Caucasian Business Week #91 by Caucasian Business Week

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March 16, 2015 #91

March 16, 2015, Issue 91

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BE INFORMED, DO BUSINESS

GEORGIA

E5P INITIATES DISCUSSION OF THE BENEFITS OF ENERGY EFFICIENCY INVESTMENTS IN GEORGIAN MUNICIPALITIES

THE LARGEST INVESTOR COMPANIES IN GEORGIA

he international multi-donor fund managed by EBRD – E5P – organized a seminar to discuss implementation and funding of energy efficiency projects in Georgia. Pg. 5

United States (US) delegation has arrived in Georgia for the purpose of deepening trade and economic ties between Georgia and America. Pg. 4

OVER 20 000 TAXPAYERS FREED FROM TAX LIABILITIES

UNIVERSITY TOWER IN BATUMI SOLD FOR 25 MLN TO TRANSFORM IN TO HOTEL

disputed university building that was finished but remained empty for more than two years in Georgia’s seaside town Batumi has a new owner and a new future.

Pg. 7

BANK OF GEORGIA EXPOSED IN CRIMINAL TIES WITH PROSECUTOR’S OFFICE

The Bank Issues 700 000 GEL for Purchase of 8 000 GEL Property Pg. 5

Pg. 9

RUSSIANS WANT KHINKALI EXPORT

here is a demand on khinkali, produced in Georgia, in Russia. Several producing companies of frozen products confirm the fact. Pg. 9

FOURTH WAVE OF “NATAKHTARI FUND” HAS FINISHED

n 12th of March in Holiday Inn Tbilisi “Natakhtari Fund”presented fourth wave report “Take Care of Future”project. Pg. 11

Temur Chkonia: For me, results are imperative, and results are money’ Pg. 4 Salome Vardiashvili: Gas prices to remain unchanged for the private sector Pg. 8

Sulkhan Zumburidze: Sixteen new power plants will be built in Georgia Pg. 8

ONLINE CASINO – UNCONTROLLED SOCIAL MINE

ENERGY SECTOR - 2014 n 2014, both the volume of the internal generation (2.9%; 292.9 mln.kvt.hr) as well as consumption of power (5.1%; 507 mln.kvt.hr) increased compared to 2013. In the mentioned period, the power consumption exceeds the power generation, hence, the negative balance was satisfied by the import of electricity (793.2 mln.kvt.hr). Pg. 13

Pg. 2

Georgia’s Economy Minister voices plans to overcome economic challengesPg. 2

UNITED STATES TRADE MISSION ARRIVES IN GEORGIA

ccording to the amendments made to the tax code, more than 20 thousand tax payers will not have to pay tax liability. Pg. 6

Garibashvili on Investments: Confidence in Our Country and Government Grows

Simpler Access to Gambling Games or Money Laundering Mechanism

Pg. 5

Wissol Group Opens Third Restaurant of Dunkin’ Donuts and Starts Development of Frosty Corner’s Chain

Currency

GOLDEN INFLATION: IS GOLD MAKING A COME BACK IN TRADING?

New online catalogue Pg. 14 launch

Pg. 14

Pg. 8

Pg. 12

INNDESIGN.GE

SECRET FOR R POPULARITY OF TOYOTA PRADO AND TOYOTA LA AND CRUISER 200

Koba Nakopia: Income taxes in Georgia should be abolished

TEPID ECONOMIC CALENDAR TO RESTRICT BIG-MOVES IN THE FOREX MARKET

GOVERNMENT NEWS

2 MAIN EVENTS 66 IDP FAMILIES WHO FLED ABKHAZIA GIFTED NEW HOMES

PM ON INVESTMENTS: CONFIDENCE IN OUR COUNTRY AND GOVERNMENT GROWS

amilies who were forced to flee their homes during armed conflict in Abkhazia and relocate to another region of Georgia are being offered new homes. The Government of Georgia announced all Internally Displaced Persons (IDPs) living in Akhaltsike, in the southern part of Georgia, will soon be gifted new homes for the symbolic price one GEL.

NATO DEPUTY: VAZIANI LOCATION PERFECT FOR TRAINING CENTRE

eorgia’s Ministry of Defence has received a glowing letter from NATO that positively assessed Georgia’s Vaziani military base as the “perfect location” for the NATO joint training centre. The letter, sent to Georgia’s Defence Minister Mindia Janelidze from NATO Deputy Secretary General Ambassador Alexander Vershbow, assessed his recent visit to Georgia.

NEW US AMBASSADOR AHEAD FOR GEORGIA

his year Georgia will have a new Ambassador of the United States (US) to Georgia. Current Ambassador Richard Norland is due to complete his three-year term later this summer. Once his term officially ends, he will be replaced by a new American representative. US President Barack Obama nominated American statesman and career diplomat Ian Kelly as the man who will replace Norland.

GEORGIA, ABKHAZIA DISCUSS ENGURI HYDRO POWER PLANT REHABILITATION

eorgian and Abkhazian officials are continuing to discuss the restoration of Enguri Hydro Power Plant (HPP), which sits on both sides of the de facto border of Georgia and breakaway Abkhazia. Abkhazia’s press agency ApsniPress stated Georgia’s Vice Prime Minister and Energy Minister Kakha Kaladze had met Abkhazia’s de facto Vice Prime Minister Viktor Khilchevski this week and discussed the major project to renovate and modernise the Enguri HPP. Work in this respect is due to start at the end of 2015.

GEORGIAN TROOPS BEGIN 6-MONTH MISSION IN AFGHANISTAN

he latest wave of Georgian soldiers have arrived in Afghanistan to take part in an international peacekeeping mission alongside soldiers from all around the globe. The 31stInfantry Battalion of the 3rd Infantry Brigade of the Georgian Armed Forces touched down on Afghan soil.

RIGA SUMMIT PREPARATION: GEORGIA, MOLDOVA, UKRAINE OFFICIALS MEET IN TBILISI

eorgia, Moldova and Ukraine have agreed on their joint approaches for the Eastern Partnership (EaP) Summit, due to be held in Riga in May. Deputy foreign ministries of the three European Union-associated countries met in Tbilisi to discuss their Summit plans earlier today. The parties agreed this trilateral meeting format would be attended by each countries’ foreign ministers in future.

EU WILL OFFER SUPPORT PACKAGE TO GEORGIA AT RIGA SUMMIT

he European Union (EU) is working on a support package it will offer Georgia, Ukraine and Moldova at the Eastern Partnership (EaP) Summit, which will be held in Riga in May. This news was announced by Latvian Foreign Minister Edgars Rinkevics after today’s meeting of EU Foreign Ministers in Riga.

March 16, 2015 #91

caucasian business week

want to assure every one that the government does its best to deal with the problems and to leave behind the current difficult period, existed in the region, easily, - this statement was made by the Prime Minister, Irakli Gharibashvili at Thursday’s government session. The head of the government responded to the statistical information, according to it foreign direct investment has increased in

Georgia through 2014 compared to 2013. “This gives grounds for optimism, especially in the given difficult political and economic situation in the region, which has affected to everyone, including Georgia. The increasing trend of investments flow is a good sign on this background. This means that the confidence towards the country and the government is increased”, - the Premier noted

According to him, the volume of direct foreign investment has made up 272 million USD, the figure exceeds by 39% to the preliminary data of 2013. “Three largest sectors have been revealed, their share have made up 64% in 2014. Most of the direct foreign investments have been made in transport and communication and it has totaled to 343 million USD, which is 27% of total direct foreign investment. Construction is on the second place with 295 million USD, while processing industry with 174 million USD – on the second. According to the preliminary data, the volume of direct foreign investment has made up 349 million USD in Q4, 2014, which the figure exceeds by 61% to the preliminary data of Q4, 2013”, - Irakli Garibashvili has declared. The head of the government positively estimated the previous year and talked about current challenges. “The last year has really been positive, growth has been fixed nearly in all sectors. We have contacts with the businessmen and they declare, that the previous year has been the most successful for them. However, we should face up to the reality that the whole region, including Europe is also experiencing a crisis. We should provide population with correct information, however, most of TV companies portray a different reality”, - the Prime Minister noted. Agenda.ge

GEORGIA’S ECONOMY MINISTER VOICES PLANS TO OVERCOME ECONOMIC CHALLENGES

eorgia’s Economy Minister Giorgi Kvirikashvili has some ambitious ways to help the country break free from current economic crisis. In Parliament today Kvirikashvili introduced a three-year plan involving short-term, mid-term and long term goals to help solve the country overcome the economic challenges currently facing the nation. The short-term plan involved privatization of stateowned assets and surrounded the period from now until June. The mid-term goals should be completed by the end of the year and the long-term goals extended out to 2017, Kvirikashvili said. To address a short-term goal of privatization, Kvirikashvili presented a list of assets that will be sold. He said privatisation of several assets was “a real investment in the country” and through this, the Government aimed to mobilise about $300-350 million USD (655-765 million GEL) through the sale of about 20 assets. “The short-term plan is about speeding up privatisation. The same plan includes raising the awareness of Georgia and attracting more tourists. The plan is also about attracting more Foreign Direct Investments (FDI) in Georgia. It includes reducing the administrative costs as well and implementing the large infrastructural projects.” Kvirikashvili said this process would require the taking of additional loans from different financial institutions. “It is very important to make legislative changes that will stimulate the business sector in Georgia. The Ministry of Economy is working in this direction,” Kvirikashvili said. While talking about attracting more FDI in Georgia, Kvirikashvili expressed his excitement that the number

of FDIs in Georgia had reached a five-year high. Preliminary data released by Geostat, the National Statistics Office of Georgia, noted the number of FDIs in Georgia at the end of 2014 amounted to $1.27 billion USD. This was a 39 percent increase on the same data of 2013. Looking ahead, Kvirikashvili said “very important changes” in terms of tax liberalisation will be announced in the near future. Furthermore, in order to promote exports, the new Georgia Export Promotion Institute will begin operating in May. The Institute is a daughter company of state-owned shareholding company the Partnership Fund. Kvirikashvili said negotiations with German and Italian export promoting institutes had taken place and these parties would help Georgia’s Export Promotion Institute to develop. The recent devaluation of Georgia’s national currency, the Lari, was also discussed, and the Minister emphasized the fall in value was a result of external shocks. In the past six months the Lari has depreciated by 23 percent against the US dollar. Kvirikashvili noted Georgia’s neighbouring countries were also affected by depreciating currencies and action was in place to stabilise the Lari. In terms of privatisation, it was expected the sale of about 20 state-owned assets would generate about $300-350 million USD (655-765 million GEL). This money would mainly be spend on new infrastructure projects. “The largest part of the mobilised money will be spent on infrastructural projects, which will be an important factor for growing the economy. Economic growth is

reduced and the prognosis has dropped from five to two percent. This is a fact,” Kvirikashvili said. Assets that will be sold and privatised includes: The Historical building of the National Bank of Georgia; The Ministry of Economy building; The former Bobokvati presidential residence in Adjara region; Tskneti Governmental residential buildings at the prestigious resort near Tbilisi; The building of Georgia’s Post Office; A hotel complex in Gudauri; The Presidential Residence on Atoneli St. (This was former building of the US Embassy to Georgia. The Ministry of Foreign Affairs now planned to move there); and The Tbilisi Balneological resort in Ortachala district. The Batumi Technological University has already been privatised. As for improving the country’s touristic potential, Kvirikashvili announced the Ministry had come up with an idea to create a calendar of large-scale international concerts and festivals. At the same time, he announced Georgia was currently negotiating with several low cost air carriers including Easy Jet (British), Ryanair (Irish) and Air Berlin (German). In this respect, Kvirikashvili said it was also important to support local airline companies. Finally, in order to create a better touristic environment in Georgia, Kvirikashvili believed it would be beneficial to liberalise the visa regime which was adopted by the state in September 2014. Agenda.ge

FINANCE MINISTER ANNOUNCES MASTER PLAN FOR 2015

he country’s authorities are taking action to improve the future of Georgia for the entire population. Fostering the business environment and offering better support to those in need were two of the four things introduced by Georgia’s Finance Minister Nodar Khaduri at today’s Economy Committee meeting in front of Georgian lawmakers in Parliament. He said the Ministry will focus on four key aspects and implement activities in these fields in the near future to create a better environment in Georgia. The areas of focus are: To protect the customers’ interests in the financial sector; To establish a pension reform and create a private insurance pension system; Establish deposit insurance; and Develop capital market; Khaduri said Georgia had a chance to raise its business awareness among international business communities this year and this could happen through the several important international events due to be held in Georgia in the coming months. The first event Khaduri mentioned was the annual meeting of the European Bank for Reconstruction and

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Development (EBRD), which will be held in Georgia’s capital Tbilisi from May 13-15, 2015. The event will be EBRD’s 24th Annual Meeting and the first time the conference will be held in the Caucasus region. Another event mentioned was the annual meeting of the Black Sea Trade and Development Bank, which will be held in Tbilisi in July. In addition, the European Investment Bank will open its office in Tbilisi this spring. Meanwhile a number of infrastructural projects in Georgia were coming to an end. When completed, these would offer support to the country’s economy and encourage tourism, among other things. One project almost completed was construction of the Georgia-Turkey Kartsakhi customs crossing point, Khaduri said. Secondly, Georgia was continuing to cooperate with the Multilateral Investment Guarantee Agency (MIGA) for insuring projects. In addition, negotiations were continuing between Georgia and the World Bank Group to implement the Global Infrastructure Facility (GIF) project. Georgia was looking to attract funding from the World Bank, who finances large infrastructural projects around the globe.

