pay a 7-8 tetri lower tariff for electricity supply in Azerbaijan, Russia and Ukraine. In turn, the tariff is 2.5 times higher in Latvia. In Armenia a four-member family has to pay 100 GEL (20,000 Dram) a month for 200kw electricity, 50 cubic meter of gas and 20 cubic meter of water, while Georgian citizens pay only 60-70 Gel for the same services (12 500 Dram). By Zurab Khachapuridze
Caraps Medline: The Number of Foreign Patients increases. As in Europe or America, Treatment with a Good Doctor is more Expensive The word of “Plastikus” stands for “Giving a Shape” in Greek language and “Refined Thing” in Latin. Those, who strive for beauty and dream of being good-looking, know very well that plastic surgeon Aleksandre Kalantarov is the best option to make similar dreams come true. I have heard from many people – “Aleksandre Kalantarov Makes Operations that Even 10 Other Doctors Cannot Do”. I always wanted to get acquainted with this nimble-fingered creator. Sure, He is a genuine creator – He creates masterpieces on the surgical table. I was interested to learn, where the verge between legends around him and the reality lays. Therefore, I visited Caraps Medline, esthetic surgery office in Dighomi. Mr. Aleksandre is head and leading doctor of this office. Caraps Medline is one of the first centers in Georgia, which works in the field of plastic surgery and esthetic reconstruction. This clinic and its director are well known in Georgia and abroad. We can find grateful patients in Germany, France, Russia, USA, Italy, Netherlands, Azerbaijan, China and many other countries. Rhinoplasty, breast plastic, liposuction, botox, blepharoplasty (plastic of blepharon), rejuvenation of face through endoscopic technology, removing cicatrice and local plastics of skin, otoplasty (plastics of ear lob), abdominoplasty (plastics of the abdomen’s front wall), reconstructive surgery, vessels surgery, bioadaptive jell, treamtnet of celloid cicatrice – this is a shortlist of the services offered at Caraps Medline. MR. Aleksandre has visited patients, summed up the workday and now we can record our interview. I graduated from the institute in 1987. In Soviet country the profession of plastic surgery did not exist. Naturally, plastic operations were made, but by maxillofacial surgeon and nasopharyngeal doctors. In this respect, Georgia was considered the center of rhinal surgery and Moscow – facial surgery. In the second half of 1980s, microsurgery started developing at high paces, with focus on transplantation of organs. Microsurgery was not taught in the Soviet Union. There was a department in the Moscow Surgery Institute, which was
working on development of this field, but this direction was not introduced in the medical curricula. Having graduated the institute, I decided to study this direction (officially I was learning general surgery), because, I thought that the field of transplantation was the closest field to the plastic surgery. In the course of time, these two directions started development, they were united and shaped into the direction of plastic and reconstructive surgery. What recent innovations would you name in this field? The world is making huge progress in this direction. Previously, we used to receive information on these innovations and come up with the world achievements…. But today they have made huge progress and we are late. We live in the era of technologies and huge financial resources are required in this respect. Theoretically, we know what is good, but new technologies are very expensive. Let’s take the simplest thing – liposuction. Today there are about 15 devices for this operation and they have different principles of operation, whilst we follow the old principle. At least, one new liposuction device is introduced every year in the world. We do not have resources to buy all new devices, whilst it is necessary to renew equipment in at least 3-5 years. The device costs the same price for me and Americans, but the procedure tariffs are higher there and the number of patients is 10 times more there. Regretfully, nobody invests money in our field and each clinic works on its own resources. There is much demand for the services of your clinic on the market. According to the statistics, which is renewed at least twice a year, the number of foreign patients grows. The majority of them are ethnic Georgians, who have migrated to Europe or the USA. They trust us and they prefer to apply to us, because professional doctors in Europe and the USA take much more money. A lot of patients visit our clinic from the Post-Soviet countries. These people constitute one third of our clients. The remaining part are domestic residents.
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What operations are made most frequently? Rhinal surgery. This is an ethnic problem. Last period the number of breast operations also grow. Liposuction ranks third, as well as weight loss surgery and so on… How old are your patients? 30-40 years old. Secondary school graduates also visit our clinic, who want to start studentship life with new appearance. I always say to potential patients – visit 1, 2, 3… doctors – there are about ten plastic surgery centers in Tbilisi. Take consultations there, ask the same questions to each doctor, then examine their offers in the internet (in English) and determine who is the most acceptable for you. Those, who have seen the results of the work of a specific doctor, also visit our clinic and they want that the specific doctors make surgery.
