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March 2, 2015 #89

March 2, 2015, Issue 89

caucasian1 Nodar Khaduri: Oil sector is the biggest contributor to the economy

BE INFORMED, DO BUSINESS

GEORGIA

REAL GROWTH OF ECONOMY WILL BE WITHIN 2%

eportedly 5% forecast of economic growth will be reduced to 2% in this year and respectively, current budget will be corrected according to this index. Pg. 9

GEORGIAN WINE INVADES ASIAN MARKET

fter successfully delighting taste buds all over Europe, Georgian wine is continuing to make an impression around the world. Next destination – Asia. Pg. 9

“TBC BANK” OFFERS A CONCESSION TO CUSTOMERS AFFECTED BY LARI’S DEPRECIATION

n this regard, “TBC Bank” released a statement which says that due to GEL fall, based on the systemic risk analysis the relevant changes were made to a new loan approval procedure as well as in terms of existing borrower requests. Pg. 11

LIBERTY: RATIO OF GELDENOMINATED CREDITS IS 91%, NO NEED TO CHANGE TERMS

iberty Bank reports, that there is no need to change or review credit terms due to GEL devaluation, as 91% of the bank’s credit portfolio is denominated in GEL. Pg. 11

THE LOWEST TARIFFS AND 24 HOUR SERVICE – MINICREDIT PLASTIC CARD

iniCredit has been providing fast and high-quality services for its clients since 2011. The company permanently cares for devoted clients and offers MiniCredit plastic cards to ensure their comfort. Pg. 10

Bidzina Ivanishvili: “NBG owns the leverage to ensure the Lari stability in the country. Considering all the objective factors today, the Lari exchange rate should not exceed 2.0 USD to 1 Lari” Pg. 6

Giorgi Kadagidze: “I want to reassure the population that there is no threat to country’s financial stability as long as I and my team are in charge of the central bank,”

Pg. 9

IVANISHVILI VS KADAGIDZE THE BILL TO EITHER CONSTRAIN OR DEVELOP MEDIA SECTOR

Pg. 5

Winners, Losers and Expected Outcomes of New AD Regulations

GEORGIA TOOK 75% OF TOTAL FOREIGN LOANS IN 2006 TO 2012

The Way UNM Used to Strengthen GEL and the Way Georgian Dream has Devaluated GEL

he EU has asked the World Trade Organization (WTO) to help settle a dispute with Russia over “excessive import duties” on refrigerators, paper products and palm oil. Pg. 13

Azim Sadikov: Georgian Economy should Be Evaluated Pg. 4

Pg. 8

Pg. 5

FAST FOOD COSTS IN TBILISI

KFC the Most Pricey Fast Food Experience in Tbilisi

Pg. 7

Analytics

Pg. 9

Kakha Okriashvili: The monetary crisis will become stable by May

WORLD NEWS EU ASKS WTO TO HELP SETTLE IMPORT DUTIES DISPUTE WITH RUSSIA

Otar Danelia: Today Georgia Offers the most Attractive Environment for Investments Ever

Pg. 8

Vato Lezhava: Privatization of state property is a correct move amid the crisis Pg. 8

MyVideo.GE to Provide Free Broadcasting of 45 Georgian Channels on Internet TV Market Pg. 12

Pg. 4

Currency

Trading with Saxo Bank:

Stadiums and sports complexes

ACTIVE ENTERTAINMENT

“THE FINANCIAL WORLD IS ABOUT TO CHANGE. ACTIVE CLIENTS HAVE FOUND A WAY TO MULTIPLY THEIR EQUITY”

STRONG US DOLLAR HURTS GOLD PRICES

2 MAIN EVENTS MARGVELASHVILI: GEORGIAUKRAINE FRIENDSHIP STRONG DESPITE SAAKASHVILI’S CONTROVERSIAL APPOINTMENT

GOVERNMENT NEWS

EUROPEAN COUNCIL PRESIDENT: “GEORGIA IS ONE OF THE FRONTRUNNERS OF THE EAP”

ny Georgian is ready to serve in Ukraine but it is Ukraine’s choice what kind of Georgian it will invite,” says the President of Georgia Giorgi Margvelashvili. It was with these words that Margvelashvili used to describe the recent situation regarding the appointment of former president Mikheil Saakashvili to the role of adviser to the Ukrainian president.

EUROPEAN COUNCIL PREFERS FACTS OVER PRAISE ABOUT GEORGIA

eorgia is one of the foregoers of the Eastern Partnership, said a top European Council official, adding that rather than a praise the remark was a mere fact. European Council President, Donald Tusk also praised the visa liberalization progress taking place in between Georgia and the EU at a meeting with Georgian Prime Minister Irakli Garibashvili in Brussels on February 26.

GEORGIA, U.S. EXPAND MARITIME COOPERATION

he U.S. and Georgian maritime experts gathered in Tbilisi for a five-day seminar about the role of a new Georgia-U.S. maritime center on February 24. The new Joint Maritime Operations Center, which was built at the Coast Guard Supsa Radar Station on the Black Sea coast, was established under the Coast Guard Department of Georgia’s Internal Ministry and equipped with joint management, control, communications and maritime surveillance systems.

GEORGIA’S JOINING NATO NOT DISCUSSED IN PRAGUE – SPECIAL REPRESENTATIVE

he issue of Georgia’s joining NATO was not discussed in Prague, Georgian Prime Minister’s special representative Zurab Abashidze said. NATO enlargement poses a threat to Russia, Russian Foreign Ministry spokesman Grigory Karasin said in Prague following a meeting with Abashidze

GEORGIA, MOLDOVA TO CREATE INTERGOVERNMENTAL ECONOMIC COMMISSION

he heads of government of Georgia and Moldova agreed on the establishment of the Georgian-Moldovan intergovernmental economic commission Feb.26 in Brussels. Irakli Garibashvili and Chiril Gaburici noted the successful cooperation between Georgia and Moldova in the customs and law enforcement fields.

BULGARIA, GEORGIA UNITED BY COMMON VALUES - PRESIDENT

eorgia’s parliamentary delegation headed by Speaker David Usupashvili is on an official visit to Bulgaria. The delegation representatives met with Bulgarian President Rosen Plevneliev. During the meeting the sides discussed bilateral relations between Sofia and Tbilisi, as well as the ways of their further intensification. The sides also discussed Georgia’s integration into European and Euro-Atlantic organizations, the situation in the separatist regions of the country, the events in Ukraine and regional security.

GEORGIA: LARGEST JAIL POPULATION DECREASE IN EUROPE

eorgia’s prison population rate has decreased more than any other country in Europe, a new report on Europe’s prison system reveals. The country cut its prison population by more than 60 percent and this decrease was the highest in the continent, according to 2013 Council of Europe (CoE) Annual Penal Statistics (SPACE) that was published earlier this month. The decrease was partially the result of amnesty and pardons.

March 2, 2015 #89

caucasian business week

eorgia is one of the frontrunners of the Eastern Partnership. This is not a compliment, but a fact,” said European Council President Donald Tusk after his meeting with Prime Minister of Georgia Irakli Garibashvili. The Georgian PM’s meeting with President Tusk in Brussels, Belguim, will be one of many for the Georgian official – while visiting the European Council Garibashvili is scheduled to attend several meetings with the new leaders of the European Union (EU). Georgia’s implementation of the EU-Georgia Association Agreement (AA), which was signed in June 2014, was the main topic discussed at today’s meeting. The President of the European Council praised the visa liberalisation progress between Georgia and the EU.

“We discussed visa liberalisation. We are making good progress on this. We are now awaiting the results and recommendations of the ongoing expert missions. And I hope that at our next meeting in Riga, we can be successful in this context,” said Tusk, in a press statement after the meeting. The Georgian PM stressed European integration was the choice of the Georgian nation and the Government’s final goal was not only successful implementation of the agreement with the EU. “Georgia has an ambition to become a success story in the region and demonstrate the transformative power of European integration. I would like to underline that the Association Agreement does not constitute the end-point of our relations with the EU but it paves the way towards the future progressive

development of EU-Georgia cooperation,” Garibashvili said. “The major focus of the Georgian Government is to demonstrate to the Georgian citizens that the European agenda delivers,” he noted. From the European Council perspective, Tusk emphasized several fields where successful reforms will be key points for Georgia’s implementation of the AA. “The time has come for Georgia to substantially advance its reform agenda in vital areas such as the rule of law and the judiciary, including the creation of an independent prosecutor’s office. Fostering a political climate of respect and cross-party dialogue is another area where I have encouraged progress,” Tusk stressed. Regional security was also at the forefront of the meeting, held at the European Commission headquarters in Brussels. Georgia’s Prime Minister assessed the situation in Ukraine as the continuation of Russian aggression towards Georgia in 2008. “The current crisis in Ukraine is a matter of great concern and heavily aggravates the security situation on the European continent. It is the continuation of Russia’s aggressive policy against its neighbours, which started with the August war of 2008 against Georgia,” Garibashvili said. In return, Tusk reconfirmed “EU supports Georgia’s territorial integrity within its internationally recognised borders”. “We continue to closely follow the implications of the treaty that was recently signed between the Abkhazian de facto authorities and the Russian Federation. This agreement violates Georgia’s sovereignty and territorial integrity. It also contradicts the principles of international law and Russia’s international commitments,” stated Tusk. The Press Office of the Georgia’s Prime Minister released a statement noting Tusk will probably visit Georgia before the upcoming Eastern Partnership Summit in Riga in May 2015.

EU SUPPORTS GEORGIA BEFORE EASTERN PARTNERSHIP SUMMIT

eorgia is a country of European culture and values”, said European Parliament President Martin Schulz during a meeting with Georgian Prime Minister Irakli Garibashvili today. The meeting was held within the official visit of Garibashvili to Brussels, where he is scheduled to meet a number of high EU officials including European Commission President Jean-Claude Juncker, European Council President Donald Tusk and High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini. Schulz also noted Georgia was the leader of the Eastern Partnership countries and said this would be “very specifically demonstrated” at the Eastern Partnership Summit to be held in Riga in May 2015.

Georgia’s European future was heavily discussed at today’s meeting. The sides spoke about Georgia’s implementation of reforms defined in the agenda of the Association Agreement (AA), which was signed between Georgia and the European Union (EU) last year. Garibashvili mentioned the importance of a visafree regime with the EU and noted his country’s successful implementation of the reforms provided by the Visa Liberalisation Action Plan (VLAP). He also emphasised Georgia’s aspiration to be a success story at the Riga Summit. The Georgian official said his country had taken “exceptional” steps to strengthen democratic institutions, the rule of law and the region’s energy security. Meanwhile, Russia’s actions in the occupied territories of Georgia were also discussed and both sides agreed this

was a step towards annexation of Georgian land. “The EU expresses its readiness to provide maximum support to Georgia in terms of the security challenges,” Schulz told Garibashvili. On another note, in Brussels Garibashvili also sat down with chairman of the European Parliament Committee on Foreign Affairs Affairs, Elmar Brok, and invited him to Georgia. The Georgian PM believed this visit would be “an excellent opportunity” to demonstrate Georgia’s successful democratic development and exemplary relations with the EU. In this respect, both sides highlighted the political importance of the ratification of the AA by European Parliament. PM Garibashvili assessed this as another historic step and the EU’s demonstration of unwavering support for Georgia’s European aspirations.

GEORGIA AIMS TO ‘FULFILL ALL BENCHMARKS’ OF EU VISA-FREE PLAN BY EAP RIGA SUMMIT

eorgia is committed to fulfill all the requirements under the visa liberalisation action plan with the EU and expects the European Commission to recommend visa waiver by the time of Eastern Partnership (EaP) summit in Riga in late May, PM Irakli Garibashvili said in Brussels on February 26. “Process of Georgia’s European and Euro-Atlantic integration is irreversible,” he said after meeting President of the European Council Donald Tusk. “It is the primary objective of my government to demonstrate to our citizens that the European agenda deliverers; so we are committed to the continued effective implementation of the Association Agreement,” the Georgian PM said. “We are looking forward to the upcoming Riga summit. We are ready to demonstrate substantial progress in the implementation of our European integration agenda and in this context we are committed to fulfill all the benchmarks of the visa liberalisa-

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The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Shrosha Street 8/10 Director: Levan Beglarishvili Mobile phone: 591 013936; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com WWW.CBW.GE

tion action plan and [we] expect that the [European] Commission will positively assess the accomplishments of our government and will issue a recommendation on visa waiver for short-term travel by citizens of Georgia,” PM Garibashvili said. If Georgia’s progress is assessed positively and the European Commission recommends the lifting of visa requirements, it must then be approved by the European Parliament and the EU-member states before it comes into force. Georgia and the EU launched the visa liberalisation talks in June, 2012 and Visa Liberalisation Action Plan was presented to Georgia in late February, 2013. The action plan represents a set of detailed requirements that a country should meet in order to be granted short-term visa-free regime in the Schengen area. On October 29, 2014 the European Commission announced that Georgia met first-phase requirements of its VLAP, paving the way for the launch of the second phase.

