Caucasian Business Week #95 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK WWW.CBW.GE caucasian business week www.facebook.com/CBW.ge Partner News Agency

April 20, 2015 #95

April 20, 2015, Issue 95

caucasian1 Suma Chakrabarti: There are good conditions for investments in Georgia

BE INFORMED, DO BUSINESS

GEORGIA

FIRST GEORGIAN FAST FOOD EATERY OPENS IN MANHATTAN, USA

eople living in the United States (US) now have the possibility to taste Georgian national dishes at a new fast food-type restaurant in New York. Pg. 3

Pg. 8

GEORGIA’S COST OF LIVING FOR 2015

he cost of living in Georgia is increasing, reflecting the increasing costs of basic food and services. Pg. 5

GEORGIAN PROVIDES HERBS EXPORTS TO EUROPE

eorgia’s western Imereti region has started executing a new project that aims to promote industrial production of herbs and export them to European markets. Pg. 5

POTENTIAL INVESTORS VISIT ANAKLIA SEAPORT

hina’s largest port operator “Qingdao Port International” is interested in the project of construction of a deepwater port in the Black Sea town of Anaklia. Pg. 7

BIG HOTEL CONSTRUCTION WORKS WILL NOT BE RESTRICTED IN FREE INDUSTRIAL ZONES

mendments should be made to the code “on Free Tourism Zone”. According to it, the state will not charge investors to construct a hotel within 18-month term. Pg. 7

TBC BANK HAS ANNOUNCED ABOUT THE INTRODUCTION OF UNIVERSAL PLATFORM

icro and agriculture business consumers will receive the loans at their working places. Pg. 9

GEORGIAN WINE FEATURED IN NATIONAL GEOGRAPHIC’S ‘OUT OF EDEN WALK’

he taproots of Georgia’s wine are muscular and very old. They drill down to the bedrock of time, into the deepest vaults of human memory. The earliest settled societies in the world—the empires of the Fertile Crescent, of Mesopotamia, of Egypt, and later of Greece and Rome—probably imported the secrets of viticulture from these remote valleys, these fields, these misty crags

Pg. 3

of Eurasia. Ancient Georgians famously brewed their wines in clay vats called kvevri. Today, these bulbous amphoras are still manufactured. Vintners still fill them with wine. The pots dot Georgia like gigantic dinosaur eggs. They are under farmers’ homes, in restaurants, in parks, in museums, outside gas stations. Kvevri are a symbol of Georgia: a source of pride, unity, strength. They deserve to appear on the national flag.

TBILISI RESIDENTIAL

NEW LIFE GIVEN TO TBILISI’S CENTRAL SHOPPING CENTRE

Research

Pg. 8

EXCLUSIVE FOR CBW:

The New Nothingness By Steen Jakobsen

Pg. 12

Darren Blanchard: Lack of direct flights to Georgia is punishing for incoming tourists

GEORGIAN CIGARS TO BE SOLD IN THE EUROPEAN MARKET

Pg. 10

Pg. 8

Devi Khechinashvili: Reform in universal healthcare program is needed Pg. 8

Currency

INTERNATIONAL MONETARY RESERVES WERE REDUCED IN MARCH AS WELL

THE EFFECTS OF GEORGIAN LARI CONVERSION RATE ON TBILISI CITIZENS

Pg. 4

Pg. 9

Pg. 13

The fluctuating nature of Georgian currency has been a popular topic of discussion for the past few months. The devaluation of Lari began by the end of November and since, has been actively discussed by the society;

Ilia Eloshvili Government Shows Confidence to Indian Company for Khudoni HPP Construction Temur Chkonia: Coca-Cola Bottlers Georgia is considering the wine business

A WEEK LOADED WITH IMPORTANT ECONOMIC DATA

GOVERNMENT NEWS

JAPANESE GOVERNMENT CHANGES OFFICIAL PRONUNCIATION OF GEORGIA

MAIN EVENTS GEORGIA, EAP COUNTRIES SIGN EU-DOCUMENT TO BOOST RURAL DEVELOPMENT

he country’s Minister of Agriculture, Otar Danelia, and his colleagues from Eastern Partnership (EaP) countries have signed a joint declaration in support of agriculture and rural development advisory systems. Danelia and agricultural ministers from four of the five other EaP countries (Armenia, Belarus, Moldova and Ukraine) signed the agreement in Riga, Latvia yesterday at the international conference ‘Rural and Agricultural Advisory Systems (RAAS): Best Practices and Experiences in the Eastern Partnership’. EaP country Azerbaijan did not sign the agreement.

GEORGIAN PRESIDENT PAYS RECIPROCAL VISIT TO LATVIA

eorgia’s President Giorgi Margvelashvili is on an official visit to Latvia. His international jaunt is a reciprocal visit, after his Latvian counterpart Andris Berzins visited Georgiain November last year. Today in Riga, the capital of Latvia, President Margvelashvili held a face-to-face meeting with the Latvian president, which was followed by an extended meeting and a joint press conference of the two presidents.

150 GEORGIAN SOLDIERS COMPLETE RESOLUTE SUPPORT MISSION IN AFGHANISTAN

ore than a hundred Georgian peacekeepers serving in a NATO-led mission in Afghanistan have returned home safely. 150 military servicemen of the 51st Battalion of V Infantry Brigade of the Georgian Armed Forces (GAF) touched down on home soil earlier today. They were greeted by military officials and invited guests. The military servicemen of the 51st Battalion were part of the Resolute Support mission – a follow-on mission from the International Security Assistance Force (ISAF) mission, which ended at the end of 2014.

DENMARK, POLAND, SWEDEN FOREIGN MINISTERS TO VISIT TBILISI

eorgia’s capital Tbilisi will host three European Union (EU) foreign ministers tomorrow. Martin Lidegaard of Denmark, Grzegorz Schetyna of Poland and Margot Wallstrom of Sweden will arrive in Georgia to express their support towards the country as it moved towards European and Euro-Atlantic integration, noted Georgia’s Foreign Ministry’s spokesperson David Kereselidze.

PM GARIBASHVILI PRAISES NEW SERVICES FOR GEORGIA’S DISABLED COMMUNITY

eorgia is the fourth country in the world to have implemented free SMS and videomessaging services for deaf people to contact the country’s emergency services. At today’s meeting of the State Council on Disability Issues, Georgia’s Prime Minister Irakli Garibashvili praised this move and said the country was working hard to make the lives of the disabled community easier. “State agencies are actively working on the challenges that people with disabilities have today in our country,” he said.

PRIME MINISTER MEETS WITH SOCAR PRESIDENT

eorgian Prime Minister Irakli Garibashvili and Rovnag Abdullayev, president of Azerbaijan’s state oil company SOCAR have discussed strategic issues of two countries’ relationship at the meeting on Friday. According to Premier’s Press Office, the sides have discussed ongoing investment projects and prospects of future cooperation. It has been noted at the meeting, that SOCAR is one of the biggest investor in Georgia. Director of SOCAR’s Georgian representation Mahir Mamedov and Azerbaijani Ambassador to Georgia Azer Huseyn attended to the meeting held in government administration.

apan is the first country to officially change the pronunciation of Georgia from the archaic Russian term ‘Gurujia’ to ‘Jojia’, based on the English pronunciation of the former Soviet republic’s name. The Japanese parliament this week approved a draft bill to officially change the name and pronunciation of Georgia following a request by Georgia’s President Giorgi Margvelashvili, stated Englishlanguage newspaper The Japan Times. The article detailed the thorough process the Japanese parliament went through to change the official name of Georgia in all official documents. The Japan Times noted the bill to revise the law on the names of diplomatic offices was approved unanimously on Tuesday at a plenary meeting of Japan’s House of Representatives. After the chamber earlier passed the amendment, the House of Councillors approved it upon making some modifications. The bill was then returned to the lower chamber for fresh approval, reported the newspaper. When referring to countries in official docu-

ments, the government uses the names stipulated to under the diplomatic offices law. Reportedly, Georgian President Giorgi Margvelashvili asked that Tokyo use the English-based version as the official Japanese-language name of his country in place of the Russian-derived name, during a meeting with Prime Minister Shinzo Abe in Tokyo in October. Abe replied that his administration would consider the issue. “The Georgian government has asked other countries to make the same name switch for official purposes, as sentiment in Georgia toward Russia shows little sign of recovery from the armed conflict between the two countries in 2008,” said the newspaper. Currently, about 20 nations, including Russia and China, continue to use the Russian-derived name, according to the Foreign Ministry in Tokyo. It is believed the Georgian President will now approach nations who still used the Russian-derived name of Georgia to switch to the English version.

NEW TECHNOLOGICAL INNOVATION CENTRE OPENS IN TBILISI

new facility has opened in Georgia’s capital Tbilisi today to better allow the Government to control and monitor the use and distribution of chemical, nuclear, radiological weapons around the country, and prevent such substances from being illegally brought into and out of Georgia. The Operative-Technical Department of Georgia’s Ministry of Internal Affairs launched the new Technological Innovation and Technical Training Centre in Tbilisi today. Until now Georgia has had a lack of equipment and professionals who were capable of working with chemical, nuclear and radioactive substances. Georgia’s Prime Minister Irakli Garibashvili said he was confident the Centre would enable the Government to successfully carry out Georgia’s chemical, biological, radiological and nuclear weapons non-proliferation strategy, which would be coordinated by the Ministry of Internal Affairs. “Today our country already has an opportunity to control the movement of nuclear and radioactive materials on the territory of Georgia, and particularly important is that the country’s border is being controlled. We took real and effective steps towards protecting the border,” Garibashvili said. The Ministry noted the facility would be fitted with equipment from their American partners,

ensuring it met international standards. A document detailing which equipment was necessary was also agreed today between the Georgian and US Energy Departments. PM Garibashvili also thanked the US National Nuclear Security Agency for its support, which would “allow Georgia to become an active participant in regional and international security”. According to the Ministry’s official website, the Centre was established for several purposes; firstly to develop trilateral cooperation between Georgia, the United States (US) and the European Union (EU) in the field of nuclear and radiation non-proliferation by means, of which Georgia

will be involved in international processes; secondly in terms of capacity building of the country in order to ensure non-proliferation of radiation and thirdly, to foster the Ministry’s contribution in the field of human and material resources. The Operative-Technical Department of the Ministry is the state department that deals with nuclear weapons and other substances. The Department actively worked to ensure border safety of the country and to provide high quality IT support. One of the directions of the Department was to control the movement of radioactive materials through the border, noted the Ministry. Agenda.ge

FIBER-OPTIC INTERNET TO COVER ENTIRE GEORGIA

PRESIDENT: GEORGIAN PROVIDES MUCH CONTRIBUTION FOR EUROPEAN INTEGRATION

resident of Georgia Giorgi Margvelashvili has met with the foreign ministers of Poland, Denmark and Sweden who are on an official visit to Georgia, Georgia Online reported. “The country’s authorities are focused on fulfilling the requirements for integration with Europe,” the president said. “We are waiting for the summit in Riga. We have great hopes. Georgia has done much for European integration. We hope that our partners and friends will take this into account.”

April 20, 2015 #95

caucasian business week

eorgia’s Ministry of Economy and Sustainable Development opened a tender for constructing optical internet cables covering entirety of the country. The aim of the project is to cover Georgia with high-speed in-

BUSINESS WEEK caucasian

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Shrosha Street 8/10 Director: Levan Beglarishvili Mobile phone: 591 013936; 577472234 WWW.CBW.GE Email: caucasianbusiness@gmail.com

ternet, including the removed and isolated parts of the country. “A tender will be held up until May 5th of 2015 to select the one company which will gain agency over this project. The aim is to cover up to 2000 new settlements and villages of Georgia.” — said

Deputy Economy Minister Ms Natia Mikeladze to the press. The telecommunications company wishing to lead the project is required to submit a statement to the Ministry of Economy no later than May 15th of this year. The given company will have three years to complete the work, which will be overlooked by the Georgian National Communications Commission (GNCC). The project will contribute into socio-economic as well as cultural development of the country. The potential companies participating for the tender include SilkNet, Caucasus Online, and Greennet. The winner company will be expected to cover all the expenses itself, no government subsidy will be provided — says the Economy Ministry of Georgia.