We also make sex change operation. It is difficult, but we successfully make these operations. Similar operations are not made frequently in our country, because it is very difficult for patients to obtain a due permit. Foreign citizens visit our clinic more frequently, predominantly Arabs. In most cases, men ask for sex change, but women also apply to our clinic for the same operation. By the way, is it easier to remake a man into woman or inversely? It is easier to change a man into woman. How efficient is it today to reshape a nose by use of the widespread filler method? It is impossible to radically change the nose form. This is unreal. We may receive changes, but they will be insignificant and temporary.
You have noted that there is a lot of plastic surgery centers in Tbilisi. What different products does your clinic offer?
Then why has the filler become so popular or the so-called threads, the so-called mesotherapy in facial surgery?
For example, plastic surgery. This is a very expensive operation and its price reaches even 150 000USD in the world, but we make this surgery for only 50 000 GEL.
Surgical procedure – cutting, stitching, surgical stretching, rhinoplasty require due knowledge and professionals spend about 10 years to acquire due skills and knowledge, while only two-week course is required to learn how to inject the filler and then they arrange cosmetic offices and so on… If the patient asks, I apply the filler too, but before I explain: this operation will unimportantly change your nose and you will have to visit the clinic every 6 months and add the filler. For essential changes you should apply efficient method – surgical operation. Those sitting at cosmetic offices will not give similar consultations and explanations.
Before coming to your clinic, I have talked with one girl, who visited your clinic after inefficient surgery in other clinics. She had no nose bone and you have used a fragment of her rib for reconstruction. The treatment process continues, but now she has a very beautiful nose. This is a standard reconstruction, which is made in other places. We also practice different methods, which is a rare case in our country. In both cases we can be proud of our achievements. Patients visit our clinic and say – we have visited 10 clinics and all of them suggested to amputate leg, but we have maintained the legs. Which citizens visit your clinic mainly for reconstructive surgery? Suffered and psychologically stressed patients come from any country and it is very difficult to work with them. This category of patients is not financed in Georgia any more and frequently, patients prefer to have legs amputated for 2500 GEL, while the maintenance of a leg costs 50 000 GEL. Would you recall specific cases? One woman visited us. A bus had overridden her legs. In another clinic everybody told her that one leg would be maintained, but another could not be maintained. I had to persuade the family members for a long period that we were to use even the tiny chance and maintain both legs. Today, this person walks on both legs. One of the patients, Oto, saved a little boy from a vehicle, but the same vehicle overrode both of his legs. We did our best to avoid amputation. Recently, he sent me a video. He was dancing in wedding. You can imagine what a happiness this is. It is very difficult to restore limbs, but you successfully make these operations. Do you make only similar reconstructive surgery? No. one girl came to us, 14 years old, with malignancy on upper jaw. In similar cases oncologists remove the half part of the jaw. Only the bone near the eye and the skin above it is maintained and the remaining space is left as a hole up. Oncologists leave similar patients in this condition. Along with the oncologists, we worked on restoration and transplanted tissues from the leg – bone, muscle. Today, this girl has ordinary face and palate. She looks pretty. Only 2 teeth remain for implantation. What other surgical operations are made at your clinic?
If I have already injected the filler and after that I decide to make operation and doctors suggest to wait till resolution. What is the solution in this case? You should visit the professional. If they do not know how to eject the filler from a nose, they prefer to keep silent and say – wait for the resolution and then you should come again, whilst the resolution takes 3-4 years. Yesterday a girl came from Russia. Jell had been injected in her nose. Before operation, we cleaned his face from jell. No problem arose. Doctors must know how to clean the face from jell. How many operations do you make a day? 3-4 operations a day. My record achievement is 22-hour operation, when I carried out chest reconstruction for an Abkhaz girl, who had the full body covered by cicatrices as a result of childhood burnt. She could not move, eat. In whole, we conducted 6 operations for 60 hours. And now I know that she lives in Sokhumi, she has got married and not she is mother. I am happy to have made contribution to her happiness. I have heard from many doctors that plastic surgery is not recommended for underage patients. Each case always has some side effects, but if we talk about nose operation, if a person has respiratory difficulties and has defect on the nose, it is better to carry out surgical intervention; but the nose is without problem and the patient does not like its shape and wants to change it, then the patient should wait to become adult. Would you operate your family members? I have already operated them. It does not matter who is on surgical table. I treat all patients equally and I think about results only and this result must be the best one. I don’t spare knowledge and energy to this end.