The plan addresses broad range of areas related to document security, border management, migration, mobility and asylum, as well as other issues such as the fight against corruption and organized crime, protection of human rights, minorities, and antidiscrimination. The first phase benchmarks included the overall policy and legal framework, involving adoption of relevant legislation, and the second phase benchmarks involve putting into practice effective and sustainable implementation of these relevant measures and legislation. EU experts are assessing Georgia’s progress in meeting its second-phase benchmarks. “We are now awaiting the results and recommendations of the ongoing expert missions,” the European Council President, Donald Tusk, said after the meeting with the Georgian PM on February 26. “We are making good progress on this and I hope that at our next meeting in Riga, we can be successful in this context,” Tusk added.

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

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March 2, 2015 #89

ECONOMIX

GEORGIA TOOK 75% OF TOTAL FOREIGN LOANS IN 2006 TO 2012 The Way UNM Used to Strengthen GEL and the Way Georgian Dream has Devaluated GEL

he GEL exchange rate – the expression last period Georgian citizens are most frequently mentioning despite their professions. Amid the high coefficient of the Georgian economy dollarization the GEL exchange rate against USD has fallen by over 20%. These changes have taken place in only several days. Therefore, such a public interest and the relevance of the issue are quite natural. The reasons behind the GEL exchange rate devaluation and forecasts are the most discussable issues today. Both issues, though, include many unclear aspects. Many reasons are named behind the GEL exchange rate depreciation against USD and these suggestions often contradict each other. Therefore, it is difficult to find a clear answer to the question: what is the reason behind the GEL rate devaluation. Forecasts are also very unclear. New statistics is required to forecast the rate. The newest statistics of the payments balance, that analyzes fundamental factors for the GEL exchange rate changes, only reflects the picture of the third quarter of 2014. I will make focus on the correlation between the payments balance and the GEL rate. We should analyze fundamental factors that determine the GEL exchange rate and see the affect of macroeconomic parameters on the GEL rate in the 2000 to 2014 period. Unfortunately, the national currency stability still depends on foreign credits and grants, because the state economy cannot draw a sufficient volume of foreign currency that would stabilize the national currency. To prove this consideration, we can submit current tendencies of the payments balance, as well as capital and financial reports for the 2000 to 2014 period. ECONOMY THAT FAILS TO DRAW USD Amid the GEL rate devaluation many citizens are pointing to the government’s mistakes and stressing the previous regime could maintain the GEL rate against USD more stable. The payments balance, though, that reflects economic operations between Georgia and the remaining world, that is, money currency inflows and outflows, clearly demonstrates that for the last 15 years the Georgian economic structure has not become able to draw foreign currency in terms of growth in exports and other sources. Georgia’s trade balance remains extremely negative. Therefore, foreign currency inflows from investments, remittances and other sources only neutralizes and cancels currency outflows, that is, the currency inflows are equal to currency outflows. Current account and capital and financial reports demonstrate the volume of the currency the economy draws by credits and grants. The Georgian economy tragedy is the reality that the currency

caucasian business week

TOP STORY

GEORGIA INCREASES AZERBAIJANI GAS IMPORT

volume without credits and grants has slightly exceeded 100 million USD for the last 15 years. Currency inflows have exceeded the outflows in only eight reports for the last 15 years. It is interesting how the GEL exchange rate has been developed in these conditions. The 15-year trend of the GEL rate’s correlation against USD shows when the Georgian economy could not draw foreign currency and the current account was extremely deficient, the GEL rate used to strengthen against USD. This tendency generates question – how the government used to strengthen the GEL rate and maintain its stability without drawing foreign currency? The answer to this question is found in the statistics of foreign debts. GEL STRENGTHENED BY FOREIGN DEBTS The statistics for foreign debts shows for the last 15 years Georgia’ foreign debts have increased 6 times (in both private and state sectors) and exceeded 13 billion USD as of September 30, 2014. In the same period, the state debts of the governmental sector rose 3.5 times. At the same time, it is also interesting a growth of debts due to years. The highest rate of growth in Georgia’s total foreign debts was registered in 2006 to 2012. This signifies the Georgian economy used to draw foreign currency by not its own development level, but in the form of foreign debts to ensure the GEL exchange rate stability and growth in foreign currency reserves. Today many interested sides stress, especially, opposition politicians, they have ensured growth in currency reserves and the GEL stability. They, however, rarely talk bout the cost they have paid in this goal. Foreign currency reserves and the GEL stability were based on not economic development, but foreign credits inflows. Georgia took 75% of its total loans in 2006 to 2012. This signifies the country has taken 75% of the loans in a

half period of the last 15 years. These foreign credits have ensured a formation of currency reserves and promoted the GEL stability, but in 2013 Georgia started paying off foreign debts in huge volumes and according to the Diagram 4 the growth in foreign debts halted, in practice. Consequently, amid deficient payments balance, the country lost foreign credits as an important source for foreign currency. As a result, the government cannot grow currency reserves and support the GEL exchange rate. This is one part of the issue. Besides, foreign currency outflows, the dynamics of growth in volume of the national currency are also very important. The GEL volume trend is growing, but its growth pace is lower compared to the rate of inflows of foreign credits. Total foreign debts in 2006 to 2012 rose about 6 times. In the same period currency reserves increased 3.4 times and the M2 aggregate grew 3.7 times. Such dynamics of masses of foreign and national currencies used to precondition a growth in currency reserves and the national currency stability. But today foreign currency growth has zeroed. Amid the growth in money mass, the National Bank of Georgia (NBG) abstained from spending currency reserves and the GEL rate has depreciated. Thus, we can name plenty of reasons behind the GEL rate devaluation and lay a responsibility on the government, but the reality is the GEL stability was based on foreign debts and when the country launched payment of debts in huge volumes, the foreign debts growth rate was minimized and the GEL remained without stabilizing sources. Today there are two ways for the problem resolution: 1) a support of the GEL rate through foreign credits that was practiced for many years and 2) achievement of the national currency stability through economic growth that was impossible in previous years.

eorgia imported 56,780 metric tons of natural gas in oil equivalent worth $35.68 million from Azerbaijan in January 2015, the Georgian National Statistics Service’s report said Feb.26. Georgia has imported natural gas worth $50.9 million since early 2015, according to the report. The rest gas supplies accounted for Russia and other sources. Georgia has increased its import of gas from Azerbaijan by 2.3 times this year. The South Caucasian neighbor imported from Azerbaijan an estimated 56,780 metric tons of natural gas in oil equivalent worth $35.68 million in January 2015, the Georgian National Statistics Service’s reported. Georgia has imported natural gas worth $50.9 million since early 2015, the report said. Georgia also imported gas from Russia and other countries. Back in 2014, for the same period, Georgia imported 24,470 metric tons of gas in oil equivalent in the amount of $43.17 million. The specific weight of gas in Georgia’s total import volume from Azerbaijan amounted to 70.6 percent in the reporting period. Georgia imported products worth $50.6 million from Azerbaijan in January 2015. Azerbaijan exports its own gas to Georgia via a pipeline connecting two countries in the Gazakh region of Azerbaijan. The capacity of gas pumping through this pipeline exceeds 2.5 billion cubic meters per year. In general, import volumes from Azerbaijan to Georgia decreased by 1.4 percent during the year, according to the report. Georgia imported Azerbaijani goods worth $51.3 million during the same period of 2014. Georgia imported $637.59 million worth of products from Azerbaijan in 2014. The volume of Azerbaijan’s export to Georgia decreased by 2.4 percent over the past year. Azerbaijan ranks third among the countries from which Georgia imports products. The share of Azerbaijani export in the total volume of goods imported to Georgia stands at7.4 percent. Georgia mainly imports gas, petroleum products and electricity from Azerbaijan.

INTERVIEW

caucasian business week

HEADLINES GEORGIA RULES OUT ECONOMIC CRISIS

eorgia is not facing an economic crisis amid the deteriorated global economic atmosphere, said a Georgian minister. “We are dealing with a currency crisis, not an economic crisis,” Nodar Khaduri, Finance Minister said on the background of a fall in the national currency’s on February 25.

AZERBAIJANI TOURISTS HEAD TO GEORGIA

AZIM SADIKOV: GEORGIAN ECONOMY SHOULD BE EVALUATED

zerbaijanis prefer visiting neighbor countries, as it’s faster, safer and cost-efficient. Turkey and Georgia are the favorite destination of the population. Number of Azerbaijani tourists who visited Georgia in 2014 has increased by 19 percent compared to 2013, the Georgian National Tourism Administration reported. According to the agency, more than 1,282 million of tourists from 9.5 million Azerbaijan rested in Georgia in 2014. This is no wonder, as authentic Georgia is the best low cost destination and Azerbaijan has a lot to learn in this matter.

BAKU-TBILISI PARTNERSHIP GUARANTEES STABLE DEVELOPMENT FOR S.CAUCASUS

etter a neighbor nearby than a brother far away. This saying is fully compatible with the relations between close neighbors and partners - Azerbaijan and Georgia. Azerbaijan and Georgia, which enjoy strong historical ties and strategic partnership, have brought the cooperation in various fields to a higher level in recent years. The two countries are united by expansion of international relations, establishment of relative political stability in the Caucasus and ensuring Transcaucasia and Trans-Caspian security.

GEORGIA INTERESTED IN HOTEL CONSTRUCTION INVESTMENTS

eorgia is interested in drawing investments in the construction of new middle-class hotels in the country, the PR Department of the Georgian National Tourism Administration told Trend Feb. 25. “The investments in tourism are one of the goals of the Georgian Tourism Administration,” the administration said. “We welcome such initiatives of the private sector. The investments are required to optimize the hotel fund, tourism infrastructure, construction of new facilities. Currently, the hotels are full of customers in Georgia. So, the investments are required to create the opportunities for middle class tourists.”

he Georgian economy should be comprehensively evaluated in light of the recent economic hardship and the external factors that are affecting the economy should be adequately reviewed, says International Monetary Fund (IMF) Resident Representative in Georgia Azim Sadikov. Furthermore, the causes and implications of the “unavoidable” depreciation of the national currency should also be investigated, and once the situation was comprehensively reviewed, action should be taken accordingly, he said. The IMF representative voiced his opinion about how to restore order and stability in the Georgian economy, following recent regular meetings with Georgian authorities where parties discussed the current economic situation in Georgia and the “unavoidable” depreciation of the Lari (GEL). “We have been discussing this issue together with Georgian Government representatives. Our mission started its activities yesterday. After the correct diagnosis we will continue cooperating with

The situation on the Georgian cable and internet TV market gets strained. Silknet, one of the leaders of the market, has increased service tariffs. The company says they have got such rights and the market realities enable to take such a decision. The market also allows MagtiSat to violate the consumer rights. According to the Kviris Palitra newspaper, MagtiSat has got problems with residents of the village of Kodistskaro. The village residents assert MagtiSat has restricted an access to channels and the promised internet has not appeared yet. In this situation ITDC, an owner of MyVideo.Ge internet portal, has proposed an interesting project by offering a new service package on the ground of cable and internet television. MyVideo TV Box is a new portable television that is installed by a special router. SOPHO ELIZBARASHVILI, a MyVideo.Ge PR and Social Media manager, makes detailed comments on this innovation.

trengthening the partnership between Georgia and Romania across a variety of areas is something the Prime Ministers of both countries today pledged to honour. Georgia’s Prime Minister Irakli Garibashvili and his Romanian counterpart Victor Ponta discussed various investment projects that would strengthen the economic ties between the two countries. In addition, a bilateral agreement was signed regarding cooperation in cultural, sporting and media issues.

onsultations between the Georgian Government and the business society are continuing as the authorities take action to curb possible negative effects of the depreciating value of the Lari against the US dollar.