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

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

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

April 20, 2015 #95

PUBLICITY

caucasian business week

FIRST GEORGIAN FAST FOOD EATERY OPENS IN MANHATTAN, USA

eople living in the United States (US) now have the possibility to taste Georgian national dishes at a new fast food-type restaurant in New York. The first Georgian bistro style restaurant has opened in Manhattan, offering a traditional Georgian bakery and authentic Georgian cuisine for an affordable price. The Tone Cafe and Georgian Bread Bakery was founded in 1997, reorganised in 2004 and started as a bistro – fast food style café in December, 2012 in Brooklyn, New York. The cuisine offers a variety of dishes with various herbs and spices. Each historical province of Georgia has its own distinct culinary tradition, with variations such as Megrelian, Kakhetian, and Imeretian cuisines. In addition to various meat dishes, Georgian cuisine also offers a variety of vegetarian dishes. The importance of both food and drink to Georgian culture is best observed during a feast called

supra, when a huge assortment of dishes are prepared, always accompanied by large amounts of wine, and that can last for hours. In a Georgian feast, the role of the tamada (toastmaster) is an important and honoured position. Co-founder of the Georgian eatery Nikoloz Chkheidze will now compete with other international food outlets offered in New York, such as Mexican, Chinese, Italian and more. “We believe that we go about ten objects in two years, in New York City. We are expecting to open more 10 café in Manhattan and in Long Island. Georgian cuisine is becoming quite popular and demand for Georgian food has increased in the US,” Chkheidze said. Lovers of Georgian food can order foods the Internet, phone or delivery. On a lighter note, one of the only difficult things that still challenge Americans is correct pronunciation of Georgian dishes like Pkhali, Kubdari, Khachapuri, Chakokhbili and more.

4 HEADLINES GEORGIA ADOPTS NEW ENERGY POLICY DOCUMENT

eorgia has adopted a new Energy Policy Document thanks to lengthy cooperation between EU energy experts, Georgia and its neighbouring countries. International energy co-operation program INOGATE, involving the European Union (EU), the littoral states of the Black and Caspian Seas and their neighbouring countries, together with the International Energy Agency (IEA), jointly developed Georgia’s new Energy Policy Document. The document was officially presented in Georgia.

INTERVIEW caucasian business week

GOVERNMENT SHOWS CONFIDENCE TO INDIAN COMPANY FOR KHUDONI HPP CONSTRUCTION An interview with Deputy Minister of Energy of Georgia Ilia Eloshvili

GEORGIA BECOMES PART OF CANNES LIONS

group of Georgian communication companies have been offered the exclusive rights to organise and host the design section of the Cannes Young Lions Competitions – an internationally recognised “Festival of Creativity” that is one of the most prestigious events in the communication and marketing industry. An agreement was signed by Georgia and the Cannes Lions as a result of three months of intense negotiations, which gives Georgia’s Association of Communications Agencies the right to be an official representative of all events under the umbrella of Cannes Lions. These events are: Cannes Lions, Eurobest, Lions Health, Lions Innovation, Spikes Asia, Dubai Lynx and the Asian Marketing Effectiveness and Strategy Awards.

TBILISI WELCOMES MOXY, MARRIOTT’S AFFORDABLE BOUTIQUE HOTEL

eading American hospitality company Marriott International will open its third hotel under the flagship Marriot Hotels brand in Georgia’s capital Tbilisi by 2017. The new hotel will be under the chain of Marriot’s newest brand Moxy, which focuses on the rapidly growing three-startier market by offering a combination of top service, smart design and affordable prices. By opening a Moxy Hotel in Tbilisi, Georgia will become the first Eastern European country to welcome a new affordable but chic hotel brand to the region.

GEORGIA DEBUTS AT WINE AND GOURMET JAPAN EXHIBITION

he sixth edition of Wine and Gourmet Japan is here, where exhibitors from 20 countries, including debutant Georgia, are presenting their products at the large-scale wine and gourmet food trade fair. More than 75,000 visitors have visited Tokyo this week, where the Wine and Gourmet Japan exhibition is taking place from April 15-17, 2015. The three-day expo has become Japan’s hub for national and international wine, beer, spirits and the gourmet food industry. Exhibitors from 20 countries, including France, Germany, Italy, Japan, Spain, South Africa, presented their products in this year’s festival. As well as receiving the returning participants, Wine and Gourmet Japan welcomed new participations from Georgia, Sicily and Thailand.

- Minister of Energy Kakha Kaladze says that construction of Khudoni HPP will begin as soon as a report on the impact of the project on the environment is prepared. Who is working on it , and when will it be ready? - “Transelectrica”, which plans to build a hydropower plant, has completed work on environmental aspect of the project. They’ve prepared several reports taking into account the recommendations of the Ministry of Environment - it’s about 101 comments, which concerned the problematic issues. At first glance this figure seems high, but considering the scale of the project, it is not so, especially when the company solves these problems step by step. - Apart from non-governmental organizations, the local residents categorically resist the construction . What is your strategy in this regard and whether there is progress in negotiations with residents? - In total 184 families live in the villages which will be flooded, and the investor has the obligation to develop a detailed plan for their resettle-

ore than 80 anti-hail firing points in Kakheti have been identified and had equipment installed, in a bid to reduce the damage to crops caused by hail by up to 95 percent. Kakheti is Georgia’s famous wine-making region and covers eight municipalities. The state allocated more than 14 million GEL to the project.

credibility is very important that “Transelectrica” is supported by the Indian Development Bank, which is a very serious financial institution. In general, there is no problem in terms of the trust in the company. With regard to the possible involvement of the state in the construction, there are many different options on this issue. For example, in Europe hydroelectric power stations are built only by the state. And there are countries where the state is not involved in the construction of hydroelectric power plants. In general, there is no single, dominant approach to this issue. As for Georgia, I can say that at the very least the government can invest in the construction of Khudon HPP, but at this stage we share the conviction that the state should create a favorable business environment but should not interfere with the implementation of even such large and strategic facilities. - Why is this project so important for the country? What will be the impact of Khudoni HPP on Georgia’s energy independence? - Khudoni HPP is very important for the country from a strategic point of view. Its capacity is 702 MW and it has the opportunity to fill seasonal energy balance. That is, it can fully develop a large amount of energy throughout the year, regardless of seasonal factors. That is why the electricity that will be generated by the KhudonHPP for us has weight in gold. It will allow us to substitute import during the most difficult periods. If we talk about numbers, the launch of KhudonHPP will increase electricity production by 600 million Kw/ h which is of great importance for the energy independence of Georgia. - How are things going with other hydropower projects? - Today 4 strategic projects- Khudoni, Neskra, Namakhvani and Daoni are being carried out in Georgia plus small and medium-sized hydropower plants, and ultimately the total capacity of all these projects is 4 000 MW. If all these projects are implemented, by 2025-2030 Georgia will be completely non-volatile.

An interview with General Manager at Hilton Batumi Stuart Nelson

he World Economic Outlook (WEO) has projected Georgia’s real Gross Domestic Product (GDP) will be two percent in 2015 and three percent in 2016 but only reach 5 percent in 2020. WEO presented the International Monetary Fund (IMF) staff’s analysis and projections of economic developments at global level in major country groups and in individual countries. IMF noted the outlook for advanced economies was “improving”, while growth in emerging markets and developing economies was projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries.

ment. Currently, work is underway with the Canadian Replan which has extensive experience in this field. The population has every right to protest against the construction of hydroelectric power station, but protests should take place within the law, otherwise the state’s response will be adequate. When we talk about the problem of the local population, it should be noted that we intend to take into account all their reasonable demands. However, there are various variants for resettlement - construction of a new village, the issuance of cash compensation, etc. We’ll ask the opinion of every family, and ultimately an optimal decision will be made. - There was a lot of talk about the government’s intention to participate in the construction of Khudoni HPP. What is your position on this issue? - An agreement with the project’s investor was signed under the previous government. We’ve had a lot of questions about the Memorandum in particular, it provided that only 7% of the energy generated by the hydroelectric power plant would remain in Georgia, and the rest will be exported - such agreement was clearly disadvantageous for the state, since almost all electricity would be sold in Turkey and nothing would be left in Georgia. The second problem was that the company was registered in the offshore, which generated a lot of questions about the transparency of its work. Now both of these problems are actually solved - an agreement has been reached under which energy produced by the HPP will be supplied to the local market 12 months a year and only surplus will go for export. In addition, the company has gone from offshore, and now detailed information about it is available to any interested party. Investors is an Indian business group about which we have all the information. It has quite large assets and considerable experience in the construction of major projects. In addition, in terms of

GENERAL MANAGER AT HILTON: GEORGIAN NEEDS A 5-YEAR TOURISM DEVELOPMENT PLAN

KAKHETI’S ANTI-HAIL SYSTEM INSTALLED, PREVENTING 95% OF HAIL DAMAGE

IMF: GEORGIA’S GDP WILL BE 2% IN 2015

April 20, 2015 #95

- What are your expectations after the opening of the Hilton hotel in Batumi ? What are your plans in this regard? - I would be happy to say that after the opening of the hotel will be able to rest, but alas, it will not work – we will continue to develop, conduct training, correct any flaws with one main purpose – to meet the needs of our guests, and even exceed them. Batumi and Georgia as a whole is a very good new market for Hilton. In Georgia, there are a lot of very positive and interesting traditions – hospitality, wine, delicious cuisine, so we will do everything in order to develop them, so that a new

and exciting time awaits us. We have a lot of plans, but still I cannot talk about them in detail. For example, we intend to open a Georgian restaurant, the products for which we’ll buy from local farmers. And it is just the beginning. - Many hotels of the world brands are operating in Batumi. How do you plan to compete with them? - We’ll offer novelties in the Georgian market, and we hope that they will help us to attract guests. We also wait for an increase in the number of flights to Batumi, which will help to extend the short summer season on the Black Sea coast. We will also undertake specific activities that will benefit the entire city, not just our hotel. - How do you assess the current state of Georgia’s tourism industry? - In general, throughout the world tourism is facing major challenges after the 2008 financial crisis. Much has changed since then; consumers’ expectations have become different. In this case, there is no one separate problem. Many challenges exist, for example, prices that are very urgent topic in the world. In addition, the demand for quality is very high. As for us, apart from business interests, we always pay great attention to social responsibility. For example, we always buy products from local farmers which provides for development of agriculture. We are also trying to employ local staff,

provide training, promote their development, and we hope that they will be part of our company. - What should the Government of Georgia do to develop tourism, attract tourists and investors? - The country needs a short-term plan for the development of tourism, which will consider the country within a regional context in order to attract tourists in all directions. The simplest thing the government can do now is to change visa regulations, which created additional challenges for the tourism industry. Iran and India, which have come under the visa regime, are a very promising markets to work with. The Georgian government should think over and open the door to the country for investment and tourists. In addition, it is necessary to open new flights, which will help increase demand. All this will take about 5 years. You must use online resources such as Trip advisor, Air B & B, Four Square. - In general, how do you assess the level of service and the state of tourism infrastructure in Georgia? - Georgia is a welcoming country, and we will encourage this remarkable feature, which will have an effect on the entire tourism industry. Tourist pointers should be installed on the main roads, the main tourist routes should be cleaned that will allow tourists to enjoy the wonderful views, mountains, gorges, waterfalls.

April 20, 2015 #95

ECONOMIX

caucasian business week

GEORGIAN WINE FEATURED IN NATIONAL GEOGRAPHIC’S ‘OUT OF EDEN WALK’

eet Maka Kozhara: a wine expert. Young, intelligent, friendly. Kozhara sits in an immense cellar in a muddy green valley in the Republic of Georgia. The cellar lies beneath an imitation French chateau. The vineyards outside, planted in gnarled rows, stretch away for miles. Once, in the late 19th century, the chateau’s owner, a Francophile, a vintner and eccentric Georgian aristocrat, pumped barrels of home-brewed champagne through a large outdoor fountain: a golden spray of drinkable bubbles shot into the air. “It was for a party,” Kozhara says. “He loved wine.” Kozhara twirls a glass of wine in her hand. She holds the glass up to the ceiling light. She is interrogating a local red—observing what physicists call the GibbsMaranoni Effect: How the surface tension of a liquid varies depending on its chemical make-up. It is a diagnostic tool. If small droplets of wine cling to the inside of a glass: the wine is dry, a high-alcohol vintage. If the wine drips sluggishly down the glass surface: a sweeter, less alcoholic nectar. Such faint dribbles are described, among connoisseurs, as the “legs” of a wine. But here in Georgia wines also possess legs of a different kind. Legs that travel. That conquer. That walk out of the Caucasus in the Bronze Age. The taproots of Georgia’s wine are muscular and very old. They drill down to the bedrock of time, into the deepest vaults of human memory. The earliest settled societies in the world—the empires of the Fertile Crescent, of Mesopotamia, of Egypt, and later of Greece and Rome—probably imported the secrets of viticulture from these remote valleys, these fields, these misty crags of Eurasia. Ancient Georgians famously brewed their wines in clay vats called kvevri. Today, these bulbous amphoras are still manufactured. Vintners still fill them with wine. The pots dot Georgia like gigantic dinosaur eggs. They are under farmers’ homes, in restaurants, in parks, in museums, outside gas stations. Kvevri are a symbol of Georgia: a source of pride, unity, strength. They deserve to appear on the national flag. It has been said that one reason why Georgians never converted en masse to Islam (the Arabs invaded the region in the seventh century) was because of their attachment to wine. Georgians refused to give up drinking. Kozhara pours me a glass. It is her winery’s finest vintage, ink-dark, dense. The liquid shines in my hand. It exhales an aroma of earthy tannins. It is a scent that is deeply familiar, as old as civilization, that goes immediately to the head. “Wine”—Kozhara declares flatly—“is our religion.” To which the only possible response is: Amen. “We aren’t interested in proving that winemaking was born in Georgia,” insists David Lordkipanidze, the director of the Georgia National Museum, in Tbilisi. “That isn’t our goal. There are much better questions to ask. Why did it start? How did it spread across the ancient world? How do you connect today’s grape varieties to