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Nina Talakvadze: "A Marketing Manager should be Ready for Continuous Learning in this Transformative Era Interview with Marketing Manager of Arttime, Nina Talakvadze. Tell us about how you got into the field of marketing, and what factors played an important role in choosing this profession? It was a coincidence, as I am a biophysicist, and worked at in the academic department of the University of Biophysics. I had to move to Moscow, where I started a family. Once I was back, I had to find a new job, and at this time a company, ’Arttime’ was searching for a marketing manager. I had an interview, and got the job. The company was newly established, and we went through the whole path of development together, which was a huge experience. That’s how I found myself in the field of marketing. In regards to technological changes, what challenges are you facing as a marketer? Marketing today is in a constant change of what constitutes ‘the usual.’ Yesterday’s practical approaches no longer works today. Therefore, immediate action is needed. You should monitor trends, and try to implement them in your work to create opportunities. Such action is sometimes risky, but marketing is experimental in its own way. What has changed in the last 5 years in the field, and what changes are expected now? The internet is so actively invading our lives that changes not only in our daily life but also in business. Since it is profitable for financial and other uses, it has led to fundamental changes in business models. Despite the fact that internet development has given many new forms and communications channels to marketers, and it has also made it more open and transparent to the world around us, which makes it easier than ever to lose user trust. I think the possibilities with a global network and smartphones are not fully utilized, but it is obvious that you can not use only one technology. In order to succeed, it is essential to review the entire arsenal of decisions that the modern world offers and optimize their business needs. What important features should a marketing manager hold their focus on, and what are their roles in an organization? In this transformative era, a marketing manager should be ready for continuous learning, and should understand that knowing everything is impossible. We
must constantly test new decisions. Also, be prepared for possible failures. The best way to develop these qualities is to remember that everything is done for the user. What steps did you take as an organization to catch up with new trends, and use innovative approaches in the field of marketing? "Arttime" is the first company that has managed to introduce world-famous Swiss watches to the Georgian market. It is to their merit that they start new trends in the world of the watches. This happens at the International Exhibition of Basel Watches in Switzerland. Annually, experts and professionals gather to present the news, and present coming trends to the public. Many of them are actively engaged in implementing innovations in the field of marketing. With the help of partner companies and advice, we try to use new approaches in the local market in the case of ’Arttime’. What’s your organisation’s business model in terms of marketing?
As regards to the concept of ‘Arttime’, we share the exact same opinion. When we mention a good watch, we mean a Swiss one. Today, 20 brands are presented in Arttime. It's interesting and has a variety of choices and prices. We represent Swiss watches, and their prices starts from 150 GEL and ends with premium brands. Today, the company is represented by 8 stores, 7 in Tbilisi and 1 in Batumi. We launched an internet store by the end of last year. We offer customers a wide range of options, and an efficient service center. We actively use social platforms for communication. One word that describes your work. Challenges. The most useful advice you’ve ever received in life? Henry Ford said: Failure is the opportunity to begin again, more intelligently. Who inspires you the most? Nicolas Hayek, founder of Swatch.
9 February 11, 2019 #270
Business News Museum of Illusions Tbilisi Set to Open in March
Leading global provider of connectivity and internet services, announces the appointment of Alex Kazbegi as Chief Strategy Officer, effective from 18 February 2019. Alex will join VEON’s Group Executive Committee and report to the Chairman and CEO, Ursula Burns.
The Museum of Illusions Tbilisi will be opened on March 1 at Bethlemi Street # 10 in historical and tourist part of Tbilisi and offers many interesting visual and intellectual experiences. Here you will be able to do what many museums are prohibited to: take pictures, laugh, entertain, and run around.
GeoLab Founder Names 3 Key Challenges for Startupers and Appraises Government’s Plan “Previously, other factors were prioritized for the development. Today, priorities have changed and focus is made on innovations, human resources and their intellectual capabilities. Therefore, the Government follows the right way”, he noted and added that it is necessary to support startups in Georgia.
National Reforms Support Foundation for Accounting and Auditing Opened
Lasha Antadze Attracts 1 million USD in Record Period
France – Georgian Chamber of Commerce and Industry (CCIFG) organized a solemn event dedicated to opening of “National Reforms Support Foundation for Accounting, Accounting and Auditing”.
