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January 26, 2015 #84

January 26, 2015, Issue 84

caucasian1

BE INFORMED, DO BUSINESS

David Iakobashvili: I sold shares to Rosneft because of BP

GEORGIA

7 BIDDERS SHORTLISTED FOR ANAKLIA DEEP-SEA PORT

even firms and consortia have been shortlisted by Georgian government commission for a deep-sea Anaklia port project. Pg. 2

DAVOS 2015

Pg. 8

Ilia Eloshvili: Without Khudoni HPP Georgia will Be Pushed back to the 90s

EBRD INCREASED ECONOMIC GROWTH PROGNOSIS TO 4.2% FOR GEORGIA THIS YEAR

eanwhile, prognosis of European Bank is more pessimist, than those of World Bank and official Tbilisi. Pg. 9

IMF FORECASTS 5% ECONOMIC GROWTH IN GEORGIA

Pg. 8 Pg. 6-7

New Opportunity for Georgia

WB: CREATION OF DEPOSIT INSURANCE SYSTEM IN GEORGIA WILL NOT TAKE MUCH TIME

epresentative of World Bank considers that government of Georgia can create deposits insurance system soon and it will not take several years. Pg. 9

Pg. 4

WORLD NEWS Pg. 5

CHINA TO BUILD 7,000 KM MOSCOW-BEIJING RAILWAY ESTIMATED $242 BLN

he railway will ease travel between Beijing and Moscow and reduce travel times, Beijing’s municipal government announced. Pg. 13

Currency

Pg. 1w

EXCHANGE RATE MONITORING

GEL Depreciates Step by Step

Armaz Tavadze: Contemporary Georgian Journalism Hinders Society Development

MARKET MONOPOLIST SOCAR CONTROLS GROWTH IN ENGINE GAS PRICES IN GEORGIA

GEORGIA GAMING CONGRESS TO BE HELD IN TBILISI Pg. 10

Robbie Steinhous: Georgia should Focus on Education Pg. 4

GEORGIA DECREASES EXPORT TO AZERBAIJAN Pg. 5

VOLATILITY TO CONTINUE ITS DOMINANCE IN THE FOREX MARKET

Pg. 12

DEMOTED BY FITCH VTB BANK REDUCES STAFF

Pg. 5

Georgia on EU Market – Report on Germany

Pg. 11

The 9th of February Special Issue, Georgia’s Investments Potential, Specially for the Wealth Pro Conference, Introduce Your Company to the World’s Wealthiest Investors. For Additional Information, please, contact the CBW editorial board.

GOVERNMENT NEWS

2 MAIN EVENTS

caucasian business week

PRESIDENT MEETS CENTRAL BANK CHIEF AS GEL FALLS

resident Giorgi Margvelashvili met on January 23 Georgian central bank chief, Giorgi Kadagidze, as national currency, Lari, fell to its lowest level since April, 2004. GEL, which was stable throughout most of 2014, lost more than 12% of its value against the U.S. dollar in a period between early November and early December. Although the Georgian national currency gained a bit by late December, GEL again started to depreciate and lost up to 6% of its value since January 1, falling to 1.9935 per U.S. dollar. President’s office said that at the meeting Mar-

INTERIOR MINISTER TCHIKAIDZE RESIGNS

nterior Minister, Alexander Tchikaidze, said in a written statement on January 23 that he has filed for resignation. He cited allegations against him about “protecting” police officers involved in operation in which two young men were killed almost nine years ago as a reason behind his decision to step down.

GEORGIA REACTS TO RATIFICATION OF AGREEMENT WITH ABKHAZIA BY RUSSIAN STATE DUMA

he so-called agreement on alliance and strategic partnership between Russia and Abkhazia violates all norms of the international law, Georgian State Minister on European and Euro-Atlantic Integration, David Bakradze said. The agreement was ratified by the Russian State Duma on Jan. 23.

ssues of bilateral cooperation between Georgia and NATO were discussed during the official visit of the Chief of the General Staff of the Georgian Armed Forces Major General Vakhtang Kapanadze to Belgium.

he summit of the presidents of Turkey, Azerbaijan and Georgia will be held in Baku this year. The tripartite summit of the presidents of Turkey, Azerbaijan and Georgia strengthens the geopolitical role of Georgia, the deputy head of Georgia’s presidential administration, Giorgi Abashishvili said.

GERMAN BUNDESTAG MEMBER TO HOLD MEETINGS IN GEORGIAN PARLIAMENT

he German Bundestag member Christoph Bergner will visit the Georgian parliament on January 22. As part of the two-day visit to Georgia, he will meet with the speaker of the Georgian parliament David Usupashvili, chairman of the Committee for the European Integration Viktor Dolidze and the head of the Foreign Relations Committee Tedo Japaridze.

GEORGIA, US DISCUSS REGIONAL SECURITY

eorgia and the U.S. mulled the further cooperation in regional security field. Davit Sujashvili, Secretary of Georgia’s Council for Security and Crisis Management focused on the issues of regional security in his mwwting with Richard Norland, U.S. Ambassador to Georgia on January 21.

LABOUR MIGRATION PROCESSES TO BE REGULATED BY SPECIAL LAW IN GEORGIA

abour migration processes will be regulated by the special law in Georgia. Government initiated a draft law on labour migration which is expected to be submitted to the Parliament Bureau.

GEORGIAN-SPANISH MILITARY COOPERATION PROSPECTS DISCUSSED

rospects for deepening cooperation in the military sphere were discussed during the meeting of the Minister of Defense of Georgia Mindia Janelidze with Spanish counterpart Pedro Morenes Eulate.

GEORGIA WILL HAVE NEW JUVENILE JUSTICE SYSTEM

ll criminal cases in Georgia involving minors will soon be handled by police officers, investigators, prosecutors and judges who specialise in juvenile offending.

gvelashvili and Kadagidze spoke about “economic difficulties in the country and about measures needed to overcome them.” “Declining exports and money transfers [from abroad to Georgia] and its negative impact on the national currency was also noted,” president’s office said. Exports from Georgia declined by 2% in 2014 compared to previous year to USD 2.86 billion, caused mostly by decreasing re-export of vehicles. Remittances to Georgia were down by 2.45% y/y in 2014 to USD 1.44 billion; decline was caused by falling transfers from Russia, which is the largest source of remittances for Georgia.

7 BIDDERS SHORTLISTED FOR ANAKLIA DEEP-SEA PORT

GEORGIA, NATO DISCUSS BILATERAL COOPERATION

PRESIDENTS’ TRILATERAL SUMMIT STRENGTHENS GEORGIA’S GEOPOLITICAL ROLE

January 26, 2015 #84

even firms and consortia have been shortlisted by Georgian government commission for a deep-sea Anaklia port project. The Georgian government announced call for expression of interest on design, construction and operation of deep-see port in Anaklia with an initial capacity to handle 7 million tons and gradually increasing its capacity to at least 40 million tons in twelve years in July, 2014. 12 firms and consortia submitted bids. The Economy Ministry first announced about shortlisting seven bidders in December, but it made the list public on January 22.

The shortlist includes: • Terminal Investment Limited SA, a subsidiary of one of the world’s largest container shippers Mediterranean Shipping Co (MSC); • Bouygues Travaux Publics, part of French industrial group Bouygues; • China Harbour Engineering Company Ltd, a subsidiary of China Communications Construction Company (CCCC); • A consortium of Japanese conglomerate Mitsui & Co. and its Singapore-headquartered port operator subsidiary Portek International Pte Ltd; • Anaklia Development Consortium, a venture launched specifically for this purpose by TBC Bank’s supervisory board chairman, Mamuka Khazaradze, who has teamed up in the project with U.S. company Conti Group, a developer and builder of capital asset projects; • A consortium of Anaklia Industrial Eco-Park and Port, a company founded by Georgian businessman Teimuraz Karchava, who owns businesses in Russia and Georgia and who is also linked to a planned thermal power plant in Vanadzor, Armenia; British Eco Power and Hubei Hongyuan Power Engineering

Co., a subsidiary of Chinese state-owned Power Construction Corporation of China (PowerChina); • A consortium of the U.S. engineering design company AECOM and DİA Holding, UAEbased company controlled by Intersun and Turkish construction firm IC Holding; DİA Holding has been active in Azerbaijan winning construction contracts there worth billions of U.S. dollars; Deputy Economic Minister, Irma Kavtaradze, said on January 22 that the shortlisted bidders will have to submit “additional proposals” to the Georgian government commission before April 16 and after that the list will be winnowed down to two or three bidders from which the government will have to select one. A contract with a winning bidder will be signed “no later than September, 2015” and the construction should start by June, 2016, the deputy economy minister said. Georgia’s Black Sea ports in Poti and Batumi are capable of handling only feeder vessels, carrying maximum of 1,700 containers. Larger, panamax size vessels with Georgia-bound cargo use other ports in the region, mostly in Istanbul, where containers are reloaded to feeder ships which then head to Poti and Batumi.

GEORGIA’S 2014 FOREIGN TRADE

eorgia’s foreign trade increased 5% year-to-year in 2014 to USD 11.45 billion with trade gap increasing 12% y/y to USD 5.7 billion, according to preliminary data released by the state statistics office, Geostat, on January 21. Imports increased 7% y/y in 2014 to USD 8.59 billion, according to the preliminary data. Exports from Georgia declined by 2% in 2014 compared to previous year to USD 2.86 billion, caused mostly by decreasing re-export of vehicles. Although exports showed upward trend in the first half of 2014, it started declining on yearly basis from August. There was 6.1% y/y decline in exports in the third quarter of 2014 and it further dipped by 20.5% in final three months of 2014, compared to same period of previous year. Turkey remains Georgia’s largest trading partner with total turnover of USD 1.96 billion in 2014, a 23.5% y/y increase. Imports from Turkey went up by 22.6% y/y to USD 1.72 billion and Georgian exports to Turkey increased 30.8% y/y to USD 239.3 million in 2014. Although trade turnover declined with Azerbaijan in 2014 to USD 1.18 billion, it still remains Georgia’s second largest trading partner. Imports from Azerbaijan (oil products and hydrocarbons make bulk of these imports) declined 2.3% y/y to USD 637.5 million and exports to Azerbaijan were down by 23.3% y/y to USD 544.4 million – decrease is mainly attributed to declining reexport of vehicles to Azerbaijan. Russia, which was Georgia’s fourth largest trading partner in 2013, moved to third place last year

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with total turnover of USD 852.6 million, a 9.5% y/y increase, accounting for 7.4% of Georgia’s foreign trade. Imports from Russia declined by 1.7% y/y to USD 577.7 million in 2014, attributed mainly to decrease of import of oil and oil products. Wheat accounted for up to 30% of imports from Russia. Georgian exports to Russia reached USD 274.9 million, a 44.1% y/y increase, accounting for 9.6% of Georgia’s total exports in 2014. Russia is Georgia’s third largest exporting market after Azerbaijan and Armenia. Wine represents major Georgian export to Russia. Value of exported wine to Russia almost doubled to USD 111.4 million in 2014; export of mineral waters also doubled to USD 66.3 million last year. China is Georgia’s fourth largest trading partner with turnover of USD 823.3 million in 2014 with imports amounting to USD 732.9 million and exports to USD 90.3 million. Ukraine, which was Georgia’s third largest trading partner in 2013, is on the fifth place with total turnover of USD 686.3 million in 2014. Georgian exports declined by 27.2% y/y to USD 140.2 million in 2014 and imports were down by 9.4% y/y to USD 546.1 million. Ukraine is followed by Germany with total trade turnover of USD 534.9 million in 2014; Armenia – USD 498.5 million; the United States – USD 494.8 million; Bulgaria – USD 373.8 million; Japan – USD 371.4 million. Georgia’s trade turnover with the EU-member states amounted to USD 2.99 billion in 2014, a 4% y/y increase, accounting for 26% of country’s total trade turnover. Georgia’s exports to EU-member states reached