the wild grape? These are the important questions.” Lordkipanidze oversees a sprawling, multinational, scientific effort to unearth the origins of wine. The Americans have NASA. Iceland has Bjork. But Georgia has the “Research and Popularization of Georgian Grape and Wine Culture” project. Archaeologists and botanists from Georgia, geneticists from Denmark, Carbon14 dating experts from Israel, and other specialists from the United States, Italy, France and Canada have been collaborating since early 2014 to explore the primordial human entanglements with the grapevine. Patrick McGovern, a molecular archaeologist from the University of Pennsylvania in Philadelphia and a member of this intellectual posse, calls wine perhaps the most “consequential beverage” in the story of our species. “Imagine groups of hunter-gatherers meeting for the first time,” McGovern says. “Wine helps to bring people together. It’s social lubrication. Alcohol does this.” Human beings have been consuming alcohol for so long that 10 percent of the enzymes in our livers have evolved to metabolize it into energy: a sure sign of tippling’s antiquity. The oldest hard evidence of intentional fermentation comes from northern China, where chemical residues in pottery suggest that 9,000 years ago our ancestors quaffed a dawn cocktail of rice, honey and wild fruit. Grape wines came a bit later. McGovern surmises that their innovation was accidental: wild grapes crushed at the bottom of a container, their juices gone bad, partly digested by airborne yeasts. For thousands of years, the fermentation process remained a mystery. This gave wine its otherworldly power. “You have a mind-altering substance that comes out of nowhere,” McGovern says, “and so this drink starts to feature at the center of our religions. It became embedded in life, in family, in faith. Even the dead started to be buried with wine.” From the beginning, wine was more than a mere intoxicant. It was an elixir. Its alcohol content and tree resins, added in ancient times as wine preservatives, had antibacterial qualities. In ages when sanitation was abysmal, drinking wine—or mixing it with water—reduced disease. Wine saved lives. “Cultures that made the first wines were productive, rich,” says Mindia Jalabadze, a Georgian archaeologist. “They were growing wheat and barley. They had sheep, pigs, and cattle—they bred them. Life was good. They also hunted and fished.” Jalabadze is talking about a Neolithic culture called Shulaveri-Shomu whose mound sites in Georgia arose during a wet cycle in the southern Caucasus and date back to first inklings of agriculture, before the time of metal. The villagers used stone tools, tools of bone. They crafted gigantic pots the size of refrigerators. Such vessels—precursors to the fabled kvevri—held grains and honey, but also wine. How can we know? One such pot is decorated with bunches of grapes. Biochemical analyses of the pottery, carried out by McGovern,

shows evidence of tartaric acid, a telltale clue of grape brewing. These artifacts are 8,000 years old. Georgia’s winemaking heritage predates other ancient wine-related finds in Armenia andIran by centuries. This year, researchers are combing Shulaveri-Shomu sites for prehistoric grape pips. One day, I visit the remains of a 2,200-year-old Roman town in central Georgia: Dzalisa. The beautiful mosaic floors of a palace are holed, bizarrely pocked, by clay cavities large enough to hold a man. They are kvevri. Medieval Georgians used the archaeological ruins to brew wine. South of Tbilisi, on a rocky mesa above a deep river gorge, lies the oldest hominid find outside Africa: a 1.8-million-year-old repository of hyena dens that contain the skulls of Homo erectus. In the ninth or tenth centuries, workers dug a gigantic kvevri into the site, destroying priceless pre-human bones. Georgia’s past is punctured by wine. It marinates in tannins. For more than two years, I have trekked north out of Africa. More than 5,000 years ago, wine marched in the opposite direction, south and west, out of its Caucasus cradle. “Typical human migrations involved mass slaughter,” says Stephen Batiuk, an archaeologist at the University of Toronto. “You know, migration by the sword. Population replacement. But not the people who brought wine culture with them. They spread out and then lived side-by-side with host cultures. They established symbiotic relationships.” Batiuk is talking about an iconic diaspora of the classical world: the expansion of Early Trans-Caucasian Culture (ETC), which radiated from the Caucasus into eastern Turkey, Iran, Syria, and the rest of the Levantine world in the third millennium B.C. Batiuk was struck by a pattern: Distinctive ETC pottery pops up wherever grape cultivation occurs. “These migrants seemed to be using wine technology as their contribution to society,” he says. “They weren’t ‘taking my job.’ They were showing up with seeds or grape cuttings and bringing a new job—viticulture, or at least refinements to viticulture. They were an additive element. They sort of democratized wine. Wherever they go, you see an explosion of wine goblets.” ETC pottery endured as a distinctive archaeological signature for 700 to 1,000 years after leaving the Caucasus. This boggles experts such as Batiuk. Most immigrant cultures become integrated, absorbed, and vanish after just three generations. But there is no mystery here. On a pine-stubbled mountain above Tbilisi, a man named Beka Gotsadze home-brews wine in a shed outside his house. Gotsadze: big, affable, red-faced. His is one of tens of thousands of ordinary Georgian families who still squeeze magic from Vitis vinifera for their own enjoyment. He uses clay kvevri buried in the earth; the hill under his house is his incubator. He pipes coils of household tap water around the jars to control the fermentation. He employs no chemicals, no additives. His wines steep in the darkness the way Georgian wine always has: the grapes mashed together with their skins, their stems. Gotsadze says, “You put it in the ground and ask God: ‘Will this batch be good?’” He says: “Every wine producer is giving you his heart. My kids help me. They are giving you their hearts. The bacteria that ferment? They came on the wind! The clouds? They are in there. The sun is in there. The wine holds everything!” Gotsadze took his family’s wines to a competition in Italy once, to be judged. “The judge was amazed. He said, ‘Where have you been hiding all this time?’ I said, ‘Sorry, you know, but we’ve been a little busy over here, fighting the Russians!’” And at his raucous dinner table, a forest of stemmed glasses holds the dregs of tavkveri rosé, chinuri whites, saperavis reds. The eternal ETC thumbprint is there. Paul Salopek Nationalgeographic.com

GEORGIA’S COST OF LIVING FOR 2015

he cost of living in Georgia is increasing, reflecting the increasing costs of basic food and services. Latest figures from Geostat, the National Statistics Office of Georgia, noted the country’s minimum subsistence level (amount of money a person needed to support themself) had slightly increased in the first three months of 2015. Figures showed the minimum subsistence level for an able-bodied male was almost 170 GEL in March 2015. This was about 7 GEL higher than in February 2014, where the minimum subsistence level was 155.4 GEL. Meanwhile for the average consumer, the minimum subsistence level was 143.4 GEL this

March, while it was 137.6 GEL at the same time last year. For an average family the minimum subsistence level reached 271.6 GEL in March 2015 – up about three percent on March 2014 when the same data was 260.6 GEL. As for households, the minimum amount of money needed to survive was: For a one-person household – 143.4 GEL For a two-person household – 229.5 GEL For a three-person household – 258.2 GEL For a four-person household – 286.9 GEL For a five-person household - 322.7 GEL For a six or more person household – 381.5 GEL Statistics showed that in comparison to the past year, these numbers had grown however this

could be comparable with increasing costs of basic goods and services. In March 2015 the monthly inflation rate in Georgia reached 1.2 percent while the annual inflation rate equalled 2.6 percent, stated Geostat. Similarly, in February this year the monthly inflation rate reached 0.1 percent and the annual inflation rate equalled 1.3 percent. Information released by Geostat revealed food and non-alcoholic beverages, furnishings and household equipment, and transport were the sectors that were mainly responsible for the inflation rate increase in March. Meanwhile, the annual inflation rate in March 2015 equalled 2.6 percent. Agenda.ge

TOP STORY

GEORGIAN PROVIDES HERBS EXPORTS TO EUROPE

eorgia’s western Imereti region has started executing a new project that aims to promote industrial production of herbs and export them to European

markets. Georgia experienced a 60 percent decline in export of fresh herbs due to the ongoing crisis in the wider region. To solve this problem and avoid a decline in exports, the country’s Economy Ministry decided to diversify its export markets. A challenge currently hampering the country’s plan to diversify its export markets was fragmentation of agricultural land, which prevented Georgia from providing different markets with sufficient volumes and a stable supply of high quality products. To overcome this challenge, Georgia’s Economy Ministry invited a Dutch company to learn about Georgia’s agricultural environment for producing herbs – parsley, cilantro, basil, mint and more. The Dutch company, which was not named, designed an Action Plan to develop greenhouses in Georgia and for attracting new export markets. On April 15, 2015, local entrepreneurs and the Industrial Development Group of the Economy Ministry signed a Memorandum of Understanding which outlined both parties’ readiness for “close cooperation”. The entrepreneurs pledged to create cooperatives and trainings to cooperative members, which expected to increase productivity by 50 percent. At the same time the cooperatives will issue Global CAP certificates to eligible respondents. Global CAP is a non-governmental organisation that sets voluntary standards for the certification of agricultural products around the globe. On the other side, the Industrial Development Group pledged to help the cooperatives attract finances and specialists. Furthermore, the Group will help the cooperatives establish cooperation with Dutch trading houses, so Georgian herbs can be exported to European markets without any obstacles. The European Union (EU) is one of the world’s largest markets for herbs and spices, led by the UK and Germany. It is an expanding market for specific products, mainly triggered by ethnic cookery. Besides the UK and Germany, countries that show the most promising EU export markets include the Netherlands, France and Spain. Since EU countries do not have suitable agroclimatic conditions to cultivate most spices and herbs, they heavily depend on imports from moderate - or semi-tropical countries. However, some specific spices and herbs are produced in the EU, mainly in eastern and some southern European countries.

BUSINESS

April 20, 2015 #95

caucasian business week

VAT MAKES GEORGIAN MAIZE LESS COMPETITIVE COMPARED TO RUSSIAN CORN FOR POULTRY FARMERS

PARK INN BY RADISSON TO BE BUILT TBILISI BY 2017

n place of the hotel Tori located on the Tabukashvili street, right next to the Economy Ministry of Georgia, a new Radisson brand hotel Park Inn by Radisson will be built by year 2017. The news was announced today as the representatives of the two sides, Georgian company BlockInvest and the American Carlson Rezidor Hotel Group signed the construction agreement. Economy minister of Georgia Giorgi Kvirikasvhvili and the mayor of Tbilisi David Narmania were present at the signing of the agreement. Both emphasized the importance of the project for social and tourist development of the country. “Right now we are gathered at this small room,” – said Mr Narmania regarding the Tori hotel conference room. “It served its function very well throughout years, when the economic and business activities in Georgia were low. However, today the business influx into the country has increased and there is a clear need for more advanced and developed gathering spaces, such as the “Park in by Radisson Tbilisi” will definitely provide.”

Mr Kvirikashvili noted that during the construction of the hotel 600 locals will get employment opportunity and more than 200 permanent jobs will be created when the hotel is completed. “Tbilisi Radisson Blu Iveria is one of our most successful projects in the region,” – Carlson Rezidor Group representative Darren Blanchard told cbw.ge. “We are looking forward to undertaking new projects in the country. As you know, another Radisson Blu hotel in Mestia is on the way. Georgia is exemplary in its hospitality, which makes it a very welcoming place to conduct our business.” However, Mr Blanchard added that the lack of direct flights from Western Europe and the awkward timing of the current flights put Georgia in a disadvantageous position, given its incredible tourist potential. Park Inn by Radisson is a mid-scale hotel chain oriented toward middle social class, with more affordable prices than the Radisson Blu branch offers. Park Inn currently operates more than 140 hotels across Europe, Middle East, Africa and North America.

PARTNERSHIP FUND WILL OPEN “PANEX” PLANT IN MAY ‘

artnership Fund will finish the socalled sandwich panels in late May and will produce the first products. The plant should be built on Rustavi highway and it will be equipped with modern Korean and Italian devices. To note, 60% of products will be sold on the local market, while the remained will be exported. The so-called “sandwich panels” is used in the construction of industrial buildings and it is much cheaper than reinforced concrete structures. However, it requires less time for mounting and

it is smaller in volume comparing to other building materials. “Construction sector is a hub of our economy and we do a significantly important activity for improvement and strengthening of economy with the support of such project”, - Irakli Kovzanadze, executive director of Partnership Fund declares. Partnership Fund carries out the project jointly with local company LLC ICES. They have founded plant “Panex” for this purpose. The total volume of investment is defined by $6 million USD.

WHEAT IMPORTERS ARE DETAINED ON CHARGES OF BUDGET DAMAGE

nvestigation Service of Ministry of Finance announced, that they revealed wheat importers, who made a huge amount of damage to the state budget as a result of illegal actions. According to the Service, three citizens are detained on this fact – Besik Jikia, Mamuka Jankarashvili and Levan Manjavidze. The investigation revealed, that the detainees established legal entities, which activities were wheat import from Russian Federation.