Investments of 1 million USD in 9 months – this amount of investments was attracted by Lasha Antadze, who is participant of TechStars 2018 and founder of Sehfl.Network.
European Commission: We Expect Reforms to Boost Georgian Wine’s Competitive Capacity
Visa and SPACE Neobank Offer Banking Card Delivery to its Consumers
‘We expect a number of reforms to grow steadiness of the wine sector and its profitability. As a result, the competitive capacity of Georgian wines will increase on the global market”, the European Commission’s report covering the association agreement implementation, reads.
Visa and Space Neobank, powered by the Georgia’s largest bank TBC, launch delivery service for Space consumers in Georgia. Fully digital bank Space provides customers with smart range of retail banking services including bill payments, loans, money transfers and payment cards. Davit Onoprishvili to Head the Insurance Supervision Service Davit Onoprishvili will be appointed as the Head of the Insurance Supervision Service The information is confirmed at Georgia’s Parliament and the Chancellery of the Government. Eatlocal or Airbnb in Food Industry – Startup Idea by Maia Sidamonidze Maia Sidamonidze, the former head of National Tourism Administration, has developed an application in food industry, which is analogue product to Airbnb.
VEON appoints Alex Kazbegi as Chief Strategy Officer Pavle Gabritchidze Invited as Jury Member of White Square in Minsk Pavle Gabritchidze, head of the digital advertising division “Livingstone”, is a member of the International Advertising Festival’s White Square jury.
10 Febryary 11, 2019 #270
Banking Sector Regulations Halve Sales – Microfinance Organizations to Develop New Installment Schemes
According to Geostat, the national statistics service of Georgia, as of December 1, 2019, there are about 2000 stores for home appliances in Georgia, including 1,954 small trading outlets. As for major networks, Elite Electronics is reported to be the major trading network with major importers, and the widest network of branches. Elite Electronics has been operating in the Georgian consumer market since 1996. At this stage, the network has 26 branches. TechnoBoom is ranked second. It was founded in 2010 by the former founder and personnel of Elite Electronics. At this stage, the network has 15 branches. Following the merger of Alta and Okay, they have a total of 11 branches. Aray Smile has 10 branches, and MegaTechnics owns 10 branches, which appeared on the Georgian market in 1997. Beco owns 8 branches, like Zoomer, which launched operation in Georgia in 2009. Starting on May 7, 2018, after the enforcement of the National Bank regulations, commercial banks cannot issue loans without income references. Starting on January 1, 2019 a Responsible Crediting component was enforced for the Georgian financial market. As a result, sales have almost halved. The installment payment schemes do not work in practice. Therefore, stores of home appliances plan to develop new schemes. It was not ruled out that several networks introduce internal installment payment schemes for sales of their home appliances. Part of these networks have begun consultations with microfinance organizations. According to their information, the details of these negotiations will be divulged in about 2 weeks. Representatives of the Elektronika network explain that regulations have halved their sales, because the ratio of installment payment schemes was about 60%-70% of total sales. Negotiations are underway with several microfinance organizations on new installment payment schemes. “We believe there are more chances to arrange new installment payment schemes together with them. Details will be unveiled in two weeks”, the company representatives noted. In response to the question of whether
national bank regulations may not be respected, Electronika representatives noted that they do not expect regulations will be violated because everybody follows the legislation. TechnoBoom founder Anzor Kokoladze has also suffered from the new regulations. Insolvency proceedings are underway against LLC TechnoBoom. “We delayed paying the bill of one of the suppliers. As reported, one of our stores was burnt down, and this debt arose after this fact. Moreover, new regulations have essentially cut our sales.” And now, negotiations are underway with the company to pay debts on a new schedule. “The company will have no failures, and it will continue to operate regularly”, Anor Kokoladze said. The new regulations have significantly decreased network sales. The ratio of installment payment schemes in total sales was 70%, but now the figure has declined to 20%, Anzor Kokoladze noted. “If the current situation is not improved, various sectors will be damaged, including furniture stores, apartments, development sector. We expect the situation to improve in about 6 months”, Anzor Kokoladze noted. Mehmed Meleq, founder of the Beco network of home appliances, explains that company sales proceed in a normal regime, but at the expense of declining prices. Installment payment schemes had a significant role in total sales, but the new regulations have reduced this ratio, and the company preferred to follow a new strategy, Mehmed Meleq noted. “We have reduced prices by 10-15%. Therefore, consumers buy our products without installment payment schemes. We have lowered our profits margin, but this situation cannot be maintained endlessly”, Meleq noted. The company has not revised the investment plan. Namely, in Kutaisi and in Rustavi additional stores will open, he added.