And finally, Georgia has been also working on inviting the Donors’ Conference to Georgia, which will discuss different issues including the Rikoti Highway project, said Khaduri. When speaking at the Committee meeting, Khaduri spoke briefly about the problems currently facing the country, such as the depreciation of Georgia’s national currency, the Lari. He noted this fact had caused prices to increase by 0.35 percent in January and by 0.11 percent in February. Khaduri also said because of changes to the value of the currency against the US dollar, the country’s foreign debt had increased. On March 18 Georgia expected to host a delegation from the World Bank, who will help the Ministry complete the debt management strategy, Khaduri stated. The policy of “tightening of belts”, which is about reducing administrative costs, will continue in 2016 as well, Khaduri said. This policy was about creating financial stability in the country. At the same time Khaduri asked all the structures which are not part of the executive authority, including the Presidential Administration, Parliament and Court, to “tight their belts” as well. Agenda.ge

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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 16, 2015 #91

PUBLICITY

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WISSOL GROUP OPENS THIRD RESTAURANT OF DUNKIN’ DONUTS AND STARTS DEVELOPMENT OF FROSTY CORNER’S CHAIN

issol Group has opened its third Dunkin’ Donuts restaurant on Freedom Square in Tbilisi and started developing another new project - Frosty Corner ice-cream store chain in Georgia. Wissol Group and Dunkin’ Donuts signed a master franchise agreement in 2014, which calls for the development of 35 Dunkin’ Donuts restaurants throughout Georgia over the coming years. According to Wissol Group President Pkhakadze, the company plans to open a further 15 Dunkin’ Donuts outlets by the end of the year and create

500 new job opportunities. Two branches of the famous donut company already operate in Vake and Saburtalo areas of Tbilisi. The new project of Frosty Corner ice-cream chain is a sub-brand of Wendy’s and mainly targets icecream and desert lovers with 25 diverse verities of ice cream, shakes and parfaits. Wendy’s icecream sub brand Frosty Corner will be developed within Wendy’s and Dunkin’ Donuts locations and separate areas as well. “We are pleased to bring Dunkin’ Donuts’ extensive range of delicious menu items and fast speed of service to guests in Georgia,” said Samson

Pkhakadze, the President of Wissol Group. “In the shortest period, we have managed to make Dunkin’ Donuts a favorite gathering place in Georgia. Therefore, we express special gratitude to our consumers, who have made Dunkin’ Donuts their favorite brand and who often visit our restaurants. Their devotion to our brand stimulates us to further enlarge the chain of Dunkin’ Donuts in Georgia. This year we will open 15 new restaurants of Dunkin’s Donuts and create about 500 new job opportunities. Introduction of the brands like Dunkin’ Donuts, a legendary American brand with a history of over 65 years of success to Georgia, underscores foreign trust in the country’s economy and business” he noted. Dunkin’ Donuts currently has more than 11,000 restaurants in 37 countries around the world, including approximately 150 locations across Europe in Germany, Austria, Sweden, Russia, Spain, Bulgaria and the United Kingdom.

Dunkin’ Donuts restaurants in Georgia feature the brand’s wide range of hot and cold coffees, espresso, cappuccino, lattes, teas, Coolatta® frozen drinks, bagels, muffins, croissants, donuts, sandwiches and varieties of wraps, all served fast in friendly, convenient locations and at a great value. The brand also offers regional menu items to cater to local tastes. “Within the new restaurant at Freedom Squire we opened Frosty Corner and started the development of a new project – ice-cream store chain in Georgia. Frosty Corner offers 25 varieties of ice-cream products and shakes prepared with special recipes, various aromas and ingredients that are especially pleasant to enjoy in warm season,” – Soso Pkhakadze said. Wissol Group Started developing Wendy’s brand in the country in 2013 and successfully operates four restaurants by now at Rustaveli Avenue, Saburtalo and Vake area.

INTERVIEW

4 HEADLINES MOODY’S: GEORGIA’S ECONOMY WILL GROW 3.5% IN 2015

caucasian business week

TEMUR CHKONIA: ‘FOR ME, RESULTS ARE IMPERATIVE, AND RESULTS ARE MONEY’

Interview with founder of Coca-Cola and Macdonalds In Georgia

eorgia’s economy will grow by 3.5 percent in 2015, reports global rating agency Moody’s. Finance Minister Nodar Khaduri positively assessed the fact that despite the tense economic situation in the region, Moody’s retained its stable outlook on Georgia’s sovereign rating, at ‘BB-’. The outlook still remained ‘positive’.

Georgia’s private sector considers Temur Chkonia to be one of the most experienced businessmen. It’s his name that’s associated with two famous brands arriving to the local market. According to various calculations, the Georgian businessman’s wealth encompasses several hundreds of millions of dollars, and if converted to the devaluated GEL, “Coca-Cola’s” president’s assets may even reach a billion. How did Temur Chkonia get started in business and what other ventures is he planning on doing in the future, on these and other matters the president of “Coca-Cola” talked in the “Business PRESS” show, which aired on March 2nd on the Palitra TV channel.

UN OFFERS GEORGIA ADVICE ON FARMING COOPERATIVES

epresentatives of a United Nations (UN) agency that aims to eliminate world hunger and ensure food security are coming to Georgia to discuss ways to develop farming cooperatives. Food and Agriculture Organization of the United Nations (FAO) consultants John Millns and Kiran Ganon have arrived in Georgia. While here, the officials will share international experience for successfully developing agricultural cooperatives with the Georgian side.

GEORGIA IN THE EYES OF 47 FOREIGN JOURNALISTS

lmost 50 journalists from around the globe are coming to Georgia to explore the country’s touristic potential. A special press tour has been organised by Georgia’s National Tourism Administration with the aim of raising the awareness of Georgia and making the country a more popular touristic destination for foreigners. A total of 47 journalists are part of the tour, from countries such as Ukraine, Armenia, Belarus, Azerbaijan, Kazakhstan and Kyrgyzstan.

SWEDEN ALLOCATES €1.5 MILLION GRANT FOR GEORGIA

he Government of Sweden has allocated a €1.5 million (3.3 million GEL) grant for Georgia’s Public Service Development Agency. Specifically, the money will be used by the Agency, a legal entity of public law operating under the management of the Ministry of Justice, to develop the services offered to those in Georgia’s central and rural areas.

ANTI HAIL PROJECT BEGINS IN GEORGIA’S KAKHETI REGION

nstallation of a revolutionary anti-hail system that aims to reduce 95 percent of hail damage to crops has started in Kakheti, Georgia’s famous wine-making region. Specifically, the anti-hail net system will be established on Chotora Mountain. Officials have selected 83 points where nets will eventually be installed. These points will cover the eight municipalities in the Kakheti region.

CHINESE, ISRAELI BUSINESSMEN TO INVEST 1 BILLION USD IN GEORGIA

- Your colleagues sometimes say that money isn’t everything. How would you evaluate it? - I disagree. For me, results are imperative, and results are money. The more there is of it, the more comfortable and powerful you are, and the more room you have to think and motivate yourself. It’s not about having lots to drink, eat or dress in, it’s about the mind having opportunity to realize all those projects which matter to me and that I want to execute. A country’s wealth is its own technological equipment. And by the way, there’s no account in Georgia – or at least non that I have information about – regarding the number of factories, their pricing, the number of businesses in Georgia and the country’s wealth itself, Georgia’s price. - Your first steps into business. - First steps… I don’t know. I’ve started quite a number of things. I don’t remember. I don’t generally like talking about the past, because it’ll waste too much of our time. That’s how it is today in Georgia, all we talk about is the past, history, songs, we write about David the Builder and ask him for help, we cry for a king who passed away in the twelfth century. - Then could you talk about how business is done in Georgia? - As it is in any other country, really – there’s nothing outstanding here. They often say that Georgian economy is a mistake. There is no such concept. Are there Georgian mathematics? There might be a Georgian school of mathematics, but it’s based on formulae created by humanity. We shouldn’t separate ourselves from them. We’re isolated and separated as we are in certain things, a case of an inferiority complex. I think the hurdles present in business development, be it per-

sonal or governmental ones, are almost the same in every country. - Could you speak step-by-step on how to make money in Georgia if you possess a viable idea, but no funds? Could you make that money? - Of course. There are often ideas from people in Georgia which are almost impossible to execute, or are too directly built on that idea and lack practical foundations. Everyone knows that we have a partnership fund here at Georgia, where according to press we have GEL 6 billion. The appeal is, you bring projects, and you’ll get financed. I’m unfortunately unaware of how long that 6 billion has resided there and when it was founded, but no one has blown a bomb yet. People talk here – I have so many ideas, if only there was money! When people claim to have many ideas, it means they have none at all. - What seems to be the problem? Is miscommunication the main culprit or is there a lack of innovative ideas in the society? - I think that there is a considerable knowledge deficit in the society. For instance, if I wish to build a Zeppelin airship all of a sudden – this is not an idea, it’s a dream. An idea is something based on formulas and prior outcomes, fortified by experience, etc. If someone has an idea to create Facebook all of a sudden – they can even do it in a garage. An idea does not necessarily need huge amounts of money. - What was the main component of your business success? Risk, experience or courage? - I think it was the strict adherence to one’s principles – the belief that once you start something you have to take it to its finish. A very long time ago our yearly turnover amounted to 700 000 laris. Can you imagine how much we’ve gone through since then? We always went forth, without looking back. - You are planning to start a new business, in spite of the fact that the country’s economy is not in a good place. I have in mind the new bread factory. What is your main motivation for doing this? - Existing economic situation should not hinder the future development. One has to be more cautious, but not stop developing altogether. The

JETRO STUDIES ESTABLISHMENT PROSPECT OF LOGISTIC CENTER

EXPORT-IMPORT INCREASED IN FEBRUARY

oreign trade turnover of goods has made up 1,433 billion USD through January-February in Georgia, the figure is 9% less comparing to the index of the previous year. According to Sakstat, export volume has totaled to 324 million USD (less by 26%), while import – 1,109 billion USD (less by 2%). The index of negative trade balance has amounted to 786 million USD and foreign trade turnover - 55% through January-February, 2015.

bread factory idea is connected to McDonald’s. Our aim is to build 22 restaurants in Georgia. We will accomplish this goal in 4-5 years, if everything goes as planned. Overall 30 million laris will be invested in this direction. I have invested at least 140 million laris in Georgia overall. I think that considering the country’s size and the fact that it’s just one man’s investment – this is not a small amount. I’m not saying this to have people applaud me – I just want our business to have support for our next steps to be successful. On the 2nd of June we are opening a new McDonalds in Zugdidi. The building will be very beautiful. My attitude toward this business is absolutely different from that of other McDonald’s owners in the world. I think that others should follow our way of doing business. Each of our McDonald’s is a distinct restaurant with its own design, architecture and infrastructure. We put these restaurants were no one else risks to build something new. This is a global statistic and not just my subjective view. McDonald’s is among the top hundred brands in the world. It’s been on the market for over a hundred years and is in the top ten global brands. These are the indicators that matter in assessing brands and not “our national khachapuri is better than McDonald’s.” Khachapuri might indeed be much better or maybe not – it’s a matter of taste and no one is disputing this question. However, one can build a city around McDonald’s and around a khachapuri place one can only build a village. This is what’s noteworthy. - Can khachapuri become a brand? - Of course it can. This requires a different kind of business zeal, different kind of funding as well as hard work. - How long is your workday? - I don’t work for 24 hours. I do not like it when people say they work for 24 hours. I can’t see how that’s possible. - If you were starting your business today, where would you invest your money? - If McDonald’s and Coca-Cola were not on the Georgian market? These same two brands, of course. bpn.ge

UNITED STATES TRADE MISSION ARRIVES IN GEORGIA

hina and Israel’s largest companies are planning to invest more than a billion USD in Georgia, said Prime Minister Irakli Garibashvili after meeting with the foreign investors today. The Georgian PM said Israeli and Chinese companies were interested in the fields of energy, agriculture and information technologies (IT).

apanese businessmen are interested in logistics of Batumi. According to the Chamber of Commerce of Adjara, a business meeting has been held between the chairman of Chamber and representatives of Japan External Trade Organization (JETRO) at the Chamber of Commerce of Adjara on Friday. As of the Chamber, Japanese businessmen discuss Batumi as trade hub.