Members of the criminal group misused the grace period envisaged by the tax legislation and they did not carry out import and payment of VAT. However, they conducted fictious economic - financial operation among their own legal entities. Totally the budget had a loss of 1 739 164 GEL as a result of illegal actions of the detainees. Investigation is carried out under the Criminal Code, Articles 210 and 185, which envisages imprisonment from 4 to 7 years.

ocal poultry farmers prefer to purchase imported maize from Russia due to Value Added Tax. As farmers declare, Georgian maize has higher quality than Russian, but they still prefer to purchase imported corn from Russia. The reason is that farmers are free from VAT if they acquire imported maize. Cost of 1 kg maize imported from Russia ranges within 50 tetri. However, price of Georgian maize is within 50-55 tetri. As Zurab Chubinashvili, chairman of “Poultry Association” declares, they will purchase Georgian maize in the same conditions, which will give additional stimulus to the local farmers. “We demand to the government for several years to release realization of egg and hen from VAT. We remind this demand to the representatives of the government on per meeting, instead we take obligations that egg price will be reduced by 2-2,5 tetri, which will be a relief for local customers. However, there is a silence from the government’s side. Our business demands big expenditures and to reduce the expenditures we are obliged to buy Russian corn. If we have been in the same conditions, we should acquire Georgian

maize. However, demand would be increased on the product and it would give stimulus to the local farmers and production would be grown as well”, - Zurab Chubinashvili declares. According to entrepreneur, local enraptures decreased egg price within the frame of Easter action. Soon egg price will be returned to the old cost. They will be decreased in price in May afresh, as egg costs are traditionally reduced in summer season. Maize import cost of 3,148 million USD has been made in January-February, 2015. Whereas, maize of 14, 483 million USD has been imported in 2014. However, import has been 16,646 million USD in 2013, while maize of 9,444 million USD has been imported in 2012.

“RUSSIAN RAILWAY” ENTERS THE TOURIST MARKET IN GEORGIA

outh Caucasus Railway (SCR) is going to enter the tourism market of Armenia and neighboring Georgia with innovative tourism products – the rail tours. The SCR displayed its pavilion designed as a railway carriage of increased comfort, which is the “highlight” of the new service at the Second International Specialized Exhibition In Tour Expo 2015 held at Yerevan Expo Center. Alexander Boiko, Head of International Department of SCR , told ArmInfo that the development of railway tourism in the region has two main objectives: improving the efficiency of the company’s operations, additional revenue through increased volume of passenger traffic

TURKISH AIRLINES IS STILL A LEADER OF AIR-TRANSFER MARKET

and with it - the need to conduct advertising campaign among the population of the two countries, as well as potential Russian and foreign tourists to familiarize them with historical and cultural sights of Armenia and Georgia and rich material and spiritual culture of the region. Tour packages offered by the SCR include one -day and three-day tours from Armenia to Georgia and backwards with full board hotel and visit of the most famous sights of the two countries. Cost for one-day tour is an average of $ 65-70. CJSC “South Caucasian Railway” (SCR) is a 100% subsidiary of OJSC “Russian Railways” and provides concession management of Armenian railways.

Airlines

urkish Airlines is still a leader of aviation market in order of passenger flow in January - February. Tbilisi, Batumi and Kutaisi Air Ports have served to 229 583 passengers through the reporting period. Turkish’s market share is increased up to 19,5% in the transfers through 2 months (2014 – 16,5%). Trend of other Turkish companies Pegasus and Atlasjet is positive as well. Russian Aeroflot, which has entered several months before on the market, holds a significant share on the market. Local Georgian Airways (Airzena) has shifted on 4th position with 6,1%-share. Air companies Rating:

FOODPANDA GAINS POPULARITY IN BATUMI

rdering online on the fast food market from www.foodpanda.ge is gaining more and more demand. The service is universally acclaimed by people of all ages and professions, from both men and women. This is especially true when the weather inconveniences us – during rains, winds, and snow, when going outside is too much of a hassle and you need a tasty and pleasant meal you can enjoy with your friends and family. Foodpanda began operating in regions outside of Tbilisi in November 17th 2014, when it extended to Batumi. Despite the short span of time the

service has already become popular in the seaside city. Foodpanda has already actively spread through restaurants, and the food ordering service is working with dining spots like “Porto Franco”, “Batumi Pizza”, “Khinklis Sakhli #1”, and “Marco Polo.” Foodpanda offers a large, convenient and wide range of choices to its customers, and delivers food to your doorstep without issues and raising e-commerce to new heights. Foodpanda’s business model has no alternative here at Georgia, and the company is planning on extending its services to more regions in the country. “I really like the service, especially when the weather’s not particularly forthcoming, and

friends decide to all of a sudden come over. Foodpanda’s fast and available, and my favorite meal is with me in 30 minutes. There’s nothing like it,” say the Batumi costumers. “We’re in this business for the long run, so whenever we see the possibility, we extend. This is our first step in Western Georgia and we can already say that the start in Batumi was a success. We are already planning on further broadening the restaurants list there. At this point, we are considering going for Kutaisi next as a viable prospect, but current focus is set on developing Tbilisi and Batumi,” stated foodpanda’s director at Georgia, Giga Kerkadze.

April 20, 2015 #95

ECONOMY

caucasian business week

MINISTRY OF FINANCE PARTICIPATES POTENTIAL INVESTORS VISIT IN THE ANNUAL SPRING MEETING OF ANAKLIA SEAPORT hina’s largest port operator “Qingdao Port International” is IMF AND WORLD BANK interested in the project of con-

orking visit of Nodar Khaduri, minister of Georgian Finance in the USA has started on Thursday. He will participate in the annual spring meeting of IMF and World Bank. According to Ministry of Finance, high level

bilateral negotiations are planned within the visit frame. Ministry of Finance will meet Suma Chakrabarti, president of European Bank for Reconstruction and Development, Menno Snel, executive director of International Monetary Fund, Masood Ahmed, director of IMF Middle East and Central Asia Department, Frank Heemskerk, executive director of World Bank, Dmitris Tsitsirago, vice president of International Finance Corporation, Keiko Honda, vice president of e World Bank’s Multilateral Investment Guarantee Agency (MIGA), Laura Tuck, World Bank Vice President for Europe and Central Asia Region. Negotiations will be held with rating companies Moody’s, S&P and Fitch and different investment companies, including with representatives of J.P Morgan, CitiBank and etc. Nodar Khaduri will meet Ukrainian college within the visit frame - Natalie Jaresko, minister of Ukrainian Finance and colleges from the Ministry of Finance of Azerbaijan. The visit will be finished on April 21.

struction of a deepwater port in the Black Sea town of Anaklia. The company representatives recently visited Georgia, observed the territory of the proposed construction and obtained detailed information about the future prospects of the port. Competition for the design of a deepwater port in Anaklia was announced by the Ministry of Economy of Georgia in August 2014. It was attended by 12 companies, after studying the proposals a list was reduced to seven candidates. According to government plans, the port capacity should reach 100 million tons of cargo per year. Construction will be carried out in 7 stages. In the first three stages, in 12 years after the start of the project, the capacity of the port should be at least 40 million tons, of them for the first 3 years - no less than 7 million tons. Apart from the port in Anaklia, development of industrial and logistic zones is planned as well as the opening of the International Airport and the construction of LNG terminal. The project must be launched in 2016.

During the visit, representatives of the Chinese company “Qingdao” met with the leadership of the Anaklia Development Consortium and Minister of Economy of Georgia. “Qingdao Port International” was founded in 1892 and is considered one of the most highly efficient port operators. Port in Qingdao is the 7th in the world by bandwidth. Its connection to the project will provide an opportunity to start the transportation of goods along the route of the Silk Road from China to Europe through Azerbaijan and Georgia.

GEORGIA DECREASES AZERBAIJANI BIG HOTEL CONSTRUCTION WORKS GAS IMPORT WILL NOT BE RESTRICTED IN FREE other sources. In annual terms, the Georgian natural gas imports INDUSTRIAL ZONES from Azerbaijan decreased by 17.2 percent in

eorgia imported 319,850 metric tons of natural gas in oil equivalent worth $67.4 million from Azerbaijan in January-February 2015, the Georgian National Statistics Service’s report said. Azerbaijan is the main supplier of this fuel to Georgia with a share of 66.2 percent of total import volume of the country in this category. Georgia has imported natural gas worth $101.9 million for two months of 2015, according to the report. The rest gas supplies accounted for Russia and

terms of value (48,700 metric tons decrease in quantitative terms in oil equivalent, or 13.2 percent decrease). For comparison, Georgia imported 368,560 metric tons of gas in oil equivalent in the amount of $81.42 million from Azerbaijan in January-February 2014. The specific weight of gas in Georgia’s total import volume from Azerbaijan amounted to 66.9 percent in the reporting period. Georgia imported products worth $100.7 million from Azerbaijan in January-February 2015. An import volume from Azerbaijan to Georgia decreased by 15 percent during a year, according to the report. Azerbaijan exports its own gas to Georgia via a pipeline connecting two countries in the Gazakh region of Azerbaijan. The capacity of gas pumping through this pipeline exceeds 2.5 billion cubic meters per year.

TURKEY IMPOSES IMPORT QUOTA FOR GEORGIAN OILCAKE

urkey has submitted a document to the Parliament of Georgia on imposing an import quota for oilcake derived from sunflowers. The quota will be defined at 15,000 tons annually – any import in excess of this amount will no longer be tax-free. Commissions of Georgia and Turkey agreed on imposing the quota as early as in 2010, but the ratification document has just been submitted to the Parliament. According to Gigla Agulashvili, the Chairman of

the Parliament’s Agrarian Committee, in 2010 the Turkish side presented documents, according to which oilcake exported from Georgia to Turkey was not produced in Georgia, since the quantity of exported oilcake was exceeding the volume of sunflowers produced in Georgia. According to Agulashvili, the oilcake exported from Georgia to Turkey was produced from the sunflowers brought to Georgia from Ukraine. The MP is sure the new regulation will not create any problems for locals, since Georgia cannot produce over 15,000 tons of oilcake by itself.

mendments should be made to the code “on Free Tourism Zone”. According to it, the state will not charge investors to construct a hotel within 18-month term. Keti Bochorishvili, deputy minister of Economy and Sustainable Development explains, that the ministry actively works on the amendments which should made to the code and it will be submitted to the Parliament during the summer sessions. As deputy minister declares, 18 months have been enough for simple construction, while this term is not sufficient for difficult buildings and amendments are planned due to it. As for the advantages defined by the code “on Free Tourism Zone” remains unchanged for the investors. i.e. if the hotel construction is finished on time, the government will release the investors from property and profit taxes though 15 years. “The planned amendments include several points. One of them is to add definition of hotel term. Current definition of hotel term means construction of merely one building, which restricts development of the resort type construction, which may include cottages and etc. So it is a technical change , which envisages definition of hotel term and it will give more possibilities to the investor to create different types of projects. As it is known, concept of free tourism zone initially included Kobuleti, where ready projects, the so-called 3-star simple constructions were represented. However, the process have been developed later and it has been spread on Anaklia and other areas. To note, 18-month term envisaged by the legislation has been for such simple and ready projects. Therefore, when the investor

has been charged to construct cottages or 5-star hotel in Ankalia, of course, it needs more time than 18 months envisaged by the legislation. Seasonality and whether should be taken into notice as well. Therefore, 18-month term is actually out of a logical point of view and in fact we throw the investor out. So, the term must be changed and it must not be written out by the legislation. The term must be defined by the special commission. If the construction is simple, they might be given 18 months, but in the case of construction of multi-functional complex (which rooms exceed 80) logical terms must be established. I want to tell you that the amendment should not restrict the investors and more interesting project will be carried out”, - Keti Bochorishvili explains. According to deputy minister, the government has necessary examples of legislative amendments. “Indian investor is interested in construction of cottages in Anaklia and not to violate the construction term, these amendments should be made to the code”, - Bochorishvili declares.