11
Fighting the Future Protest rallies broke out in a new region – the Pankisi Gorge. Local residents are protesting against the construction of major hydro power plants. The same rallies take place from time to time in the Svaneti, Racha and Adjara regions too. The arguments are almost the same. We hear these arguments for decades, starting from movements against the Khudoni HPP in the 1980s – the bones of our ancestors, we have lived here for centuries, and there will be ecological damage. Recall the unforgettable words of Guram Petriashvili: “A Georgian bird flies there, drinking Georgian spring water and signing a Georgian song”. Let’s imagine a bird, which sings Mravaljamieri and therefore, it is worth thwarting the construction of hydroelectric power plants. This is not a problem of specific regions. If so, nobody would care, but the situation is more serious. There are only several economic areas where Georgia can represent itself on the international market. Agriculture – this field does not work for Georgia at all. The uncertainty around agriculture here results from the fact that it is, , in reality, a natural economy – peasants grow
products on small land plots. They consume the main part of the harvest themselves, and take the remaining part to Tbilisi on a rusted Opel to sell them at subway stations. This is the economy of the 17th century. Replace the rusted Opel with carts, and you will find no difference, and you will never know that it’s the year 2019. This is not industry – Georgia will never replace China, Thailand, Indonesia, Malaysia, Vietnam and Cambodia as a production base for transnational corporations. This market is closed, and Georgians have no qualifications, discipline or work ethic. A company failed to open a clothing factory in Kutaisi because it could not find the personnel, while 300,000 persons are employed in the clothing industry in Cambodia, a country with 5 million citizens. There is no finance, technology, metallurgy, machine-building. Georgia has the opportunity to thrive through only 3 fields – tourism, transit and “IT” – the power sector. Today, we can see how the nation destroys its own future. Despite optimistic statements by government officials, it is clear that the development of the power sector has stopped.
The Government boasts of 155 HPP projects February 11, 2019 #270 at various stages of development. But the government does not detail that multiyear and inefficient negotiations are continued with local residents in the majority of cases, and this torture continues endlessly. The field that should become a driving force, including in the exports part, remains frozen for years. Everybody screams, without hesitation and in unison, “we want power systems, but of a small and medium size.” And we have to deal with the same traditional Georgian disease – everybody talks about things they do not know. Green , wind, and solar energy and other, positive innovations are developed in Europe at a fast pace, but these fields are still subsidized. Clean energy is the future and rich countries can afford to invest money in growing technologies. As for current consumption, for example, 70% of power in France is generated by nuclear power plants. This ratio is at 45% in Sweden, which focuses more on ecology. And what, do the Swedes care less about ecology than Georgians? As for small energy facilities, this is much more expensive. The Georgian power system has the following structure; power goes from the station to one big power bank, and from there it is distributed to distribution companies. This seemingly monopolistic and unhealthy system is accepted by everybody – power stations, which do not care for sales, and distributors, who communicate with one supplier and not with 100 ones. In the end the population gets a more stable power supply and the big power bank distributes electricity there, where it is needed more and is not affixed to one specific consumer. In this scheme, small and medium HPPs are unprofitable – the more HPPs, the more stretched the infrastructure, the more transmission lines, transformers, and ultimately, more expenses. And can you guess who will compensate these excessive costs? Power generated by small HPPs is more expensive for the same reason, which is why a Georgian tomato is more expensive than a Turkish one – small turnover means higher expenses and the inverse. These are the fundamentals of economics, and even experts cannot realize this. The actualization of ecological issues is a separate issue. From where, and why? Ecological issues are promulgated in the country, which has polluted rivers, air polluted with vehicle emissions, mercilessly chops down trees. And why are they placing emphasis on HPPs when talking about nature protection? I can forecast how all these developments will end. The Georgian village is dying, and this death is inevitable. In the 21st century, Georgian villages have no potential for survival, especially in highland regions. The villages, where local residents hinder the construction of hydroelectric power plants, will be emptied in 20 years, and local residents will move to betting houses in Tbilisi or to subway stations to sell bananas. In the end, we will lose both the village and the power sector. Today, fighting against major hydro power plants signifies the fighting against the future of Georgia.
By Tengiz Ablotia
12 Febryary 11, 2019 #270