March 16, 2015 #91

United States (US) delegation has arrived in Georgia for the purpose of deepening trade and economic ties between Georgia and America. The US Trade Mission arrived in Tbilisi earlier today and in recent hours, the group met Georgia’s Prime Minister Irakli Garibashvili. The US delegation consists of large number of US company representatives and is being led by US Department of Commerce Deputy Assistant Secretary Matthew Murray. At the meeting, the sides discussed Georgia’s investment environment. In this context, the Deep and Comprehensive Free

Trade Area (DCFTA) was heavily discussed, as were the opportunities this agreement would bring to Georgia and how the country could best use these opportunities to its advantage. The DCFTA is an integral part of the European Union-Georgia Association Agreement, which was signed in June last year. Garibashvili noted Georgia’s economic policy focused on free, transparent, inclusive, and sustainable development, while a number of legislative amendments had been made to ensure a free and competitive market, protection of property rights including intellectual property, and free access to

an independent judiciary. Other topic discussed at the meeting was the construction of the Anaklia deep sea port and the Tbilisi Silk Road Forum, which will be hosted by Georgia on October 15-16. Garibashvili emphasized in 2014 trade turnover with the US had grown by 26.8 percent compared to 2013, and comprised of more than 1 billion GEL. In addition, exports grew by 52.1 percent, which totalled 455.8 million GEL, and imports grew by 26.8 percent and amounted to 630.5 million GEL. The Prime Minister stressed the importance of the US Trade Mission’s visit to Georgia and noted it was an important component of the high-level trade and investment dialogue between the two countries. Today’s meeting was attended by Murray, US Ambassador to Georgia Richard Norland, USAID Director Stephen Haykin, US Department of Commerce Senior Policy Advisor for Caucasus and Central Asia Danica Starks, President of the American Chamber of Commerce in Georgia Sarah Williamson, and representatives of Dow Chemical, Procter and Gamble, Honeywell and other large companies. Meanwhile the Georgian side was represented by Garibashvili, Deputy Prime Minister and Minister of Economy and Sustainable Development Giorgi Kvirikashvili, Secretary of the Economic Council under the Prime Minister Giorgi Gakharia and Director of the Georgian National Investment Agency Giorgi Pertaia.

March 16, 2015 #91

ECONOMIX

caucasian business week

BANK OF GEORGIA EXPOSED IN CRIMINAL TIES WITH PROSECUTOR’S OFFICE

TOP STORY

The Bank Issues 700 000 GEL for Purchase of 8 000 GEL Property

usinessman Valeri Shoshiashvili is one of the thousands of victims, who have lost property of several millions of GEL under pressure of the Prosecutor’s General Office and other law enforcement structures amid the United National Movement (UNM) governance. In many characteristics the case with Valeri Shoshiashvili is almost identical to all other cases, but the peculiarity of this case is the fact, besides former state officials, one of the commercial banks has also taken part in extorting considerable funds from the businessman. Valeri Shoshiashvili directly accuses Bank of Georgia of direct collusion with the Prosecutor’s Office, as the bank has issued a loan to the businessman under instructions of Beqa Basilaia, the former employee of the Prosecutor’s Office. By the way, later Beqa Basilaia appeared as a defence lawyer and human rights defender in behalf of the UNM high-ranking officials. Relations between UNM and Valeri Shoshiashvili started in 2008, when the businessman transferred 300 000 GEL to the ruling political party. “Prior to the 2008 parliamentary elections, they called me to the Finance Police and requested from me to finance the UNM election campaign. Naturally, that time I could not refuse the request and I could not even think so. I knew the fate of other businessmen who had refused the UNM request. Having analyzed the situation, I realized I had to finance the UNM election campaign and transferred 300 000 GEL to them”, Valeri Shoshiashvili said and added he transferred considerable funds to the UNM in 2010 too.

“Later our cooperation continued as part of the 2010 municipal elections. The Finance Police called me again and requested finances again. I obeyed them again and paid nearly the same amount for the election campaign”, the businessman said. In 2012 the Finance Police was replaced by the Prosecutor’s Office to keep relations with Valeri Shoshiashvili, who asserts the office employees Beqa Basilaia and Zaza Maludze requested from him to pay 5 million GEL, but later the figure was reduced to 1 million GEL. “Basilaia requested from me to reregister my property to a concrete person, but I refused the request under the pretext the property had been mortgaged by Bank of Georgia, but they told me the issue would be resolved without problems and they would solve all details with Bank of Georgia themselves”, Valeri Shoshiashvili noted. The Prosecutor’s Office had to genuinely settle the issue with Bank of Georgia after it turned out Valeri Shoshiashvili had no 1 million GEL. Beqa Basilaia contacted a Bank of Georgia representative and the bank approved a 700 000 GEL credit to Valeri Shoshiashvili without any procedures. “Beqa Basilaia requested that I had to buy a culture house in the village of Gremi, the Kvareli District, at 700 000 GEL. He explained Bank of Georgia would lend this sum to me. I have preserved a SMS notification proving this fact. In reality, the audit valued the property at 8 000 GEL. The commercial bank violated all standards having issued to loan for the asset. Basilaia phoned a Bank of Georgia credit officer from

his own study and instructed him to directly issue that sum to me without any problems. In several hours the bank genuinely transferred the sum to my account”, Shoshiashvili noted. The businessman assures previously he had normal relations with Bank of Georgia for many years, but the bank had refused to issue 30 000 USD credit to him. Later the bank issued 700 000 GEL to him without any procedures. Before, I had taken an about 1.1 million USD credit from Bank of Georgia and I had mortgaged movable and immovable properties and the credit limit had been fully exhausted. Prior to these developments I has asked for a 30 000 USD additional credit to Bank of Georgia, but they refused under the pretext of the exhausted limit. But surprisingly, after the interference of the Prosecutor’s Office, they transferred 700 000 GEL to me in several hours. I would like to stress this loan had got a concrete purpose with a cadastre code to purchase the culture house in Gremi”, Shoshiashvili asserts. This statement is proved by the credit agreement that clearly shows that Bank of Georgia has issued 700 000 GEL for purchase of an 8 000 GEL property. Under the Bank of Georgia regulations, a bank representative was to evaluate the property, first of all, then the commission should have discussed the proposal and the liquid value of the property should have been determined in case of the loan approval. The very liquid value was to be issued as a loan. According to the Bank of Georgia standards, the liquid value constitutes about 40% of total value of the property. Under this standard, the Gremi Culture House value should have been nearly 2 million, but this is an absurd. The property had been previously put out for auction. For the first time, the asset was valued at 8 000 GEL, but the auction failed, next time the value marked 5 600 GEL and the second auction failed again”, the businessman says. Valeri Shoshiashvili asserts besides representatives of the Prosecutor’s Office, Bank of Georgia is also guilty in his misfortune. “I believe the justice will reign and I am sure the crimes of Bank of Georgia and the Prosecutor’s Office will be proved. I will definitely demand for remuneration of moral and financial losses from unjust steps of Bank of Georgia and the Prosecutor’s Office. Before Bank of Georgia, I had cooperated with ProCredit Bank and today I am sure the Authorities specially pushed me to Bank of Georgia to further implement their plans. Initially, Bank of Georgia offered genuinely attractive and dizzy conditions with low interest rates and other preferences. But later I realised I dad made a mistake of my life by starting partnership with Bank of Georgia”, Shoshiashvili noted.

ONLINE CASINO – UNCONTROLLED SOCIAL MINE Simpler Access to Gambling Games or Money Laundering Mechanism

nline Casinos – an army of losers nourish the gambling business. The gambling business is being developed at high paces in Georgia. Along with technological progress, the business penetrates wider into more and more social strata, into various geographical areas and so on. Several years ago citizens were to personally visit the clubs, but today a PC with internet connection enables to dive into the gambling games without leaving home and without many efforts. As a rule, any changes and development in this or that sector results in amending the legislation to introduce new regulations. The gambling business, however, is regulated by the legislation that was adopted far ago, when only several happy persons owned PCs in Georgia. Today over a half part of Georgian citizens have an access to the internet connection and this is radically different reality and this reality actualizes new challenges arisen before the online service providers, including online gabling business providers. These challenges are relevant for the Authorities too as they are responsible for establishing unbiased and modern rules of game in this or that sector. The gambling business always remains as a relevant issue. There is no unanimous position and attitude to this issue. A part of citizens consider it as a source for their misfortune, while another part makes fortune thanks

to these games. Theoretically, gambling games are an instrument for entertainment, but there are a very few individuals who would only get entertained by gambling games. The gambling business is not an only entertainment instrument and this conclusion may be done without much logical and analytical considerations. The business exists, moreover, it is developed and the sector registers more losers than winners. This signifies the gambling business exists at the expense of an army of losers (everything depends on the appetite of the casino). The more gamers, the more of them joins the category of losers. Indeed, the quantity of winners also grows, but the society becomes loser, because casinos register more losers than winners. The only way the “loser” part of the society can somehow return the losses is related to taxes casinos pay to the state budget, as these sums go back to the society in various forms (asphalted roads, pensions and so on). The gambling business, however, cannot bring much benefit even in this way. The ratio of casino payments in the tax revenues is under 1%. Thus, the gambling business makes almost an everyday expansion in the public life. As a result, the number of loser citizens grows and the negative results also increase. Growth in the quantity of gamers (including underage gamers) is not an only negative result. Online casinos bear additional risks too, including money laundering and criminal use of bank accounts in online casinos. It should be noted this issue are often covered by various international organizations. Recommendations of the Financial Action Task Force (FATF) and the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) also prove this consideration. These recommendations call for improving online registration procedures in the online casino games space. Under the current practice, users of internet casino services are able to pass registration and the validity of information is not verified. As a result, users are able to

insert faked data or get registered as other persons. There are no regulations for identification and verification, and casinos are able to use unreliable methods and personal databases cannot be verified. For example, a part of casinos receives information on users in the form of names and personal numbers indicated during the online registration, while no copy of ID card is required to verify whether the name and ID card numbers correspond to each other. Moreover, no control exists for preventing a use of faked name and ID card number. Nor money transfers to online casino accounts are controlled. Moreover, if the user transfers money to a bank account or a credit card, the personality is not verified. FATF and MONEYVAL recommendations call for eradicating this problem, because similar practice contains risks of money laundering, financial support to terrorism and other illegal activities. Currently, online casino accounts represent uncontrolled channels for money turnover. Therefore, all registered bodies must be valuably verified to examine the created personal database. It should be noted this system has been established in the developed countries and moreover, the state carries out active control so as personal registration in online casinos be carried out in line with standards to rule out personal registration with faked data. Thus, currently online registration practice in Georgia contradicts to the international standards. Moreover, there are no similar standards in Georgia and consequently, competent bodies cannot control casinos. Therefore, online casino accounts may be used for money laundering and criminal financing. These accounts seem to be alternate system for money transfers and financial turnover in this system is not controlled. This is only one issue among many other problems in the gambling business. All of them cannot be covered in one article or even one issue of the newspaper. At the same time, actualization of each similar problems and activities for their resolution will lead us to establishment of modern and civilized regulatory norms in the gambling business.