GEORGIAN BLUEBERRIES TO APPEAR IN EUROPEAN MARKET

eorgian blueberries soon be eaten by people all over Europe. A multi-million dollar blueberry plantation and processing plant will soon be established in Georgia in a bid to counter Europe’s high demand of blueberries. And the increase in exports will offer a much-needed boost to the country’s economy, said Agriculture Minister Otar Danelia.

fect through the region.” The IMF representative said the fortunes of many of Georgia’s key trading partners, such as Armenia, were closely tied to Russia. He said the sharp decline in oil prices since last summer had intensified the crisis in Russia and was also weighing down on other oil-dependent economies of the region such as Azerbaijan and Kazakhstan. These developments led to shortfalls in external inflows in Georgia, with exports and remittances dropping by 20-25 percent year-on-year in November and December. “The shortfalls in foreign exchange earnings led to pressures on the Lari. Because the external shocks are large and generally seen as persistent, depreciation of the Lari was unavoidable,” he said. “It was justified as well because resisting depreciation under the current sustained external pressures would have been counterproductive. It might have worked only for a time being and would have cost Georgia its hard-earned foreign reserves. So, it was appropriate—and we are pleased—that the authorities allowed the Lari to float in line with the market realities,” Sadikov said. He believed there were ways other than intervention to limit the depreciation of the national currency. “Pressure on the GEL could be reduced by sharply tightening monetary and fiscal policies. However, this can have serious ramifications for the real economy as tighter policies will likely cause severe slowdown or even a recession,” he added. The Government of Georgia’s economic team is debating ways to bolster the country’s economy. Currently officials are exploring the idea of the World Bank, the Asian Development Bank and the European Bank for Reconstruction and Development as possible donor financial institutions who could offer loans for investing in Georgia’s infrastructural projects.

MYVIDEO.GE TO PROVIDE FREE BROADCASTING OF 45 GEORGIAN CHANNELS ON INTERNET TV MARKET

GEORGIA’S EXTERNAL MERCHANDISE TRADE DROPS 9%

GOV’T REVEALS LEGISLATIVE INITIATIVES TO BOOST GEORGIA’S OIL INDUSTRY

the Government and the National Bank of Georgia to think about appropriate reciprocate activities,” Sadikov told Rustavi 2 television channel. “The Government runs an adequate policy for [ensuring] a floating exchange rate in Georgia, which is right. At the same time the Government should take into account the slowdown of neighbouring countries’ economies,” he added. Sadikov explained the depreciation of the Lari, Georgia’s national currency, was a result of the global and regional environment, in which the Georgian economy had been operating. “The Lari has been affected by two large external shocks: the sharp fall in oil prices and the crisis in Russia and its impact on the region,” Sadikov said. Meanwhile in an interview with The Financial newspaper, Sadikov said as a fuel importer, Georgia was “benefiting directly” from lower oil prices, as this reduced the country’s import bill. However these gains were “more than offset by losses from the deepening recession and sharp currency depreciation in Russia and its ripple ef-

March 2, 2015 #89

-What services will your new project MyVideo TV Box offer to the customers. How many channels will you broadcast and will you offer reverse and pause functions like your competitors? - First of all, I would like to note MyVideo TV Box is not an IPTV television, but an OTT technology. At the same time, it is very important MyVideo TV Box is a 100% Georgian product. As to services and functions, if our clients buy a special router they will be able to have a free access to 45 Georgian channels with reverse and pause functions (with a 30-day archive on average), as well as over 1 million video clips and a plenty of movies from MyVideo.GE movie theater. Those wishing foreign channels in addition will receive Ultra package with 100+ Georgian and foreign channels and reverse and pause functions. - What is the main difference between IPTV

television and OTT technology? - Both, OTT (Over the Top Technology) and IPTV (Internet Protocol Television) are instruments for growth in media distribution. Both technologies provide broadcasting of TV services by the internet, instead of traditional satellite, landline or cable signals. There are a lot of differences between these two technologies, but the main one is internet providers basically use IPTV technology within their own intranet infrastructure, while OTT covers the whole public Internet despite service providers. -To explain clearer what should customers do to receive this services and will this television broadcast for subscribers of all internet providers? - The customers must have at least 3 megabyte/ second internet connection to receive MyVideo TV Box channels. The channel may be installed at any TV set via both HDMI and Audio/Video cables. Moreover, TV Box is portable and it may be installed everywhere with both cable and WiFi internet connections. -What will be the price of TV Box packages. What will be the price of primary router. You know one of the influential companies have increased service tariffs. Do you think your company will offer more affordable prices to customers? -The price of the router is 135 GEL and customers will be able to buy the product by installment payment schemes too. Customers are able to return the router for a period of a week in case of discontent and we will fully remunerate the sum on the customer’s bank account. We also provide a year guarantee that calls for substituting the device in case of manufacturing disorders. The router will broadcast free 45 Georgian chan-

nels with reverse and pause functions, over one million video clips and a plenty of movies from MyVideo.Ge movie theater. At the same time, the price of the Ultra package is 15 Gel a month. Moreover, we also offer the package of Georgian TV from Abroad that is attainable from any point of the world, where MyVideo.Ge is accessible. A monthly price of the service is 20 GEL and the package includes 45 Georgian channels with pause and reverse functions and 30-day archive on average. -What would you say about the service quality. Does your service quality fit the price? -The quality of TV Box appliance meets the world’s standards and we provide HD broadcasting. -We know AmazonTV offers the same service. What is the difference of your product from the foreign analogy? -First of all both the brand of the product’s content is Georgian. Moreover, we provide free of charge broadcasting of video content and movies all over Georgia. -I know the modem may be relocated so as the customer receive any channel at any desirable place. Does this opportunity work in only Georgia or in foreign countries too? -TV Box may be used at any point in the world, where MyVideo.Ge is accessible. We offer the package of Georgian TV from Abroad to the Georgian customers abroad. -Finally, do you plan to expand the channel in the future? - We have been continuously working on adding new channels, from the inception till the present day. The package of Ultra has already added about 20 foreign channels. We also prioritize sports channels to meet the demands of our clients.

March 2, 2015 #89

REGULATIONS

caucasian business week

THE BILL TO EITHER CONSTRAIN OR DEVELOP MEDIA SECTOR

Winners, Losers and Expected Outcomes of New AD Regulations

he Georgian Parliament has approved a bill of amendments to the law on broadcasting by the second hearing with 63 votes against 30 votes. The amendments set new regulations for placing TV commercials. Under the new regulations, TV broadcasters will be able to place only 12-minute (20% an hour) commercials an hour. This signifies PrimeTime TV program with the most number of commercials will have to shrink the placement duration. Under the current regulations, broadcasters are able to use 20% of a daily broadcasting time for placing commercials or TV shoppings and distribute this time due to their priorities. The initial variant of the bill called for maintaining this regulation along with introduction of hourly limitations. As reported, the bill was developed by the parliament’s branch economic committee by the initiative of the Georgian National Communications Commission (GNCC). TV broadcasters had expressed much discontent concerning the initial variant of the bill. During the parliamentary discussions MP Zurab Tkemaladze form the Georgian Dream coalition, a head of the branch economic committee, noted the committee had taken into account a major part of the remarks of broadcasters, including the demand for abolishing a 20% restriction due to the broadcasting duration. The committee has also removed the article banning indication of sponsors in announcements of television programs. The bill introduces a 4-minute limit for similar indications. Moreover, the bill maintains the article for two years that lets broadcasters to make inserts with commercials and TV shopping every 15 minutes in news programs. Starting January 15, 2017 this limit will be extended to 30 minutes, Tkemaladze said. The committee has ignored only one remark of Rustavi 2 TV company that has expressed the most discontent over the bill. Namely, Rustavi 2 demanded for postponing the introduction of the 12-minute limit for 2016. This norm, however, will come in force on April 1, 2015, Tkemaladze said. The new regulations are introduced in line with European instructions to protect the consumer interests, Tkemaladze added. What results will the bill bring? Will it constrain the rights of TV companies or, on the contrary,

will it ensure redistribution of commercials in the whole media sector? Was it correct to adopt the bill so quickly and who will make use of this bill? The Banks&Finances has posed these questions to representatives of media and nongovernmental sectors. According to the Head of Sales Department at Rustavi-2 KOTE BATMANIDI, any restriction of advertising will automatically lead to a reduction in income. “It is still difficult to say what document will eventually be adopted, as changes may be introduced into the current draft. First of all, I would like to draw attention not to the law but standards. In Europe, advertising law meets the standards that exist there, and we plan to pass the law excluding standards. Well, for example, in Europe and the USA advertising time is sold not by minutes but rating, accordingly, the standard TV commercial lasts there about half a minute. Virtually all advertisers place 30 – second promotional videos, while in our country there is a complete confusion in this regard.”- Kote Batmanidi notes. General director of Radio Commersant GOGA SAMUSHIA said,from a marketplace redistribution standpoint,law is definitely acceptable “-it will help better distribute advertising funds in branches of media like the radio, the Internet and printed issues. The law will help develop these fields, enabling them to offer more creative, technological or innovative advertising spaces or means to the market. This is a resource that the aforementioned media types possess, with special emphasis on the perspectives of the Internet and radio, which still have a large amount of untapped potential.” The more the finances are redistributed, the more the rivalry between media agencies will increase, allowing competition to usher in better quality and a higher level of trust from the media. As to what this may mean for Commersant – we are getting ready for said changes, to offer new projects and forms of advertising to contractors, seeing as we take the recent tendencies from marketing planning companies – which are gaining a vastly segmented nature from the general quantity - into account. And this in turn is quite important for a segmented business media agency like ours.

MAMUKA GLONTI head of Maestro Radio said:-“I will definatly assess project positivly.this is a very important step for the development of media,without mentioning the users and viewers who won’t have half-hour advertisement clips to watch anymore. Money will certainly not be lost it will be distributed to smaller companies.And I think soon we will witness the time when ads get into the newspapers,so project is accaptable.Maybe this project will reduce income for monopolistic companies but at the same time I think it will bring good results to the media as a whole. IRAKLI ABSANDZE, an editor for the Liberal magazine: “I believe we should welcome the adoption of this bill and it will bring quite positive results. Today national channels control the whole space of AD market and other information sources, radio stations, journals, newspapers, in practice, are marginalized. Therefore this bill should be enforced as soon as possible. Moreover, customers do not care for target audiences, they do not care which media outlet to select for AD placements, because it is the cheapest and the simplest way to bring all orders to major TV channels. But this is not normal. ADs must be differentiated due to groups of interest and all media outlets must have their own portions in these Ads”.

TAMAR RUKHADZE, an executive director for the Georgian Charter of Journalistic Ethics: “I consider these amendments very important for both media and customers and the ADs market in itself. I believe these changes, finally, will drive a better distribution of AD orders to various media outlets. The bill will promote the media outlets that have got a small volume of AD orders or lack of AD orders. I mean print media and online media. I also believe revenues will be better redistributed between TV channels. Indeed, these amendments are not simple. At the beginning this bill will bring some inconveniences, but I am sure these regulations, finally, will bring healthier and better AD market”. MAMUKA ANDGHULADZE, an analyst for Transparency International – Georgia: “The position of broadcasters demonstrate regional media agrees and welcomes this bill, but national channels and a major part of Tbilisi-based companies disagrees with these amendments, even more so an enactment of the bill so quickly. In general, it is necessary to adopt the bill. The EU associated membership agreement also calls for making these amendments, but the bill may be enforced for a period of three years and this issue should be discussed. It is difficult to forecast expected outcomes on the ground of this bill. The conduct of market players and their adaptation to the new regulations are very important”.