USD 621 million in 2014, a 2% y/y increase, accounting for 22% in Georgia’s total exports. Import from the EU increased by 4% y/y to USD 2.36 billion in 2014. Trade with Commonwealth of Independent States (CIS) declined by 5% y/y to USD 3.59 billion in 2014, accounting for 31% of Georgia’s total trade. Exports to CIS-member states were down by 10% y/y to USD 1.46 billion, accounting for 51% of Georgia’s total exports. Import from CISmember states declined by 2% y/y to USD 2.12 billion in 2014. Re-export of cars lead the pack in Georgia’s total exports with USD 517.7 million (26.4% y/y decline) in 2014, followed by ferroalloys with USD 285.7 million (24.2% y/y decline); copper ores and concentrates – USD 248 million (53.4% y/y increase); hazelnut – USD 183.3 million (10% y/y increase); wine – USD 180.7 million (41.3% y/y increase); nitrogen fertilizers – USD 137.6 million (5.4% y/y increase); mineral waters – USD 137.1 million (28.4% y/y increase); nondenatured ethyl alcohol and spirits – USD 95.2 million (4.6% y/y decline); medicines – USD 92 million (76.7% y/y increase); bars and rods of iron and steel – USD 63.7 million (1.9% y/y increase). Oil products remain on top of the list of imports with USD 918.3 million, followed by cars with USD 715 million; hydrocarbons - USD 368.8 million; medicines - USD 314.6 million; mobile and other wireless phones – USD 195.5 million; copper ores and concentrates – USD 165.2 million; wheat – USD 151.7 million; cigarettes – USD 115.4 million; computers – USD 104.1 million; metal construction materials – USD 90.6 million.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

Editor-in-Chief: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Tamar Kakabadze, Lazare Gvimradze

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

January 26, 2015 #84

INTERVIEW caucasian business week

FOODPANDA – A CONSUMER-ORIENTED COMPANY’S YEAR ON THE GEORGIAN MARKET Ordering food online on www.foodpanda.ge is becoming more and more in-demand. Everyone likes it – people of all ages and professions, men and women alike. foodpanda is a customer-oriented company and uses contemporary technological means – mobile application – to make food ordering simpler and more fun, which ensures user comfort. It’s already possible to order food and have it delivered to your doorstep from over 70 dining points in Tbilisi, Batumi, Kutaisi, Mtskheta and Rustavi. You can do so using both the website (www.foodpanda.ge) and the mobile application, which is available for iOS, Android, and Windows Mobile smartphone platforms. Foodpanda is an online food ordering service active in over 45 countries around the world. The German brand began operating on the Georgian market in March 2014. On how the brand sees the Georgian market and what novelties we might expect in the future, foodpanda’s director in Georgia, Giga Kerkadze, answers our questions. - It will soon be a year you stepped into the Georgian market. How would you evaluate it? - After working for ten months on the market, we can say that foodpanda has managed to claim a solid niche on the Georgian market. It’s known that foodpanda is active in over 40 countries and different markets are always correlated. Georgia’s results are impressive in various ways, especially the foodpanda application popularity here. The number of downloads will soon surpass 40,000 and most of our orders are coming through that very channel. This is one of the most outstanding results if we compare it to other countries in temrs of their population proportion towards application usage. This is a direct sign that the Georgian population is not only ready for modern internet services, but is even surpassing a number of developed countries in this field. This is a happy fact and we help to contribute to the development of the modern technology industry in the country by showing such results. - You started with Tbilisi, which was followed by Rustavi, Batumi, and Kutaisi most recently… how would you rate the region effect, how is the demand there for your service and how has the consumer embraced it? - After Tbilisi, regional demand keeps growing daily on our service. Despite the fact that we

haven’t begun active marketing campaigns outside of Tbilisi, the regions have already given us loyal customers. You could even say that in certain ways Batumi and Kutaisi customers are somewhat more active than the Tbilisi ones, since we’re getting lots of letters and various feedback and advice regarding our service. Feedback is very important to us. - What is the Georgian customer like – when they place an order, are they inquisitive, hesitant, what are their preferences? Are there corporate orders? - I can’t really single out special traits of our customers since all kinds use our service, and at the end of the day, all of them are more-or-less coming from the same place in each country: when they’re hungry, they wish to have food delivered swiftly, warmly, and packaged in a nice way. According to orders, obviously, fast food points favor in popularity; as for the corporate segment, it can be said that foodpanda’s service is used by almost all leading Georgian company staffs daily, and our publicity in this segment is quite high. It’s easy enough to check, just ask around in various companies. - What would you say about your partners? Their number shave gone past the 80 mark. - Our partner numbers are rapidly growing, al-

though at the same time there’s a certain selective approach to the restaurants. Meaning, that in total we had over 150 restaurant contracts from the day of launch, it’s just that the market shifts its own rules during the working process. Only those stayed in the lineup who managed to deliver a wide assortment of varied meals. If before we had to actively communicate with them first, now it’s them who seek us out and try to become a partner, which is the first stage of their evaluation. - Are you planning on expanding the regional reach? Kakheti, Samegrelo, etc? - We have it planned in 2015 to add new countries. At this stage I can’t exactly tell you where, but this will probably happen in the latter half of the year. - Did all your plans with which you entered the market a year ago come to completion? - It can definitely be said that all the plans we had set in the beginning of 2014 have been successfully completed. - Are there plans for any joint-partner promotional or sales campaigns for the customers? - Foodpanda will always have various promotional activities for our customers. For example, right now we have a loyalty campaign active and every fifth order a customer gets a 10 lari voucher as a gift, which can be used when placing the

subsequent order. We’ll start another promotional activity in the near future, however we cannot disclose the details right now just yet. In order to not miss out on interesting news, I urge our users to keep track of our Facebook page: https://www. facebook.com/foodpanda.ge - What activities have you done in terms of social responsibility and are there any such plans for the future? - Despite being a startup and not having strong financial means, foodpanda will keep trying to be active on the social responsibility side as well. From a number of charitable initiatives in 2014 I’d note the campaign for the International Food Day, which was carried out in October. We gave our users the ability to help the socially defenseless by being active in the social network, which resulted in us giving away lots of products to children. Similar activities will undoubtedly carry over to 2015. - What would you say about the future? How will you celebrate the 1 year anniversary on the Georgian market? - By all means, in order to celebrate our first birthday – 21st March – we have large plans. Detailed plans regarding it will be disclosed in early March, so don’t miss out and keep track on our social channel.

4 HEADLINES EXPORT OF GEORGIAN WINE TO RUSSIA HALTED

ccording to Nutsa Abramishvili, the CEO of the wine company Schuchmann Wines 10 trucks loaded with 100 000 bottles of wine stopped due to the limited transfer of foreign currency outside of Russia because of the ruble devaluation.

INTERVIEW caucasian business week

ARMAZ TAVADZE: CONTEMPORARY GEORGIAN JOURNALISM HINDERS SOCIETY DEVELOPMENT “Georgian journalism cannot meet modern standards and often poses a serious threat to the country’s development” - Armaz Tavadze, media holding “Kommersant “founder, makes such a loud statement. We asked him to talk future plans. Note: Media Holding “Commersant” includes the first business radio station in Georgia “Commersant”, news site commersant.ge and the only Russian-language economic newspaper “Commersant Gruzia”.

GEORGIAN WINE GALLERY OPENED IN BERLIN

inistry of Agriculture informs that the gallery, which is located on the central street of Berlin (Savini platz) only Georgian wine, Chacha and brandy will be represented. Currently there are 25 kinds of products of Winery Granely, Askaneli, Wine Cellar of Twins, Kvareli Cellar, Alaverdy Wine.

INDIAN METALLURGICAL COMPANY TO EXPAND CO-OP WITH GEORGIA

ndia’s Jindal Steel and Power is interested in intensifying cooperation with Georgia. A Georgian delegation held a meeting with the head of Jindal Steel and Power, Naveen Jindal during the World Economic Forum in Davos, the Georgian prime minister’s office told Trend Jan.23.

PRESIDENT ILHAM ALIYEV MEETS GEORGIAN PM, DISCUSSES ENERGY PROJECTS

resident of the Republic of Azerbaijan Ilham Aliyev met Georgian Prime Minister Irakli Garibashvili in Davos, The parties expressed satisfaction with the successful development of the bilateral ties in various areas, including political, economic and energy spheres.

REPRESENTATIVES OF ONE OF EUROPEAN INVESTMENT FUNDS TO VISIT GEORGIA

working group of one of Europe’s largest investment funds will visit Georgia in the near future. The working group will review Georgia’s investment sphere. CVC Capital Partners is one of the leading direct investment funds. At present, the fund manages the funds of more than 300 investors from North America, Europe, Asia and the Middle East.

DUTCH TRADE MISSION TO VISIT GEORGIA

rime minister of Georgia Irakli Garibashvili met with Prime Minister of the Netherlands Mark Rutte at an economic forum in Davos. The sides discussed prospects for deepening bilateral relations and cooperation in such areas as defense, economy, culture and education. It was noted at the meeting that the Netherlands occupy the leading positions in terms of investment in Georgia. In 2014, the bilateral trade increased by 21.5 percent and amounted to $158.11 million

- What innovations will “Commersant” offer to its readers and listeners in 2015? - “Commersant” was founded 7 years ago. It is one of the youngest media outlets in Georgia. When in 2008 we came to the idea of creating the first business radio, even the most optimistic well-wishers believed that it would not exist more than one-two years, as in the country overwhelmed with political topics to make the business news seemed incredible. Especially hard it was to select positive themes and convey information to the audience in a way that is clear and that keeps the listener interested in the topic. “Commersant” journalists are fighting stereo-

he liberalization of trade and integration with the leading world markets is the priority of Georgia’s economic policy, Georgian Prime Minister Irakli Garibashvili said. He made the remarks during the World Economic Forum in Davos, at the “Travel and Trade in a High-Risk Era” session.

GEORGIA ATTRACTS NUMBER OF FOREIGN COMPANIES

GERMAN COMPANY HENKEL ENTERS GEORGIA

erman company Henkel, a global producer of detergents, cosmetics, technological products and adhesives is entering Georgia. Rights to ownership of agricultural Georgian land return to foreigners

DRUGS PRICES TO GO UP he sharp depreciation of the GEL exchange rate may be reflected in prices of certain medicines. Kakha Okriashvili, PSP pharmaceutical company’s founder said.

media outlets increases one hundred times. Georgian media outlets should revitalize a depressed Georgian public. And what is happening in the media space? I find it difficult to give a name to this. Look at some popular and rating publications read by tens of thousands of citizens. Information is conveyed in black and white, negative information flow is senselessly exaggerated. If journalists call it freedom of speech, they’re mistaken. I cannot tell you what it’s called, but it is not journalism. A systematic flow of such information instills a sense of hopelessness in a society, which unfortunately still does not have the opportunity to become familiar with the alternative original foreign-language editions. Many journalists enjoy the fact that the overwhelming majority of the public does not have the right to choose. In my view, such a journalist is more dangerous to society than many offenders. But, do not tell me that this is the order of the society. Many European media outlets imposed censorship on violence and dramatic facts, while, in our country everything is free. I can recall the latest incident, a video showing agents recruited by Russian intelligence apparently being shot in the desert by a child who is thought to be around 10 years old that was placed on the Internet for a few days openly, without any age restriction of consumption. Many European TV stations and the Internet editions released it only with certain restrictions. Georgian journalists today are ready to cover all to be rating, it is not journalism. Modern Georgian journalism is behind the modern European standards, which significantly affects the society. I wish the Georgian media outlets shared the spirit of modern European journalism and rejected negative.