E5P INITIATES DISCUSSION OF THE BENEFITS OF ENERGY EFFICIENCY INVESTMENTS IN GEORGIAN MUNICIPALITIES The international multi-donor fund managed by EBRD – E5P – organized a seminar to discuss implementation and funding of energy efficiency projects in Georgia

seminar organized by the Eastern Europe Energy Efficiency and Environmental Partnership (E5P) on “Investment opportunities for Georgian municipalities within the framework of E5P” took place on March 13th 2015 in Tbilisi, Hotel Courtyard Marriott, 4 Freedom Square. Georgia has recently joined the Eastern Europe Energy Efficiency and Environment Partnership (E5P), which is a multi-donor international fund set up to promote energy saving investments in the Eastern Partnership countries. E5P supports projects in the municipal sector by providing grant co-financing alongside loans from the participating International Financial Institutions (IFIs) such as the EBRD, EIB, CEB, NEFCO, NiB, KfW and the World Bank. The Fund has resources of close to €170 million with €20 million allocated as grant financing for Georgia. Overall the European Union is the largest Contributor to E5P with pledged funds of €70 million. Contributors to the Georgian window of E5P include: the EU, Czech Republic, Denmark, Estonia, Georgia, Germany, Lithuania, Norway, Poland, Sweden and the USA. The objective of the Seminar was to learn about investment needs of Georgian municipal companies and find ways to match these with the grant and loan co-financing mechanism offered by E5P. Compared to the EU average, the energy intensity of Georgia is about 2.5 times higher. Georgia has vast resources of almost all types of renewable energy and an untapped potential to save energy in its buildings. Also waste management and public transport can benefit from E5P grant funds. The participants to the Seminar included representatives from the Georgian state authorities, municipal companies, International Financing Institutions active in E5P, Ambassadors and honorary representatives from the donor countries, and the European Union as the largest contributor to the Fund. According to Anders Lund, Е5Р Fund Manager: ‘The seminar provided an opportunity to understand energy efficiency problems of the municipalities in Georgia and find solutions to them in a group of key players in the sector’. David Lezhava, Deputy Minister at the Ministry of Finance of Georgia, has commented: ‘It is an excellent opportunity for Georgia to finance environmentally friendly investments. We are just starting and are hopeful that E5P resources will increase as we move forward. Joining E5P instantaneously boosted demand for such projects. Demand is so high from Georgian municipalities and there are so many project proposals from the donors and IFIs that we will have to select only the very best.’

ECONOMY

caucasian business week

March 16, 2015 #91

OVER 20 000 TAXPAYERS FREED FROM TAX LIABILITIES

GEOSTAT RELEASES JAN-FEB FOREIGN TRADE REPORT

he value of Georgia’s External Merchandise Trade (export and imports) is on a downward trend, claims Geostat. In the first two months of the year, Georgia’s External Merchandise Trade (excluding non-organised trade) amounted to $1.4 billion USD. This was a nine percent drop when compared to the same figures of 2013. Geostat preliminary data revealed the value of exports decreased by 26 percent year-on-year, and reached $324 million USD, while imports dropped two percent and amounted to $1.1 billion USD. The trade deficit equalled $786 million USD and its share in the country’s total trade turnover constituted 55 percent.

Geostat noted more detailed data on External Merchandise Trade of Georgia will be published on March 23, 2015. Meanwhile, the number of Foreign Direct Investments (FDI) in Georgia is at a five-year high. Preliminary Geostat figures showed the number of FDIs in Georgia at the end of 2014 amounted to $1.27 billion USD – a 39 percent increase on the same data of 2013. Geostat figures revealed this was a five-year high; where in 2013 FDI’s amounted to $942 million, in 2012 FDIs reached $912 million, in 2011 FDIs reached 1.1 billion and in 2010 FDIs amounted to $814 million. Moreover, 21 percent ($266 million) of the total $1.27 billion of FDIs were reinvestments, stated Geostat.

“PARTNERSHIP FUND” TO NAME PARTNER IN REFRIGERATOR INDUSTRY PROJECT

artnership Fund”, agriculture is one of its priority directions, works on the implementation of fruit and vegetable refrigerator industry project. The Fund announced interest expression on this purpose. Application submission will be

finished by the end of March and then candidates’ each proposal will be discussed. As management of Partnership Fund declares. The proposed business model also includes collection of fruits and vegetables from small farmers, which will improve efficiency of supply chain. The project envisages, arrangement of 4700 t fruit and vegetable refrigerator industry. The Fund carried out a research with the external consultants in this direction, which is available to any interested person in the process of interest expression. The supposed cost of the investment is 7 million USD. Partnership Fund is ready to make co-funding of the project.

ccording to the amendments made to the tax code, more than 20 thousand tax payers will not have to pay tax liability. Amendments have been made to the tax code with the initiative of Ministry of Finance ((December 12, 2014, Georgian code N 2946), Part 37 of Article 309 has been formed in a new edition and according to it, the following tax liabilities are the a subjected of write-off: A) Tax liabilities, originated before January 1, 2005 and prior to the enactment of this subsection will be written off, if assets are not fixed to the person. B) Tax liabilities will be written off if fines, charged on the recognized tax debt, originated before January 1, 2009 will be paid and if assets are not fixed to the person.

C) Imposed fines to the private individuals for violation of cash register usage prior to January 1, 2013. According to the preliminary calculation, the amount of written off sum totals to 1 billion GEL. As of March 11, Article 37 of Tax Code 309, tax liability of 334 315 514, 10 GEL has been written off to 3612 tax payers. The aim of this amendment is to stimulate and support the business. This amendment enables tax payers, who have accumulated debt and are not able to pay it, to continue their business activity from a clean sheet of paper and strengthen their own families and county’s economy. The Revenue Service makes debt write off with its own initiative (Article 309, Article 37 of the “a” and “c” of the cases) as well as on the base of the taxpayer’s appeal.

15 MILLION GEL REQUIRED TO MAINTAIN GAS TARIFF

ice Premier and Minister of Energy Kakah Kaladze declared after the meeting with the members of Business Association, that gas tariff would be kept for the commercial consumers before May 1 and it would be made at the expense of subsidy. According to him, gas tariff change will become a subject of discussion. “An announcement has been made about the tariff, that it will be kept before May 1 and it is made at the expense of budget subsidy. Of course, the government should discuss to continue the subsidy or not in the future. If subsidies have not taken place today and the licensee company would have a loss. It is not in the state’s interests. On contrary, we want strong, lightened and developed Georgia”, - Kaladze has declared and added, that it costs 15 million GEL to the budget.

Irina Milorava, chairman of Energy and Water Supply Regulatory Commission has also made a comment, linked to the tariff. According to her, natural gas tariff for commercial sector is regulated from 2007 and it is not a regulation sphere of the Commission and distributor companies establish gas price. “Official application about the review of gas tariff has not been submitted to the Commission yet, but we might received it by the end of this month. GEL change has an impact on thermal power stations as well. However commission will define tariffs in this sector. Respectively, they cannot grow costs by themselves, they must appeal to the Commission”, - Milorava has stated. To remind, gas distribution companies were planning to increase gas price to the commercial sector from March 1. They explained, that they were acquiring distributing gas in USD and prices have been increased due to GEL devaluation.

AYFB MEETS LOCAL FARMERS IN NIQOZI VILLAGE AS PART OF DEVELOP BUSINESS PROJECT

he Association of Young Financiers and Businessmen (AYFB) has met with representatives of the local farmers’ association in the village of Niqozi, the Gori Municipality, adjacent to the conflict zone. The main objective of the meeting was to iden-

tify the existing problems and to outline an action plan for the “Niqozi” farmers association. AYFB members have visited about 20 small farms in the village of Niqozi. All of them have got much potential for development in case of state support. • A plants nursery is also very interesting to de-

velop not only a concrete business, but also to provide the whole region with new species received through modern technologies. • AYFB calls for paying special attention to creating educational initiatives. Modern knowledge in various fields of agriculture should be applied in real practice. To this end local farmers and enterprisers should be involved in determining the priorities. Trainings and other retraining projects should be also implemented on the local level, at the centers adapted to the local environment. The meeting in Niqozi has outlined a characteristic problem. Namely, local farmers lack for information on the state-initiated programs. Consequently, they have no access to the opportunities of these programs. According to AYFB position, the problems Niqozi farmers have put forward fully meet the parameters of the Plant the Future, the Agriculture Ministry’s new program. Consequently, the organization approves the project submitted by the Niqozi farmers’ association that calls for developing plants nurseries and organizing modern training centers locally. The meeting was held in Niqozi as part of Develop Business, a joint project of AYFB and Beeline. The project makes focus on problems that exist

before the development of small entrepreneurship. Under the project, we want to express our support to the state-initiated projects and make our contribution to stimulating the very important segment of the economy. The project determines the self-employed segment as a target audience. This segment registers 60% of the employed citizens in Georgia. Consequently, research of problems before the self-employed, our efforts for their resolution, as well as popularization of businesses of the self-employed segment, are additional steps for improving Georgia’s social and economic situation. The project support is provided by Vimpelcom that operates under the brand of Beeline in Georgia. Vimpelcom joined the small entrepreneurship support projects as part of Make Your Mark, the company’s corporate social responsibility campaign. Vimpelcom has been implementing this campaign in all countries, where it operates. Under the project, AYFB continues meetings with representatives of micro and small business sectors, identifying their problems and simplifying their access to the due state programs. Association of Young Financiers and Businessmen – AYFB.

INVESTMENT

March 16, 2015 #91

caucasian business week

5 YEARS’ MAXIMUM OF FDI RECORDED IN 2014

THE LARGEST INVESTOR COMPANIES IN GEORGIA

ccording to the preliminary data, direct foreign investment volume has made up 1,272 billion USD in 2014, the figure exceeds by 39% to the predicted data of 2013, while 39% - to the exact data of the same year. According to Sakastat, previous year’s investments has been on 5-year maximum. However, reinvestment volume of direct foreign investment has totaled to 21%. Inflow of the investments has been 2,198 billion USD in 2014, while outflow over 925 million USD has been fixed in the same year. As of the preliminary data of 2014, the share of

he largest investor in Georgia in 2014 is BP group which is registered in Azerbaijan- Second place holds Chinese Hualing international special economic zone, And on the third position is AGL. Investment by companies are not published due to confidentiality, but ranking of leading investor companies are public.

three big investor countries has amounted to 65% in the direct foreign investments. Netherland is on the 1st place with 26%, while Azerbaijan with 24% - on 2nd , while china with 15% - on 3rd. The share of three biggest sectors (according to the volume of foreign direct investment) has totaled to 64% in 2014. However, most of the foreign direct investments has been made in transport and communication and the figure has made up 343 million USD, it is 27% of the total direct foreign investment. Construction is on the 2nd place with 295 million USD, while processing industry – on the 3rd with 174 million USD.

According to preliminary data, the volume of direct foreign investments in Georgia,in 2014 grew by 39% and reached 1,272 billion US dollars. In the field of Investor countries Netherlands is on the first place with 26% of share.Between sectors, the biggest capital implementation were in the transport and communications sector,with the propotion of 27%.

GOVERNMENT PLANS TO INTRODUCE EXPORT PRIVILEGES FOR TURKISH INVESTORS

he Government of Georgia plans to introduce export privileges for Turkish investors, so that they could export products manufactured in the country within an association agreement with the EU. This possibility is provided by the principle of the so-called “diagonal cumulation”, according to which, the products produced on the territory of Georgia from Turkish raw materials will be deemed Georgian, and accordingly, will enjoy the free trade regime. However, to make use of this principle it is necessary to introduce a number of changes in the free trade agreement between Turkey and Georgia, which are now being developed. To date, the products manufactured in Georgia from the Turkish raw material return to Turkey, and from there are exported to the European

Union because 90% of the value of the goods is not of Georgian origin - that is, for example, the fabric from which clothes will be sewn must be made in Georgia, otherwise it will not use the trade preferences in Europe. In the case of the appropriate changes in the free trade agreement between Georgia and Turkey, the goods produced in Georgia from Turkish raw materials will be considered as Georgian. Ministry of Economy of Georgia declares that it will encourage the influx of Turkish investments. According to the head of the Department for External Relations of the Ministry Mariam Gabunia, mostly it will affect textile producers. “Representatives of the textile business are waiting for adoption of the cumulation principle in the free trade agreement, as in Georgia there are many enterprises which sew products from imported raw materials, their main investors are Turkish companies who then sell products in their own country, or export them to the EU,” - she notes. While there is no exact information about when the document is signed, the Government is currently considering proposals of the Turkish side, and then a document which is to be ratified by the Parliament of Georgia and Turkey must be signed. “We’ll speed up the process, as this issue is of great importance for the Georgian business,” Mariam Gabunia adds.