TRAVEL TIPS: EAST MEETS WEST IN TBILISI, PLUS DEALS OF THE WEEK Take me there: Tbilisi, Georgia WHY GO? Neither Asian nor fully European, Georgia mixes an intoxicating cocktail of eastern and western influences, spiked with a generous shot of Soviet-style strangeness. The enigmatic capital is in the throes of a renaissance. Ambitious new landmarks, such as the Bridge of Peace and the aerial tramway, are transforming the cityscape, while a crop of boutique hotels, bars and cafés are injecting new life into the ramshackle old town. On the outskirts of the city, beyond the brooding Soviet-era apartment blocks, the Caucasus mountains beckon. WHAT TO DO Take the new cable car up to the 17th-century Narikala citadel for a bird’s-eye view of the city and a close-up of the iconic Mother Georgia statue – cup of wine in one hand, sword in the other. Explore the twisting lanes of the old town with its ornate balconied houses, domed bathhouses and Byzantine churches. Take a trip to the Caucasus mountains: tour operator Wild Frontiers offers a mix of tailormade and group tours (wildfrontierstravel.com). WHERE TO STAY No 12 Boutique Hotel has nine bright rooms set around a courtyard in the old town (from £65, no12hotel.com). Rooms Hotel makes a bold design statement with a colourful conversion of a former publishing house in the arty Vera neighbourhood (from £100, designhotels.com). WHERE TO EAT Georgians are famed for their food and hospitality: feast on local specialities such as khachapuri (stuffed flatbreads), shashlik (kebabs), and badrijani nigvzit (aubergines with walnut paste), while gazing down on the Mtkvari river from the terrace of In The Shadow of Metekhi (+995 32 230 30 30). INSIDER TIP “The best place to hang out and listen to live music is Akhvlediani Street – in particular Buffalo Bill (info-tbilisi.com/buffalobill),” says Khatuna Gabitashvili of Visit Georgia (visitgeorgia.ge). “The Sky Bar has great views over Tbilisi (22 Metekhi Street)”.

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IVANISHVILI VS KADAGIDZE IVANISHVILI URGES NBG TO “TAKE ADEQUATE STEPS” TO STABILIZE LARI GIORGI KVIRIKASHVILI Minister of Economy and Sustainable Development ast week , the National Bank could contribute to more rapid devaluation of the depreciation of the emotional component counterbalance. By the interventions by the National Bank in the amount and timing it was possible to avoid large amplitude fluctuations of gel.

ZURAB TKEMALADZE The Member of Parliament did not change position about depreciation lari. I already talked that the National Bank should have shown their position in right time. His reaction was delayed. I can make a lot of examples. Stir contributes to the fluctuations. But the course does not come to a stable benchmark and the reason for this was the delayed reaction of the National Bank. Working with the government and the central bank was active and this was very good, but then NBG dissociated. As the Prime Minister said the central national bank’s foreign exchange reserves were not sufficient used to fill the currency gap.

GIGA BOKERIA UNM vanishvili and his team are demolishing the economy and state institutions. What is happening now is a result of this policy. Now he and his government were instead working on anti-crisis plan, they have only one plan - to shift the blame on somebody. Two weeks ago they were told us that everything is in order, now they are shifting the blame on somebody. Blaming will not help. We need lower taxes, deregulation and the reduction of bureaucracy, to increase incomes, create jobs and to stabilize the gel.

NINO BURJANADZE Democratic Movement-United Georgia hen alarming symptoms appeared intervention was possible, it has not been done. Do not blame only on the government to run the exchange rate, but when alarming symptoms appeared intervention was possible, it has not been done. In June 2013, I made a statement about the fact that if it economic situation in the country continued I expect the budget sequester and inflation and this is very serious problems. I pointed to the government what should be done in order for this not to happen.

eorgia’s former Prime Minister Bidzina Ivanishvili is blaming the National Bank of Georgia for the current national currency crisis. He claimed the currency crisis in Georgia was created because of (NBG) president Giorgi Kadagidze’s “inaction” and “wrong actions”. In his special statement released today, Ivanishvili said: “It was in NBG’s competence to manage the situation correctly. However we saw the contrary – the president of NBG, [who was] appointed by [former ruling party] United National Movement brought the national currency up to the crisis.” While Georgia’s former Prime Minister lay most of the blame on Kadagidze, he acknowledged the Lari depreciation against the US dollar was also influenced by foreign factors. He mentioned almost all global currencies, including the Euro, had depreciated against the US dollar. Another reason for the depreciation of the national currency was a result of the “complicated economic-political situation in the region”. “As foreign factors affected the Lari fluctuation, the Government alleviated the negative impacts of foreign factors by implementing the fiscal policy and reduced the budget deficit by 300 million GEL in 2014. As we saw, at the

end of last year and in January of 2015 the Lari exchange rate has become stable,” Ivanishvili said. In his statement Ivanishvili said NBG could relinquish more of its reserves in order to save the national currency – as Armenia and Moldova had. He noted Armenia had allocated 34 percent of its reserves and Moldova had allocated 30 percent of its reserves to save their national currencies. In

comparison, NBG had relinquished only five percent, which amounted to $120 million USD. Ivanishvili believed this exact action by Armenian and Moldovan banks had caused their national currencies to stabilize. NBG’s lack of action in this front had allowed the Lari to continue to fluctuate. “According to the country’s Constitution the monetary policy is determined

by NBG and it is responsible for stabilizing the exchange rate,” Ivanishvili said. “NBG owns the leverage to ensure the Lari stability in the country. Considering all the objective factors today, the Lari exchange rate should not exceed 2.0 USD to 1 Lari,” he said. “I call on the NBG president to fulfil his Constitutional duty and take adequate steps,” Ivanishvili concluded.

GIORGI KADAGIDZE CALLS ON THE GOVERNMENT TO CEASE ATTACKING THE NATIONAL BANK

resident of the National Bank of Georgia, Giorgi Kadagidze dismissed exPM Bidzina Ivanishvili’s criticism of the central bank as “deliberate slanderous campaign” and said that “blame-shifting” in the current situation harms already weakened national currency lari and country’s economy in general. “We are not making political comments regarding various attacks on the central bank and we are not going to engage in political debates in the future either, but as we are facing a deliberate slanderous campaign against [the central bank], we deem it appropriate to remind you chronologically about the position we have been voicing over the recent period of time,” President of the National Bank of Georgia, Giorgi Kadagidze, said at a news conference on February 27. He said that in early 2013 the central bank warned that 6% growth forecast was too optimistic and it required downward revision. “Instead of heeding our arguments, we received the first wave of slander and accusations of sabotage,” Kadagidze said, adding that central bank’s forecast turned out correct and the growth in 2013 was only 3.1%, half of what the government was initially expecting. “Starting from the summer 2013 we have been stating for multiple times at closed-door or public meetings that uneven spending [from the state budget] had a negative effect on currency’s exchange rate and represented a problem for lari; again our forecast turned out to be correct and by the end of 2013 there was pressure on lari and in order to prevent depreciation we had to intervene by selling several hundreds of millions

[of U.S. dollars],” Kadagidze said. At the time central bank’s currency reserves declined from USD 3.1 billion in October, 2013 to USD 2.82 billion by the end of December, 2013. “At the time we took this decision because the problem was caused by onetime factors and not by fundamental reasons,” he said. Kadagidze said that in the summer, 2014, when “we failed to accumulate currency reserves even in the peak of tourism season” and when first signs of declining exports emerged in August, “regrettably arguments of those representatives of government’s economic team prevailed who argued that everything was alright and there were no fundamental problems whatsoever.” “Instead of heeding our arguments we [the central bank] again received torrent of paid [newspaper] articles and attacks from newly emerged ‘ex-

perts’,” Kadagidze said. He said that the Georgian central bank’s policy of handling currency reserves is hailed by the international financial institutions among them by IMF. “Filling gap, created by declining exports and remittances, with currency reserves is not only a wrong decision, but also counterproductive and fruitless,” Kadagidze said. “We cannot afford mistakes in this regard,” he said. “We have made mistakes for multiple times in 1990s and we are not going to repeat the same mistakes now.” “I want to reassure the population that there is no threat to country’s financial stability as long as I and my team are in charge of the central bank,” said Kadagidze, whose seven-year term in office expires in February, 2016. He said that timing of Ivanishvili’s statement on February 26, when GEL

gained a bit, was also “incomprehensible”. “This cascade of [criticism] is even more surprising now, when situation took the trend towards stabilization and… lari has trend towards strengthening,” he said. “We do not expect situation to go towards worsening.” “I want to call on the government and ruling coalition representatives to stop attacks on the National Bank; such attacks harm not personally me, but country’s economy; it has negative effect on investors’ mood and is counterproductive,” Kadagidze said. “There is no time for blame-shifting and there is no time for looking for a scapegoat,” he said. Kadagidze also said that the central bank will continue to cooperate closely with the government. “We have no problem of communication” with the government, he added.

March 2, 2015 #89

DINING

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FAST FOOD COSTS IN TBILISI KFC the most pricey fast food experience in Tbilisi - at least 22 GEL to try the famous chicken bucket that much food will have to put out at least 9,20 laris just for the sandwich. Add to that the drinks at around 3 laris and you have a meal of 12,20 laris, which is approximately in Wendy’s price range. Subway sandwiches come in numerous variants of filling combinations, so it’s a really tricky game here trying to calculate whose tastes cost what. However, expect to have at least 13 laris in your pocket when you enter this restaurant. Subway has the most business-like atmosphere among these dining places and seems to be serving office worker Tbilisites as a regular lunch destination. KFC has entered the Georgian market very re-

BW calculates what a standard American fast food meal will cost Georgian consumers. A meal at McDonald’s in Tbilisi will cost you roughly 7,50 laris. In this amount one can get a cheeseburger (2,30), standard fries (3,15), and a small coke (2,05). A happy meal at McDonalds will cost you even less: 6,80 laris. McDonald’s has been operating in Georgia since the end of 1990’s and is already the beloved fast food place to go for Tbilisites. Its cheap prices and familiar atmosphere are proving hard to beat for the new fast food restaurants like KFC and Subway entering the market. At Wendy’s there is a big range of different types of burgers. The so-called ‘specialty’ burgers include: baconator (8,85), a large burger with a additional bacon filling, pretzel burger (8,30), a burger with a crusty bun, and a Portobello melt (8,25) with the famous mushroom, of course. The veggie burger will cost you, almost three laris

less – 5,70. Thus, a standard meal at Wendy’s will cost Georgian fast food lovers at least 8,10 laris. For this price one can get a standard cheeseburger for 2,40, from the so-called ‘economy burgers’ category – which are not nearly the classy burgers like baconator or Portobello – standard fries 3,15 and a standard coke for 2,50. However, if one goes to Wendy’s and twould want to get the house specialty burgers they would have to pay 13,95 laris at least, since the price in the burgers almost triples as you go up the categories. Wendy’s presents a more family-oriented atmosphere where a lot of kids mingle and seem to enjoy a fun Sunday morning outing with their parents. Also, a happy tune is playing here during every part of the day. At Subway in Tbilisi you will be able to get a 6-inch standard sandwich for 4,70 laris. An additional 4,50 will get you the famous footlong sandwich that not nearly everyone can devour. However, those who go into Subways expecting

cently, end of 2014, and the only spot is located in the famous former Nikala building on Pekini Street. A standard meal at KFC will cost you at least 11,80. For this price one can get a classic zinger sandwich for 5,90, which is a chicken nuggets-filled version of a burger; standard fries for 3,10 and a cup of Pepsi for 2,80. However, what is the Kentucky Fried Chicken experience without the famous KFC nuggets bucket. Here is where Georgian consumers will have to spare at least 22 laris to try this American delight. Hence, KFC with 8 pieces of chicken strips costing 10,80 and chicken bites 8,70 is not a 10 lari meal, but a more of a luxury among the fast food dining places in Tbilisi.

ANALYTICS

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QUOTES

“The monetary crisis will become stable by May”

KAKHA OKRIASHVILI One of the founders of PSP Business representatives are satisfied with the plan worked out by the government to stabilize the national currency. The monetary crisis will become stable by May, said Kakha Okriashvili, one of the founders of PSP, after a meeting of government representatives and businessmen.According to him, the GEL exchange rate will stabilize, with one dollar being equal to 2 GEL. “Giorgi Kvirikashvili has just presented a short-term action plan to overcome the crisis. Presumably, there will be no crisis by the end of May and according to my estimations, one USD

will be equal to 2 GEL,”- Okriashvili remarked. Government has presented representatives of the private sector its own plan to stabilize the situation in the country to in short, medium and long terms. Giorgi Kvirikashvili, Deputy Prime Minister, Minister of Economy and Sustainable Development of Georgia, predicts that this year’s economic growth will be in the range of 2 percent. At the end of the meeting organized by the Business Association at the “Tbilisi Marriott” hotel, Kvirikashvili told reporters that the need for changes in the budget was caused by the fact that this year’s real economic growth in Georgia will, presumably, be within 2 percent. “But in terms of foreign direct investment and tourism, the Government will take serious measures, and I think that the situation will be completely balanced,” – Giorgi Kvirikashvili said. “We will do everything in order each lari spent in the economy to give the economic effect. In this situation, it will be inadequate to issue bonuses. Still, I wish the mood were upbeat, as a reduction in government spending, in any case, will have a positive impact on the economy,” - Giorgi Kvirikashvili said.