EURONEWS: GEORGIAN ECONOMY GETS ACCUSTOMED TO THE CRISIS

ECONOMIST: THE GOVERNMENT MUST CARRY OUT BUDGET SEQUESTER OR DEVALUATE GEL

eorgian economy gets accustomed to the crisis, - Euronews has prepared TV reports under this title, which describes the recent months’ events of Georgian economy. “Ruble devaluation in Russia and war conflicts in Ukraine had a direct impact on the Post-Soviet space. However, it grew into crisis in Georgia. Export sales of Georgian agricultural products are reduced in Russia, Ukraine and CIS. Georgian national currency rate is reduced by 20% from November. Roman Gotsiridze, former president of National Bank of Georgia blames Georgian government in it: “the main problem is in the change of economic policy, it has changed from liberal strategy to reg-

eorgian government officially still expects economic growth of 5% despite the reduced economic growth forecast to 2% by International Monetary Fund. Respectively, Georgian government is not in a hurry to make adjustments to the budget, which is planed within the condition of 5% economic growth forecast. Economist Giga Bedineishvili declares, that government must carry out budget sequester or they should devaluate GEL. Delay of budget adjustment will create problems to the state institutions in the correct distribution of costs. “Implementation of sequester means that the government recognizes the mistakes made while

ulatory. Government’s role is strengthened in the economy. The total difficulties come from here”. Georgia is dependent on the industrial product and fuel export, so devaluation has driven it to the inflation and it has an instant influence on the small business. Alexander, who trades with jeans in Tbilisi declares: “my small enterprise will be shut down. I think that small business will die in Georgia. If this situation continues even half a year, small business will not survive”. According to National Service of Georgian Statistics, the annual inflation has amounted to 2,6% in March and experts regards, that price growth will be continued, while economic growth will slow down”, - Euronews reports.

planning the budget. This is not politically profitable step and the government delays to do it. If sequester is not carried out, there is merely one way out remained, GEL must be devaluated to fulfill the revenues. In this case, the government should try to make a pressure on National Bank to devaluate GEL. Devaluation of national currency means additional taxes for the population. The burden will be increased further, who have credits in USD. We will have to pay more in the case of spending holidays abroad and etc. Budget sequestration delay creates risks to the budget expenditure part. The ministries start to spend money and then it will be turned out that there is not enough money, which will make their work more difficult”, Giga Bedineishvili declares.

ANALYTICS

caucasian business week

QUOTES

TBILISI RESIDENTIAL JANUARY-FEBRUARY 2015

“There are good conditions for investments in Georgia”

SUMA CHAKRABARTI, President of EBRD Finance Minister Nodar Khaduri met Suma Chakrabarti, president of European Bank for Reconstruction and Development within the visit frame in the USA, Ministry of Finance has declared.

The sides have discussed bilateral cooperation issues and details of business forum planed within the frame of EBRD’s annual meeting in Tbilisi. “Georgia is a reliable partner for European Bank for Reconstruction and Development. The annual meeting and business forum, which should be held in several weeks in Georgia is extremely important. We invited up to 1500 businessmen, representatives of the government and civil sector to introduce the reforms carried out in Georgia. We want to be informed about your country’s achievements and investment potential. The bank has successfully implemented a project, cost of 215 million EUR in the different sectors in the previous year. It should be noted, that there is a good investment environment for investors in Georgia”, - Suma Chakrabarti has declared. Minister of Finance also met with Keiko Honda, Vice President of The World Bank’s Multilateral Investment Guarantee Agency (MIGA). They have discussed insurance prospects of big foreign investments in the country and MIGA’s support.

“Lack of direct flights to Georgia is punishing for incoming tourists”

DARREN BLANCHARD, Radisson Representative What would you say the Georgian government can do to improve the tourist activity in the country and the tourism-related FDI specifically? I think they’re doing a fantastic job and I mean it very much. I’ve been coming to Georgia for fifteen years.

I’ve seen the changes, I’ve seen the infrastructure growth and it’s almost like another planet. I think Georgia has stepped up from being down the bottom. Now it’s really at the top in terms of tourism infrastructure and tourism welcome. There was a huge campaign some years ago to promote Georgia and I think that’s had a good impact. So, I would just say keep going on the same course. I think one of the challenges Georgia has is access. Having no requirement for visas for most countries is fantastic – that really puts Georgia ahead of the game. However, getting flights into the country, particularly, flights arriving at midnight or whatever the awkward timing is [4 a.m. – Ed.] – I think the government has to look into this. They have to try and work with the airport or the airlines to improve the amount of direct flights. It’s particularly problematic if you’re flying from Western Europe. I live in Moscow, so I don’t have to face the problem that much when traveling to Georgia. But the current lack of flights is quite punishing and you have to really want to come to Georgia to make it. If it was much easier, I think it would change a great deal in terms of tourism for the country.

“Coca-Cola Bottlers Georgia is considering the wine business”

TEMUR CHKONIA “Coca-Cola Bottlers Georgia” founder “In the wine-producing regions, especially in Kakheti, incomes have grown in recent years. We are interested in the development of these regions, and we are already

working there - in particular, we opened a hotel there which is always full, we also plan to open a McDonalds in Telavi in the near future. We already have a distribution network in the Kakheti region with a turnover of GEL 8 million, and after the opening of McDonalds it will even up. There are some problems, in particular, a visa regime should be liberalized; there is a lot of talk, but nothing has been done in this regard. We already have plans, including in the winemaking. We are engaged in consultations on this matter with foreign experts who raise the question of promotion of local wines made on the basis of local grapes. Georgian wine is of particular value when it is real, authentic, there is no need to invent something. We will have our own vineyard, and maximum in one year and a half we will start to produce wine from local varieties. Investment in the project will amount to about Euro 7. 5 million”.

“Reform in universal healthcare program is needed”

DEVI KHECHINASHVILI Head of Insurance Association Mr Khechinashvili considers, that numerous problems are found in the universal health care program and it will be better, if the government launches a corresponding reform. “Especially over-expenditure of funds is an issue. Control of these sums is very difficult. However, medicines are not included in the insurance program and it creates

an especially big problem for the population. So they have difficulties to acquire the drugs. We do not know, what the government plans at this stage, but if they take care of this problem, it will be better. A scheme should be made which would enable comfortable service for the population,”- Devi Khechinashvili said. One of the main issues of the announced reform by the Ministry of Healthcare will be optimization of universal health care costs. Healthcare institution works on the reduction of universal healthcare costs to reduce expenditures to the state budget and to make funding more transparent. According to David Sergeenko, minister of Healthcare, innovative model of healthcare is worked out, which might provide improvement of patient service. David Sergeenko declares, that universal health care program will be inspected and drugs will become more accessible. Namely, universal healthcare should be transferred into universal health insurance. A state insurance fund will be formed, which will manage the new project. International Consultation Company will assist Georgian Ministry of Economy to be in harmonization of Euro directives. Representative of international company will give recommendations to public officials, so that obligations, envisaged by Association Agreement, will be correctly reflected in the relevant legislation.

April 20, 2015 #95

Supply During January-February 2015, 18 construction permits were issued totalling 385 dwelling units. The delivery time is estimated to be second half of 2016. Vast majority of this projects accords to low segment. The total construction area equals to 56,000 sqm, 85%of which represents residential space, 5% commercial (office and retail) area and the rest 10% is other space.

Demand In the beginning of 2015 transaction units decreased by 3% compared to previous year same figure, totalling 2,650 units. According to transactions, the first quarter of the year is always characterized by decreasing trend. Due to this fact it can be mentioned that significant changes are not expected. In the majority of districts transactions stands stable. The significant changes has been observed only in two districts. In Didube the growth rate equated to 4%, in Samgori district transactions decreased by 4%. The main player in demand distribution still stands Saburtalo District, which holds 25% of total transactions. According to analysis of transactions, the trend remain stable. The largest share is held by small-sized apartments (<50 sqm). Latter trend is more significant in suburban parts of the city – Chughureti, Gldani, Nadzaladevi and Samgori, where small apartments represent almost 50% of transaction. Vake district holds the biggest portion of 150-250 sqm units, after which comes Krtsanisi and Mtatsminda.

April 20, 2015 #95

BANKING & STATISTICS

caucasian business week

ANNUAL EXPORTS DROP BY 28%, IMPORTS DECLINE BY 3%

xport from Georgia is decreased by 28% in Q1 comparing to the previous year, while import - by 3%, Sakstat declares. Foreign trade turnover (except unorganized trade) has amounted to 2, 279 billion USD through JanuaryMarch, 2015, the figure is less by 10% comparing to the rate of the previous year. At that, export has been 503 million USD (less by 28%), whereas import – 1, 776 billion USD (less

by 3%). The negative trade balance has amounted to 1,273 billion USD through January-March in 2015 and 56% of foreign trade turnover. It should be noted, that both: export and import are grown in these months despite the annual reduction: the export has been 167 million USD in February, while 179 million USD in March; import has made up 571 million USD in February and the volume has increased up to 666 million USD in March.

MARCH RECORDS CONTRACTION IN FOREIGN CURRENCY RESERVES

ccording to NBG’s statistics, reserve assets amount to 2,453 billion USD by April 1 ((1/03/15– $2,469 billion, Q1/2014 – $2,598,6 billion). The reduction has been 9% in Q1, annually – 5.6% (y/y), )01/04/14 – decline 11,7%). NBG has brought $40 million on the currency

market in March (19/03), while $129 million – in February (11/02, 19/02, 24/02). Interventions have not been carried out in January. Reserve assets include foreign currency reserves (($2 241 383 000) and Special Drawing Rights (SDR). Georgia’s reserve position is defined by 13,8% in IMF (01/04/14 – 15,5%).

GEL CIRCULATION REDUCED IN MARCH

ational currency volume is reduced in the circulation from 2,320 billion to 2,313 billion in March. Growth has been 55 million in the previous month (01/15 – decline 200 million, 12/14 – growth – 242 million). In addition, money supply, which includes cash, is increased merely by 28 million. Annual growth totals to 11,4% (01/03/14 – 13,9%, 01/03/13 – 13%). Dynamic is positive, respective pressure on the

rate is minimal, which fundamentally indicates to GEL strengthening trend in the future. Operative data of monetary aggregate change is reliable, including M2(6/04 -5,460 billion, 3/04 -3.443 billion, 2/04 - 5,472 billion, 1/04 -5.436 billion, 31 / 03-5,483 billion, 30/03 - 5.537 billion, 27/03 -5.571 billion). VAT removal should reduce pressure on the rate as well. Improvement of fundamental factors of GEL devaluation is added to it, import is reduced by 5,8% in March (y/y), while export – by 30%.

MINIMUM LIVING WAGE CONSTITUTED GEL 161,9 IN MARCH

inimum living wage increased by 1,9 GEL in March and the figure made up 161,9 GEL. According to Sakstat, minimum living wage of average consumer has been 143,4 GEL in the previous month (February – 141,7 GEL), while average

family – 271,6 GEL (February – 268,4 GEL). According to the calculation of Sakstat, minimum living wage of four-member family has amounted to 286,9 GEL in March, while six and more-member families – 381,5 GEL. It should be noted, that minimum living wage has been 160 GEL and 20 tetri in January of this year.

GEOSTAT: GEORGIAN EXPORTS MARKED 503 MILLION USD

he first part of the year has seen the value of Georgia’s exports and imports (External Merchandise Trade) experience a slight downward trend in comparison to 2014, claims Geo-

stat. In January, February and March, Georgia’s External Merchandise Trade (excluding non-organised trade) amounted to $2.279 billion USD. This was a 10 percent drop when compared to the same figures of 2014.

Geostat preliminary data revealed the value of exports decreased by 28 percent year-on-year, and reached $503 million, while imports dropped three percent and amounted to $1.776 billion. The trade deficit equalled $1.273 billion and its share in the country’s total trade turnover constituted 56 percent. Geostat noted more detailed data on External Merchandise Trade of Georgia will be published on April 21, 2015. •Figures are in USD.

PRODUCTION OF ALL ANNUAL AGRICULTURAL PRODUCTS EXCEPT BARLEY HAS REDUCED IN GEORGIA

ccording to Sakstat, potato of 196,6 thousand t has been grown in Georgia in 2014, the figure is less by 33,7% (296,6 thousand) to the index of 2013. However, 252 thousand t potato have been produced in 2012. Potato crops have amounted to 52,2 thousand t in the rpeviosu year, while 81 thousand – in 2013. Wheat production index has been 52,2 thousand t in the previous year, whereas 81 thousand – in 2013. Barley production is increased from 35 thousand

t to 35,8 thousand t. Maize production has made up 336, 3 thousand t in the previous year, while 363,9 thousand t – in 2013. Bean production rate has been 8,2 thousand t in the previous year in Georgia, whereas 10,5 t – in 2013. Vegetable production rate is reduced from 204,8 thousand t to 187,4 thousand t in the last year. Sakstat declares, that exact data will be published on June 16.

TBC BANK HAS ANNOUNCED ABOUT THE INTRODUCTION OF UNIVERSAL PLATFORM

icro and agriculture business consumers will receive the loans at their working places. According to TBC, the bank is number one with this unprecedented offer on the market. The bank works remotely with a tablet, galaxy Tab Active, which enables the customers to apply loans in his business location. The procedure takes 45 minutes.

TBC Bank will offer micro loans nearly in all regions with its new technology. Over 140 employees of the bank serves to this direction. “We are proud, as we are the first, who have offered this innovative service to the customers. Our aim is to do the work better than we have been doing. I think, that we still keep the leader’s position on the market”, - Nikoloz Kurdiani, deputy director of TBC Bank has declared.

MARCH RECORDS 15.4 MLN GEL OUTFOW FROM GEORGIA

s of Q1, annual growth of transfers has made up 4% y/y (Q1, 2014 – 29%). Remittance volume is grown, but the pace is reduced 7 times (Q1/15 – 42,5 million; Q1/14 – 40,8 million; Q1/13 – 31,6 million). Source: National Bank of Georgia The data includes transfers by banks and micro-finance organizations.