DIRECT INVESTMENTS FROM RUSSIA GREW 33 TIMES IN 2014

ost of the direct foreign investment were streamed from Netherlands in Georgia through the last year and the figure totaled to 331 million USD. As of Sakstat, it is 26% of the investments (1,272 billion USD) made in the previous year. Investment volume has doubled in the last year and the index has been on 5-year maximum. Number two investor is Azerbaijan, over 302 million USD is invested in Georgian economy through the previous year and the index exceeds 3,7 times. However, China is on the third place, investment volume has totaled to 195 million USD in 2014,

while in 2013 – 90 million USD. Then comes the United Kingdom with investment volume of 114 million USD in 2014 and 55 million USD in 2013. Investment amount has been reduced from 143 million USD to 85 million USD from Luxemburg in 2013. Then it is followed by USA, over 80 million USD capital has been invested in the last year, while 45 million USD in the previous year. Investments are increased from Turkey as well – from 43 million USD to 67 million USD. Investments from Russia have made up 2 million USD in 2013, while the figure is increased 33 times (66 million USD) in 2014.

FOREIGN INVESTMENTS IN 4Q14 MARKED 349 MILLION USD

s of “Sakstat’s” preliminary data, direct foreign investment volume made in Georgia has totaled to 349 million USD in Q4, 2014, the figure exceeds by 61% to the pre-

liminary data of Q4, 2014, while - by 54% to the exact data of the same period. Most of the foreign capital has been invested in Georgian economy through Q3, 2014 and the figure has amounted to 508 million USD. Investment of over 265 million USD has been made in Q1, while 151 million USD in Q2. However, investment stream has amounted to 607 million USD and outflow 257 million USD in Q4. Most of the investment (84 million USD) has been streamed from Azerbaijan through OctoberDecember, 2014, while most of the money (90 million USD) has been invested in transport and communication.

TURKISH COMPANIES INTERESTED IN INVESTING IN ENERGY AND TEXTILE FIELDS

fter Georgia-Azerbaijan-Turkey Business Forum, the International Investors Association expects specific investment projects to be carried out in the current year. The Association’s Secretary General states “Commersant” that within the Business Forum held in Batumi on March 6the main interest was expressed in the energy, agriculture and tourism sectors. According to Osman Chalishkan, the Forum was attended by a representative of the Energy Ministry and the projects that are planned to be carried

out will be considered at the autumn meeting. In his words, Turkish companies are interested in construction HPPs as well. The Secretary General at the International Investors Association notes that in the near future Turkish investments will be made in the textile field, the factories will be opened in Samtredia, Guria and Kutaisi and the products sewn there under Made in Georgia label will be sold in Europe. Chalishkan does not specify the company and investment volumes.

INVESTMENTS IN THE FINANCIAL SECTOR MADE UP 5-YEAR MINIMUM IN 2014

oreign investors have expressed the greatest interest towards the transport and communication sector in Georgia through the previous year and foreign direct investment of 343 million USD has been made in this business in 2014. According to Sakstat, this branch is the number one in order of direct foreign investments of 2014 in the economic sectors and investment volume is increased 2,45 times comparing to the previous year. Construction is on the second place and investment volume has made up 295 million USD in 2014, while 50 million USD – in the previous year. Processing industry is on the third place, investments of 174 million USD have been made in this sector in 2014, however 100 million USD has been invested in this sector though 2013. Energy is on the fourth place, investment volume is reduced 2,5 times in 2014 and the figure has amounted to 99 million USD.

Energy is followed by construction with foreign capital investment of 87 million USD in 2014 and 42 million USD in 2013. Financial sector is on the sixth place, foreign investments have been reduced from 166 million USD to 78 million USD. This is the 5-year minimum. Over 48 million USD has been invested in the mining industry, while 44 million USD – in the last year. Direct foreign investments of 40 million USD have been invested in hotel and restaurant business in the last year, while capital of 13 million USD has been streamed out from this business in 2013. Agriculture and fishing are on the 9th place, however investment of 19 million USD has been made in the previous year, while in 2013 – 12 million USD. Healthcare business finishes the top ten with 1 million USD, the figure is the same, as it has been in 2013.

QUOTES

caucasian business week

“Gas prices to remain unchanged for the private sector” SALOME VARDIASHVILI, Energy Ombudsman According to Ms Vardiashvili, there is no viable prognosis for the near future to be made in this regard, however the gas prices wll remain the same for the private sector for now. Energy Ombudsman spoke on this issue during the meeting of the energy ministers and the Business Association of Georgia. “Private sector has raised many questions in this regard today, including the tariff-related ones. The majority of private sector companies are interested whether the rates are due to increase for them. As concerned parties have been informed and as the gas companies themselves have announced, no increase in gas prices is going to take place for the commercial sector yet. Everyone will pay the same fixed tariff. However, we cant make prognosis for the near future so far.”

“Sixteen new power plants will be built in Georgia”

SULKHAN ZUMBURIDZE, manager at the Georgian State Electric System (GSE) According to Mr Zumburidze in recent years the company has moved to a new stage of development, and this period was the most important for the company - in particular, the rehabilitation of dilapidated infrastructure has begun as well as power lines built 30-40 years ago, substations which have not been repaired for several decades.

“Substations are almost updated, and during 2015 the GSE will get practically new stations. In addition, we are currently implementing the project “Black Sea Energy Transmission System,” which has no analogue in the region. It became an incentive to attract investment in the country - 7 new power plants have already been built, currently 16 new hydropower plants are under construction. In Gardabani construction of a new power plant with a capacity of 230 megawatts has begun. Apart from that, contracts for the construction of another 82 hydroelectric power stations have already been signed, and projects are in different stages, “- he notes. According to the GSE manager, two transmission lines in western Georgia have been renovated, 500-kV power line connecting the energy systems of Georgia and Azerbaijan has been built, which will increase the degree of energy security of the two countries and ensure stability of supply. “We have also signed an agreement on construction of a new 500-kV transmission line between Georgia and Armenia with the Armenia Energy Power Operator that will double the level of security of electricity supply in Tbilisi. In addition, on October 31 we signed an agreement to begin the rehabilitation process of a 500 –kV substation in eastern Georgia, the implementation of which will begin this spring and be completed in 2016,”- states Sulkhan Zumburidze.

“In two years fiber broadband will become accessible in every part of Georgia”

JEMAL VASHAKIDZE, Deputy Head of Communications, IT and Innovations Department at Ministry of Economy According to the ministry of economy potential investors will be informed in this regard and the countrywide construction will begin in the near future. Fiber broadband infrastructure is expected in even the mountainous regions of Georgia. Local providers will also be able to

take part in the project, Mr Vashakidze adds. “The ministry has considerable plots of land that belong to the government right now. Optic fibers will be built on these specific plots of land – future investors will gain possession of this land. Investors can be both local or international, we do not put any restrictions on these criteria.” This is a quite serious project and its execution will give the population a very wide variety of Internet services to choose from. Competitiveness of the telecommunications sphere is bound to increase threefold. As a result, the entirety of Georgia will be covered with fiber 4G network. This is a very grand scale.” Today’s global world requires this type of services to be available to our population. It is almost unimaginable for the country to develop otherwise, notes Mr Vashakidze. “Noteworthy is that any local provider can obtain the already existing telecommunications infrastructure in the countryside of Georgia and continue building fiber broadband on their own. This will significantly increase the pace of the construction. Also, the local community will have new jobs created for them, which is a very positive impact of this countrywide project,” Mr Vashakidze concluded. A study found that only 45% of Georgia’s population has Internet access, out of which only a very small portion enjoys fiber broadband access.

“Income taxes in Georgia should be abolished”

KOBA NAKOPIA, businessman In a situation when the International Monetary Fund (IMF) recommends the Government of Georgia either to reduce budget expenditures or increase taxes, the businessman Koba Nakopia has initiated the abolition of the income tax.

According to him, this could be a way of strengthening the national currency. “It is impossible to raise taxes in Georgia today, because under the constitution this requires a referendum. Moreover, most likely this issue will not be resolved even at the Parliament, since the majority of deputies in all fractions are against raising taxes. Moreover, the economy development needs alleviation of the tax burden. In particular, in order for the businesses to be able to reinvest their income, it is necessary to abolish the income tax. I can give an example of Estonia, where the business is free from paying income tax, but pay tax on dividends. When a business does not pay income tax but a situation in the country is normal, why not reinvest the released funds? This will be a very good incentive, which will improve the investment climate in Georgia,”- the businessman notes. At the same time, he agreed with the recommendation of the IMF to reduce government spending.” Costs should be minimized and maximum possibilities to attract investors into the country should be created. A growth of foreign investment is one of the ways to stabilize the national currency,”- Koba Nakopia notes.

March 16, 2015 #91

COMPANY NEWS

caucasian business week

CZECH REPUBLIC POSTPONES UNIVERSITY TOWER IN BATUMI RATIFICATION OF GEORGIA’S SOLD FOR 25 MLN TO TRANSFORM ASSOCIATION AGREEMENT WITH EU IN TO HOTEL

zech parliament postponed the ratification of the Association Agreement with the EU. The reason is the company “Energo-Pro`s” dispute with the state of Georgia - Rustavi TV company reports. The Czech local press reported that the energy distribution company, which is one of the major players in the Czech market, would possibly bear up to 60 million dollars damage. This is the amount the Georgian side charges the company. Czech Foreign Minister told the local press that theof state resources were under threat. According to Lubimir Zaorálek, this was the reason for blocking the ratification of Georgia-EU Association Agreement. The ratification in the Czech par-

liament has already been delayed for 6 months. The government does not speak about the reason for asking the money from “Energo-Pro is” . Neither does the Ministry of Energy and “EnergyPro” itself. Czech Senator, MEP Jaromir Stetina compared this topic to useless crossfire. “It becomes a useless crossfire. We know that “Energy-Pro” is a solid company, so it”s not clear why the repressive measures are taken against it; on the other hand, the fate of the Association Agreement should not be threatened because of a particular trade deal , “said Jaromir Stetina. Discussion of the issue was to begin tomorrow, but lawmakers postponed the ratification process for April 1.

NEW GEORGIAN BRAND OF WOODEN EYEGLASSES APPEARES ON GEORGIAN MARKET

young designer from Georgia Levan Lashkarashvili created a wooden eyeglasses brand. Lashkarashvili sells handmade sunglasses both in the local and foreign markets on the basis of individual orders. His glasses are made under the Lwood Eyeglasses brand, the product’s price starts from $ 300. Lashkarashvili began making eyeglasses about 2 years ago. During this period he had orders mainly from Israel. Currently, several countries

are interested in his wooded glasses. “Glasses cost starts from $ 300, in the case of an individual order the cost may be slightly higher as it depends on design and material. The material may be a maple tree, olives, African and Georgian walnuts. I began to do eyeglasses boxes. I am also working on a prototype of frames of various design as well as dioptric lenses and carrying boxes, which will also be sold at an available price “, - says Lashkarashvili.

RUSSIANS WANT KHINKALI EXPORT

here is a demand on khinkali, produced in Georgia, in Russia. Several producing companies of frozen products confirm the fact. Ketevan Mikadze, director of LLC “Ravha” declares, that Russia has an eager to make export of frozen khinkali, but the concrete negotiations have not been conducted yet. “Three is a whish. They want to bring khinkali in Russia, but it is not

possible at this stage. The process is linked to big expenditure. You know, that meat products spoil easily. Their transportation must be made by the refrigerators, where temperature totals to – 19 degree. I do not think that it will be made in the near future”, - director of LLC “Racha” declares. Corresponding offer has been submitted to Ministry of Agriculture, but concrete works related to the export have not been launched yet.