ACTIVE ENTERTAINMENT Stadiums and sports complexes

“Lari depreciation will eventually be reflected on oil prices”

SOSO PKHAKADZE Founder and president of Wissol Group Devaluation of lari will eventually be reflected on oil prices – founder and president of Wissol Group Soso Phkhakadze told the media before the Businessmen Association conference held in “Tbilisi Marriot.” Mr

Phkakadze says devaluation of lari is detrimental for businesses as well as ordinary citizens of Georgia. “Today we will hold a very open discussion with the government. I think that with mutual cooperation we can reach a reasonable agreement. I can’t see any other way-out from the situation,” – Soso Phkhakadze said. In regard to the question whether or not lari depreciation will reflect on oil prices Mr Pkhakadze noted that fall of the national currency will affect oil prices eventually. This is going to be the main subject of discussion on the today’s meeting. “I am confident that with mutual efforts we can reach a sound agreement. The government is correct when it says that investments are one of the way-outs, but not the only possible way-out. We have planned some projects and are going to make considerable investments in the upcoming months. This information will become public very soon,” – Mr Phkhakadze stated.

“We buy fuel in USD, which means prices are bound to climb”

ZAAL IAKOBIDZE, Founder of Senta The international price for diesel increased by approximately 120 USD in the last three weeks, which came with a strict devaluation of Lari against USD. “Throughout the last 2-3 weeks Platts prices on oil products increased. When we stated that we’d sell oil products on the local market for 10-15 tetris less than on branded fuel stations, we’d sell a liter of diesel fuel for 1.25 laris in the wholesale network. Now

its cost is up to 1.45 laris. Along with this we saw a drastic devaluation of lari against the dollar, and as you know we oil importers purchase fuel in dollars. The rise of prices on fuel hasn’t reflected on the retail network yet, but it undoubtedly will. The prices will rise in the coming 7-10 days. As soon as the prime cost of fuel experiences a rise, the same will happen on wholesale prices and maintaining the existing retail network will become difficult. For now there are certain reserves which allow us to maintain prices on the retail market, but as soon as the reserves run out, the prices will spike,” – states Zaal Iakobidze, the founder of Senta. After a lengthy break, Senta returned to the oil products market with ambitious plans, according to which it would offer fuel on retail networks for 10-15 Tetris cheaper than on branded fuel stations. Zaal Iakobidze states that accomplishing this goal will become difficult because of the continued condition of lari devaluation against the dollar.

“Privatization of state property is a correct move amid the crisis”

VATO LEZHAVA, chancellor of Free University Vato Lezhava, chancellor of Free University and economic advisor of former Prime-Minister Nika Gilauri estimates the government’s decision on privatization of state property as a correct step, but declares, that everything will be dependent on the offered terms to the investors. “Privatization of state property is correct during the

crisis, but it is not enough. In addition, it is essential what initial price will be offered by the government to the potential investors. The investors’ interest will be dependent on the price and privatization terms. Moreover, the offers should be various. It might be stately-owned enterprises, agriculture land areas, licenses on the forest usage and so on. There should be great choice and attractive terms. In this case, investors will be interested in purchasing. In addition, we have experience in conducting of the privatization program,” - Vato Lezhava declares. Activation of privatization is a part of government’s anti-crisis strategy. The Property Agency has already published a list of privatization objects, which are brought for sale, but their initial privatization prices are not known yet. The following objects are in the list of privatization: former building of Batumi Technology University, building of government structure and residences, 70% share of “Georgian Lottery”, resort Akhtala and other assets.

Turnover of sports comlex, stadiums and sports clubs in Georgia mln GEL (2009-2013)

he reported turnover of sport complexes and stadiums amounted to GEL 24.8 mln in 2013, which is 2.3 times higher than the same figure for 2009. Turnover increased rapidly in 2012 as a result of new football transfer agreements. In the first half of 2014, turnover of the sector amounted to GEL 10.4 mln. Tbilisi is the most developed region in Georgia for sports infrastructure. Two large stadiums (Boris Paichadze Tbilisi Dinamo arena and Mikheil Meskhi Stadium) are operating in the capital, with the third one (rugby stadium) in the pipeline. Tbilisi will host the Youth Olympic Games and the UEFA Super Cup in 2015. The government actively supports the development of sports infrastructure in Tbilisi. A new sports complex is being constructed near Park Mziuri. The complex will host the 2015 Youth Olympic Games and will comprise a central open court with a capacity of 850 seats, eight open courts and two indoor tennis courts accommodating an audience of up to 300. It is also planned to develop the area of “Dighmis Chalebi” . Under the plan, a water sports complex will also launch in 2015 as a part of the Youth Olympic Games. The complex will be located in Dighomi and will consist of two swimming pools, a gym, fitness centre and sauna. The major players in the Georgian aqua park market are Euro Park and the recently opened Gino Paradise. Euro Park manages four aqua parks throughout Georgia. Its complexes are located i n Tbilisi, Batumi, Kutaisi and Telavi. Gino Paradise operates an aqua park which is spread over 22 hectare land plot and includes several swimming pools, saunas and a spa centre. Health and well-being is growing in popularity, encouraging the development of fitness clubs in Georgia. The international brand Aspria Fitness launched in Tbilisi in 2013. Currently, Aspria Fitness operates four branches throughout the city and has expansion plans. The fitness clubs market is underdeveloped in the rest of country. A European-standard golf club was recently opened in Kachreti, in proximity to Hotel Am-

basadori. It is the first international-standard golf club in the South Caucasus, located on a 35 hectare land plot. The golf club is becoming increasingly popular among foreign travelers. A rugby stadium is being constructed in Tbilisi, near the US embassy. The stadium will have a capacity of 30,000. A European standard football stadium is also being built in Batumi, planned to complete in 2017. In Kutaisi, a rugby sports complex on Gamsakhurdia Street is under construction . Complex comprises four stadiums, two of them are already open. Complex will be fully completed in the summer of 2015.

March 2, 2015 #89

ECONOMY

GOV’T SELLS A 25 PERCENT STAKE IN “TELASI” LLC

overnment intends to sell a 25% share in “Telasi” LLC, an electricity distribution company of Tbilisi. We are talking about the share which is still state-owned. “Petrokas” Vice-President told “Commersant” after the meeting between the government’s economic team and the Business Association members. According to Niko Mchedlishvili, the sale of shares was discussed at the meeting along with

other privatization objects. Nevertheless, “Telasi” is not included in the list of objects for privatization published by the government. “Commersant” was told at the Economy Ministry’s Public Relations Office that they are informed only about the sites which are officially published. However, they do not rule out that some of the objects will be added to the list. The Partnership Fund (PF) which controls 25% of shares in “Telasi” does not also have any information about the sale. The shares of “Telasi” were transferred to the Partnership Fund by Vano Merabishvili in the last months of his tenure as Prime Minister. To stabilize the lari’s exchange rate, the government stimulates the privatization process. A list of objects for privatization was published by the National Agency for State Property.

GEORGIAN WINE INVADES ASIAN MARKET

fter successfully delighting taste buds all over Europe, Georgian wine is continuing to make an impression around the world. Next destination – Asia. Georgian wine is invading the Asian market and featuring at upcoming exhibitions in Japan and China, thanks to the efforts of Georgia’s National Wine Agency. Six Georgian wine companies will be presented at the 40th International Food and Beverage Exhibition (FOODEX JAPAN) in Japan – the largest annual food and beverage tradeshow in Asia. The expo established in 1975 and since then, the event has served Japan’s $700 billion USD food market as well as many lucrative Asian markets. More than 75,700 professional visitors attended FOODEX 2014, including more than 8,000 from Korea, Taiwan, China, Thailand, and Hong Kong. The four-day event will begin on March 3. Georgia’s participation in FOODEX JAPAN would increase the profile of Georgian wine and encourage more customers and tourists, said the Georgian side. Wine companies that will feature at the Japanese event are: Kimerioni, Telavi Wine Cellar, Kakhuri, Kakhuri Wine Cellar, Shumi and Khareba. Georgian wine is already gaining popularity in Asia. At the Sakura (Japan Women’s Wine

Awards) exhibition in February, Georgian wine gained gold and silver medals after being reviewed by an expert female jury involving wine experts, importers, retailers, sommeliers, restaurateurs and wine journalists. Meanwhile at the end of March Georgian wine will be showcased at the China Food and Drink Fair, where Georgian wine master classes will be held. Raising the profile of Georgian wine in European and Asian countries was something the country’s National Wine Agency was actively pursuing. In Europe, Georgian wine companies are gearing up to take part in Germany’s ProWein Düsseldorf exhibition for the 16th time. Later the focus will move down to Italy, to the town of Cerea in the Verona province, where Georgian wine will be exhibited with other natural wines from the world. The Georgian National Wine Agency summarised February as a “very fruitful month” for raising awareness of Georgian wine abroad, as local stalls took part in a range of exhibitions in Europe and gained several awards. Agency officials hope the same trend will continue in March as well. Meanwhile, seven Georgian wines were recently trademarked by Kyrgyzstan. These were: Akhasheni, Tsinandali, Mukuzani, Napareuli, Kindzmarauli, Tvishi and Khvanchkara. By issuing a trademark, Kyrgyzstan recognised these wines had Georgian origins.

TWO EU COUNTRIES AMONG GEORGIA’S TOP THREE EXPORTS MARKETS

uts, copper ore, crude oil, gold and armature – are the basic exporting goods, which export have been increased in January comparing to same period of the previous year on the background of total export reduction by 30% through a year. According to “Sakstat”, vehicles have been the number one exporting products of Georgia in January of this year. However, the dynamic has been decreased - from USD 43, 357 million to USD 22,204 million in January of this year. Nut export is on the 2nd place and its export is doubled. The figure has made up USD 18,903 million in January of this year. Export of cooper ore and concentrates is grown from USD 7,931 million to USD 17,402 million. Export of ferro-alloy is significantly reduced: from USD 31, 857 million to USD 10, 832 million. However, mineral water export has amounted to USD 7,071 million in January, while USD 9,672 million- in the previous year.

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Therefore, wine export is significantly reduced and the figure has amounted to USD 5,158 million in January of the previous year, while the rate has been USD 14,814 million in the first month of 2014. Then comes crude oil and its export is increased from USD 3,162 million to USD 4,265 million. Export of gold is grown from USD 3,081 million to USD 4,065 million. Armature export volume has made up USD 2,638 million in the previous year, while USD 3,745 million - in this year. Medicines are on the final 10th place, however their export is reduced from USD 3,646 million to USD 3,084 million. Georgia’s basic exporting markets are: Azerbaijan, Bulgaria and Netherlands. Export is reduced from USD 37,087 million to USD 28,49 million in Azerbaijan, while export is significantly increased in Bulgaria and Netherlands. Export index is grown from USD 11,874 million to USD 16,717 million, while in Netherlands – 6 times from USD 2,167 million to USD 13,504 million.

KVIRIKASHVILI: REAL GROWTH OF ECONOMY WILL BE WITHIN 2%

eportedly 5% forecast of economic growth will be reduced to 2% in this year and respectively, current budget will be corrected according to this index, George Kvirikashvili, minister of Economy has declared at the meeting with businessmen. “Budget correction will become unavoidable , because real growth of economy will be within 2%. However, we plan serious acts towards direct foreign investment and tourism. We try to balance the situation totally. As for the “belt tightening policy” is linked to the economic growth index from 5% to 2%. This balance will be reflected

on the administrative costs and it will not have an impact on the economy and infrastructural projects. We will do everything to gain economic effect form each spent GELl in the economy”, Kvirikashvili ahs declared. According to him, the issuance of bonuses will be inadequate. The minister declares, that he wants to be optimistic, as reduction of government expenditure will be positively reflected on the economy. “This is our internal kitchen and we should do everything to give more oxygen to businesses, people and economy. We must not be burden for them in this satiation”, - the Minister has declared.

OIL SECTOR IS THE BIGGEST CONTRIBUTOR TO THE ECONOMY – FINANCE MINISTER

inance minister Nodar Khaduri held a meeting with the oil importing companies after the gathering of the Businessmen Association. Main focus of the meeting was the possible ways that the ministry could assist the further development of the oil sector. This includes the legislative initiatives put forward by the ministry as well as new initiatives for simplifying procedures regarding more orderly accountability in the field.