GEORGIA JOINS CHINA-LED ASIAN INFRASTRUCTURE INVESTMENT BANK

ccording to Chinese Finance Ministry, existing founding members of the China-led Asian Infrastructure Investment Bank have accepted applications of Georgia, Denmark, Brazil, the Netherlands and Finland to join the bank as founding states. The existing founding members of the China-led Asian Infrastructure Investment Bank (AIIB) have accepted applications of Georgia, Denmark, Brazil, the Netherlands and Finland to join the bank as founding states, the Chinese Finance Ministry said Sunday. “With the consent of the existing founding members, the Netherlands, Brazil, Finland, Georgia and Denmark officially became the founding countries of the AIIB on April 12,” a statement on the Chinese finance ministry’s website said. In 2013, Chinese President Xi Jinping and Premier Li Keqiang put forward an initiative to set up the AIIB in a bid to boost investment in infra-

structure projects in the Asia-Pacific region. In October 2014, 22 Asian states signed a Memorandum of Understanding to establish the AIIB with the headquarters in the Chinese capital of Beijing. The authorized capital of the financial institution amounted to $100 billion. Media reports suggest that 52 countries, including Russia, have made submissions to become founding members of the bank. The final list of AIIB founding members is expected to be announced by mid-April. According to Georgia’s Ministry of Finance, Asian Infrastructure Investment Bank will promote investments in infrastructure. “I think that the bank’s investments will increase the country’s transit potential. The bank will give new opportunities to cooperate with developing countries and the donor organizations ‘’ - said Deputy Finance Minister David Lezhava a few days ago.

TBILISI TO HOST LEADERS OF WORLD’S GIANT BANKS

undreds of banking giants from around the globe will gather in Georgia’s capital Tbilisi in a special ceremony to award the best performers at banking industry from Europe, the Middle East and Africa next month. The Europe Banking Award 2014, scheduled to be held in Tbilisi on May 13, will honor banking devotees for their efforts in different directions in 2014. The Europe Banking Awards 2014 ceremony is organized by EMEA Finance magazine and will select the winners based on EMEA Finance’s criteria. The Europe Banking Awards recognize the achievements of leading commercial and investment banks in the EMEA region, which stand out among their peers, demonstrate leadership in their home markets, top the performance and

deal-making tables both in individual countries and across the region. The awards consider various performance and structural factors, such as market share, growth in important product classes, profitability and corporate strategy. Georgia’s TBC Bank will reportedly be among the winners, according to the bank’s official website. In response, the TBC Bank CEO, Vakhtang Butskhrikidze said he was proud to receive the Best Bank in Georgia award. Meanwhile, Barclays and UBS were named the Best Investment Banks in Georgia 2014 for their work on the TBC Bank IPO. EMEA Finance magazine has an editorial vision to be “the independent voice” – one that speaks at the highest level of integrity and journalistic ethics – for the financial community, its customers, and suppliers across the EMEA region.

COMPANY NEWS caucasian business week

April 20, 2015 #95

TERJOLA WINE TO EXPORT 3 000 BOTTLES OF WINE TO JAPAN

C URAL AIRLINES PLANS TO LAUNCH REGULAR FLIGHTS FROM YEKATERINBURG TO TBILISI

ccording to the company, the air company will perform direct flights Yekaterinburg – Tbilisi - Yekaterinburg one a week on Monday. However, exact date of the regular flight launch is not named yet. Administration of Georgian Civil Aviation de-

ooperative “Terjola wine” expands its business. Instead of 700 bottles, this year up to 3 000 bottles of wine produced by the cooperative will be exported to Japan. Japanese will be able to purchase a bottle of “Terjola wine” for $ 10. According to one of the founders of the cooperative Gogita Makaridze, production has increased after the cooperative was established and the costs and working in the vineyard reduced at the expense of distributed liabilities among the members of the cooperative. Gogita Makaridze first succeeded in the Wine Fair, where Japanese investors were interested in his family wine. According to him, due to the

scarcity of land, he produced a small quantity of wine, afterwards along with the rest 6 members of the cooperative, took part in the European Neighbourhood Programme for Agriculture and Rural Development. They won the project and within the ENPARD were given the necessary equipment and machines that allowed to increase the cooperative production. As they say in the cooperative, they produce a bio-product which does not have any chemical additive and is completely natural. In the future, the cooperative “Terjola wine” plans to expand vineyards, to increase the number of cooperative members and turn “Terjola wine” into a brand.

clares, that “Ural Airlines” has not submitted application on the launch of direct flights from Yekaterinburg to Tbilisi by this time. It should be noted, that “Ural Airlines” performs flights from Yekaterinburg to Tbilisi even today, but they are charter flights. “Ural Airlines” makes flights from Moscow to Kutaisi as well.

DEMAND FOR GEORGIAN MEDICINE NEW LIFE GIVEN TO TBILISI’S ON THE RISE IN EXPORT COUNTRIES CENTRAL SHOPPING CENTRE emand for Georgian medicine for export and if earlier the company sold 20

is increasing in the export markets. As per Geostat data, in 2014 drugs worth $92.065 million were exported to foreign markets, that is 44% more than in 2013. According to Geostat, medicines cost $52.1 million were exported from Georgia in 2013. In addition, medicines share in total exports has increased in 2014 and reached 3.2%. The medicines are in the last position in the Georgia’s top ten exported products, but this group was not included in the top ten in 2013 when its share of the export products was 1.8%. Geostat data is confirmed by the drug manufacturer and one of the major exporting companies – GMP. The company’s exports director Boris Jinjolava says that last year compared to 2013, demand for medicines produced by the company increased by about 60%. In his words, the increase was recorded in all types of medicines, which are exported, including cardiac drugs, gastrointestinal, as well as anti-cold and analgesic medications. Boris Jijolava notes the increase in exports was caused by the increased number of medication

varieties of medicines abroad, today the list includes more than 50. GMP carries out export of Georgian medicines mainly to the former Soviet Union countries, including: Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Moldova and Ukraine. As for the EU, GMP exports director says that to export the medications to EU countries, a multi-stage procedure and medicines registration is required. Another exporting company is GPC, which is engaged not only in exports of Georgian medicines but imported from abroad. David Kiladze, GPC Director , states that they are focused on re-export of medicines and exports have increased in this regard , however, the company’s Director refrains from specifying numbers. According to him, the number of medicines manufactured by their contractor company has increased, which also means that compared to 2013, the demand for Georgian drugs in export countries has increased. Kiladze notes that GPC exports and re-exports medicines to the countries, such as Armenia, Azerbaijan, Ukraine and Turkmenistan.

GEORGIAN CIGARS TO BE SOLD IN THE EUROPEAN MARKET

igars produced in Keda region of Adjara will be exported to Europe and the CIS countries. The company’s Director Tamaz Turmanidze says that at this time the company manufactures 23 names of sigars and cigarillos. According to him, the Georgian cigar is exported to the Turkish market in a small amount and is sold in “Duti Free” shops of a few airports. Tamaz Turmanidze notes that the company is working on export markets expansion, negotiating with a number of different countries and by the end of the year their products will be sold in Europe and the CIS countries. Apart from Batumi, the cigar is sold in several

major cities, including Tbilisi. The Georgian cigar price ranges within GEL 1.3 - GEL 32. Products are made from several types of tobacco blend. The enterprise uses mainly local and Indonesian tobacco. The company buys tobacco both from the locals and residents from other regions of Adjara. “Imeri’’ was founded in 2007 and is located on 2 000 square meters. In total $ 120 000 were invested in the enterprise. As they say in the Ministry of Agriculture of Adjara, the company also received $ 40 000 in the form of additional agro- credit. Apart from tobacco and tobacco products, the company produces up to 60 cigar accessories, including ashtrays, tobacco-pipe, boxes and more. In total 45 people are employed at the enterprise.

n old shopping centre built in the Soviet times on the capital city’s main Rustaveli ave has a new owner and a new future. The building, commonly known as the Univermagi building, is located near Freedom Square in central Tbilisi. The building was purchased by the Georgian CoInvestment Fund (GCF) – a $6 billion USD fund founded by former Prime Minister and billionaire tycoon Bidzina Ivanishvili. The GCF has a mandate to provide investors with unique access through a private equity structure to opportunities in Georgia’s fastest growing industries and sectors. However the GCF’s future plans for the Univermagi building is unknown. Seven years ago Georgia’s Economy Ministry sold the building to multinational corporation Willbrok Management International, which announced the launch of construction of WillbrookPlatinum Tbilisi Plaza. A significant investment valued at around $100 million USD was planned to be invested into the project, which was due to be completed several years ago. Initially the Willbrook-Platinum Tbilisi Plaza project involved opening shopping and entertainment facilities in one of the two Univermagi buildings, with a total area of 85,000 sqm. Meanwhile a business centre would open in the second Univermagi building. The Willbrook-Platinum Tbilisi Plaza was due to

be completed in 2012 but the construction works was suspended several times. Willbrook representatives earlier promised the project would be completed by 2016 however the building was sold to the Georgian Co-Investment Fund. The Fund has not announced their plans for the building. In earlier years Univermagi was a former department store that very popular among Tbilisi locals. Now, some locals speculate the former Univermagi building could be used as part of the Panorama Tbilisi project, which was initiated by Ivanishvili. Meanwhile, the Georgian Co-Investment Fund released an announcement yesterday that said the Fund would cover all the preferential duties taken by the Fund within the framework of the state program Produce in Georgia. This decision was made by Ivanishvili and the cost of the preferential duties will be covered using his personal money.

SWEDISH COMPANY ACQUIRES GEORGIA-BASED OPERATOR EUROPE-BET

uropean sports betting operator Betsson AB is negotiating the acquisition of Georgian BC Europe-Bet for Euro 100 million. eGR reports. According to the source, the negotiations are at the final stage, and must end before June 2015. Representatives of Betsson have not yet given any official comment regarding the transaction. Despite this, Magnus Silfverberg, executive director of the bookmaker, said last month in his interview with eGR that Betsson is looking for ways to bargain purchase of licensed operators. Georgian Europe-Bet started to operate in 2010. It provides its clients with a bookmaker, casino and online poker. Last year, the company generated revenues of 18 million euro.

In its latest yearly performance report Betsson AB posted record 2014 earnings of SEK 770.6 million (£60.3 million), The operators governance are keen to expand the company’s operations and services into new regulated markets Betsson CEO Magnus Silfverberg and governance are thought to be on the lookout for potential corporate acquisitions to add to Betsson’s current igaming and sports betting portfolio. In 2014 the operator acquired Dutch focused online gaming brands Oranje and Kroon Casino. If approved Georgian Europe-Bet will be added to Betsson AB’s industry portfolio which at present includes – Betsson, EuroCasino, casino.dk, triobet, Nordicbet, MrSmith, and betsafe.

April 20, 2015 #95

HEALTHCARE caucasian business week

GEORGIA’S PRIME MINISTER MEETS HEALTH CARE EXPERTS

rakli Gharibashvili expressed hope that cooperating with international experts would yield a qualitatively new system for Georgia’s health care management International consulting group Global Alliance for Health and Social Compact will help Georgia facilitate a program aimed at increasing efficiency of the Health Care System – the group comprised of health care experts was received today by Georgia’s Prime Minister, Irakli Gharibashvili. The Prime Minister emphasized during the meeting that it is one of the government’s primary priorities to ensure each individual resident’s health and their accessibility to high-quality health care services. Irakli Gharibashvili expressed hope that cooperating with international experts would yield a qualitatively new system for Georgia’s health care management. Information about the group’s activities and goals were provided to the Georgian’s government’s leader by the group coordinator, Dr. Jean-Elie Malkin. According to his clarification, their goals include the facilitation of a completely new and innovative health care model that will ensure highquality, safe and efficient treatment of patients; the development and quality control of a modern

and efficient regulative system for medical and pharmacological products; the organizing of a network of treatment establishments on a local level, with them being as close to patients as possible and will offer an optimal medical service; the residents’ wider accessibility to medicine and health care field technologies; as well as facilitation of goal-based programs for health care development. Dr. Malkin noted that the meeting with the Prime Minister was a signal reflecting Georgia’s strong commitment to improve health quality for the population. He also said that the Prime Minister reaffirmed the notion that health would be kept a top priority in Georgia’s political agenda. “So, we will support, with our Georgian counterparts, this momentum in order to move Georgia close to the European standards on health. Moving to the European standards means to give the population of Georgia access to quality care, but also to affordable care, in order to decrease the overall cost of health, and do this in a transparent way,” stated Malkin. According to him, tangible results would follow very soon for the population of Georgia. The meeting was attended by Georgia’s Minister of Labor, Health and Social Affairs, David Sergeenko.

HEALTH MINISTER: GEORGIAN CITIZENS WILL NOT NEED MEDICAL TREATMENTS AT FOREIGN HOSPITALS

t the meeting with a group of international experts, Georgian Health Minister David Sergeenko made focus on the quality of medical treatments in Georgia. “We should care for the quality of our achievements. Georgian citizens should not have to visit foreign countries for medical treatments. Out state has got sufficient resources to develop this direction here and our patients will need foreign clinics in only exceptional cases”, David Sergeenko said. As reported, as part of the EU associated membership agreement the Georgian government has

signed a long-term agreement with an international consulting group of Global Alliance for Health and Social Compact. The document calls for harmonizing the Georgian practices with the European standards of the Health System. The document was signed by Georgian Minster of Labor, Health and Social Protection David Sergeenko and the group coordinator Jean Li Malkin. The group aims to organize a fundamentally new innovative model of the healthcare system through meeting European medicals standard by 100% and minimizing expenditures on health and medical treatments.