MEAT COMPANY FOUNDED IN GEORGIA BY GEORGIAN-SWISS COOPERATION

roduction of meat was launched by “Blauenshtain Georgia” company established with the Georgian-Swiss investment which also owns the cattle farms in the region of Racha. For the first time in Georgia, “Blauenshtain Georgia” has produced the so-called “flesh meat” meeting modern standards. Cattle is slaughtered in a special way after that meat is placed in refrigerators with appropriate humidity and temperature for 14-21 days in order to minimize the acidity in the meat. Meat produced by this method is distinguished with remarkable flavoring qualities. At this stage the company produces 10 varieties of frankfurters, 3 varieties of sausages and a variety of dishes made according to the European recipe. The factory is equipped with the latest Swiss-French technology. Hygiene practices are fully protected. Laboratory studies are conducted continuously at

all production stages. The company owns cattle farms in the villages of Racha-Lechkhumi region. In the village of Sori, the company built a modern slaughter house which meets international standards. Veterinary control and laboratory studies are constantly performed to ensure manufacturing of safe, high-quality products. “Blauenshtain Georgia” invested a total of GEL 15 million and employed 60 people. The company’s founder Max Blauenshtain familiarized Minister of Agriculture of Georgia Otar Danelia with the products manufactured at the enterprise that will be sold on the local market. “Healthy Holding” is another successful example of Georgia - Swiss business cooperation which was founded in 1997 and includes mineral water company “Healthy Water”, “Marneuli Food Factory”, the distribution company “ENGADI”, innovative enterprises in rural farming “Marneuli Agro” and Teleti “Healthy farm”.

disputed university building that was finished but remained empty for more than two years in Georgia’s seaside town Batumi has a new owner and a new future. The 35-storey, 200m building was purchased yesterday at auction by Batumi Tower Ltd for $25 million USD (55 million GEL). Instead of opening as a Technological University, as previously planned, the building will now most likely be transformed into a hotel. Negotiations with international hotel brands have already begun. Batumi Tower Ltd management announced it hoped to attract hotel-operators united under Starwood Hotels and Resorts – an American hotel and leisure company. The building in question is a prominent feature in Batumi and distinguished by its unique architecture. Boasting 35-storeys and 200 meters, the complex is the city’s tallest structure and has a small ferris wheel at the top. It was designed by a Georgian architect. Meanwhile according to the terms of purchase, Batumi Tower Ltd must open at a hotel that meets at least 4-stars with 100 bedrooms within 36 months of signing the agreement. The contract also stipulated the payment schedule, where Batumi Tower Ltd can pay off the full $25 million gradually. In the first month the company should pay $8 million. Six months after ownership the company should have paid off $15 million, and in one year, Batumi Tower Ltd should have paid off $20 million towards the total cost. From there the company will have a further six months to pay off the remaining $5 million. When the auction closed on Wednesday afternoon, the vendors had received only one bid – a $24.5 million offer by Batumi Tower Ltd. Batumi Tower Ltd was registered as a company in November 2014 by the Real Estate Development Company (RED-Co), which in turn was 100 percent owned by American company Celwood Investment Ltd. Meanwhile 80 percent of RED-Co shares belong to Natalia Koziukia of Ukraine and the other 20 percent are owned by RED-Co general director Mirian Katamadze of Georgia. Batumi Tower Ltd was specifically established to purchase the university tower building and renovate it into a hotel, said Redco’s project manager Malkhaz Kunelauri. In recent years RED-Co has been involved in a number of local infrastructure development projects, including the Monte Carlo Apart-Hotel and Old Boulevard restaurant in Batumi and three apart-hotels in Gudauri, a Georgian ski resort. Several apartments are currently being constructed in Bakuriani (another ski resort in Georgia) and in capital city Tbilisi. Meanwhile construction on the university tower building began in 2011 on the Batumi Boulevard. About 40 million GEL was spent on the construc-

tion of Batumi Tower and the facility was officially opened in 2012 by Georgia’s ex-President Mikheil Saakashvili. Georgia’s Ministry of Economy donated the 4,504 sqm land to the Railway Property Management – a daughter company of Georgian Railways, which was responsible for the construction works. The facility was meant to be a Technical University – an initiative of Saakashvili – but the idea was heavily criticized and was eventually abandoned. During the previous government, many criticized the building for not being suitable as an education facility. And after the change of power, the new Government decided to sell the building. At the time Georgia’s Minister of Economy Giorgi Kvirikashvili told journalists at least $18 million would be invested into the building to renovate it into a hotel complex. “We haven’t sold a university but a building, which was the subject of many discussions,” he said. He noted construction of the tower “wasn’t compatible with educational standards”, which is why it was sold. The Government considered the idea of transforming the building into a hotel complex, and built a new facility elsewhere that would house the Technical University. Georgia’s Prime Minister Irakli Garibashvili said the new future of the Batumi tower would be “20 times better” than Saakashvili’s project.

SEVENTH GLOBAL BRAND WANTS TO LEAVE GEORGIAN MARKET

ommersant” reports that the global brands operating on the Georgian market have serious problems. Recall that recently the Georgian market has been left by such international brands as River Island and Debenhams. Early last year Tom Taylor and 123 brand withdrew from the local market. As reported, the American sports shoes brand “Skechers” which entered Georgia a few months ago is going to leave the country as well. A trend of leaving the Georgian market by global clothing brands continues. The Italian “Alcott” store closed in Tbilisi. The store representative does not talk about the reasons for the decision by the brand’s head office in a conversation with “Commersant”. But notes that “Alcott” store in Batumi will be closed in the near future as well. The closure of “Piazza Italia” shops operating in

Tbilisi is not excluded in the near future. “Commersant” reports that the reason for the brand’s leaving the Georgian market is the lari’s depreciation and a decline in users. However, this information is not confirmed by “Piazza Italia” representatives. In the words of the store manager, the product price has not hiked and the number of users has not decreased. The store manager does not comment the brand’s withdrawal from the country. “Commersant” reports that the recent developments in the country and the devaluation of the GEL created problems for “Parfoice” representatives. For this reason, the cost of products will hike and the staff is planned to be reduced in the near future. Manager of “Parfoice” store located on Chavchavadze Avenue he did not confirm the information.

FOREIGN PRESS caucasian business week

March 16, 2015 #91

WHY ARE OSSETIANS AND ABKHAZIANS COMING TO GEORGIA FOR MEDICAL TREATMENT?

n the run up to the signing of the agreement between Russia and South Ossetia “On Alliance and Integration,” which should take place soon (Interpressnews.ge, March 7), the president of South Ossetia, Leonid Tibilov, lashed out at those residents of the breakaway Georgian autonomy who continue to travel to Georgia to receive medical treatment even after Russia recognized the region as an independent country following the five-day war in August 2008. At a government meeting, Tibilov emphasized that “in the overwhelming majority of cases, there is no need whatsoever for patients to go to the neighboring country [Georgia].” At the same time, President Tibilov said that the South Ossetian authorities intend “to develop our own medical centers and attract specialists. We are already doing it actively—we are launching construction of a modern medical center with relevant equipment”. Residents of the separatist region still prefer to go to Tbilisi to receive urgent medical treatment or to undergo complex surgery. In order to do so, South Ossetian patients travel to North Ossetia first, which is part of the Russian Federation; then they reach the official Lars border checkpoint on the North Ossetian side of the Russian-Georgian border and display a Russian passport, which does not require a Georgian visa. After passing through border control, they go to Tbilisi to undergo medical treatment or surgery in Georgian hospitals.

A source in the Ministry of Healthcare of Georgia told Jamestown that for the past six years, several hundred ethnic Ossetians who come from South Ossetia, received treatment in various Georgian medical facilities. For the tiny breakaway region, where the general population does not exceed 20– 30 thousand people, according to unofficial sources, this is a large number. This is especially true as the Ossetian patients have to overcome so many barriers and sustain the criticism by the authorities for their cooperation with the “enemy state”. What encourages Ossetians to travel to Georgia despite all the obstacles they face? First of all, no modern clinic has appeared in South Ossetia since it was recognized by Russia, despite the fact that Moscow has invested an estimated $1 billion into this region’s development (Forbes.ru, May 31, 2010). Only now President Tibilov promises to build such a clinic. Second, Ossetians can compare the level of medical treatment in Georgia with North Ossetia and other nearby regions of the Russian Federation. Thus, their decision to continue on to Georgia looks to be a vote in favor of the higher quality of Georgian healthcare in comparison to the medical facilities available to them in the North Caucasus as well as Russia’s Rostov and Krasnodar regions. Third, Ossetians can receive high-quality medical treatment in Georgia at no cost, thanks to a special program previously launched by the

Georgian government (see below). Georgia does not have state hospitals, but the government pays private medical centers for the services they provide to residents of South Ossetia. One of the main proponents and initiators of this policy of “good will” toward the South Ossetians—whom Georgia still legally considers to be its citizens—is the State Minister for Reconciliation and Civic Equality Paata Zakareishvili. In an exclusive interview for Jamestown, he said that Leonid Tibilov’s statement would not change anything in the approach of the Georgian leadership to the problem; and nothing would change in the attitudes of the Ossetians themselves to medical treatment in Georgian hospitals. “We continue to work as we did before. The main thing is that residents of Tskhinvali [capital of South Ossetia] continue to trust our program and receive substantial medical assistance in our clinics. No signs exist that would indicate that this process will be stopped,” Zakareishvili said (Author’s interview, March 6). The minister emphasized that the program of medical assistance for the Ossetians “is implemented at the expense of the Georgian budget, and the healthcare ministry is responsible for the distribution of those funds.” State Minister Zakareishvili is convinced that Ossetians visit Tbilisi to receive medical treatment because Georgia has a “high-quality and non-corrupt healthcare system.” According to Zakareishvili, “in order to receive the same level of medical assistance, residents of Tskhinvali would have to go to Moscow or St. Petersburg, but that is very far away, while Tbilisi is only a 40-minute drive from Tskhinvali.” However, the state minister lamented that the Tskhinvali authorities do not allow the residents of the territory to travel to Georgia directly, so “they first have to go to Vladikavkaz and then on to Tbilisi. Thus, they have to cross the Main Caucasus Ridge twice, but they do it even during winter in order to travel to Tbilisi.” Residents of Abkhazia also receive medical treatment in Georgia. Giorgi Gvazava, the par-

liamentary speaker of the “Abkhaz Autonomous Republic”—the Abkhazian government in exile in Georgia—told Jamestown, on November 15, 2014, that the majority of ordinary residents of Abkhazia do not harbor hatred for Georgia. That is why ambulances from western Georgia often bring critically ill patients from Abkhazia to clinics in Zugdidi, Kutaisi and Tbilisi for urgent medical treatment. Abkhazian authorities also dislike this, but they prefer not to create any obstacles for those of their residents who can receive assistance from Georgia. The difference between the approaches of the current and former authorities of Georgia is that under the government of Mikheil Saakashvili’s United National Movement (UNM), Abkhazian and Ossetian patients had to first acquire Georgian citizenship to receive treatment. They had to receive at least a Georgian ID number and a social insurance card. Later, however, the new Georgian Dream government decided to liberalize medical treatment even more, and residents of Abkhazia and South Ossetia are now not required to have Georgian documents. It is sufficient if they have a document that proves they reside in Abkhazia or South Ossetia. State Minister Paata Zakareishvili explained this novelty by saying that medical treatment is a purely humanitarian issue and has no political strings attached. “We do not want to advertise this process. Especially, as the residents of South Ossetia and Abkhazia still come over, despite all the obstacles. Nobody is able to prevent them from coming, and nobody is seriously trying to counter the people’s wish to receive treatment in places where they can receive quality and free medical assistance,” Zakareishvili stated (Author’s interview, March 6). It is clear, however, that this policy may serve as a powerful example of soft power in Tbilisi’s rivalry with Moscow over the Georgian breakaway territories. Publication: Eurasia Daily Monitor Volume: 12 Issue: 43 By: Giorgi Menabde www.jamestown.org

REAL STORY OF 34

he topic the most intensely discussed lately is a beer 34, produced by means of unique method. Being made of three sorts of malt and 4 types of distinguished hop, special flavored beer is being brewed for gourmets. It was a certain experiment to create a new beer. Currently there is a high competition on the beer market. Consumers can choose local as well as imported beers of various flavors and prices. Respectively, a new product that would appear on the market should have been distinguished and memorable by its taste as well as brand name and package. Launch of the product was preceded by advertisement campaign. Everything including videos, billboards, internet ads were leading to one question, what was 34. A webpage was created, where visitors could write their own versions about 34. During several weeks the webpage got visited by many people and various versions were proposed. 34 forced everyone to start making guesses. And when the interest reached its peak, 34 ap-

peared in supermarkets, for GEL 34 per bottle. Such an unusually high price for a bottle of beer was puzzling for many. Only real gourmets did allow themselves to buy it and they did not lose, as they got awarded with special presents. For the first three buyers a monument was constructed in the city and everyone who bought the beer received many bottles of 34 for free. Such presents were really surprising and accompanied with joy and emotions. After five days, price for 34 dropped and became affordable for everyone, GEL 2 per bottle, while the unusual campaign would be remembered for long. Great interest of consumers was proved by the number of ad viewers on the web. Internet users, in their comments, were writing that they had never seen such advertising before, many were regretting that did not buy the beer for GEL 34 and were left without gift. Of course, there were skeptics as well, though majority agreed that 34’s entry into market was full of positive attitudes and creativity.