Representatives of the finance ministry were presented with the remarks and observations that the oil importing companies of the country had toward the government. According to the finance minister, the oil sector is extremely important for the country’s economic development, being one of the biggest contributors to the Georgian economy. Due to this when making decisions in this sphere it is important to consider the business sectors’ interests as well as the consumers’ rights.

AGRICULTURE MINISTER - TODAY GEORGIA OFFERS THE MOST ATTRACTIVE ENVIRONMENT FOR INVESTMENTS EVER

f Georgia was ever attractive for investment, it is today – Otar Danelia, Minister of Agriculture of Georgia, told reporters at “Tbilisi Marriott” hotel before the meeting organized by the Business Association. As noted by Danelia, Georgia has never had such opportunities in terms of freedom of business as now. Answering the question about what is the problem, the Minister says that it is a reality that prevails not only in Georgia, but in all regions and other countries. “This is the current phenomenon requiring appropriate adaptation and preparation,” – Danelia notes. As to whether the economic team of the government is responsible for the current reality in the country’s economy, Agriculture Minister said that the government did not evade, does not evade and will not evade responsibility. In Danelia’s, the

government is actively engaged in attracting investments. “We take proactive in what is called the attraction of foreign investment. Accordingly, this year $ 70 million were attracted in agriculture, “- Otar Danelia adds.

PRODUCE IN GEORGIA PROGRAM TO PROMOTE HOTEL BUSINESS

he hotel business joins “Produce in Georgia” program which will cover all the regions. Recall that this year a hotel component is planned to be enacted within the framework of “Produce in Georgia” program. The Minister of Economy and Sustainable Development of Georgia Giorgi Kvirikashvili stated a few days ago. Economic Development Minister Giorgi Kvirikashvili announced a promotion for the hotel business. According to Giorgi Tsikolia, the Entrepreneurship Development Agency, the Agency is working on the project and further details will be announced in the near future. Tsikolia says that the meetings are being held with the representatives of the hotel industry, as well as the financial sector and all the partner organizations which will be involved in this program. In his words, in the initial phase the program will apply only to the regions, as the hotel market in the capital is well developed. In the frames of the

program, new hotels will be developed while operating hotels will be expanded. Hotel business considers the government’s idea the way of survival of their business. Hotel owners in the regions say if the government supports them in developing the hotel business, it will automatically develop tourism in the country. George Gorjiladze, Director of “Premier” hotel in Bakuriani, says his business really needs to be developed. I cannot do this with my own resources , if the government helps to expand and gives a long-term low-interest loan, it will be good. Lali Sozashvili, Director of “Caucasian House” hotel in Signaki, hails the idea to support the hotel business. She owns a family hotel for 10 years, but has failed to expand as planned. In the words of Neli Japaridze, Director of “Neli” hotel, the hotel has been operating for 7 years, but she has never had a relationship with the bank. She notes that the banking institutions give out loans at high interest rates, which is unacceptable for entrepreneurs. Japaridze will certainly use a preferential loan issued by the state.

COMPANY NEWS

caucasian business week

March 2, 2015 #89

GERMAN COMPANY “HIPP” PLANS NEW INVESTMENTS IN GEORGIA

he German baby food manufacturer “HiPP” plans to increase investment in Georgia. According to the company’s representative in Georgia Vasiliy Akhvlediani, “HiPP” plans to engage in grain growing, vegetable growing and cattle breeding. In his words, the company is already looking for a suitable plot of land for their new tasks. “The company is studying additional opportunities in the market. In general, interest in investing is very large. In particular, we are talking about bio-products, which will be exported to Europe, particularly in Germany. With regard to the volume of prospective investments, they depend on

the scope of the project. Today, “HiPP” owns an enterprise in Georgia, whose work is complicated by the situation on the market,”- Vasily Akhvlediani notes. In his words, today there are low prices on the market, Georgia does not have enough apples that could be processed. “As soon as there is a corresponding situation, the plant will start working again,” - said the representative of “HiPP”.

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MiniCredit offers a 50 GEL to 700 GEL credit on MiniCredit cards, while clients enjoy decreasing tariffs for taking every new credit. The plastic card owners also enjoy unique conditions and preferences: - DESIRABLE AMOUNT ON WEEKENDS TOO; - 24 HOURS FOR 7 DAYS A WEEK; - 0% COMMISSION FEE FOR ATM SERVICE - 0% COMMISSION FEE FOR TERMINAL SERVICE; - MINI INTERNET BANK. The card is issued at MiniCredit Café, a MiniCredit innovative service center. The asset is located at the hypermarket of Goodwill, Kavtaradze Street no. 1. MiniCredit Café staff provides valuable services to the visitors and offers various brands of coffee for enjoying. At the service center visitors are able to: - GET REGISTERED ON MINICREDIT.GE - FILL IN APPLICATIONS WITH DESIRABLE MATURITY PERIOD AND AMOUNT; - SELECT AND RECEIVE A DESIRABLE DESIGN OF THE CARD FREE OF CHARGE; - PAY OR PROLONG THE CREDIT VIA QUICK PAYMENT TERMINAL; - VISIT THE SERVICE CENTER FOR 7 DAYS A WEEK FROM 10 O’CLOCK TO 20 O’CLOCK.

ue to the growth of excise tax, production of Georgian tobacco company “Samgori 94” has fallen by 80%. According to the company’s cofounder Avtandil Tsereteli, in the near future a sharp deterioration of the tobacco production is expected in Georgia due to the introduction of ad valorem tax since July 2015. “I have not personally met with representatives of the government, but in the end, will surely put the question of abolishing the tax after they are before the fact. Until then, I will follow the process, as in this situation it would be impossible to draw concrete conclusions for one month. In the meantime, there is no point to meet with members of the government, as they will not help us,

“- he says. According to him, he met with representatives of the economic bloc of the government in November and tried to explain to them that the increase in excise duty on tobacco products would lead to an increase in smuggling. “In addition, the increase in excise duties has reduced consumption - two years ago we sold 21 000 boxes, then this figure dropped to 17 000, and in 2013 - already 5 000. In such a situation there is no sense to work accordingly, our company doesn’t work at full capacity. Moreover, the prices existed in November threatened us bankruptcy even without an increase in excise taxes. To work for profit, the plant should sell 9-10 thousand boxes, otherwise the company is at a loss,”- the businessman notes.

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FIVE-STAR INTERCONTINENTAL TO ARISE IN TBILISI CENTER

djara Group Hospitality will get a funding of $ 24 million from European Bank For Reconstruction and Development (EBRD) and Bank of Georgia for construction of 5-star hotel of InterContinental Hotels Group (IHG). The hotel will be built on the area of former publishing house “Smashoblo”, locating on Ksotava str. 14. Presentation of the project will be held in Rooms Hotel at 18 pm, on February 27. The press conference will be led by Bruno Bal-

vanera, regional director of European Bank, Valeri Chekheria, general director of Adjara Group and Sulkhan Gvalia, deputy general director of Bank of Georgia. Aron Libinsoni, associated vice president of InterContinental Hotels Group for Russia, CIS and North Europe will take part in the press conference as well. The project cost of $53 million in Tbilisi is the 3rd project of Adjara Group Hospitality after Holiday Inn and Crown Plaza Hotel in Batumi. Construction of InterContinental will be finished in 2016.

“MAGTICOM” TO FILE A SUIT AGAINST “BEELINE” DUE TO IMPROPER ADVERTISING

LC “MagtiCom” has appealed to Georgian National Communications Commission. The company regards, that LLC “Mobitel” i.e. “Beeline’s” advertising on 4G is improper and damages the competitive company. “MagtiCom”

requests the Commission to consider the issue and to make a relevant response. Georgian National Communications Commission has taken “MagtiCom’s” suit against “Beeline” under the proceeding and the session will be held at 15.00 pm on March 12, 2015. The session will be open.

BATUMI TOWER’S STARTING PRICE IS 25 MILLION USD

uilding of Batumi Tower, where Technological University should be placed, is sold at USD 25 million. National Agency of State Property has already brought non-agriculture land area of 4504.00 square m (locating on NinoShvili/Zhenti str in Batumi), a building N01/36 and movable property, namely, “Review (CCTV) Wheel” and outdoor use LED-Media Display of 740 square m (Palami-Media NET- 50/50) on the auction. According to the auction terms, the investor will be obligatory to build 4-star hotel with 10 rooms within 3 years after signing of an agreement. The agreement also envisages arrangement of hotel infrastructure (recreation space, entertainment objects and other). The company should make an investment of USD 15 million. As for the payment terms, according to the conditions of the auction, the winner company is obligatory to pay USD 8 000 000 within 30 calendar days after the finish of electronic auction. However, the company must pay totally USD 15 000 000 within 6 months after the signing of the agreement, while USD 20 000 000 million within 12 month after signing of the agreement. Moreover, the holder of the object is obligatory, to pay the remained share of the privatization cost within 18 months after signing of an agreement. However, the purchaser of the property is entitled to set only ApartHotel (hotel rooms, apartments or other non-residential areas managed by one person) on the base of privatized property before the performance of the obligations.

Auction on alienation of Batumi Tower is scheduled for March 11. To remind, the building is on the balance of LLC “Batumi Towers”. The founder of the LLC is Minister of Economy and Sustainable Development. According to the released information, GEL 78 million is spent on the construction of the building.

March 2, 2015 #89

BANKING

caucasian business week

LIBERTY: RATIO OF GELDENOMINATED CREDITS IS 91%, NO NEED TO CHANGE TERMS iberty Bank reports, that there is make individual new schedule of credit payment

no need to change or review credit terms due to GEL devaluation, as 91% of the bank’s credit portfolio is denominated in GEL. As of February 1, loan portfolio of Liberty has amounted to GEL 795,4 million. Due to the GEL drop to the critical index, NBG and banks have decided to

with per consumer to mitigate the burden who have income in GEL and credits in USD. Possible restructuring envisages establishment of grace period or term extension or any other conditions and it will concern to the retail loans, placed in US dollars. All commercial banks must submit a plan to NBG within a week.

LIBERTY FINISHED JANUARY WITH A “TBC BANK” OFFERS A CONCESSION TO CUSTOMERS AFFECTED BY PROFIT OF GEL 2,029 MILLION iberty Bank finished January with a GEL 760,6 million), loans – GEL 759,4 million LARI’S DEPRECIATION profit of GEL 2,029 million and its (01/02/14 – GEL 671,8 million; 01/02/13 – GEL

share was defined by 7,2% among the profitable banks (10 banks). The bank had a profit of GEL 214 000 in January of the previous year. However, the bank finished 2014 with a profit of GEL 18,4 million (2013 – GEL 37,5 million; 2012 – GEL 10 million). Deposit portfolio has amounted to GEL 1,3 billion by February 1 (without banking deposits) (01/02/14 – GEL 1,155 billion; 01/02/13 –

404,1 million). Deposit number is increased by 12,6% (y/y) comparing to the same period of the previous year, while loans – by 13% (01/02/14 – 52%, 66%). Total liabilities amount to GEL 1,4 billion. Liberty’s assets are defined by GEL 1,5 billion (1,3 billion), market share 7% totals to (01/02/14 – 7,7%; 01/02/13 -6,7%). Chartered capital of the bank is GEL 159,8 million ((01/02/13 – GEL 111,8 million).

BANKS’ REVENUES GROW BY 31%, EXPENDITURES INCREASE BY 54%

anking sector has a revenue of 298 million in January, the figure is increased by 71 million (31%) comparing to the previous year (01/2014 – 227 million). The sector’s expenditure is grown by 54% and the rate has amounted to GEL 284,6 million in January, 2015 (01/14 – USD 184,4 million). Banks’ revenues gained from the loans have made up GEL 149 million (01/14 – 128 million, 01/13 – 119 million), deposit expenditures is 43 million (01/14 – 40 million, 01/13 – 45 million). The sec-

tor spent 35,8 million on the storage of the office (01/14 – 34,5 million, 01/13 – 28,7 million). Net profit has amounted to GEL 15,8 million (01/14 – 37 million, 01/13 – 13,04 million) in January. However, 10 banks have a loss. The banks have transferred over GEL 2,4 million in the budget as a revenue in January (01/14 – 5,4 million, 01/13 – 1,9 million). The chartered capital of 20 banks, operating on the market, is GEL 3,5 billion by February 1 (01/02/14 – 2.928 billion; 01/02/13 – 2,463 billion). The consolidated data includes results of 20 banks.