An interview with a business coach Robbie Steinhous

epresentatives of five large companies will visit Georgia in the nearest future to discuss the investment opportunities as a result of the bilateral meetings...

types based on negative for the seventh year. To tell the truth it was the most difficult. I am pleased that “Commersant” gathered a very good team of like-minded young people. Most importantly, this team is not afraid to learn from its mistakes and is constantly in the process of self-development. I am also glad that I involve in the work of the holding only once a year - to congratulate the staff with the New Year. The most important is that “Commersant” has gathered journalists, who share our main idea - to convey information without the negative. And this year Commersant remains committed to its principles and tells categorical “no” to the negative. Consider that this is “Commersant’s” motto. - Don’t you think that in this case it will be really difficult to get high ratings? - No, I do not think so. “Commersant’s” rating is increasing moderately, but steadily. For me, the important thing is not how many people read and listen to “Commersant”, but who reads and listens it and what thinks after reading. A new generation has grown up in the country and Georgian journalists need to protect their awareness more. Unfortunately, many journalists do not realize their responsibility in this regard. Recently, the serious pressure has been removed from the public and it was given an opportunity to boldly realize themselves. However, in terms of intensification of public life, nothing interesting happens. Many people search for the reasons in political governance, however, the real reason is the indifference of each of us, non-professional skills, lack of knowledge of life in freedom. Our society is like a man who is not aware of how to live in freedom after spending many years in prison, who feels very uncomfortable and awkwardly. In such circumstances, the role and purpose of the

ROBBIE STEINHOUS: GEORGIA SHOULD FOCUS ON EDUCATION

LIBERALIZATION OF TRADE PRIORITY OF GEORGIA’S POLICY

January 26, 2015 #84

- Whether Georgia can draw attention both in terms of culture and economy? - Georgia has a very interesting culture, and in my opinion it is necessary to spend more to preserve the historic appearance of Tbilisi. Maybe it will not be investing in new buildings, but more should be spent on historic buildings, the construction of roads and other infrastructure. You also need to invest a lot in advertising tourism, facilitate the development of international aviation. Tourism is always very interesting and many countries focus on its development, Tbilisi has great potential in this regard. - What should a country do to attract investors? How should we interest foreigners to invest in this sector? - There are many factors - good infrastructure, the rule of law in concluding agreements, economic

stability and the stability of the exchange rate, direct flights, etc. In addition, profitability of the project is crucial for investors. A stable and sustainable economic growth is also required. For example, if economic growth in Turkey amounts to 10%, then in Georgia it should be 2-3% higher to be considered high. - Currently, Georgia’s economic growth is 4%. Is this result good for a developing country? - By itself, the 4% growth is not bad, but the problem arises when, for example, this figure is compared with Turkey where growth amounts to 10%. To attract investors, Georgia needs a more active growth. - If you were an investor, what would you pay priority attention to? - Stability of contracts and the implementation of laws are very important factors. It is also very important what are the expectations in the country. I worked in a French Bank BNP Paribas, which employs 200 000 people, I conduct trainings in China, Turkey, France, USA, etc. I know that about 30% of Georgia’s population works abroad, and this is very bad. I often meet talented and intelligent Georgians in London. Georgia has a great culture, but as the situation is not good enough for all to show themselves, many people have to go abroad. - What should a country do to bring them back? - A large-scale migration is a temporary process that took place in all the countries of the world. When the economy grows and incomes rise, it creates the conditions for people to come back. Access to education is also very important. In this direction the state must invest a lot as well as bring from abroad specialists in various fields of business.

The secret of success of any country is a high management level and it is directly related to training. For example, China has invested a lot in education to get a highly qualified workforce. Georgia just needs to develop management skills. - The government launched a program to support small businesses and introduced a system of subsidies. Will this allow businesses to be profitable in the long run? - Businessmen are like little children, at the beginning they need great resources, and annually they grow stronger. For example, in a country like the USA 70-80% of startups fail within a year. A number of people who can achieve long-term and sustainable business success is very small. Of course, government incentives are very helpful, and I think that Georgia will retain a 4% growth. - What would be your top three tips to the Georgian government and business? - First of all, this is education and learning. Many companies have ambitions that they know everything, but nevertheless constant development is needed. Second – the government should invest more in education in order business companies to get qualified specialists. The third is that the government, through its departments and organizations, could develop the skills of the population. If the level of education and skills grows equally both in the private and public sectors, it will provide for big competition that is good for everyone. For example, people with a good education and skills will be able to easily change jobs and move from public to private sector and vice versa.

January 26, 2015 #84

ECONOMIX

caucasian business week

MARKET MONOPOLIST SOCAR CONTROLS GROWTH IN ENGINE GAS PRICES IN GEORGIA

TOP STORY

Azerbaijani Company against Georgian Population

eorgia-based gas filling stations name the State Oil Company of Azerbaijan (SOCAR) as the market monopolist. Previously, only small-sized gas filling stations used to express similar considerations. Now, even Wissol Group representatives assert engine gas prices are out of their control because of lack of market suppliers. Wissol Group President Soso Pkhakadze says Wissol cannot control gas prices, because the market is monopolistic. “I joined this business 18 years ago and the society has been complaining about high prices all the time. We only follow the existing trend. We cannot determine gas and oil products prices. The Georgian market registers very few gas suppliers on the market and we keep no real leverages to affect gas prices. We only follow the market realities”, Soso Pkhakadze noted. Not only strengthened USD has driven an upturn in gas prices, Ecogas company says. Gas prices are determined by gas purchasing prices that are set by SOCAR. At the same time, the company says engine gas price will go cheaper in the near future if the GEL exchange rate strengthens for the coming 2-3 months. At this stage, the company sells one cubic meter of engine gas at 1.15 GEL. In mid December 2014 the gas price rose by 0.05 GEL. Six month earlier the gas prices had also increased by 0.05 GEL because of the market tendencies. “We increased price to save the small players on the market so as the major players could not overwhelm us”, representatives of small-sized gas filling companies say. Gama company also accuses SOCAR of raising engine gas prices. The company director general David Chakhtauri says the company sells one

cubic meter at 1.15 GEL, because all companies raised the tariffs by 0.05 GEL about two months ago, after SOCAR increased gas prices. “If the supplier lowers the price by 1 GEL, I will also decrease the engine gas price by 1 GEL on the same day”, Chakhtauri noted and added he may even apply to the Prime Minister for assistance. At the same time, Chakhtauri abstained to divulge details further. Meanwhile, SOCAR points to two main factors that form selling prices of engine gas. “First of all, the GEL exchange rate against foreign currencies is depreciating. Another factor consists in implementing additional investments for technically equipping gas filling stations at modern level and for secure operation. These equipment were purchased by bank credits and their financial service is strictly regulated. The loan portions must be paid in a concrete term for each invested station. In other case the company will have to pay fines”, Irakli Zubitashvili, a head for the company corporate business communications department, noted. According to the market regulations, if any market player changes prices, all other players have to correct prices too, Zubitashvili added. Today, the lowest price is registered at gas filling stations of SOCAR Georgia Petroleum and the price makes up 1.13 GEL. The price lowers by 0.09 GEL to 1.04 GEL if the consumer purchases gas by coupons as part of the campaign, Zubitashvili explained. Small-sized networks of gas filling stations were speaking out of SOCAR’s monopolistic decision in summer 2014, when monopolist Azerbaijani company lowered the supply tariff within its network, but artificially increased the

gas prices to other companies. Several months ago SOCAR increased natural gas price to competitor gas filling stations, while lowered retail prices within its own network. This monopolistic decision worsened the condition of competitor companies. A major part of them went bankrupt and closed, while another part was absorbed by SOCAR. SOCAR applied a classic scheme to get rid of competitors and strengthen its positions on the market. As a result, the product prices increased in the interest of SOCAR, not because of the market principles. The Banks & Finances has also written about monopolistic positions of SOCAR on the fuel market in Georgia. SOCAR fully controls diesel market and 80% of the petrol market. Consequently, SOCAR dictates pricing policy on the fuel market. After the power change in Georgia, Georgian citizens were expecting fuel prices would be corrected, but SOCAR’s top managers have clearly said to the Georgian government officials the market terms were regulated by the Azerbaijani company. The conversation contained almost threatening statements. Mayr Mammadov, SOCAR Petroleum Georgia director general, noted SOCAR could cease petrol supply to Georgia. The natural gas market is in more complicated situation, where SOCAR is recorded a full monopolist of the market, excluding Tbilisi gas supply network. The Azerbaijani company controls all segments of the market: imports, transit and supply. SOCAR is also interested in controlling Tbilisi gas distribution network too, the Banks&Finances reports. “Our country, in practice, completely depends on Azerbaijani gas supplies. Georgia has introduced no natural gas standards. State regulatory component is invaluable and SOCAR as an only real monopolist has no competitor in Georgia. Absence of competition, dominant position of SOCAR restricts our choice and we depend on SOCAR’s goodwill and honesty, economic expert Levan Kalandadze noted. SOCAR’s prices are one of the sharpest problems. Despite the new government makes loud statements on natural gas prices, the information on prices at which Georgia receives natural gas from Azerbaijan remains secret, as well as preferences Georgia enjoys as natural gas transit country and the agreements these countries have concluded. Classified and unclear information serves SOCAR’s interests as the market monopolist.

DEMOTED BY FITCH VTB BANK REDUCES STAFF

ussian banks, including VTB represented in Georgia, arefacing problems. Fitch Ratings downgraded the ratings of 30 Russian financial institutions, including state-owned banks. Ratings of VTB,Rosselkhozbank and Gazprombank, thus fell belowinvestment to “junk” BB + from BBBwith a “negative” outlook; Sberbank and VEB’s ratings fell to BBB- to BBBwith a “negative” outlook. The state-owned “VTB Bank” refused from the services rendered by Fitch agency in 2012 is

concerned with these estimates. Vedomosti was told at “VTB Bank” that Fitch team consists of non-professionals focused on t sensational material and PR. They say in the Moody’s agency that «VTB» rating is below sovereign. In addition to the decrease in ratings, Russian banks have other problems as well – they reduce branches and personnel overseas. According to Russian media reports, this trend will affect our country as well. In December 2014, “VTB” announced about a 15% reduction on salaries and staff. In an inter-

view with the Russian”Kommersant”, VTB first Deputy President Yuri Soloviev said that the bank was forced to respond by reducing trade in the public markets. What impact will the current situation have on “VTB Bank Georgia”? Economic expert Emzar Jgerenaya says that the Russian “VTB Bank’s” positions downgraded by Fitch will not adversely affect “VTB” branch operating in the Georgian market. However, he notes that the bank might have a problem in terms of attracting investment. According to him, when the general line of any company is in poor condition, this time it reduces the number of branches and staff. The expert says that it is a natural thing. He says it is not clear why “VTB Bank Georgia” announces vacancies. George Barkalia, Vice President of “VTB Bank of Georgia”, says that the bank is fully regulated by the Georgian law and is under the supervision of the National Bank. Russian “VTB Bank” is regulated by the central bank of Russia, Georgian “VTB” - by the National Bank of Georgia. Therefore, this will not have any impact on the Georgian “VTB”, “- says Barkalaia. He notes that the bank has very ambitious plans in Georgia. “In 2015 we are going to be in all cities where we are not presenttoday”, - Barkalaia adds. In his words, “VTB Bank Georgia” plans to open 10 branches in 2015, where a total of 100 people will work.