FOODPANDA RAISES USD 110 MILLION IN NEW FUNDING ROUND

lobal food delivery company already active in 40 countries will invest in achieving best customer service foodpanda, the online food delivery marketplace active in 40 countries across five continents, today announces that it has secured another round of funding of USD 110 Million. The sum comes from Rocket Internet AG, as well as other existing and new investors. Since its launch in 2012, the company has now raised more than USD 200 Million. After acquiring key competitors this year in India, Mexico, Russia, Brazil, Eastern Europe, Middle East and Asia, the company will now further invest into product and technology, and continue focusing on customer service and loyalty for becoming the most convenient and most user friendly

way of ordering food delivery or take-away. Ralf Wenzel, Co-Founder and CEO of the foodpanda group: “Over the last couple of months we have become the leading online food delivery marketplace across the most promising and fastest growing emerging markets. The new funding allows us to fully focus on user experience and customer service with the aim of completely disrupting the way people order food by establishing a real alternative to pizza flyers and phone calls. „ foodpanda offers the most convenient way to order food via the mobile app or online. For restaurants, the online marketplace helps to increase delivery sales through online and mobile platforms and provides them with constantly evolving technology and analytics. Globally, foodpanda partners with over 45.000 restaurants in 40 countries, being market leader in 32 of those countries.

March 16, 2015 #91

EVENT

caucasian business week

FOURTH WAVE OF “NATAKHTARI FUND” HAS FINISHED

n 12th of March in Holiday Inn Tbilisi “Natakhtari Fund”presented fourth wave report “Take Care of Future”project. On a meeting Marketing Director of Natakhtari-Tornike Nikolaishvili and head of Association our Home Georgia and Psychological servicesManana Omarashvili talked about fund activities and on collected sum of money in detail. Meeting also was attanded by govermental and non-govermental organizations as well as media representatives. For supporting fund beneficiaries event

invited well known actors,singers and sportsmans. Natakhtari Company established Natakhtari Fund in November 2011 and launched a new project Take Care of Future, with support of the Association Our Home Georgia and blessings of his Holiness and Beatitude the Patriarch of All Georgia. Each year, during three months from November to February, within the charity campaign framework, from each sold bottle of Natakhtari Lemonade 1, 3 and 5 Tetri are being transferred to the Fund in accordance with the bottle volume 0.33 L, 0.5L, 1L and 2L.

hen the world’s political and economic situation becomes more complicated, gold is often perceived by investors as so-called “Safe haven,” where they can wait out those difficult times. So it was in 1980s, a period rich in numerous conflicts in the world - especially in the Middle East, where stability has been upset by the Iranian Islamic revolution of Ayatollah Khomeini and the invasion of the Soviet Union in Afghanistan. International tensions were exacerbated by the kidnapping of American diplomats in Tehran, which brought the threat of direct involvement of the United States’ military. All these factors in the first place pushed up - of course - the price of oil, transported from the destabilized regions. The value gained from “Black Gold” became a tradition. Taking into account inflation, gold bullion reached its peak of $2,300, setting an all-time record, beaten only three decades later. Geopolitical risk, however, is not the only factor, which caused then such sharp increases in the price of gold. Many experts also point out to the runaway inflation plaguing the United States in the early 80’s of the last century. Reaching the threshold of 13% (the highest level since the end of World War II), has discouraged many investors from investing their capital in government bonds and undermined the credibility of the dollar. Thus, gold has become one of the few assets that allowed to obtain a satisfactory rate of return on investment - that could reach up to 3750%, assuming the hypothetical use of CFD, with an increase in the price of gold by around 300% (from the end of 1978 to the beginning of 1980). Assuming a hypothetical possibility of investing in gold CFD, this market move, with minimal security deposit at 8%, would make it possible to open a long position with a nominal value of $1,000,000 with a deposit in the amount of $80,000. With this involvement of capital, a customer would gain $3,000,000, investing only $80,000, and that means more than 37-fold increase in the value of the portfolio (3750%). Of course, predicting the scale of that movement, and thus investing in bullion at the beginning of the “gold rush”, would be quite difficult, nevertheless taking advantage, even in part, of the trend through CFD, would have brought above-average returns. Also in the XXI century, gold was able to surprise investors. Although most analysts expected in 2013 the further appreciation, the royal metal showed a reverse trend ending the fourth quarter with 28% decrease in value. Scale of surprise was such that this, not so shocking after all, forecast prepared by Saxo Banks analysts has been consid-

CURRENCY

March 16, 2015 #91

caucasian business week

GOLDEN INFLATION: IS GOLD MAKING A COME BACK IN TRADING? ered in the economic fiction category, rather than reality. In fact, it was mainly the political fiction that was responsible for the decrease in value. Central banks, and in particular their PR departments, managed to convince the market that the Euro-Atlantic economy is doing great and in the subsequent years will be experiencing unprecedented prosperity. Investors naively believing in the optimistic rhetoric used by politicians, were getting rid of the gold to the other assets in the hope of a better economic situation. This prosperity was to be provided by so-called non-standard monetary policy, involving a maximum reduction of interest rates and bulk purchases of assets, in particular government bonds. This procedure, according to the classical approach to economic processes, should lead to an oversupply of money, and thus an increase in inflation. It has become quite the opposite, which only heightened aversion to gold. This procedure, according to the classical approach to economic processes, should lead to an oversupply of money, and thus an increase in inflation. It has become quite the opposite, which only heightened aversion to gold. According to central bankers, investors could gain only 33 per cent in nominal terms. However, assuming a hypothetical possibility of investing in gold CFD, this market movement, with minimal security deposit at 8%, would make it possible to open a short position with a par value of $1,000,000 with a deposit in the amount of $80,000. With this involvement of capital, a customer would gain $330,000 investing only $ 80,000, and that means more than 4-fold increase in the value of the portfolio (412%). SUMMARY In the ranking of the epochal economic events changing the face of the global economy, the greatest return on investment would have been undoubtedly ensured by stock market declines associated with the Great Depression in the beginning of the 20th century and a sudden gold value increase in the 80’s. If the then investors had had access to Contracts for Difference, their capital would have increased 45 or 35 times, respectively! Contemporary economic breakdowns - at least so far – cannot compete with economic tremors besetting the world in the last century. It should be kept in mind that this is only the beginning, and the uncertain geopolitical situation and the escalating conflict between the civilization of the East and the West, may result in unimaginable changes that will outclass the greatest recessions of the twentieth century. This time, however, thanks to modern financial instruments, they can be tamed.

TEPID ECONOMIC CALENDAR TO RESTRICT BIG-MOVES IN THE FOREX MARKET

ast week’s excellent NFP number and a drop in US unemployment rate to 5.5% triggered a fresh leg of strong up-move for the overall US Dollar Index (I.USDX), which rose for the third-straight week. Strong US employment reports has now fuelled speculations of a possible rate-hike by the US central bank as early as June this year. This eventually turn investor’s focus towards the next major trigger for the Forex market, US Federal Reserve’s two-day monetary policy meeting scheduled to begin on March 17. Meanwhile, this week’s lighter US economic calendar is unlikely to provide any meaningful direction for the market. Investors, however, will look for additional clues to gauge the strength of broader US economic recovery from retails sales data, this week’s highlight from otherwise a tepid US economic calendar. Also, manufacturing data from UK, China along with Australian employment report could possibly generate some momentum in the Forex market. Let’s have a brief outlook on some important market-moving events scheduled during the course of the upcoming week. The US monthly retail sales data for the month of February is scheduled for release on Thursday. Following a sharper than expected drop in January, market participants are expecting a strong rebound with consensus estimates forecasting the retail sales to have gained by 0.5%, while core retail sales expected to rise 0.6%. Apart from the US retail sales data, preliminary University of Michigan’s consumer sentiment index is scheduled for release on Friday. The Preliminary University of Michigan’s Consumer Sentiment Index reading for the month March is expected to improve marginally to 95.6 from a upwardly revised 95.4 recorded in February. Moving on to manufacturing data, the latest print for Chinese industrial production for the month of February is scheduled for release on Wednesday and is anticipated to show a slight down-tick

to 7.7% as against January’s better-than-expected reading of 7.9%. The UK manufacturing production data, which makes up around 80% of total UK industrial production, is also scheduled for release on Wednesday. For the month of January, both UK manufacturing and industrial production are expected to improve and estimated to register a growth of 0.2%. Also watch out for Chinese inflation data, Australia’s largest trading partner, and UK trade balance data, scheduled for release on Tuesday and Thursday respectively. Following the global trend, Chinese inflation has been trending lower in recent months. The trend, however, is now expected to have paused in February with the CPI expected to come-in at 1%, up from 0.8% recorded in January. Meanwhile, UK trade balance is expected to slightly better the previous month’s reading, but still remain elevated, to show a trade deficit of 9.7 billion Pounds for the month of January. Along with the Chinese industrial production data, other economic data that could materially impact the Australian Dollar (AUD) include Australian employment report, scheduled for release on Thursday, and would determine whether AUD could recover from multi-year lows or not. Consensus estimate the number of new people employed during the month of February to have increased by 15.3 K and unemployment rate to hold steady at 6.4%. After last month’s dismal jobs report and last week’s disappointing GDP data, sluggish jobs data is more likely to extend the ongoing weakening trend for AUD. Last week’s strong NFP data now seems to have convinced market participants that the Fed is more likely to hike rates earlier than expected, possibly in the middle of this calendar year. This would eventually pave way for continuation of the ongoing strong momentum for the US Dollar. However, this week’s lighter economic calendar might compel investors to book some profits, thus posing some risk for the US Dollar strength, at-least for the week ahead.

Australia Employment Change and Unemployment Rate

Admiralmarkets.ge/analytics/ facebook.com/adimralmarketsgeorgia/

March 16, 2015 #91

ANALYTICS

caucasian business week

ENERGY SECTOR - 2014 In 2014, both the volume of the internal generation (2.9%; 292.9 mln.kvt.hr) as well as consumption of power (5.1%; 507 mln.kvt.hr) increased compared to 2013. In the mentioned period, the power consumption exceeds the power generation, hence, the negative balance was satisfied by the import of electricity (793.2 mln.kvt.hr). In 2014, the value added in energy sector increased (5.2%) compared to 2013. In the first three quarters of 2014, the volume of investments in energy sector declined (-52.9%) compared to corresponding period in 2013.

NEIGHBORHOOD

Russia To Reduce Gas Price For Armenia

ussia reduced the armenian authorities and the management of gazprom (russia) have come to an agreement to reduce the gas price on the armenian border from 189 to 165 usd, zhamanak (time) newspaper says, citing its own sources close to the armenian government

Azerbaijan is able to selffinance energy projects

A In January 2015, the electricity generation is lower (166 mln.kvt.hr) compared to consumption in the country. In this period, negative balance of energy consumption was eliminated by the import of electricity (51.2 mln.kvt.hr). In January 2015, the growth of power consumption (4.4%; 43 mln.kvt.hr) exceeds the growth of power generation (0.3%, 2.69 mln.kvt.hr) compared to January 2014. Accordingly, electricity import increased (32.1%; 40.369 mln. kvt.hr) in this period. The balance of electricity consumption and generation is negative (-248.3 mln.kvt.hr) also in 2014. It should be noted, that negative balance increased (213 mln.kvt.hr) also in comparison with the indicator of 2013 (33.7 mln.kvt.hr). In 2014, the indicator of electricity import in Georgia is 793.2 mln.kvt.hr. , which exceeds (63.8%; 309.1 mln.kvt.hr) the corresponding indicator in 2013. Electricity import is increasing in the period of autumn and winter. Despite the negative balance of power, Georgia is also electricity exporter. In 2014, the indicator of the electricity export is 545.0 mln.kvt.hr. Georgia exports electricity basically in spring and autumn. The average weighted price of balancing power (20% of total power) is characterized by seasonality, but this is not depicted on the price the consumers pay. This indicator increase in the period of July-January and decreases in the period of February-June. In January 2015, this indicator achieved its highest level (13 tetri) during the last two years, which is due to GEL depreciation and increase of price of the electricity imported from Russia.