PASHA BANK TO FUND SME IN 2015

oga Japaridze, Commercial Director of Pasha Bank Georgia, told The FINANCIAL that the this year the bank is going to start financing a small business. “PASHA Bank has been operating in Georgia for

two years. Its target segment is made up of large and medium-sized enterprises. We are a corporate bank - we do not do retail banking at this stage of our development,”- Goga Japaridze says. In his words, 2014 was a formative year in many respects. The bank completed staffing of the front-office by the middle of the year. For the first time they became able to cover the entire target segment of ours, which is made up of large and medium-sized enterprises. They have identified our market niche and have finalized localization of brand platform. All in all, the bank has positioned itself for sustainable growth in 2015.

BANKS EXTEND THE REPAYMENT TERMS OF LOANS TO CUSTOMERS

mid the devaluation of the national currency, the Georgian banks announce the introduction of favorable payment terms. According to the CEO of “TBC Bank” Vakhtang Butskhrikidze, on the basis of individual analysis, in each case a new loan repayment schedule will be developed, which will be adapted to the real situation. “This decision was taken in relation to customers who have loans in dollars, and incomes in the GEL. The good news is that most consumer loans are taken in the national currency, and this greatly simplifies the situation. The problems mainly relate to mortgages, which are usually denominated in dollars, while borrowers have mainly income in the GEL. During the meeting with the President of the National Bank, we have come to a consensus that each case will be examined individually, and decisions will be made depending on the particular situation. We’ll try to adapt new graphics of covering debts to the new realities, “- says the banker. In his words, we are not talking about lower-

ing interest rates on loans. “Bank of Georgia” has already announced its intention to propose a new payment schedule for borrowers whose loans are taken in dollars, and incomes in GEL. According to the President of the Association of Banks of Georgia Zurab Gvasalia, 80% of loans granted to individuals are issued in local currency. The devaluation of the GEL affects about 20% of borrowers who receive income in GEL and cover a credit debt in dollars - their loans have risen in line with the devaluation of the national currency – by 30%. “It is possible that banks will hold individual consultations with each of these customers in order to extend the deadline for the payment of loans, or to carry out restructuring, so that clients can repay their loans. The bank itself will not seek contact with this kind of clients - if they want to ease the repayment schedule, they must turn to banks at their request. The bank cannot take any decision on its own initiative, as sometimes happens that the extension of the loan repayment harms the clients themselves, “- President of the Association notes.

ue to Georgian lari’s depreciation, “TBC Bank” offers a concession to the affected customers. In this regard, “TBC Bank” released a statement which says that due to GEL fall, based on the systemic risk analysis the relevant changes were made to a new loan approval procedure as well as in terms of existing borrower requests. “Each case will be considered individually and preferential terms tailored to each individual client will be offered. Concession means an increase in the loan term so that the borrower’s monthly payment will be the same as before GEL fall ( at 1.75). Concessionary terms will affect: 1) Customers who have loans in foreign currency and income in the national currency and due to lari’s depreciation, their monthly payments increased; 2) Customers who have a loan and income in the

national currency, but whose income reduced for various reasons, as a result of lari’s depreciation); Each case will be individually examined by the bank’s representatives who will study the customer’s income and will draw up a new schedule. A loan payment may be prolonged in two ways: A) A loan remains in the same currency - in this case, the loan interest rate will be maintained; B) To reduce the problems caused by GEL fluctuations in the future, to convert loans in U.S. dollars to national currency. In this case, the interest rate will rise to the minimum rate of the loans in Georgian lari. Long-term mortgage loans converted to lari will be tied to refinancing rate set by the National Bank. At the time of the loan prolongation, additional security is not required. “TBC Bank” clients should apply to the bank’s branches and their financial experts,”- “TBC Bank’s” statement reads.

GEL-DENOMINATED LOANS PORTFOLIO TO DOMESTIC ENTITIES SHRINK BY 78 MILLION GEL

he volume of lending by commercial banks (including loans to non-residents) increased GEL 743.4 million (5.7%) in January 2015 compared to a previous month and amounted to 13.7 billion by February 1, 2015. During the same period, a volume of loans in the national currency increased by GEL 3.5 million (0.1%), while the volume of loans in foreign currency- by 739.9 million (9.4%). Commercial banks issued GEL 1.4 billion in the national currency to resident legal entities in January 2015 ( 5.1% less or GEL 78.2 million than in the previous month), and in foreign currency – GEL 5.2 billion (8.3% or 402.5 million more ). During January 2015, lending to resident indi-

viduals increased 3.8% or GEL 233 million and reached GEL 6.4 billion by February 1. It should be noted that non-bank deposits in the banking sector amounted to GEL 11.9 billion by February 1, 2015 which is 277.6 million or 2.4% more than the figure for January 1. In January, compared with the previous month, demand deposits decreased by GEL 202 million, or 3.9% and term deposits increased 479.7 million or 7.5%. The deposit dollarization ratio totaled 63.98% in February 1 of this year - 3.83 percent more than in January 1. The weighted average interest rate on term deposits totaled 6.2%, including deposits in the national currency - by 8.9%,

GEORGIAN BANKS’ ASSOCIATION: THERE ARE NO CRISIS SIGNS IN GEORGIAN BANK SECTOR

here are no signs of a banking crisis in the country. President of the Association of Banks of Georgia Zurab Gvasalia says that despite the drop in the exchange rate, there are no signs of the crisis. He notes that proof of this are non-bank deposits increased by almost 2.5 billion compared to the same period of last year. According to the National Bank’s data, the banking sector decreased by 57% in January compared with January of 2014. As per the NBG data, the banking sector’s profits amounted to GEL 15.8 million in January, while in January 2014 – GEL 37 million. NBG says that the profit of the banking sector increased by 183% (13,039 million) in January 2014 in comparison to the previous year. It should be noted that the sector’s profit for December 2014 totaled GEL 93.2 million. Gvasalia says that in January this year the banking sector’s revenues amounted to GEL 297 million that is GEL 70 million or 30% more com-

pared to January of last year. In January 2013, the banking sector’s revenues amounted to GEL 181 million. As for the net profit, Gvasalia explains that while the net profit figure reduced from GEL 36 million to 15 million compared to last January, but compared to 2013 this figure grew by GEL 2 million. In Gvasalia’s words, interest income increased from GEL 138 million to 163 million, as well as non-interest income from GEL 88 million to 134 million, but costs have also increased. Noninterest expenses led to the decline in net profit. Gvasalia says that the net profit decline was mainly due to two factors: Compared to last January, losses from the conversion amounted to GEL 8 million while in the previous year the figure was 10 million in profit. Another important article, which lowered the rate of profit, is the damages from the possible asset destruction, which compared to last year increased from GEL 17 million to 60 million, including in loans from GEL 51 million to 16 million.

CURRENCY

caucasian business week

March 2, 2015 #89

STRONG US DOLLAR HURTS GOLD PRICES

TRADING WITH SAXO BANK: “The financial world is about to change. Active clients have found a way to multiply their equity” According to Emmanouil Lemonakis, Head of Central Eastern Europe Region for Saxo Bank, the approach to banking services will change significantly. “The process has already started and I believe that the trend moves towards more active bank clients who will not be satisfied with just depositing their funds somewhere and then waiting for several years without being actually able to influence matters for a dubious profit. People will want to be more active in looking after their money, and that is something we already provide for our clients.” - What will be different in banking? - Well, I can give you an example from telecommunications. Long ago, you would go to a post office to make a phone call, later the phones would appear on the streets in phone boxes and the luckier would finally get a phone in their homes. Today, the mobile phone fits in our pocket and has many other useful functions that save time and money. In the financial world, the post office with a phone is the stone financial institution where you can get a savings account or a unit trust. Today, this is not enough. The active and inquisitive clients are looking for new and user friendly ways to enhance their capital. After years spent with one of the largest global financial institutions I feel that this change is inevitable and I would like to be a part of the change. - How is Saxo Bank prepared to face this challenge, specifically? - I believe that Saxo Bank is the bank of the future. It represents the biggest supermarket of investment opportunities and tools you can use to transform the opportunities into yields from the comfort of your home or your mobile phone. No begging at the large banks for better yields. I have an idea, I read the market analyses, I choose the right tools, and I begin to manage my funds on my own. - How can someone begin to invest? - You can just fill in our form at saxobank.com, and our team will introduce the applicant into the trading world depending on his/her experience so far. Experienced investors already know what they are looking for and after a quick comparison of our demo SaxoTrader platform with their current platform they open their account. Beginner clients can read our materials on individual products first, including videos on technical analysis or trading psychology, they can connect to our webinars or online workshops from the comfort of their home, and usually they try trading for several weeks in the demo environment. You can start an account online from the comfort of your home in five minutes, you just need two copies of ID documents. As soon as you receive your payment instructions you can transfer funds to the Saxo Bank account and start trading. - What is the most frequent question the investors ask when they think about opening an account? - Firstly, they ask how the invested funds are protected. Unlike other brokers, Saxo Bank is a full bank with a bank license and as a Danish bank it offers a really high standard of protection in its field. The second most frequent question is our product range. With over 42,000 investment tools, Saxo Bank is a real supermarket of opportunity. Saxo

Bank doesn’t provide investment consultancy but enables its clients to access global and sector focused analyses alongside another innovative function – connecting trading with social networking via tradingfloor.com, which is gaining popularity as we speak. - How do you deal with objections that trading is “speculative” or “hazardous”? - It is necessary to have a certain inner discipline. Just like when you learn new things, it is common that it doesn’t work at the start and one is upset, but then it starts working and suddenly you feel well. I recommend a very slow start for those who decide to trade on their own. If they have a large disposable income, I recommend working with professional fund managers. - The minimum investment with Saxo Bank is 10,000 dollars. Some of your competitors require less. Why is the sum so high? - We provide solutions for serious investors, financial managers and banks. If you want to just bet or “play” on the equity market, Saxo Bank is not the right choice. Our future clients can learn and try all the opportunities on the Saxo Bank demo account, so it is a kind of a dry run. The investor will get a virtual 100,000 dollars and they can try trading safely and will see if they want to continue with a live account. - Where do you think it’s sensible to start trading? - Most clients start with foreign exchange transactions. Personally, I believe it is better to begin with something tangible. I prefer to select several commodities, stocks, or international indexes. I can find much more information on oil, gas, copper, silver, or Germany in the form of a story, and I will begin to build a mosaic of information to use for future decisions. Unless a trader is willing to have a phone or tablet at hand at all times to check exchange rates I recommend to focus on options. They can be sold only after gaining some experience. Let’s say I will focus on Germany and its DAX index. I don’t want to monitor the market daily but I believe that its value will be higher in a week or month. So in the instrument search engine, which is similar to the Internet search engine, I select options, DAX, the date and value I believe DAX will reach in future. I select the call option, and enter the date in my calendar so I can check the result. As this is a “European option” you are not interested in the development but only in the result on the selected day. This way, I can have more “irons in the fire” and wait for the selected days to bear fruits. The advantage here is that the expenditure on the option purchase is the highest possible loss you may incur if the option does not come through. But the yield potential is practically unlimited.

rrespective of surprise actions by the major central banks and the looming uncertainty over the futures of Greece and Ukraine, the Gold prices lost nearly 5% in the month of Feb ruary as investors continue supporting the US Dollar expecting the only major central bank to hike interest rate in 2015. The yellow metal registered nearly 8.5% gain during the month of January, mainly because of the surprise action by the SNB during mid-month meeting. However, improvement in US labor market details coupled with the positive comments from the FOMC members, during January-end and early February, provided strong support to the expectations concerning near-term interest rate hike by the Federal Reserve. Gold prices declined nearly 29% in the previous two years, posting the first consecutive annual decline since 1998. Improvements into the US labor market details have been a pillar for most of the speculations concerning the interest rate hike by the Federal Reserve. Market players do support an increase in benchmark interest rate near the June 2015, also supported by some of the FOMC members, supporting the across the board strength of the US Dollar. The Euro continued its decline even after the ECB announced its much awaited Quantitative Easing as the economic numbers, like inflation and the growth details, continue linger the expectations and the Greece election signals an exit

On the demand side, the global gold demand for the year 2014 remained at 3924 tons, down by 4% on a yearly basis and testing the lowest level since 2009. The jewelry demand was down by 10% to 2153 tons while investment demand gained 2%% to 905 tons from the 885 tons in 2013. However, the demand from smaller investors, consisting requirements of bar and coins plunged 40%. Central bankers remained as strong buyers for gold amidst the uncertain global markets by adding 16% more gold into their reserves to 477.2 tons during the year 2014 as compared to 409.3 tons in 2013. India and China, that accounts nearly 54% of the global gold jewelry demand, are flashing different signals as India hit a record 662.1 tons in 2014 with 19% gain in Q4 2014 while the Chinese jewelry demand declined by 33% to 623.5 tons as compared to the 2013. The demand front signals that the increment in US Dollar and rise into the other investment avenues snatched major part of the gold investment demand and a continuation of the same can become detrimental for the gold prices. Moreover, recent plunge in the Chinese demand is covered by jewelry demand from India but declines of larger magnitude, which is more expected considering recent weakness into the Chinese economic numbers, can provide considerable damages to the Gold prices. To sum up, recent escalation in the turf between

of the troubled nation from the Euro region. Recently, the anti-bailout party of Greece gained victory into the snap election and is discussing ways to avoid extension of existing bailout package that expires on Feb. 28. The talks between the Greece Finance Minister and the Troika (EU/ECB/IMF), to avoid the bailout and find the intermediate solution has gone null on early Wednesday as none of the parties are agreeing to anything. The talks would resume on Monday to have final solution of allowing Greece some intermediate relief to restore the troubled economy. However, should there be continued non-agreement between the parties before the Fed 28, the Greece will run out of funds to work properly and will again join the queue for bankruptcy. Moreover, speculations also mounted that the Greece may leave the regional currency on the non-agreement of their terms by the European leaders and that can become sharp negative for the Euro region currency and provide uncertainty into the market supporting the Gold prices. Another factor that has fueled considerable worries into the market was Geo-Political tensions in the Ukraine. However, the recent meeting between the Russia, Ukraine, Germany and France provided positive solution as the ceasefire was agreed upon starting from February 15. Hence, with this news, market players may relieve of this geo-political tension and that can adversely affects the Gold prices.