GEORGIA DECREASES EXPORT TO AZERBAIJAN

zerbaijan received 19 percent of Georgian export in January-December 2014, the National Statistical Service of Georgia reported. The report shows that goods worth $ 544.4 million were exported from Georgia to Azerbaijan in this period. The last year marked a 23.3 percent decline in Georgia’s export to Azerbaijan in comparison with the same period of 2013. In January-December 2013, Georgia exported goods to Azerbaijan worth $ 709.9 million. Despite this fact, Azerbaijan ranks first in the list of countries Georgia exports its products to, followed by Armenia ($ 288.24 million), Russia ($ 274.96 million), Turkey ($ 239.3 million) and the U.S. ($ 207.58 million). The main items of Georgian exports to Azerbaijan are cars, cattle, medicines, cement, steel reinforcement and other products. Cars export from Georgia to Azerbaijan decreased this year after introduction of Euro-4 ecological standard in Azerbaijan. In 2014, 17,550 cars totaling $ 267.96 million were exported from Georgia to Azerbaijan, the report said. The share of this category in the total volume of Georgian exports to Azerbaijan in this period amounted to 49.22 percent. The export of cars in this period decreased by 33.19 percent or by 133,110 vehicles in comparison with 2013, when 44,460 cars amounting $ 401.07 million were brought to Azerbaijan. Azerbaijan imported 1,933 trucks in the amount of $15.79 million in this period, which is 39.4 percent lower than the index of 2013. Georgia exported 4,000 trucks to Azerbaijan for $ 26.05 million in 2013. In January-December, 92,480 tons of cattle in live weight for $ 57.26 million were brought from Georgia to Azerbaijan. The report shows that the share of this category in the total volume of Georgian exports to Azerbaijan for the reporting period amounted to 10.5 percent. Exports of cattle from Georgia to Azerbaijan compared to the same period of 2013, increased by 41.4 percent, and in quantitative terms - by 28,000 tons in January-December 2014. In 2013, Georgia exported to Azerbaijan 64,470 tons of cattle in live weight in the amount of $ 40.49 million. Trade turnover between Georgia and Azerbaijan in January-December 2014 amounted to $1.18 billion, which is 10.3 percent of total foreign trade of Georgia. The last year’s turnover is 13 percent less than the same period in 2013. The trade turnover between the two countries amounted to $1.36 billion in 2013.

OPINION

caucasian business week

January 26, 2015 #84

WORLD ECONOMIC FORUM

New Opportunity for Georgia

he 45th Annual Meeting of the World Economic Forum took place in Davos, Switzerland, from 21-24 January 2015. The first meeting in Davos was held in 1971, when only 444 participants met for discussions that continued for a fortnight. Over 40 leaders of states and governments are among 2 500 participants at this year’s Annual Meeting. This program consists of over 280 sessions, of which over 100 sessions will be webcast. Participants include senior executives from major technology businesses, including Alibaba, Facebook, Google, Microsoft, Wikipedia and Yahoo. Other 2015 participants include leading figures from politics, civil society, labor unions, the world’s major religions, media and the arts. Over 1 500 participants are actively involved as speakers, facilitators and panelists. This year’s themes for discussion include addressing geopolitical crises, health pandemics and the future of technology and also oil prices, deflation and impact of political instability on the global economy. - The main theme of this year’s World Economic Forum Annual Meeting is the “New Global Context,” which is quite pertinent in the current economic climate. The organizers of the Davos summit determined this theme on the basis of following major topics:

LEVAN KALANDADZE Economic Analyst, Chairman of Georgian Infrastructure Projects Initiative

he World Economic Forum in Davos has a great importance to the countries like Georgia. Practically, this is forum for demonstrating capabilities – place, where state

- The systemic impact of deepening geopolitical fault lines, decreasing multilateral cooperation and increasing strategic competition. - The expected normalization of monetary policy through the reduction of quantitative easing and a future rise in interest rates. - The continuing erosion of trust in public and private sector institutions, and the deteriorating dialogue between government and business globally. - The breadth and velocity of scientific and technological advances that are considered inspiring and empowering as well as disruptive and ominous. - The inability to significantly improve the management and governance of critical global commons, most notably natural resources and cyberspace. - The ecological, societal and business repercussions of unabated climate change, youth unemployment and income inequality. - The generational shift from societies sharing common values to those that are primarily interest-driven, and the related rise of sectarianism, populism, and nationalism. First of all, the organizers of the Davos summit acknowledge that the global economic and political cooperation are in danger, and the rising competition has led to a geopolitical division. As a result of this, they also accept that the systemic impacts of ever-growing income

and wealth inequality in the world will worsen with the U.S. Federal Reserve’s interest hike in 2015. The main topic of the discussion was Russia. Economic sanctions imposed by Western countries against Russia, following the outbreak of conflict within Ukraine, combined with the falling price of oil and gas and a tumbling ruble, have helped send the country into economic turmoil. While there is a substantial Russian presence at Davos, it is less high-profile than in previous years. “Russia is going to be a sour spot in 2015. We’re seeing a more-than 20 percent decrease in the Russian market. But the potential for Russia is here – it will just take some time to recover,” Carlos Ghosn, the chairman and chief executive of car maker Renault-Nissan. World economic forum is very important to Georgia. Representatives of five large companies will visit Georgia in the nearest future to discuss the investment opportunities at place, Government Administration press office announced. This is a result of the bilateral meetings that Georgian Prime Minister Irakli Garibashvili has been arranging with the different company representatives in Davos, Switzerland within the framework of the World Economic Forum 2015. Georgia’s Prime Minister Irakli Garibashvili and a small Georgian delegation are set to trav-

Governments are encouraged to introduce their own country to the world’s biggest investors and profitably “sale” it. Therefore, the benefits from successful transactions and investment projects are multilateral – the benefits go to governments, investors and population. The World Economic Forum 2015 is very important from the standpoint of the agreement between EU and Georgia signed in 2014 and DCFTA. New relationship between Georgia and EU is new challenge to the country. On the one hand, this is a new opportunity and advantage, which will enable the country to ensure the correct use of the business environment, high economic growth and high standards of social protection. In other side, this format of communication is opportunity - Georgia can become an international and regional hub for transit goods, as well as services like a high-tech industrial production and the development of financial flows transit. This will allow us to correct the investment policy of the Georgian Government to become the most interesting and attractive country for investing. It’s real potential and it needs only political willingness of the government and properly and

wisely planned economic policy and strategy. This meetings and interests the Georgian government conducted in Davos with international investment companies and with representatives of business circles (Jindal Steel and Power, British Petroleum, CVC Capital, Tech Mahindra, Louis Dreyfus Group) give us a reason for optimism - Properly planned economic and investment policy in Georgia may become a precondition to start a major international investment projects in the region. DEMUR GIORKHELIDZE Economic Analyst Demur Giorkhelidze is not surprised Georgia lacks for FDI. This tendency is driven by objective reasons – Russian-Ukraine war, economic crisis in some countries of EU, but the main problem is a lack of investors’ trust to the country. The Georgian business abroad is about 80 billion. They are ready to invest in Georgia, but they need guarantees that they will not have to clash the bureaucracy. They require for private property protection. They want Georgia to protect certain rules of the game. Demur Giorkhelidze says that the government no

el to Davos, Switzerland today to discuss with world leaders how to improve the state of the world through public-private cooperation. Garibashvili will be accompanied to Davos by Georgia’s Vice Prime Minister, Economy Minister Giorgi Kvirikashvili, Foreign Minister Tamar Beruchashvili, head of the Co-Investment Foundation Giorgi Bachiashvili, head of the National Investment Agency Giorgi Pertaia and director general of Georgian Railways Mamuka Bakhtadze. Representatives of world’s five big companies will visit Georgia in the nearest future to discuss the investment opportunities at place, Government Administration press office announced. This is a result of the bilateral meetings that Georgian Prime Minister Irakli Garibashvili has been arranging with the different company representatives in Davos, Switzerland at the World Economic Forum 2015. The world economic forum is great opportunity to Georgia to attract IDF-s. After forums we are expecting growth of in foreign direct investments but in 2013 and 2014 Georgia had problems in this topic. How important is world economic forum to Georgia and what should we expect from Davos? How successful was the forum for Georgia? Economic analysts discuss about Davos’15.

DEMUR GIORKHELIDZE Economic Analyst longer plunders and illegally deprives property, but it is not enough to create a favorable business environment. Economic analyst believes that if local business does not show successful activity, foreign investors will not invest in Georgia. Without this, the world economic forum in Davos cannot not help us.

DAVOS 2015

January 26, 2015 #84

GEORGIAN PM’S SILK ROAD ASPIRATIONS IN DAVOS Irakli Garibashvili assessed his trip to Davos as “productive” and introduced an annual ‘Silk Road Forum’ to be held in Tbilisi “I introduce the initiative of establishing a ‘Silk Road Forum’ in Tbilisi – annual high level meeting to revitalize the historic Silk Road to enhance partnership in transport, energy, trade and people-to-people contacts,”— Irakli Garibashvili announced at the World Economic Forum on January 23rd.

Georgia Named as Switzerland’s Special Partner

SCE’s activity under Switzerland’s chairmanship throughout 2014 has been summarized in a meeting between the Georgian and Swiss high-fliers in Davos. Georgian Prime Minister Irakli Garibashvili talked over wide range of bilateral relations with Didier Burkhalter, Swiss President, who also heads the Department of Foreign Affairs of the Swiss Confederation. Garibashvili thanked Burkhalter for the mediation in the relations between Georgia and Russia, informing him about the ongoing discussions under Geneva Talks and negotiations between

Georgian and Russian special representatives Zurab Abashidze and Grigory Karasin. Burkhalter, in turn, said Georgia was a special partner of Switzerland. The two officials have also focused on the possibilities of deepening the bilateral cooperation, ways of making full use of these prospects, particularly in terms of economic cooperation and investments. Burkhalter noted that although Switzerland has transferred the OSCE chairmanship to Serbia, Angelo Gnaedinger, Swiss Special Representative for the South Caucasus, will continue the necessary activities in 2015.

Five Global Companies Interested in Georgia – Davos 2015

The Georgian Prime Minister meets representatives of French-based company Louis Dreyfus Group. Photo by PM’s press office

epresentatives of some of the world’s five largest companies will visit Georgia in the near future to discuss investment opportunities. The companies’ interest in investing in Georgia was the result of many bilateral meetings Georgia’s Prime Minister Irakli Garibashvili has arranged and held with a variety of business representatives at the World Economic Forum 2015 in Davos, Switzerland, said the press office of the Georgian Government Administration. The Georgian PM summed up his first day in Davos as “productive” on his official Twitter account. French-based company Louis Dreyfus Group, which is involved in agriculture, oil, energy and commodities, was one of the companies who expressed interest in possibly investing in Georgia. Head of the company Margarita Louis-Dreyfus and Garibashvili agreed that a representatives of Louis Dreyfus Group will visit Georgia soon. At the meeting with Louis-Dreyfus representatives, PM Garibashvili said the Georgian Government had created liberal conditions for offshore investors. Meanwhile representatives of Hanwha Group of South Korea, also pledged to visit Georgia in the near future to learn about the country’s invest-

caucasian business week

ment opportunities. Hanwha Group is involved in the manufacturing and trading sector. Garibashvili told the company’s director Dong Kwan Kim of the benefits the Association Agreement (AA) and the Deep and Comprehensive Free Trade Area (DCFTA) had brought to Georgia. With this agree-

ment, the EU market, involving its 28 member states and more than 500 million customers, was now open for Georgia, Garibashvili explained. The third company to express its interest in investing in Georgia was Tech Mahindra, an Indian multinational provider of information technology, networking technology solutions and business support services to the telecommunication industry. HCL Technologies, an Indian global IT services company said it was also ready to discuss Georgia’s investment opportunities. In Davos Georgia’s Prime Minister also met Martin Gilbert, CEO of Aberdeen Asset Management, an international investment management group who manage assets for institutions and private investors from offices around the world. Aberdeen Asset Management has already invested more than $300 million USD in the securities issued by Georgia and Georgian companies. At the meeting company representatives positively assessed Georgia’s policy in terms of level of judicial independence and the improvements made in protection of private property rights.