In 2014, the volume of power generated in Georgia is 10 153.6 mln.kvt.hr. Among them, 81 % (8 221 mln.kvt.hr) is generated by the hydro and 19% (1 932.5 mln.kvt.hr) is generated by the thermal power plants. In 2014, the volume of the power generated by the hydro power plants increased (0.7%; 57.7 mln.kvt.hr) compared to 2013, but its share in the total power generation declined (1.8 percent point). In 2014, the volume of the power generated by the thermal power plants also increased (13.9%; 235.4mln.kvt. hr). In 2014, the indicator of power consumption is 10 170 mln.kvt.hr. Among them, 68.5% is consumed by the distribution companies, 15.4% by the direct customers (Georgian Water and Power; Georgian Railway; Georgian Manganese; Rustavi Water; Geoferrometal) and 16.1% by Abkhazia. In 2014, power consumption by the distribution companies (6.8%; 442.3 mln.kvt.hr) as well as the direct consumers (0.3%; 4.3 mln.kvt.hr) and Abkhazia (2.1%; 33.4 mln.kvt.hr) increased compared to 2013.

zerbaijan is able to self-finance all energy projects that should be implemented by 2020, Minister of Energy of Azerbaijan Natig Aliyev said on the results of the EBRDhosted Caspian Corridor Conference in London March 12. He made the remarks in a brief video comment about Southern Corridor now available on the EBRD’s YouTube channel. He said that the Southern Gas Corridor is a global, possibly unique, project in terms of scope, financing, complexity, in terms of a lot of construction being not only in upstream but also in midstream, and so on.

The Turkish Lira Is Getting Slammed Again

fter a few days of relative calm, the Turkish lira is back setting record lows against the U.S. dollar. The Lira has fallen 13 percent against the dollar so far this year, driven to some extent by Turkish President Recep Tayyip Erdogan’s disagreements with his central bank on monetary policy. The Prime Minister’s office in Turkey issued a statement on Tuesday praising the central banks performance since 2002, which was expected to help ease those tensions.

Russian Central Bank cuts key interest rate to 14%

he regulator slashed the rate by 100 basis points to 14 percent from 15 percent, which comes as some relief for business which has been lobbying for lower borrowing costs. The Central Bank said Russia’s weak economy is quelling inflation on its own. “The balance of risks is still biased towards a significant slowdown of the economy,” the regulator said after the decision was published on Friday, March 13.

Azerbaijan’s top bank ups authorized capital

T In 2014, the indicator of the total electricity exports (Direct investment + Transit) is 545 mln.kvh. The destination of 26.5 % of total export is Russia, 1.3% is Azerbaijan and 48.9 % is Turkey. 9.7% of total export is transit. In 2014, the volume of electricity export to Russia declined significantly (-56.8%; -210.6mln.kvt.hr), but the export to Armenia (91.9%; 67.2 mln.kvt.hr), in Azerbaijan (21.0%; 1.4 mln.kvt.hr) and Turkey (290.0 mln.kvt.hr (236.5 mln.kvt.hr - direct export, 58.5 mln.kvt.hr – re-export)) increased. In 2014, the indicator of the total electricity import (Import + Transit) is 793.3 mln.kvt.hr. Among them, 73.7 % of import is from Russia (71.4% -direct, 2.3% - transit), 21.6% is from Azerbaijan and 4.5 % is from Armenia (transit). In 2014, the import from Russia (36.4%, 167.7 mln.kvt.hr) as well as the import from Azerbaijan (7 times; 160.6 mln.kvt.hr) increased.

he Azerbaijani State Securities Committee registered the issue prospectus of ordinary registered shares of International Bank of Azerbaijan in the amount of more than one hundred million manat, the committee said March 12. Around 370,370,371 shares at par value of 0.27 manat will be issued as part of the issue. The company’s share capital will be increased from 590.2 million manat (as of January 1, 2015) to 690.2 million manat following the issue.

174 million Chinese tourists to spend record $264bn by 2019

ome 174 million Chinese tourists are expected to spend $264 billion by 2019 in comparison with the 109 million who spent $164 billion in 2014, according to new analysis by Bank of America Merrill Lynch, Bloomberg reports. In 2014, the number of Chinese tourists traveling abroad increased by 19.5 percent year-on-year to 109 million compared to some 10 million Chinese tourists in 2000. Last year Chinese tourists spent over $163 billion on overseas shopping, according to estimates by the China Tourism Academy.

Commerzbank fined $1.5bn for doing business with sanctioned Iran and Sudan

ermany’s second biggest bank, Commerzbank, is to pay $1.45 billion (€1.36 billion) in fines to settle US Justice Department charges over transactions with sanctioned companies in Iran and Sudan. From 2002-2008, the German bank cleared transactions worth $253 billion for Iranian and Sudanese companies that were sanctioned by the US. It used a method called ‘wire-stripping’ so as not to leave an identity on the transaction.

Europe’s trillion euro stimulus may kill bond market yields

he start of the €1.14 trillion ‘easy money’ program is causing the European sovereign debt market to go a bit haywire, with investors scooping up debt they know they will lose money on. The €60 billion per month bond buying program, which came into force March 9, is pushing up the price of 10-year bonds, which makes the yield, or the return investors earn fall. On Tuesday, Germany’s 30-year bund yield dropped below 0.75 percent for the first time ever. It has since recovered to 0.89 percent.

Italy’s debt burden now at record high 132% of GDP

taly’s debt load is now €2.1659 trillion, the Bank of Italy said Friday. The country’s public debt increased by €31 billion in January, bringing the total close to the record-high of €2.1677 billion euro recorded in July 2014. Italy’s public debt is only second to Greece in the eurozone. The main reason debt spiked in January is because the Treasury increased its available liquidity, or money supply, by €36.3 billion euro, bringing the total to €82.6 billions, Italy’s ANSA news agencyreported Friday.

Azerbaijan, Belarus explore ways of developing agro cooperation

In 2014, the indicator (forecast) of value added in energy sector increased (5.2%; 36.7 mln. GEL) compared to 2013 and achieved 736.5 mln.GEL. The share of this indicator in GDP is still 3%. In the first three quarters of 2014, the foreign direct investment in the energy sector is 92.9 mln. USD, which is significantly lower (-52.9%; -104.1 mln. USD) compared to the corresponding indicator in 2013. In this period, the share of FDI in the energy sector in total FDI is 10.0 %.

WORLD NEWS

elarus is ready to cooperate with Azerbaijan in all avenues. Belarusian President Alexander Lukashenko made the remark at a meeting with Yagub Eyyubov, First Deputy Prime Minister of Azerbaijan in Belarus on March 10, according to BelTA. “We trust your country and leadership. We are ready to cooperate with Azerbaijan in all avenues. There are absolutely no closed topics,” the president stressed. President Lukashenko underscored that the two countries have always managed to resolve all topical issues.

BBC Is Making A Drama Based On GTA

nfamous for its use of prostitutes, torture, Graphic Sex and extreme violence, it may seem like an odd choice for the national broadcaster but the drama will be based on its creation, rather than the game itself. Rockstar developers in Edinburgh and Leeds have contributed to the series, which started in 1997 on the PlayStation 1 and has since become a huge critical and commercial success.

COMPANY NEWS caucasian business week

March 16, 2015 #91

SECRET FOR POPULARITY OF TOYOTA PRADO AND TOYOTA LAND CRUISER 200 makes up 11.7 seconds to develop 100 km/h. The emission volume has been reduced to 226 g/km. Moreover, the body of these models, MT monitor and MTS system enable drivers to select a desirable regime of driving in various road conditions. X-HAC system of pneumatic suspension ensures soft and comfortable driving. PRADO and LC200 fans also know other important and usable functions that stress the peculiarity of these models. KDSS system adds more self-confidence to the vehicle and ensures comfortable driving in both urban and off-road conditions. AVS system takes the vehicle to a higher level and this function is very important in the impass-

oyota PRADO and Toyota Land Cruiser 200 are reported to be our region’s most requested and most sellable models among Toyota vehicles. The best parameters, unique driving advantages and characteristics make PRADO and LC 200 the most demandable models, Toyota’s official representation in Georgia says. Last period the interest in the mentioned models has doubled. Toyota Center Tbilisi and Toyota Center Tegeta, Toyota’s official dealers in Georgia, offer preferential campaigns jointly with partner commercial banks. The history of Land Cruiser started over 60 years ago. This is a legendary off-road vehicle with the best technical characteristics. It is successfully sold in over 170 countries of the world. “These models have deserved special respect in

able section of the motorway. HAC system helps the driver overcome the rise, while DAC system assist on descents and steep slopes. Crawl Control simplifies driving in off-road conditions and minimizes the necessity of use of an accelerator and breaks. VFS system regulates the steering, aerodynamics indicators and fuel consumption on long distance driving. NVH system minimizes noise inside and ensures maximum comfort in fast driving. Consumers are able to buy vehicles as part of the campaign at Toyota Center Tbilisi and Toyota Center Tegeta up to March 31.

our region thanks to their best adjustment to the region’s off-road conditions. Moreover, these vehicles provide genuinely premium and business class comfort”, the Toyota representation says. It should be also noted the seven-seat model is also very sought-after vehicles in the Caucasus. This category of vehicles includes the third line of seats, which are rolled up and the space is transformed into a quite extensive trunk. Similar models are especially convenient for families with many children for traveling to outskirts or making long-distance tours. Currently, diesel-driven vehicles are the most requested models in Georgia. The mentioned models have further improved diesel combustion efficiency, that is, about 8 to 11 liters in urban areas. Moreover, the vehicle’s torque is 400/1600-2800, horsepower equals to 188, and the acceleration

INNDESIGN.GE – NEW ONLINE CATALOGUE LAUNCH

www.innDesign.ge – is a new Georgian online catalogue about architecture, design, construction and home improvement, which will be launched on March 16th. GOALS OF CATALOGUE: - To acquaint Georgian constructive situation with large society: Building companies and their portfolio, current and completed buildings, constructions in regions etc. - To present Georgian and foreign architects and designers, also their works to readers and users in order to connect them with clients and manage to start new projects. - To make information about repairs at most available and easy to access: Service, design, materials etc. - To become N1 online magazine of Georgia in the field of design, construction and architecture. MISSION OF CATALOGUE: - To provide users with detailed and exhaustive information about recondition, architecture, design and construction in Georgia. - To save consumer’s time and energy while obtaining information. - To offer direct contact between user and executive person: architects, designers or repairmen. - To provide interested people with news.

THE CATALOGUE CONSISTS OF FOLLOWING CATEGORIES: - Construction - Home Improvement - Building and repair materials - Landscape - Techniques - Furniture and lightening - Portfolio (architects and designers) Each category consists of several appropriate subcategories, where will be placed Georgian companies, which work in those fields. The readers of site will have opportunity to get more detailed information about companies they are interested – news, ongoing projects, novelties, promotions, actions and different events. This information will be delivered by the companies themselves. Besides, the catalogue will have Blog – where will be articles about international architectural achievements and news. Project “InnDesign.ge” belongs to LTD “INNOVATE”. LTD “INNOVATE” – is fast growing IT and online marketing company, which has been established in Tbilisi and it has been on market since 2011. The company’s main competences are: web design, web programming, SEO/SEM, PPC, social media marketing, technical service and consultation.

March 16, 2015 #91

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

TBILISI GUIDE

caucasian business week

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

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

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

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

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

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

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

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

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

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

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

PUBLICITY

caucasian business week

March 16, 2015 #91