INSURANCE INDUSTRY’S PROFIT AMOUNTED TO 40 MILLION IN THREE YEARS OF LOSS

n three years of loss the Georgian insurance industry logged a 40 million profit in 2014. The insurance expert George Gigolashvili says that in 2011 the insurance industry’s 22-million loss was caused by the obligation to build hospitals and an increase in appealability of the insured, in 2012 the loss exceeded 7 million, the 2013 year was also unprofitable for the industry which suffered more than 3 million GEL due to the participation in the state programs and an increased number of the citizens involved in these programs. The situation has dramatically improved in 2014. The agricultural insurance was introduced last year within which companies managed to earn GEL 12 million. A total volume of premiums raised by the companies outside the state programs, increased from 246 to 298 million. “Aldagi” accounts for the biggest share of the raised premiums among the insurance companies. In order the companies’ potential to be objectively assessed, insurance experts recommend to compare a volume of attracted premiums outside the state programs and combine data on “old” and “new” Aldagi” and “Imedi L”. Accordingly, as per the 2014 data, without taking into account premiums raised within the government programs in 2014, “Aldagi” leads with a total of GEL 104 million in premiums, in the previous year the figure reached 85 million. “GPI” earned 77 million last year while in the previous year this figure

was 58.5 million. “IRAO” – 28 million (a little more than 20 million a year earlier), “Ardi” – 23 million (22 million in 2013), “IC Group”- 17 million (12.6 million in 2013). Mikheil Japaridze, Business Development Director at the insurance company “Ardi”, talks about a positive trend recorded on the market – the people who declined the private insurance companies services in July 2013 have resorted to private insurance again as over time were convinced of the benefits of service provided by the private sector . Experts estimate that the largest share of 40 million profit falls on the duet of “Aldagi” – “Imedi L” and “GPI Holding”. As for smaller companies, who don’t own clinics, Japaridze notes they have to purchase medical services from their rival hospitals or pharmaceutical network, which puts them in a worse situation because of higher prices. In the world this process is regulated by law as the insurance and pharmaceutical companies are separated. “Today only two or three companies are engaged in the net insurance. However, small companies are more focused on the quality of service – if the big players try to serve the client in their own clinics, others offer their customers more choice, “- Mikheil Japaridze notes. In Japaridze’s words, the current year will be difficult for the insurance industry because the lari’s devaluation seriously undermined the insurance companies. He says the new contract prices have been increased because of the rise in medical services.

DAVID SERGEENKO: HEALTHCARE SYSTEM MOVES TO HIGHER STANDARDS

he Minister of Labour, Health and Social Affairs of Georgia David Sergeenko has signed a long-term agreement with the international consulting group of the Global Alliance for Health and Social Compact with the aim to harmonize the Georgian Health system with the European standards. The document was signed as part of the EU associated membership agreement. The document was signed by Georgian Health Minister David Sergeenko and the group coordinator Jean Elie Malkin. The Georgian healthcare reforms are being taken to higher standards, Georgian Health Minister David Sergeenko told reporters. “The healthcare system represents a certain challenge in all countries. The system should be renovated periodically and fundamental directions

should be modernized. Our system is not exception either. We have moved to a general healthcare system and increased an access to services, one of the important factors. However, efficiency of the project falls if the reforms are implemented without due quality. We have worked in this direction for over a year. As a result, we are able to implement new and innovative methods and approaches to ensure a high quality of healthcare reforms and pricing and to expand the attainability of the healthcare services. We will introduce new models of partnership between private and state sectors, new systems of quality control over healthcare and medications. I believe this way and the current document signed with top class professionals will enable us to successfully implement this project. The healthcare reforms are moving to higher standards”, the Georgian Health Minister said.

GOVERNMENT SIGNS AGREEMENT WITH INTERNATIONAL ADVISORY GROUP

ithin the framework of the EU Association Agreement the government of Georgia has signed a long-term agreement with the international advisory group Global Alliance for Health and Social Compact to bring the country’s health care system in line with European standards. The document was signed by Minister of Labor, Health and Social Affairs Davit Sergeenko and group coordinator Jean-Elie Malkin. According to the Healthcare Ministry, the group’s aim is to provide quality healthcare, pricing and availability through new, innovative methods. One of the basic principles will be reduction of healthcare costs with absolute observation of European medical standards. “The healthcare system is a challenge for all countries and requires periodic renewal and modernization of the primary approaches. Our system

is no exception. By moving to a universal healthcare system, we managed to increase one of the most important factors – access to services. The same success must be achieved in healthcare quality and pricing in order to make this project successful,”- said the Healthcare Minister. “I am confident that this is a positive step the Georgian government has taken. They once again proved that healthcare is a priority to the state. Due to the implemented reforms, the population’s standard of living has been significantly improved. We will work along with Georgian experts to make healthcare reforms successful. This will be an open and transparent process,”- said Jean-Elie Malkin The group includes healthcare experts who have great experience in global healthcare projects. According to the signed agreement, the alliance will work to develop a program for enhancing the effectiveness of Georgia’s healthcare system.

GEORGIA’S PRESIDENT HONOURS HEALTH MINISTER WITH TOP STATE AWARD

eorgia’s President is honouring the country’s Minister of Labour, Healthcare and Social Affairs with a top state award for his efforts to bring better healthcare to the Georgian people. President Giorgi Margvelashvili awarded Minister Davit Sergeenko with the St. George’s Order of Victory for his personal contribution to the county’s successful healthcare reforms and for the high level of professionalism he exuded while performing his duties. “On behalf of the Georgian people I would like to thank Mr. Sergeenko for his outstanding work in the country’s healthcare system,” said the President. The Ministry of Healthcare truly made a revolutionary step forward in terms of the protection of our citizens. We decided to honour his great contributions and awarded him the St. George’s Order of victory,” said President Margvelashvili at yesterday’s ceremony. The award ceremony coincided with World Health Day, which was marked around the world on April 7. After presenting the award, Margvelashvili reit-

erated that as a result of Sergeenko’s outstanding work, life had become easier for thousands of people living in Georgia. Sergeenko responded and said he was honoured to receive such important recognition. A sincere thank you, Mr. President on behalf of the entire medical community and with your permission I would like to share this greatest award to the doctors, nurses and all the people, who right now are standing next to patients’ bedsides or surgical tables, or hurrying to save a patient’s life.” Without their support it would have been impossible to achieve this modest success we have made,” Sergeenko said. The St. George’s Order of Victory is an honour awarded by the President of Georgia. It is the country’s second highest award, following behind the Order of National Hero. It was established in 2004. To date about 100 people have received a St. George’s Order of Victory, including former United Staates President George W. Bush, Senator John McCain, former President of Lithuania Valdas Adamkus, former President of Poland Lech Kaczynski, and former Ukrainian President Viktor Yushchenko.

CURRENCY

April 20, 2015 #95

caucasian business week

CAN US DOLLAR EXTEND LAST WEEK’S BULLISH-MOVE?

THE NEW NOTHINGNESS By Steen Jakobsen “The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences.” Winston Churchill

have noticed a very troubling trend recently – everywhere I go, I’m the optimist. This concerns me and should concern you as well as I am normally introduced as someone who has predicted five of the last two crises. I write this on the Copenhagen-bound plane that brings me back from a visit to Slovenia and Croatia, where everyone has given up on the future. I found the same on a recent trip to Hong Kong and Australia, and on another occasion in Turkey before that. We have zero growth, zero inflation and zero hope. That combination has left the countries of this circumstance in total apathy as zero rates are being interpreted as meaning that no reforms are needed. No inflation means no new margins as well as no new wage bargaining, and zero hope means politics and elections may change the affiliation of countries’ leaders, but not their politics and certainly not their vision for the future. This is one of the unintended consequences of zero-bound economies and policies. This apathy has, however, reached a zenith-point that needs to be addressed. Media and policymakers continue to talk about what we can’t do, leaving no room for talk of we can do and characterising dreams as mere fantasies, things best left to children. This new nothingness is creating a youth, a political system and an economic outlook which is based more in peoples’ heads and minds than it is in reality. Every country I visit has terrible macro policies, and features a political class who are mainly interested in maintaining the status quo (as well as a dynamic micro economy). There are always business people and students who are willing to do more and better – to go higher, longer and further – but they are drowned in this “nothingness reality”. Here is my solution, then, which should and would work. First of all, everybody needs to respect why God gave us two ears and one mouth: it means you listen twice as much as you talk. We are designed to listen more than we talk! Secondly, everyone needs to be more ambitious. For yourself, your country, your company… talk about what you can do and not what you can’t do. This is my political and economic platform (or rather my non-platform, given that I am not actually running for office); it’s simple and costs close to nothing to implement: Promise No. 1: I promise to do absolutely nothing as your president, except support the country in everything it does. Macro kills productivity, innovation, personal freedom, and dreams by misallocating capital and resources and by limiting ideas and expression. A rich society grows from the bottom, not from the top. Promise # 2: The public sector will not be allowed to grow in size for the next ten years. No one will be laid off, but the private sector needs to be able to outgrow the public sector, while the remaining public sector needs to be more ambitious. The public sector should be the best at the job it does – nothing less, nothing more. The public sector has a central role in any society, and its role is to that which only it can do. Promise # 3: For every new law introduced, one law needs to be go away. There need to be “sunsets” built into most laws which deal with business, tax and incentives. The administrative complexity is reaching new all-time highs every

single week, creating “control costs” which have no utility are unproductive. Promise # 4: All credit and political capital should be invested in SMEs – small-and medium sized companies. EU studies show that 85% of all new jobs are created in the SME space. Additionally, 100% of productivity and innovation lies with SMEs. Most of this sector’s considerable contribution comes from startups, hence there needs to be a focus on incentive structures for starting a new business. I suggest tax amnesty for first three years (most companies don’t make money before their fifth year anyway!) and propose that investments into startups be made deductible in top tax and pension schemes. This is it – It represents the reverse-engineering of my Bermuda Triangle of Economics theory which explains how today, and through zero bound rates, 20% of companies (listed companies, banks and state-owned-enterprises) get 100% of credit and political capital. This means their funding rates are 300-400 basis points lower than a normal business cycle. Meanwhile, SMEs (the other 80% of companies) get zero credit and zero political capital. Stocks go up as discounted cash-flows (300-400 bps below normal) result in higher valuations. Unemployment and inequality keep rising and there is no growth – no productivity, no political changes and no hope. There is a reason why hope is at zero. The systemic failure of policymakers to understand and reverse the worst monetary experiment in history has created a situation where we need a deep crisis to shake off the mantle of this nothingness reality. I am optimistic – technology and smart, capable, well-educated people stand ready to do their part if they only get the chance. The 80% can get us back on track in less than five years as growth, if given the chance, will be exponential and not slow. My travels prove to me that the world is stuck in neutral. Everyone, in a sense, wants to be “halfpregnant”, wallowing in the idea that “things could be worse” while not dealing with reality. The consequences for markets are manifold: Companies can’t continue to grow top-line earnings when their customers – the 80% – have less to spend. At this point, a zero-rate environment is one in which “financial engineering” has reached its inbuilt maximum, the pinnacle of the Excel spreadsheet maker’s art (discounted cash-flow close to zero = infinite valuation). In addition, zero expected returns for equity markets, a normalisation of interest rates – not based on growth but instead on the need to “normalise” zero bound – and a tectonic shift from investing in “paper money” to doing so in productivity and jobs among the 80%. Expect the Federal Reserve to issue a margin call on asset inflation in June or September, a Grexit, and a much stronger US dollar (EURUSD at 1.10) in a final move where lack of liquidity and shortage of access to USD funding will create a “mini-crisis”. The world only ever changes direction after a crisis, and all macro changes stem from policy mistakes. 2015 is a lost year. I think that 2016 will see us leave the nothingness reality behind, however, and I am now as optimistic as I have ever been. Why, you might ask? Because things have never been worse!

ollowing a substantial decline in the previous three weeks, the US Dollar, last week, snapped its losing streak and managed to recover against most major currencies. The US Dollar recovery that started with the release of ISM non-manufacturing index, that remains firmly in expansion territory, was reinforced by the minutes from the Fed’s latest monetary policy meeting in March. The greenback soared after the release of the minutes that revealed several FOMC members favoring the Fed to start rising the funds rate at the highlyanticipated June meeting. Elsewhere, Greek worries continued dragging the Euro-zone common currency, while uncertainty over the upcoming UK elections has started weighing on GBP. Meanwhile, RBA’s decision to hold its key benchmark rates at historic low levels provided some minor support for the Australian Dollar. Nevertheless, the overall US Dollar Index (I.USDX) ended the week on a firm footing and would now take cues from this week’s busy economic calendar. From the US, investors this week will be looking forward to the release of monthly retail sales data, two regional manufacturing indices along with the release of CPI and housing data. In the world of data-dependent monetary policy, the US economic data will be closely scrutinized in order to determine the timing of the Fed starting to move towards normalizing its monetary policy. The US economic calendar begins with the release of monthly retail sales data and is scheduled for release on Tuesday. Following a back-to-back dismal retail sales data for three consecutive months, market participants are expecting a strong rebound in March with consensus estimates forecasting the retail sales to have gained by 1.1%, while core retail sales (excluding automobile sales) expected to register a rise of 0.7%.