HCL Technologies said it was also ready to discuss investment opportunities in Georgia. Photo by PM’s press office

DAVOS INTERNATIONAL NEWS IMF managing director Christine Lagarde speaks at the ‘Ending the Experiment’ event in the Swiss mountain resort of Davos Jan 22, 2015

t was supposed to be a serious debate about the merits of monetary stimulus, but instead a panel in Davos on Thursday featuring IMF chief Christine Lagarde, quickly degenerated into a skirmish over the European economy. “There is a general expectation to compare the US economy and the euro area and I don’t think that’s a reality,” Lagarde said after an onslaught from her largely American co-panelists, including the chief executive of megabank Goldman Sachs. Hand-wringing over the fate of a wobbly Europe has become a Davos tradition, ever since debt-wracked Greece threatened to destroy the euro zone in 2010. This year was no different, especially with Greek elections set for Sunday and the European Central Bank’s decision to unleash a massive bond-buying scheme worth €60 billion (S$92 billion) despite resistence from the bloc’s most powerful member, Germany. Rather than Greece, or other usual targets France and Italy, it was Germany that stirred debate, blamed for a blind push for austerity and imposing its singular economic vision on others.

Ukraine Asks IMF for New Bailout Funds – Davos 2015

he Ukrainian government released a statement on January 22nd, confirming it has asked the IMF for more support. In it, Ukraine Minister of Finance Natalie Jaresko argues that investors should welcome it (even though Ukraine is also planning to restructure its debt). “The markets were expecting this step and should welcome it as it will provide the financial support Ukraine requires to jumpstart its economic recovery while yielding acceptable outcomes for all of our stakeholders. Today’s decision gives international financial partners and creditors’ reassurance of the Ukrainian Government’s continued commitment to its ambitious reform programme and macro-economic stability.”

If You Want to Learn More About Inflation, Come to Russia” — Arkady Dvorkovich in Davos

olatility discussion slid into the discussion on Russian economy a great deal today as other participants had many questions regarding the country’s situation given the sanctions imposed after the meddling in Ukraine and the fall in oil prices, the key commodity for Russia. Arkady Dvorkovich, a Russian public servant and economist, who was appointed as Deputy Prime Minister in Dmitry Medvedev’s Cabinet on 21 May 2012 responded to many questions that arose about the prospects of Russian economy with the current plunge in oil prices. Russia’s government will cut its budget by around 10% this year, and maybe by as much as 15%, as a result of the sharp decline in oil prices, and it will also use reserves to cover some of the expected budget shortfall, Deputy Prime Minister Arkady Dvorkovich said. “A few years ago we decided to establish a macro framework where dependence on oil price is lower than before,” Mr. Dvorkovich said. This year was an exception as “no one expected prices to go down so sharply,” he said. In the first quarter, the government decided that banking stability was a key priority, which is why some of the funds from the reserves were put into recapitalizing the banking system, he said. The government will “use some of the reserves for fiscal” matters as well, he said.

Ilham Aliyev: Eurasia session at World Economic Forum

he president spoke about the transformation that took place in Azerbaijan. “Transformation for us was the transformation of the political system, because before independence we didn’t have any, and transformation of planned economy to market economy,” he added. President Aliyev went on to add that from economic point of view, Azerbaijan’s economy now is 85 percent private sector, adding that the policy of diversification of economy is also successfully implemented. He said Azerbaijan is getting more and more independent from the pressure of oil prices. “At the same time, a lot has been done in implementing major infrastructure projects, with assistance from international financial institutions in particular EBRD and others,” President Aliyev noted. He further said Azerbaijan has already become a donor country. “We ourselves already finance several projects,” the president added. “Now, our energy resources play role in the region, and just recently we launched a new mega-project, which is called the Southern Gas Corridor, to transport gas from Azerbaijan to Europe, which will probably be one of the biggest infrastructure projects of Europe.”

ANALYTICS

8 QUOTES

A LOOK AT WAREHOUSE MARKET OF GEORGIA

“I sold shares to Rosneft because of BP”

DAVID IAKOBASHVILI Shareholder of Petrokas. Businessman David Iakobashvili says that he has

January 26, 2015 #84

caucasian business week

sold shares of Petrokas to Rosneft because one the stockholders of this Russian company is BP, which has great opportunities. David Iakobashvili attended Davos World Economic Forum from where he stated to Imedi that control package of Petrokas remains in his hands. “Establishment of the joint enterprise with Rosneft will bring investment of $200 mil to Georgia, over 1000 jobs and also increase freight turnover. I’m not a politician and I do not interfere in politics. Function of the government is to help business and create favorable conditions for it.” “If they create such conditions, we will increase capacities in Poti. Tangerines and other products are exported from Georgia to Russia and these freights need service, opportunities are great”, -- the businessmen stated in his defense.

“If we do not construct Khudonhes, we will not be technically able to import electricity, which will bring us back to Georgia of the 90’s”

ILIA ELOSHVILI Deputy Minister of Energy. Mr Eloshvili states that Environmental Impact evaluation document for Khudonhes is not ready, but the economic study has been completed. “Khudonhes is a seasonal regulation power plant, which gives opportunity to collect water in its reservoir during spring and summer, which will convert into electricity in autumn and winter. It should serve the same function as Enguri power plant. It’s essential that our consumption increas-

es, also imported product from Russia increases annually. Considering this, Enguri power plant by itself will not be enough for the country’s energy independence. That’s why it’s necessary to construct new reservoir stations. We do not have many places for it. It is Khudoni, Nenskra, Namakhvani. Construction of these stations will give opportunity to us in 5-6 years to get rid of import. This year we’ve already imported 800 mln KW/hours electricity from Russia and it’s about 7% of our total consumption. If we do not construct these power plants, we will not have technical abilities to provide import for such amount of energy in the country. I will say directly this will pose a threat for Georgia to return back to the dark 1990s”, - Eloshvili stated in the interview with TV Trialeti. According to statistic of Electronic System Commercial Operator (ESCO), last year import of electricity reached to maximum of 8 years. 76.5% of last year’s import comes on Russia. Azerbaijan comes next, from where the country purchased 184 mln KW/hours electricity.

“Deposit insurance system cannot be activated in Georgia at this stage”

EMZAR JGERENAIA Economic analyst. According to Mr Jgerenaia, the insurance system is enacted in every sound country and minimal deposits are insured from cataclysms. The expert notes that the introduction of the deposit insurance system has been discussed for a long time, but to no avail. In his opinion, it will not be car-

ried out this time either. It was reported a few days ago that the deposit insurance system would be activated in Georgia. According to Economy Minister Giorgi Kvirikashvili, the government started working on the initiative. In his words, a special working group, headed by the Minister of Finance and co-chaired by Minister of Economic Affairs, will be set up. Kvirikashvili states that the group also includes George Kadagidze, the President of the NBG, as it cannot be introduced without the involvement of the National Bank. Vice-premier claims that the World Bank (WB) will help Georgia introduce the system. The introduction of the deposit insurance system was planned in 2005. The Budget and Finance Committee of Parliament and the National Bank came out with the relevant initiative. The experts of the Germany’s Reconstruction Credit Institute KFW were involved in the work on the bill.

“Zedazeni is not afraid of competition. It’s only beneficial for Georgia to have as many new international brands as possible”

CEZAR CHOCHELI Zedazeni Founder. Mr Chocheli commented on the news of launch-

ing new German beer in Georgia. Founder of Zedazeni hails the entry of new brands into the country and talks of a healthy competition among beer producers. Recently it was reported that Georgia would launch production of a new German beer. The businessman Temur Chkonia will begin bottling of three types of beer of the beer manufacturer König Ludwig International on April 16-17. According to him, the Bavarian prince has arrived in Georgia, visited the enterprises of the company and gave the businessman permission to bottle three types of beer. In the words of Chkonia, German beer produced in Georgia will go on sale in the local market in the beginning of May.

he total volume of warehouse space in Georgia amounts to around 1.8 million square metres, of which around 1.2 million square metres is owner-occupied and the remainder is leasable. The largest share of total leasable space is located in Tbilisi - 61%, with 23% in Batumi and 10% and 6% in Poti and Rustavi, respectively. From the 627,000 square metres of leasable warehouse supply, 89% is dry storage and 11% cold storage. The total capacity of cold storage amounts to 243,700 tons. A significant proportion of total leasable warehouse floor space is classified as Class B (59%) and Class C (39%). Only 2% of total warehouse supply in Georgia can be classified as A class space. The broad categories with the highest occupied space are food and beverage, representing 42% of occupied space in listed warehouses and building materials - occupying 14% of stock. Transport companies take up to 13% of space. The warehouse market in Tbilisi is more developed than in other Georgian cities. The only A class warehouse storage in Georgia with a leasable area of 10,000 square metres is the recently developed facility by Gebrüder Weiss near Tbilisi Airport, which was fully occupied at the date of this research. The company plans to develop an additional 37,000 square metres as a second phase of development. Even though Poti has a lower share in total stock than Batumi, warehouse real estate is more developed. The Free Industrial Zone (FIZ) and Clearance Economic Zone (CEZ) in Poti provide better prospects for development of the warehouse market. It should also be noted that the average vacancy rate in Poti is lower than in Tbilisi and amounts to 15%. Of all sectors in the Georgian real estate market, the industrial market is the least developed. With the exception of the recently completed Gebrüder Weiss facility in Tbilisi, modern A-class space is non-existent and developer-led schemes have not yet started. The market is further characterized by a very high share of (local) owner-occupied stock

and a limited amount of international occupiers. After the collapse of Soviet Union state-owned industrial buildings came into possession of individuals. This event promoted the growth of the low class warehouse supply and currently, majority of this buildings are occupied by the local companies. International and local brands mainly take up A and B class warehouse space located in Tbilisi. It should be noted that low indices of exports is one of the major factor of obstacle the development of warehouse market. Given the country’s strategic position and potential as a gateway between Europe and CIS/Asia, it is anticipated that development of the warehouse market will accelerate in coming years. Increased investment in infrastructure, including the recently completed Kutaisi Airport, the Baku-TbilisiKars railway and development of Georgia’s port capacity will likely facilitate growth in the sector. Combined with Georgia’s confirmed orientation to Europe, featuring the recently signed Association Agreement and DCFTA, these public initiatives should result in strongly improved conditions for growth of the industrial real estate market. Recent government support for local producers will likely fuel demand in the regions as well, with strong potential for centrally located hubs such as Kutaisi and Khashuri. Port-related cargo transport is developing well, although the gravitation is shifting towards the northern part of the Black Sea Coast, with recent developments in Poti and the confirmed government investment in a new port in Anaklia. Governments stated policy and strategic location is giving Georgia the opportunity to become regional hub for the neighbor countries. Entrance of international large-scale distributor companies and progress of manufacturing industry will also accelerate the development of warehouse market in Tbilisi. Given Georgia’s relatively narrow economic base, the potential of the industrial real estate market will remain modest for the coming years, but with strong economic growth and public investment initiatives, the market is ready for further development.