Russia and Ukraine, in addition to the stronger US Dollar, could prove to be a negative for the safe haven demand of the yellow metal. Should there be constant improvement in the US economic details, which has been hurt in recent days, speculations concerning earlier rate hike by the Federal Reserve gains momentum which together with the solution to Greece bailout package could result noticeable declines into the gold prices. From the technical perspective, the yellow metal prices are currently resting on the strong support near $1223, encompassing 100-day SMA and the 23.6% Fibonacci Retracement of its May 2013 to November 2014 decline. On the extended decline, and a close below $1223, it can test $1180 support level with $1200 psychological support being intermediate rest. A close below $1180 can call for multiple supports, near $1150 & $1130, before plunging to $1100 and the $1080 support levels which mark near-term bottom of the gold prices. Alternatively, a reversal from the current level is more likely to pullback the prices towards $1240 resistance level, breaking which the 38.2% Fibo., near $1270 and the psychological mark of $1300, also including the 20 month old descending trend-line, are likely to provide strong resistance to the yellow metal prices. Admiralmarkets.ge/analytics/ facebook.com/adimralmarketsgeorgia/

RESEARCH

March 2, 2015 #89

REPORT ON TV COMMERCIALS OF BREWERIES IN 2014

eorgia is considered one of the leading countries in terms of beer consumption, despite seasons of the year. Consequently, a major part of the breweries apply TV commercials for conducting AD campaigns more efficiently. The dynamics of the last 2 years shows in 2012 breweries placed 30 045 TV commercials. The figure slightly increased to 40 948 TV commercials in 2013 and the figure marked 42 725 clips in 2014. The chart shows the dynamics of the quantity of TV commercials of breweries. Quantity

2012

2014

2013

Advertising dynamics of breweries in 2014 was as follows: Zedazeni – 16 632 clips, Natakhtari – 13 700 clips and Castel -9.119 clips. The chart shows the number of TV commercials due to breweries in 2014.

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NEIGHBORHOOD

Fitch Ratings supports measures on Azerbaijani manat rate depreciation

he Azerbaijani manat rate depreciation will assist fiscal and external adjustment to the lower oil price, Fitch Ratings reported Feb. 26. “The sharp appreciation of the manat’s real effective exchange rate as a result of the depreciation in 2014-2015 of the Russian rouble and Turkish lira would, if sustained, have hampered efforts to develop the non-oil economy in Azerbaijan,” the statement says. However, this also poses risks in terms of the crystallization of contingent liabilities, notably in the banking sector although Azerbaijan’s very strong sovereign balance sheet provides a considerable buffer, with the State Oil Fund of Azerbaijan (SOFAZ), at USD37.1bn, equivalent to 49% of GDP at end-2014.

TANAP to connect Caucasus with Balkans Turkish PM

Quantity

AD chronometry parameters have ranked breweries as follows: Natakhtari – 269 253 seconds, Zedazeni – 267 529 seconds and Castel – 122 702 seconds. The chart indicates the chronometry of TV commercials in 2014 due to breweries. Chronometry (in seconds). 2014

he Trans-Anatolian gas pipeline (TANAP), the Baku-Tbilisi-Kars (BTK) projects will connect the Caucasus with the Balkans, Turkish Prime Minister Ahmet Davutoglu was quoted Feb. 25 by TRT Haber TV channel as saying. “These projects will help turn Turkey into a regional energy center,” he said. Davutoglu said that Turkey intends to continue implementing the energy projects in the future. The TANAP project envisages the transportation of gas of Azerbaijan’s Shah Deniz field from the Georgian-Turkish border to the western borders of Turkey. TANAP’s initial capacity is expected to reach 16 billion cubic meters of gas per year. Around six billion cubic meters of this gas will be delivered to Turkey and the rest of the volume to Europe. Turkey will obtain gas in 2018. The gas will be supplied to Europe in early 2020 after the Trans Adriatic Pipeline (TAP) is constructed. The project’s cost is estimated at $10-$11 billion.

Dollar and Euro fall in Armenia

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T Investments in 2014 (due to the price list) are as follows: Natakhtari - 5 142 654 USD, Zedazeni – 4 216 294 USD and Castel – 1 666 365 USD. The chart shows investments of TV commercials in 2014 due to breweries.

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he American national currency (USD) exchange rate against the Armenian dram (AMD) comprised AMD 478.76/$1 in Armenia on Friday; this is down by AMD 0.35 from Thursday. The exchange rate for one euro was AMD 537.12 (down by AMD 7.87), that of one British pound was AMD 736.96 (down by AMD 7.29), and the rate of one Russian ruble was AMD 7.84 (down by AMD 0.16), informed the press service of the Central Bank of Armenia.

Russia to Take $50 Billion From Reserve Fund This Year to Plug Swelling Deficit

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Investments (in USD) According to the Official Price List 2014

caucasian business week

www. wom.ge

ussia plans to spend more than $50 billion from its emergency Reserve Fund in 2015 as falling oil prices and a slumping economy cause the government’s deficit to rise. First Deputy Finance Minister Tatiana Nesterenko said Friday the government would ask parliament to allow the spending of up to 3.2 trillion rubles ($52.36 billion) from the Reserve Fund in 2015, including 500 billion rubles already envisaged in the budget. The increase means that Russia could spend well over half of the fund, currently worth $85 billion, in a single year — a rapid run-down of the fiscal buffers that underlines the precarious state of government finances.

WORLD NEWS

Japan’s industrial output increases most in 3 years

apan’s industrial output increased the most in more than three years while retail sales slid and inflation slowed, Bloomberg said. Production jumped 4 percent in January from the previous month, according to trade ministry data. Retail sales fell 1.3 percent and household spending dropped. The central bank’s main inflation measure slowed to 0.2 percent, excluding sales-tax effects.

Germany’s inflation in February likely to be higher than previous month

nnual inflation in Germany is likely to remain low in February but it looks set to be higher than in January, Reuters reported. Data from three federal states showed consumer prices rising on an annual basis. They were unchanged on the year in two states, including North Rhine-Westphalia (NRW), Germany’s most populous state. The HICP reading in Germany will likely push back into positive territory, with a reading of around 0.1 percent after a 0.5 percent drop last month, according to Jennifer McKeown, of Capital Economics.

EU asks WTO to help settle import duties dispute with Russia

he EU has asked the World Trade Organization (WTO) to help settle a dispute with Russia over “excessive import duties” on refrigerators, paper products and palm oil. The request for the WTO to create a panel of experts to review the dispute comes after the two sides failed to settle the issue through consultations late last year, AFP said. Brussels says Russia “has continued taxing a number of products across various sectors more heavily than agreed.” The WTO dispute settlement body will evaluate the EU’s request next month.

Saudi Arabia minister says oil demand is growing

audi Arabia’s Oil Minister Ali al-Naimi has said oil demand is growing, Bloomberg reported. “We want to see calm markets,” the minister said after a speech at a conference in the Red Sea city of Jazan in the nation’s southwest. Saudi Arabia will remain the largest oil exporter, he said. Brent crude futures have gained 7.2 percent this year after plunging 48 percent in 2014.

Ukraine pays Gazprom $15mn for 24 hours worth of gas

kraine’s Naftogaz has paid Gazprom $15 million for gas delivery. At current levels, the prepayment covers one day’s gas consumption and will be spent by Tuesday, Gazprom spokesperson Sergey Kupriyanov said. “Today at 9:20am MSK Gazprom received a payment from Ukraine’s Naftogaz in the amount of $15 million. At the current level of supply this sum will be enough roughly for one day,” he said. “If Naftogaz paid for another 24 hours, it means the resources would last through Monday till Tuesday,”he said. China agrees to amend $3.6bn loan agreement with Ukraine The National Bank of China has agreed to extend the range of projects the Ukraine’s cash-strapped Naftogaz can fund with a $3.6 billion credit line agreed in 2012. “Given the current situation in Ukraine, the Ministry of Energy and Coal Industry of Ukraine and Naftogaz continue negotiations about the possibility to substitute some of the projects and partially extend the lending purpose of the credit agreement signed by Naftogaz of Ukraine and the China Development Bank in 2012,” Naftogaz said in the statement Thursday.

BUSINESS

caucasian business week

March 2, 2015 #89

6 HEALTH BENEFITS OF DRINKING BEER

f you are still eating healthy from your New Year’s resolution this year, you might be glad to find that drinking beer has many surprising health benefits. So, go ahead and enjoy that green beer, because it might just be doing you some good! Remember, though, to always drink in moderation, and be sure to get a designated driver to get home safely.

It is also packed with B vitamins like niacin, pantothenic acid, folate, riboflavin, and vitamins B6 and B12. It is also rich in silicon, a nutrient that is said to help strengthen bones.

Reduces Risk of Heart Disease

In 2011, Harvard did a study of 38,000 middleaged men which showed that, when they upped their intake of beer to two a day, they dropped their risk of developing type 2 diabetes by 25 percent. There was, however, no noted benefit from drinking more than two beers a day.

All alcohol, whether it is beer, wine, or liquor, is known to help reduce heart disease. According to a 2008 article in the Journal of the American Dietetic Association, moderate consumption of alcohol makes blood less sticky, and so it is less likely to clot. Alcohol can also increase good cholesterol and lower the bad, as well as lower your blood pressure. A Harvard study of 70,000 women found that those who consumed beer had a lower blood pressure than those who consumed wine or hard alcohol.

Helps the Kidneys

Alcohol gets a bad wrap for being hard on your kidneys, but beer can actually help in that department. According to the 2011 ADA Times, beer can actually reduce your risk of kidney stones. The hops not only help slow the release of calcium from the bones — too much calcium can cause kidney stones — but beer also has a high water content, which helps clear out those kidneys.

Packed with Nutrition

Beer is a surprising source of many nutrients. One 12-ounce beer has around one gram of fiber.

Reduces Risk of Diabetes

Reduces Risk of Cancer

Just putting your meat in a marinade of beer can eliminate almost 70 percent of carcinogens from the meat, a Portuguese study found. That might not transfer to drinking the beer, but who doesn’t love a good beer marinade? If you do just drink it, though, it does contain loads of helpful antioxidants that can keep you healthy.

Increases Brain Health

Researchers think that a few beers a day can also stave off Alzheimer’s and can reduce your risk of stroke. In 2005, a study was done of 11,000 older women, and those who had one beer a day had better mental function than those who didn’t. In fact, they decreased their risk of mental decline by as much as 20 percent. The Harvard School of Public Health also did a study that showed that a few beers a day might reduce the risk of stroke by thinning the blood and preventing blood clots from traveling to the brain.

March 2, 2015 #89

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

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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

March 2, 2015 #89