number of building permits to hold steady above the 1 million mark, at 1.08 million units annualized rate and housing starts are also expected to reclaim the annual pace of 1 million units in the month of March. Apart from the US releases, monetary policy decision announcements and subsequent press conference from ECB and BOC along with employment data from UK and Australia, and inflation data from UK and Eurozone have the potential to trigger some volatile moves in the Forex market. Both the ECB and BOC are scheduled to announce their monetary policy decisions on Wednesday, where both the central banks are not expected to alter their current monetary policy stance and leave interest rates unchanged. However, what could be of special interest for the market participants is the subsequent press conference, where comments about the economy from the respective central bank chiefs are likely to impact the movement in the currency market. Additionally from the Euro-zone, the final print on the inflation data for the month of March is scheduled for release on Thursday. Ever since ECB shifted its focus to defend the Euro-zone economy against the risk of deflation, the important of Euro-zone inflation data has risen. The final print is unlikely to show any inflationary pressure and is expected to remain at negative 0.1% while the core CPI is expected to remain at 0.6%. From UK, the annual CPI reading and monthly employment report, scheduled for release on Tuesday and Friday respectively, are likely to infuse substantial volatility, especially for GBP pairs. Inflation data and labor market conditions remains key determinant for Bank of England’s monetary policy decision, and hence would be closely scrutinized to determine the timing of a rate hike, if any, by the central bank. The UK inflation, measured by CPI, is expected to remain flat at 0%

This week’s key highlight from the US economic calendar would be the latest print on US headline inflation, consumer price inflation (CPI), for the month of March and is scheduled for release on Friday. Following a modest rise by 0.2% in February, economists are expecting March reading to follow suit and come-in at 0.2% on a month-on-month basis. The Core CPI figure, which excludes the volatile food and energy prices, is also expected to register a rise of 0.2%. Moving on to the US manufacturing data, investors will confront the release of industrial production data for the month of March and two regional manufacturing indices, namely - Empire State Manufacturing Index and Philly Fed Manufacturing Index for the month of April. The Empire State Manufacturing Index and industrial production data are scheduled for release on Wednesday, while Philly Fed Manufacturing Index is scheduled for release on Thursday. Following a weakening trend in ISM manufacturing PMI since the end of 2014, this week’s manufacturing data will provide fresh insight on the level of activity in the manufacturing sector. The industrial production for the month of March is expected to have dropped by 0.3% but the regional manufacturing indices are expected to show manufacturing activity regaining some momentum in April. Following an unexpected downtick in March, both the Empire State and the Philly Fed Manufacturing indices are expected to rise and come-in at 7.2 and 6.5 respectively. The release of government’s report on building permits and housing starts for the month of March are scheduled for release on Thursday. Economists expect the

for March and could further push back the prospects of a rate-hike by BoE beyond 2015. Meanwhile, the UK labor market report for the month of March is expected to show the number of people claiming unemployment related benefits declining by 29,000 and the unemployment rate dropping further to 5.6%. Elsewhere, economic data that could materially impact and determine whether the Australian Dollar could recover from multi-year lows or not includes Chinese GDP data along with Australian employment reports. Investors will be particularly focusing on the release of the first-quarter 2015 GDP growth figure from world’s second largest economy, China. The Chinese GDP data, scheduled for release on Wednesday, is expected to continue pointing towards economic slowdown with consensus estimating a 7.0% year-on-year GDP growth in the first-quarter of 2015, down from 7.3% recorded in the last two quarters of 2014. Meanwhile, the Australian employment report, scheduled for release on Thursday, is anticipated to show the number of new people employed during the month of March to have increased by 14.9 K and unemployment rate to hold steady at 6.3%. After last week’s hawkish FOMC meeting minutes that led to an up-surge in the US Dollar, a better-thanexpected US economic data print this week, especially higher-than-expected CPI, is likely to turn the US Dollar back into its medium to longer-term up-trend. Also, being the industrial power-house of the global economy, this week’s Chinese GDP data would also contribute towards setting the market tone for the upcoming week.

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

April 20, 2015 #95

RESEARCH

caucasian business week

THE EFFECTS OF GEORGIAN ENERGY SECTOR RATE - 2014 ON LARI CONVERSION TBILISI CITIZENS

he fluctuating nature of Georgian currency has been a popular topic of discussion for the past few months. The devaluation of Lari began by the end of November and since, has been actively discussed by the society; many people associate this process with risks, such as economic instability of Georgia, rise of prices and so on. ACT asked residents of Tbilisi whether the fluctuation of national currency impacted their financial situation. As it turns out, one out of ten citizens of the capital (12%) have financial responsibilities (loan, credit, mortgage, etc.) in US Dollars. However, seven out of ten (70%) say that devaluation of Lari had negative effect on their financial situation (very negatively – 46% and negatively – 24%) According to the research, almost quarter (23%) of Tbilisi residents consider that changes in exchange rate of Lari had no influence on their material circumstances. As they say, everything has a positive side. 6% of Tbilisi residents state that devaluation of Lari had a positive effect on their financial situation. This is natural, if we take into account that 9% of the citizens have salary in US dollars (or its equivalent).

NEIGHBORHOOD

UK wants to support Azerbaijani businesses growing internationally

oint Economic and Trade Commission to be created between Azerbaijan and UK will support the broadening of trade between the two countries on the basis of mutual benefit, UK ambassador to Azerbaijan told Trend Apr.17. Ambassador Irfan Siddiq reminded that the agreement to form a Joint Economic and Trade Commission between the UK and Azerbaijan was signed on March 2 between the Azerbaijani Minister of Economy and Industry Shahin Mustafayev and Professor Charles Hendry, the prime minister’s trade envoy to Azerbaijan.

Turkey government at odds with big business

The research was conducted on 416 adult residents of Tbilisi, in March, 2015. The statistical error of the data does not exceed 4.75%.

THE TIME WE SPEND WATCHING TV

atching TV has indisputably become a social custom and this custom has been widespread in not only Georgia. People often watch TV because of this custom of keeping their TV sets turned on to catch all news and information, or just to spend time. As a result, people often complain they spend much time on watching TV. Finally, they fully ignore TV sets. It is interesting how much time do we spend watching TV? According to the TVR Georgia report, Georgia is recorded among the EU countries in terms of the time spent on watching TV. Namely, each individual of the cities with over 45 000 residents has spent at least 3.47 hours in 2014, down 11 minutes compared to 2013. Eurodata TV Worldwide, an international partner to TVR Georgia company, collects information on over 90 countries from domestic measuring companies. According to its report, global TV-watching time made up 3.13 hours in 2014, down 1 minute compared to 2013. We introduce a TV watching report on several countries. The report shows TV watching takes in Georgia almost as much time as in England and Germany.

urkey’s business elite gathered last month on the mountain top from which the Greek god Zeus is said to have watched the Trojan war. The meeting was Turkey’s answer to Davos, but bore an uncanny resemblance to a dissidents’ conclave. Explicit criticism of President Recep Tayyip Erdoğan was not on the agenda at the Uludağ Economy summit. Turkey’s corporate elite knows too well the risk of antagonising the government. No one needed reminding of the initial $2.5bn tax fine levied in 2009 on Doğan Media Group after Mr Erdoğan was angered by its flagship newspaper’s coverage of a corruption scandal. The government denied any political motive for the tax investigation.

Armenia approves World Bank loan program

he Government of Armenia approved a World Bank (WB) loan program worth $52 million. The amount will be used for the major overhaul of the Ashnak electricity substation in the Aragatsotn Province, and the electricity substation of Yerevan Thermal Power Plant in the capital city. The Government will provide $17.16 million, for its part, for these projects. The WB loan program also envisages the construction of a reserve dispatch center, which will reduce the risks of emergency power outages and relevant deficiencies in Armenia.

Russia officially joins $50bn China-led infrastructure bank

There are various tendencies of growth and decline in TV-watching time. In various countries of the world, as well as in Georgia, young people tend to minimize the TV watching time and this is one of the main factors of contraction in the TV watching time, in general. For example, in the Georgian cities with over 45 000 residents, young people in the15 to 24 year old age category spent 2.22 hours on watching TV in 2013, while the figure marked 2.18 hours in 2014. Young people in a major part of European countries minimize TV watching time every year. We submit a report on several countries. www.wom.ge

n Tuesday Russia officially becomes a founder of the China-led Asian Infrastructure Investment Bank (AIIB). It means Russian companies can take part in infrastructure projects in the Asia-Pacific region, and could attract foreign investment into Russia. Russia applied for membership as a founding member of the AIIB 2 weeks ago, along with another 52countries. The founding members have the right to establish the rules guiding the bank’s activities. China reportedly had rejected requests from North Korea and Taiwan to join the AIIB. The final list of the bank’s founding members will be announced on April 15.

S&P says Ukraine crisis cost Russian banks $5 billion

ussia’s five largest banks were left nursing costs of as much as $5bn on Ukrainerelated assets last year and could face further costs of a “similar magnitude” this year, according to rating agency Standard & Poor’s. The war in Ukraine, unsurprisingly, took its toll on the financial results of the biggest Russian banks in 2014. S&P estimates the five largest banking groups were forced to shoulder total costs on Ukraine-related assets of $4bn-$5bn last year – approximately 20 per cent-25 per cent of their aggregated operating revenues. Costs are likely to continue rising this year as the banks’ Ukrainian subsidiaries battle against poor economic conditions in the recession-ravaged and war-torn country but S&P says the impact on the credit ratings of Russia’s banks may be “limited”.

WORLD NEWS

Eurozone annual inflation minus 0.1% in March

nnual inflation in the eurozone was minus 0.1 percent in March, up from minus 0.3 percent in February, the statistical office Eurostat said on Friday. However, in encouraging signs for the eurozone, month-on-month inflation rose by 1.1 percent suggesting a descent into entrenched deflation is now unlikely, the Telegraph said. Consumer prices could now hit positive territory in April, according to Howard Archer of IHS Global.

UK unemployment at lowest rate since July 2008

K unemployment has fallen to its lowest rate since July 2008, the BBC reported. The number of jobless people dropped by 76,000 to 1.84 million in the three months to February, according to Friday’s statement of the Office for National Statistics. Thus, the unemployment rate has fallen to 5.6 percent. Employment hit a new record high, up 248,000 to 31.05 million.

Saudi Arabia announces biggest oil production surge in 30 years

ndisputed leader of OPEC, Saudi Arabia, increased daily oil production by 658,800 barrels in March to an average of 10.294 million barrels a day, says data the country gave to the Organization of Petroleum Exporting Countries’ secretariat in Vienna. This volume is more than the kingdom’s 10.2 million barrels per day(bpd)in August 2013, and output will continue to hover around 10 million bpd , Saudi oil minister Ali al-Naimi told reporters last week.

The winners & losers of cheap oil – Bloomberg research

he dramatic 50 percent decline in oil prices which started last summer had a relatively small impact on the global economy with 0.7 percent GDP growth worldwide, the IMF estimates. However, cheap oil has affected major economies differently. Net oil importers like the US, Europe, and Asia got nearly a $900 billion economic stimulus from cheaper oil prices, while Russia and the Middle East “get stuck with the bill,” Bloomberg reportedThursday. The research was based on a $5 drop in natural gas prices and $50 drop in oil prices as well on imports/exports from 2011 to 2013, excluding the expansion in US oil production. “I believe we are in an era of lower oil prices in the medium-term and also in the longer-term,” Michael Liebreich, founder of Bloomberg New Energy Finance (BNEF), said in a presentation at the group’s annual summit on Tuesday. “We have cheap oil, cheap gas, cheap renewables. We are definitely in an age where supply is not constrained.”

Former IMF Chief Rato Faces Spain Money Laundering Probe

odrigo Rato, the former head of the International Monetary Fund and deputy prime minister of Spain, was detained by customs agents in Madrid on Thursday night as the tide of corruption allegations swamping the country’s political establishment reached a fresh high. Rato, 66, is being investigated for possible money laundering after he took advantage of a 2012 tax amnesty to repatriate previously undeclared offshore funds, Justice Minister Rafael Catala said earlier on Thursday. After a court ordered a search of his home in the exclusive neighborhood of Salamanca in downtown Madrid, Rato was led to a car wearing a dark blazer and driven away by agents shortly after 8 p.m.

PUBLICITY

caucasian business week

April 20, 2015 #95

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

April 20, 2015 #95