January 26, 2015 #84

BANKING & STATISTICS

GEORGIA’S EXPORTS SHRANK BY 23% IN 2014

ast year Azerbaijan remained as main export market of Georgia, meanwhile, amount of export sharply reduced in the neighbor country. In 2014 Russia moved from the 4th to the 3rd place and replaced Ukraine. According to Geostat data, last year export to Azerbaijan was 19% of the total export and its value equaled to $544.419 mln. 24.4% of the total annual export came on Azerbaijan in 2013, it was $709.897 mln. Therefore, last year export to Azerbaijan reduced by 23%. Export also reduced to number two export market – in Armenia: from $315.414 mln in 2013 to $288.244 mln. Export has increased in Russia, which is on the

third position – fro $190.703 mln to $274.964 mln (44%). Last year top-3 export list included Azerbaijan, Armenia and Ukraine. This year Russian was on the third place, but last year it ranked 4th. As for other export market, $239,313 mln comes on Turkey ($182,863 mln in 2013), $207,583 mln - USA ($136,424 mln in 2013), $164,09 mln Bulgaria (150,754 mln in 2013), $140,213 mln – Ukraine (192,76 mln in 2013), $90,393 mln China (33,863 mln in 2013), $88,545 mln - Kazakhstan (103,603 mln in 2013) and $86,193 mln – Italy (81,489 mln in 2013). On other countries came export to $737.234 mln.

NUTS EXPORTS INCREASED BY 10% IN 2014

ast year export of nuts and hazelnuts increased by 10%. According to Geostat data, in 2014 nuts and hazelnuts of $183.3 mln were exported. According to this data, the product’s share in the export basket equaled to 6.4%.

In 2014 amount of the export of nuts and hazelnuts was $166.7 mln and 5.7% of the total export. It’s noteworthy that in 2014 demand on Georgian nuts sharply increased in Turkey because of bad harvest. Respectively, sales price of the nuts was higher.

TBC ANNOUNCED START OF 13TH SABA CONTEST

he writers, translators and editors, who want to participate in the literary contest, should submit application till February 5 (saba.com.ge). Saba award traditionally is offered in 1- nominations: The best novel, prose, poetic collection essay, criticism and documental prose, translation and 10th award – for contribution in the literary development. List of the contest books will be published on the website of electronic bookstore www.saba.com.

MOTORCARS EXPORT REDUCED BY 26% LAST YEAR

equaled to 44 962. The reason was establishment of Euro-4 standard on the car import in Azerbaijan in spring of last year. Ferroalloys import tanks second in the export basket with $286 mln. Its share in the total export equals to 10%. Copper ore and concentrates are on the third place. Export of this commodity group equaled to $248 and 9% of the total export. It’s noteworthy that only export of motorcars and spirituous drinks has been reduced in the top-10 list of the export products. It’s noteworthy that last year spirituous drinks of $95 mln were exported last year. In 2013 the data was about 100 mln.

ge. In parallel with the contest electronic versions will be published there. Jury, members of which are confidential till awarding ceremony, will start working from February 15. Award fund equals to 44 000 GEL.

LIBERTY BANK PROFITS IN 2014 MARKED 18.4 MILLION GEL

iberty Bank completed 2014 with 18.4 mln GEL profit (2013 –37,5 mln; 2012 -10 mln). Clients’ deposits (non-banking) equal to 1.4 billion GEL (2013 –1,1 billion; 2012 -687,6 mln), credit portfolio – 760 mln GEL (2013 – 620 mln; 2012 -403 mln). Overall obligations are 1.4 billion GEL. Deposit portfolio has increased by 27% (y/y),

loans – by 23% (2013 - 60%, 54%), actives – by 23$, to 1.604 billion GEL market share is 7.8% (2013 – 7,5%). Stock capital of the bank is 158 mln GEL.

EBRD INCREASED ECONOMIC GROWTH PROGNOSIS TO 4.2% FOR GEORGIA THIS YEAR

E ales of the number one export product of Georgia reduced by 26% last year. Geostat informs that despite motorcars remains a leader of the top-10 export products, amount of export has sharply reduced. In 2014 motorcars of $518 millions have been exported from Georgia, which is 186 mln less than in 2013. Besides, its share in export has reduced from 24 to 18%. Azerbaijan remains as a major market for motorcars export. 51.7% of the total export is made there. In particular, last year motorcars of $268 mln were made in Azerbaijan, which is almost 1,5 times less than in 2013. 17 553 motorcars were exported in the neighbor country in 2014. In 2013 the data

caucasian business week

uropean Bank for Reconstruction and Development (EBRD) improved economic growth prognosis for Georgia. Meanwhile, prognosis of European Bank is more pessimist, than those of World Bank and official Tbilisi. According to new report published by European Bank, in 2015 EBRD improved only prognosis for Georgia and Uzbekistan in the Eastern Europe and Caucasus region. For other countries reduced or did not change. In 2015 the bank expect that Georgian economy will increase by 4.2%. The prognosis made in September expected 4% growth. Prognosis for Uzbekistan has increased from 7.6% to 7.8%. This year World Bank expects 5% economic growth in Georgia. So does government of Georgia. EBRD expert consider that in the case of crisis escalation in Russia, in the countries economi-

cally related to it situation will worsen. In Moldova and Armenia economic growth will be zero. In the September report European Bank expected 4% growth in Moldova, 3.5% growth in Armenia. In Belorussia 1.5% drop is expected. Economic growth prognosis in Kazakhstan has been reduced from 5.1% to 1.5%. 5% drop is expected in Ukraine. Economy of Russia will reduce by 4.8%, in Turkey – by 3%. This year European Bank expects 1.5% growth in Azerbaijan. In September prognosis was 3%. EBRD experts state that justification of the prognosis depends how the affairs will develop. In particular, whether oil price reduction is accelerated. It will strengthen pressure on the Russian economy, which will cause sharp reduction of its gold reserves and new wave of Ruble devaluation. In this case so-called domino effect will be formed, which will promote crisis in the certain Post-soviet countries.

IMF FORECASTS 5% ECONOMIC GROWTH IN GEORGIA

GEORGIA’S EXPORTS TO TURKEY GROW BY 31%

17% of the foreign trade of Georgia comes on the number one trade partner. In 2014 trade turnover with Turkey equaled to $1.966 billions. During last 1 export to Turkey has increased by 31%, amount of import – by 22.5%. According to Geostat data, in 2014 products of $239.3 mln have been exported to Turkey ($182.8 mln in 2013). All directions of top-5 export products have increased. Export of nitrogenous fertilizers equaled to $51.66 mln (+20.2 mln), textile

WORLD BANK: CREATION OF DEPOSIT INSURANCE SYSTEM IN GEORGIA WILL NOT TAKE MUCH TIME

products - $36.3 mln (+15,3 mln), semi-fabricates of iron and steel - 32,29 mln, electricity -16,9 mln, meat and fish flour – 15 mln. As for import, Georgia imported products of 1.727 billion from this country. Remedies are on the first place with $71 mln. Then comes air turbines – 66.67 mln, black metal constructions = 43.3 mln, pipes and tubes – 40.2 mln, wires and cables – 37.2 mln. Despite export growth, negative trade balance with Turkey exceeds to 1.48 billion.

IMPORT OF ELECTRICITY REACHED AN 8-YEAR MAXIMUM PAST YEAR

ast year export and import of Georgia increased. Amount of the import made by Georgian Energy System in 2014 equaled to 793.34 mln KW/hours, which is maximal for 8 years. Besides, it’s 64% more than 2013 data (2013 - 484,11 mln). According to statistic of Electricity System Commercial Operator (ESCO), last year 76.5% of the import came on Russia. 607.01 mln KW/hours

electricity has been imported from this country. Azerbaijan ranks second, the country purchased 184 mln KW/hours from there. As for export, electricity export from Georgia increased by 94.67 mln, to 545 mln KW>hours. Highest amount of export – 236.49 mln KW/ hours was made in Turkey, 160.08 mln – in Russia, 140.46 mln KW/hours – in Armenia. Besides, first time this year Georgia made transit of 58.58 mln KW/hours electricity.

nternational Monetary Fund expects 5% economic growth this year. The fund wrote about in the document published on Wednesday and indicated that government of Georgia expects 6% economic growth this year, considering political stability and Free Trade Agreement signed with EU. Reminding that another international organization (World Bank) has similar prognosis about

epresentative of World Bank considers that government of Georgia can create deposits insurance system soon and it will not take several years. Representative of World Bank South Caucasus office Angel Progojina stated on Maestro TV that Agreement signed by Georgia and EU gives a clear impression what does the system should look like and respectively, its arrangement in the country will not take much time. Representative of World Bank considers that maximum 12 months will be necessary for establishment of the system model and regulatory framework. Then formation of the agency and appointment its head should start.

economy of Georgia – they also expect 5% economic growth in Georgia. European Bank for Reconstruction and Development (EBRD) has the most pessimist prognosis – 4.2% economic growth. Reminding that on Tuesday IMF published a new economic growth prognosis of the world. They consider that this year global economy will grow not y 3.8% (prognosis made in October), but by 3.5%.

As for funding system, Progojina considers that the state and banks should make primary payments in the fund. First time Minsiter of Economy George Kvirikshvili stated about establishment of the deposits insurance system to fulfill liabilities taken with EU. The minister said that commission was created, which is headed by Minister of Finance and National Bank will also be involved in the work of the commission. The government considers that the arrangement of the system will take several years. It should cause increase of deposits, as Kvirikashvili considers that it’s insufficient today. 30.2% of GDP came on banks’ deposits by October 1, 2014.

ANALYTICS

January 26, 2015 #84

caucasian business week

BUSINESS REPORT DCFTA: PROMISING GROWTH INSIGHTS FROM GRANT THORNTON’S INTERNATIONAL BUSINESS REPORT

n 2014 Georgia signed the long awaited association and trade liberalization agreements with the EU. The agreements provide an opportunity to the decrease trade deficit by increasing export capacity, as well as making Georgia more attractive for potential investors. Because of the particular importance of this subject, Grant Thornton’s International Business Survey covered the topic and tried to show expectations of the business sector connected to association agreement. The recent survey shows that 70% of respondents expect positive and very positive impact on the economy from recent trade agreement, while 26% do not expect any change. At present Georgia has unilateral trade concessions from the EU. The DCFTA will abolish tariffs for almost all products. The agreement aims to establish more predictable legal and institutional environment, making Georgia more attractive to economic partnership. The skepticism of those who do not expect improvement of economy, is explained by the fact the all the processes require time, and while the agreement provides opportunities, making most of them is a test

which country has yet to pass. When asked about the impact that business representatives expect from trade liberalization on their companies, only 6% were not able to answer, 34% said that they do not expect any change, 44% and 16% foresee positive and very positive impact, respectively. Business owners express the same confidence about readiness to compete with European counterparts. 50% reported that their supply chain management and sustainability is ready in compliance with EU regulations, 4% stated that they will be ready within one year and 18% within two years and more. At the same time 28% said that they do not know how long it will take to adopt and implement necessary standards. The lack of confidence is backed up by the fact that companies need to implement quality standards and modern practices to able to keep up with the competition, which requires significant investment of both time and money. Georgia can offer natural and quality food products and European consumers tend to focus on these product characteristics. Nevertheless, it should be noted that the European market is very competitive. Local

companies will need significant investment in marketing and product development to enter the EU market and be able to compete with longestablished players. And while predicting success today is a long shot, the investment most likely will require a few years to break even, after which managers will start seeing profits. The conflict between Russia and Ukraine has been among major events in 2014. Grant Thornton’s IBR survey covered the topic by asking the question “what impact has the conflict between Russia and Ukraine had on your business?” in Armenia, Estonia, Georgia, Latvia and Lithuania. As Russia and Ukraine together are major players in the eastern European market, the ongoing conflict has played a negative part in the region’s development. 14.6% of survey participants expect significant reduction in orders within the region. The figure is slightly better compared to Latvia and Lithuania, where expectations for reductions are 18% and 24%, respectively, but it is significantly high compared to Estonia and Armenia, where only 6% have the same expectation. At the moment, 2% from Georgia and Lithuania report that all orders have been cancelled from the re-

gion, while Estonia and Latvia report 4%. 6% of respondents in Georgia also say importing of raw materials and goods from Russia or Ukraine has become more complicated, same as in Armenia and Latvia. The distribution of percentages was interesting for an answer about doing business in Russia or Ukraine. According to the survey, 20% of respondents from Armenia and Lithuania said that they do not do business in these countries. Estonia has the largest figure – 84%, followed by Latvia 36%, while Georgia has the lowest 8.3%. The expectation for rising energy prices is low, in Georgia and Latvia about 2% think energy costs might be higher against 6% in Armenia and Lithuania. In 2014 Georgia has gained an opportunity to enter the market of 27 states with over 500 million high income consumers. To exploit such opportunity the country has yet to get rid of unpredictable and poorly implemented business decision making. In the other words, Georgia needs modernization and a focus on market development, consumer protection and product quality. Nikoloz Akhalaia

GEORGIA GAMING CONGRESS TO BE HELD IN TBILISI WHO ARE OUR GUESTS? • management of casinos, slot machine halls and poker clubs; • investors; • owners of bookmaking software, betting houses and betting shops; • organizers of sports poker tournaments; • manufacturers of gambling equipment; • owners of hotel and tourism business and real estate developers; • those who wish to open a gambling establishment; • junket tourists and players. WHAT WILL BE DISCUSSED AT THE CONGRESS? ABOUT THE CONFERENCE In 2015, Georgia will celebrate the 25th anniversary of legal gambling business. Georgia Gaming Congress will be a bright professional event of recent years in this industry. On February 20, 2015, Tbilisi will hospitably play host to leaders of the largest casinos of Georgia, CIS and Europe, hotel and tourism business, foreign investors, manufacturers of gambling equipment, bookmakers, online casino operators, officials, junket tourists and players. Are you looking for investment, business part-

ners or investment objects? Do you want to adopt the best practices of creating and managing the casino? Would you like to learn the secrets of gambling business in the country, where it is successfully developing? We are waiting for you! At Georgia Gaming Congress, you will hear speeches and presentations of the Georgian and international experts in the areas of casinos, poker, slot machines, bookmaking, online gambling, junket tourism, as well as take part in interactive discussions with professionals willing to share their knowledge and experience.

• How to find your place on the crowded gambling market of Georgia; what areas of country are promising for opening a casino? • How to make your gambling establishment successful and attractive to visitors: success stories from owners of the largest casinos in Georgia; • Georgian experience of investing and finding investors for the casino; • Regulation and taxation of gambling business in Georgia, from the nineties until today; • Junket tourists in Georgia: who are they and how to develop junket tourism;

• Position and prospects of online gambling; • Shows and entertainment programs as a tool to attract players to the casino; • Modernization of lotteries as a way to increase their popularity. DEMO AREA The demo area of Georgia Gaming Congress will familiarize you with the leading companies of Georgia, CIS and Europe, producing and supplying furniture and equipment for casinos, poker clubs and halls with machine guns, including slot machines and roulette, as well as the latest technologies in online gambling , social network and mobile gambling. Visiting the demo area will help you to make a decision on the kind of equipment or technology to buy in order to optimize your gambling business and to meet the modern trends and maximize profits. Business Tour Within Georgia Gaming Congress, there will be held a business tour to three most luxurious casinos of Tbilisi: Shangri-La, Adjara and Iveria. As a part of this unique event, you will see the underside of the gambling establishment organization and make useful business contacts by taking part in meetings with managers and owners of casinos. Moreover, if you want, you can play and try your luck!

January 26, 2015 #84

ECONOMY

caucasian business week

GEORGIA ON EU MARKET – REPORT ON GERMANY

ermany is one of the oldest members of the European Union (since 1952) and Georgia’s one of the major trade partners among EU countries. According to the 2013 report, Germany ranks 11th among Georgia’s major exports markets with a 2.5% ratio. At the same time, Germany ranks 6th among Georgia’s major imports markets with a 5.7% ratio, while Germany’s ratio in Georgia’s total imports among EU countries is 19.8%. In January to October 2014 Germany emerged as Georgia’s one of the major trade partners among the EU countries. In the reporting period Germany ranked 12th among Georgia’s exports markets with a 2.3% ratio. At the same time, the ratio of Germany Georgia’s EU exports markets marked 10.7%. Georgia’s exports to Germany in 2013 marked 73 million USD, up 89.2% compared to 2012 and up 2.5 times compared to the 2002 to 2012 averaged indicator. The table shows Georgia’s imports from Germany records a growing tendency from 2000 to 2008. The year of 2009 may be called as a crisis period, when the imports volume declined by about 39.2% compared to 2008, but the German products imports turned growing in 2010, while downturn tendency arose in 2012 again. The indicator has dropped by 17.1% since 2012. The highest imports volume from Germany for the last 14 years was recorded in 2012 (541.9 million USD). In 2013 Georgia’s exports to Germany rose by 0.9% compared to 2012 and marked 2.5% in Georgia’s total exports. The ratio of Germany in Georgia’s total exports to EU countries rose to 12% from 10.9%. In the reporting period of 2000 to 2014, the highest ratio of Germany in Georgia’s total exports hit 10.5% in 2000. In 2000 Germany’s ratio in Georgia’s total exports to EU countries marked 43.2%.

NET EXPORTS To outline a real picture of Georgia’s exports to Germany, we should observe the exports without reexports, that is net exports. In January to October 2014 compared to the same period of 2013 Georgia’s re-exports to Germany rose about 6.6 times to 8977.5 million USD, compared to 1352.7 million USD in the same period of 2013. The ratio of re-exports in Georgia’s total exports to German was insignificant in 2013 (3.4%), but the figure hit 16% in January to October 2014. Analysis of net exports and re-exports in 2013 due to the major commodity groups:

Georgia’s major exports items to Germany in 2013

According to the above table, Georgia carried out re-exports of only the following products from the top major exports items to Germany in 2013: Spares and Appliances of Tractors, Motorcars, Trucks and Special Machines – 72.9%, Wheat Milled Purely or Rudely; Powder of Dried Leguminous Vegetables 9.9% and filbert and nuts – 0.2%. It should be also noted the ratio of the mentioned products in Georgia’s total re-exports to Germany in 2013 marked only 31.3%. The remaining ratio is recorded for the products that are not recorded in the list of ten top exports items to Germany. Namely, the ratio of re-exports of electric transformers and static electric transformers exported to Germany in 2013 marked 95.7%. The re-exports ratio in total exports of pharmaceutical products marked 99.8%; the ratio of re-exports in total exports of Spares of Tractors, Motorcars, Trucks and Special Machines marked 91.2%; IMPORTS Georgia’s Major Imports Items from Germany in 2013

The above table shows, the ratio of filbert and nuts in Georgia’s total exports to Germany marked 64.9%, wastes and scrap iron of precious metals – 4.3%, Crops and other parts of plants, tinned or prepared in different way – 3.4%, Wheat Milled Purely or Rudely, Powder of Dried Leguminous Vegetables – 2.5%. The ratio of other products marked 24.8%. It is worth noting in 2013 Georgia exported filbert and nuts to about 40 countries, including the ratio of Germany marked 28.4%. The ratio of Germany in Georgia’s total exports of wastes and scrap iron of precious metals made up 30.4%, Crops and other parts of plants, tinned or prepared in different way – 76.2%, Wheat Milled Purely or Rudely, Powder of Dried Leguminous Vegetables – 55.4%, Female Clothes, Overalls, Breeches and Shorts – 37.7%, juices of fruits and vegetables – 22.3%, manganese oxides – 13.3%. The ratio of Germany in Georgia’s total filberts exports marked 28.4% in 2013, Kazakhstan - 17.6%, Italy - 11.4%, Czech Republic - 5.4%, other countries – 37%. At the same time, over 50 countries exported filbert and nuts to Germany in 2013, besides Georgia, including major competitors were the USA with 40%, Turkey - 9.7%, Spain - 9.2%, the Netherlands - 7.6%, Italy - 6.6%, Belgium - 5.2% and France - 3.5%. Georgia ranks 8th in Germany’s total exports of filbert and nuts with a 3.3% ratio. In terms of value, the ratio of peeled filbert (code 080222) is 99% in Georgia’s total exports of filbert and nuts to Germany. In terms of the mentioned product Georgia ranks third with a 19% ratio in Germany’s total exports of filbert and nuts after Turkey and Italy. Georgia’s major exports items to Germany in January to October 2014

The above table demonstrates the ratio of motorcars in Georgia’s total imports from Germany in 2013 marked 26.9%; the ratio of packed medicines marked 5.2%, trucks – 4.2%, Appliances and Devices for Medical or Veterinary Sectors - 2.9%-%, Tractors and Saddle Straps – 2.7%, spares of vehicles – 2.5%. In 2013 Georgia imported motorcars from many counties, including the ratio of Germany made up 17% and ranked first among European countries. The ratio of Germany in Georgia’s total imports of medicines in 2013 marked 8.3%, trucks – 23.8%, Appliances and Devices for Medical or Veterinary Sectors – 43.1%, Tractors and Saddle Straps – 28.9%. Georgia’s Major Imports Items from Germany in 2014

Filbert and nuts ranked first in Georgia’s total exports to Germany in January to October 2014. The item’s ratio marked 50.1% compared to 64.9% in 2013. The category of Spares and Appliances of Tractors, Motorcars, Trucks and Special Machines marked second with 4.6%; the category of juices of fruits and vegetables marked third with a 3.9% ratio. The ratio of Crops and other parts of plants, tinned or prepared in different way marked 3.7%, the ratio of Female Coats, Raincoats and Similar Goods hit 2.8%, the ratio of Wheat Milled Purely or Rudely; Powder of Dried Leguminous Vegetables equaled 2.4% and so on.

The above table shows the content of major imports group in January to October 2014 has changed compared to 2013. The ratio of the commodity contrary to 2013, the item of Tractors and Saddle Straps has been replaced by Malt. Economy and HealthCare Research Center of University of Caucasus

CURRENCY caucasian business week

January 26, 2015 #84

EXCHANGE RATE MONITORING 19.01.2015-23.01.2015

GEL Depreciates Step by Step

he first month of 2015 has recorded negative tendencies for the Georgian national currency. From January 1 to January 23 the GEL exchange rate has declined by over 5.4% and exceeded the 2.0000 point. As to the week on week indicators, from January

19 to January 23 the GEL exchange rate against USD fell by 2% to 1.9847 point from 1.9434 point. The GEL exchange rate against EUR declined by 2.3% to 2.3076 point. The rate went down by 1.9% against GBP to 3.0138 point from 2.9565 point. As to the YTD report, the GEL exchange rate against USD has shrunk by 5.4%, the

rate fell by 0.9% against EUR, a 3.1% downturn was recorded against GBP and strengthened by 8% against Russian Ruble. As to the GEL exchange rate’s past for the last 10 years, the national currency rate against USD saw the highest indicator of 1.5628 point in 2008 and the lowest rate of 1.8147 in January 2005. The GEL

exchange rate against EUR saw its ceiling of 2.1475 in January 2012 and its bottom of 2.4634 in January 2010. The GEL exchange rate against GBP saw its highest rate of 2.4491 in January 2009 and its lowest rate of 3.4156 in January 2005. As to the YTD change of the GEL exchange rate against various currencies are as follows:

VOLATILITY TO CONTINUE ITS DOMINANCE IN THE FOREX MARKET

ith the overhang of the Greek political uncertainty, last week, which preceded the much awaiting ECB monetary policy decision, was expected to remain sluggish. The European Central Bank’s (ECB) decision to increase their Quantitative Easing (QE) program or not will have an impact on the volatility and direction of the Euro (QE will most likely further weaken the Euro). However, the Swiss National Bank (SNB) surprised the financial markets by eliminating its three-year-old policy to cap the Swiss Franc (CHF) at 1.2000 against the Euro (EUR), making it one of the most dramatic weeks in Forex market. The SNB announcement triggered a sharp spike in volatility, fueling demand for perceived safe-haven currencies, namely USD and JPY. The Euro-zone common currency, Euro, took a sharp knock down against all major currencies on the back of SNB decision and the Swiss franc (CHF) strengthened as much as 41% against EUR. The move also pushed USDCHF down by 38%. The SNB decision diverted investors attention from other economic releases like inflation data from the US and UK, which dropped below market expectations, and weaker US monthly retail sales data. The US Dollar, however, benefited from safe-haven demand and was also supported by upbeat University of Michigan’s Consumer Sentiment Index. All-in-all the overall US Dollar Index (I.USDX) managed to register one more

positive weekly close, amid extreme volatile market conditions. This week’s US economic calendar features important housing market data. Economists expect the number of building permits and housing starts to hold steady above the 1 million mark, at 1.06 and 1.04 million units annualized rate respectively. Meanwhile, existing home sale data, scheduled for release on Friday, are also expected to continue reflecting positive momentum in the US housing sector with the consensus estimating the figure to reclaim the 5 million units mark and come-in at annualized rate of 5.16 million units. UK economic releases consisting of employment reports, retail sales data and minutes from Bank of England’s latest monetary policy meeting are likely to continue probing some volatile moves for GBP pairs in the week ahead. The UK labor market report, scheduled for release on Wednesday, is expected to show the number of people claiming unemployment related benefits declining by 24,200 and the unemployment rate dropping to 5.9%. Meanwhile, consumer spending, which remains supportive pillar of UK’s economic recovery, is expected to have declined in December. Consensus forecast retail sales for December, which is scheduled for release on Friday, to have declined by 0.6% on a month-on-month basis. Relatively stronger retail sales data and (or) better-than-expected employment reports is likely to increase the possibility of a sharp rebound for GBP pairs, at-least in the near-term.

However, in-line with estimated releases would still keep GBP vulnerable to further downside in the near-term. GLOBAL RELEASES Statistics published by the Chinese government show that the world’s second largest economy grew by 7.4% in 2014 compared with 7.7% in 2013. The government target of 7.5% was missed but the level was still above market predictions as low as 7.1%. The slowdown comes as China attempts to rebal-

ance its economy from an export-led market to one which must rely on domestic consumption.A global slowdown means China can no longer rely on its “Made in China” exports.Being Australia’s largest trading partner, Chinese economic releases bears a material impact on the Australian Dollar (AUD). Also, being the industrial power-house of the global economy, this week’s Chinese GDP data is likely to set the market mood for the week ahead. admiralmarkets.ge/analytics/ facebook.com/adimralmarketsgeorgia/

January 26, 2015 #84

WORLD

caucasian business week

NEIGHBORHOOD Russian Business is Braced for“much worse”

he last six months has been a torrid time for Russia’s business and companies operating there, but the worst could be yet to come. “We will see a much worse time in Russia. A lot of mistakes have been made. It will maybe be over by September,” Oleg Deripaska, president of aluminium giant Rusal and one of the bestknown business figures in Russia. Economic sanctions imposed by Western countries against Russia, following the outbreak of conflict within Ukraine, combined with the falling price of oil and gas and a tumbling ruble, have helped send the country into economic turmoil. While there is a substantial Russian presence at Davos, it is less high-profile than in previous years.

KING ABDULLAH DEAD: OIL PRICES JUMP AS DEATH OF SAUDI KING FUELS UNCERTAINTY IN MARKETS

il prices jumped today following the death of King Abdullah of Saudi Arabia at the age of 90. Brent crude futures rose to a high of $49.80 a barrel shortly after opening before easing back to $49.30 a barrel by 0650 GMT, up 78 cents. US WTI crude futures were at $47, down from a high of $47.76 earlier in the session. Abdullah’s brother Salman succeeded him as the monarch of the world’s top oil exporter – but his death catalysed further uncertainty in energy markets already facing some of the biggest shifts in decades. Salman named his half-brother Muqrin as heir in a move aimed at avoiding a potential succession crisis at a time when Saudi Arabia faces unprecedented turmoil on its borders and in oil markets. “This little spike in prices is understandable. But this is a selling opportunity in our view. It should be sold off quickly and it won’t last long at all,” Mark Keenan of French Bank Societe Generale told Reuters. After seeing strong volatility and price falls earlier in January, oil markets have moved little this week, with Brent prices range-bound between $47.78 and $50.45 a barrel. The new king is expected to continue an OPEC policy of keeping oil output steady to protect the cartel’s market share from rival producers. “When King Salman was still crown prince, he

very recently spoke on behalf of the king, and we see no change in energy policy whatsoever,” Keenan said. Analysts said almost equally as important as the royal succession to energy markets would be whether Saudi oil minister Ali Al-Naimi, in office since 1995, might step down. Abdullah’s death comes amid some of the biggest shifts in oil markets in decades. Oil prices have more than halved since peaking last June as soaring supplies clash with cooling demand. Booming US shale production has turned the United States from the world’s biggest oil importer into one of the top producers, pumping out over 9 million barrels per day. To combat soaring output and falling prices, many oil exporters, such as Venezuela, wanted the 13-member Organization of the Petroleum Exporting Countries (OPEC) to cut output in order to support prices and revenues. Yet, led by Saudi Arabia, OPEC announced last November it would keep output steady at 30 million barrels per day. Abdullah is to be buried in an unmarked grave. In the kingdom’s strict Wahhabi sect of Sunni Islam, ostentatious displays of grief are frowned upon: after previous deaths of Saudi monarchs and other top royals, there was no official period of mourning and flags hung at full mast.

China to Build 7,000 Km Moscow-Beijing Railway Estimated $242 Bln

he railway will ease travel between Beijing and Moscow and reduce travel times, Beijing’s municipal government announced. Fast Train Sapsan Makes First Trip from Moscow to St. Petersburg. © SPUTNIK/ RUSLAN KRIVOBOK Chinese Companies Ready to Invest $10.8Bln in Moscow-Kazan High-Speed Rail Project MOSCOW, January 22 (Sputnik) – China will build a high-speed railway connecting Beijing and Moscow, estimated to cost 1.5 trillion yuan ($242 billion), Beijing’s municipal government announced on Thursday. The length of the railway will total 7,000 kilometers. The railway will pass through Kazakhstan, and the journey will take two days, Bloomberg reports, citing the government’ announcement in the Weibo social network. The railway will ease travel between Beijing and Moscow and reduce travel times, the announcement notes

Ukraine Asks IMF for New Bailout Funds – Davos 2015

he Ukrainian government just released a statement, confirming it has asked the IMF for more support. In it, Ukraine Minister of Finance Natalie Jaresko argues that investors should welcome it (even though Ukraine is also planning to restructure its debt). “The markets were expecting this step and should welcome it as it will provide the financial support Ukraine requires to jumpstart its economic recovery while yielding acceptable outcomes for all of our stakeholders. Today’s decision gives international financial partners and creditors’ reassurance of the Ukrainian Government’s continued commitment to its ambitious reform programme and macro-economic stability.”

Armenia Experiencing Increase in Construction Through Foreign Loans

OIL MARKET REACTION TO SAUDI ARABIA’S KING DEATH

rude oil rose in Asia from the weakest close in almost five years on the news that Saudi Arabia’s King Abdullah has died. His successor King Salmon is 79 years and will most likely be viewed as a transitional figure. From an oil market perspective the big focus is now whether its oil minister Al-Naimi who has been in the job since 1995 will continue. A change in oil price policy at this stage seems highly unlikely not least considering the belief that the applied medicine of lower oil prices have

already begun to impact the future outlook for supply. US inventories has risen to an 80-year for this time of year and the 10.1 million barrels increase last week was the biggest in 14 years. Changing policy on the back of such data will only lead to an even bigger reduction in OPEC’s market share. One thing is supply and demand, another is geopolitics. Saudi Arabia provides 10% of the world’s oil and developments there naturally enough receives close attention from the outside world.

nternational financial organizations have provided AMD 33 billion 246.9 million for construction in Armenia through the period between January and November of 2014. According to the statistics of the National Statistical Service, the indicator has risen by 15.2 percent compared to last year. Reportedly, half of the funding provided for construction has gone to projects carried out by the Asian Development Bank, making up approximately AMD 19 billion 10 million. The World Bank has carried out projects worth AMD 5 billion 426.5 million, the European Bank for Reconstruction and Development has provided AMD 5 billion 271.9 million, while the German Development Bank has provided AMD 2 billion 130 million. During the 11 months of last year, the portion of construction done through foreign loans made up nearly 10 percent of the gross amount of construction.

WORLD NEWS Jamaica Approves Bill In First Step Towards Legalising Marijuana

he Jamaican government has approved a bill legalising the possession of small amounts of marijuana, bring joy to the country’s Rastafarian community now able smoke legally for the first time. The legislation also outlines a licensing body for the cultivation, sale and distribution of the drug for medical and therapeutic purposes. The bill, which still needs to pass through the senate tomorrow, will prohibit the smoking of marijuana in public spaces. The Cannabis Commercial and Medicinal Research Taskforce (CCMRT) director Delano Seivright called the development “long overdue”.

Facebook Enabled $227 Billion Global Economic Impact, 4.5 Million Jobs

ith over 1.3 billion users, world’s largest social networking firm Facebook has enabled global economic impact of $227 billion (roughly Rs. 14,01,725 crores) and 4.5 million jobs around the world in 2014, according to a report by consultancy firm Deloitte. The report titled Facebook’s Global Economic Impact, analyses how Facebook’s marketing, platform and connectivity effects have facilitated growth and jobs around the world. Commissioned by Facebook, the study estimates that the company, with an approximately $8 billion cost base, enabled global economic impact of $227 billion and 4.5 million jobs around the world in 2014, the social networking giant said in a statement.

IMF: The World Economy is Worse off Than We Thought

he world economy will grow by just 3.5% in 2015, and by 3.7% in 2016, according to the latest estimate from the International Monetary Fund. Both estimates are down 0.3 percentage points from the group’s previous forecast, made in October. The IMF estimates underscore the difficult set of choices facing policymakers around the world. Yet growth remains limited. Even drastically lower oil prices will have limited impact on stimulating the overall economy. “New factors supporting growth — lower oil prices, but also depreciation of euro and yen — are more than offset by persistent negative forces,” said IMF chief economist Olivier Blanchard.

Starbucks Launches Wireless Charging in UK Shops

sers will be able to charge their mobile phones wirelessly in 10 Starbucks cafes in the UK by the end of the month, the chain has announced. The free service follows a pledge in the US to follow up a similar service in San Francisco with a national roll out across 2,000 branches. Of the two competing wireless charging standards currently available, Starbucks has chosen Powermat, requiring users to plug in an adapter to their phone. The ring-shaped devices will be available to borrow or to buy for £10 each, and will be offered for new and old Apple adapters, as well as those phones using the micro USB standard. To charge efficiently, phones must be placed on specially equipped tables that Starbuck is installing in the branches across London.

PUBLICITY

caucasian business week

January 26, 2015 #84

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy

TBILISI GUIDE

caucasian business week

7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge Embassy of the Slovak Republic Address: Chancery: 85 Irakli Abashidze St. Tbilisi, 0162 Georgia Consular Office: 38 Nino Chkheidze St. Tbilisi, 0102 Georgia Phone: 2 222 4437, 2 296 1913 e-mail: emb.tbilisi@mzv.sk

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi; Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition. Contact information: Email: info@gsservices.ge. Address: Shalva Dadiani 10

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

PUBLICITY

caucasian business week

January 26, 2015 #84