Caucasian Business Week #98 by Caucasian Business Week

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May 11, 2015 #98

May 11, 2015, Issue 98

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GEORGIA

POSITIVE CHANGES AHEAD FOR GEORGIA’S WINTER RESORTS

eorgia’s leading ski resorts Bakuriani and Gudauri will meet the next winter season with new trails and upgraded infrastructure. Pg. 5

GEORGIA’S HOTEL SECTOR TO ACQUIRE 2000 ADDITIONAL SUITES

n the next two years, more than 2,100 hotel rooms will be added to Georgia’s already growing hospitality industry, encouraging more guests to visit the developing nation. Pg. 5

TBC BANK’S COMPETITIVE ADVANTAGE: LEADING CUSTOMER EXPERIENCE AND SATISFACTION

BC Bank is a market leader in customer experience among Georgian banks. Focusing on customers’ needs is a priority that is vital to the Bank’s success. Pg. 9

MINICREDIT OPENS NEW SERVICE CENTER AT GLDANI MALL

iniCredit has opened the MiniCredit Café innovative service center at the Gldani Mall, where clients receive interest-free credits starting May 2015. Pg. 10

Janos Herman: Joining EU Would Have Dire Consequences for Georgia’s Economy Right Now Pg. 8

RATING OF COMMERCIAL BANKS IN TERMS OF TOTAL ASSETS, STOCK CAPITAL, TOTAL LOANS, TERM DEPOSITS, NET PROFITS AND RESERVES ON EXPECTED LOAN LOSSES

Rovnag Abdullayev: SOCAR suspended construction in Kulevi due to Disagreements with the Georgian Government Zurab Tkemaladze: Business to be Exempt from Profits Tax

(AS OF 31.03.2015)

Pg. 6-7

GEORGIAN RAILWAY WILL OPERATE ON WORLD’S LEADING TECHNOLOGICAL PLATFORM SAP

Pg. 8

Vano Mtvralashvili: Cant Keep Current Fuel Prices if Lari Doesn’t Stabilize

TOURISM ADMINISTRATION WORKS ON ATTRACTION OF MORE TOURISTS FROM IRAQ

lights will be renovated towards Iraq, Georgian Tourism Adminsitration declares. Air company “Georgian Airways” will perform flights Tbilisi-Erbil-Tbilisi. Pg. 10

Pg. 8

GEORGIAN SEAPORTS SHOW MAJOR GROWTH IN THROUGHPUT IN REGION

he volume of container throughput by Georgian ports is distinguished with the highest dynamic (+13%) in 2014 among the Black Sea Countries. Pg. 10

NEW FITNESS BAND INVENTED BY GEORGIAN CLAIMS TO BE THE FIRST THAT CAN COUNT CALORIES DIGESTED

GLOBAL ENERGY POLICY AGAINST GEORGIAN INTERESTS Pg. 9

he band, priced individually at $299.99 (£196 plus international postage), raised well over its $1 million fundraising target on Indiegogo in April last year. Pg. 10

Research

Pg. 8

Kakha Okriashvili: Business in Georgia does not Have Guarantees of InviolabilityPg. 8 Demur Giorkhelidze: Government Created an Ugly Banking System Pg. 8

Pg. 12

Pg. 13

WHICH COUNTRY’S FOOD PRODUCTS RESIDENTS OF TBILISI PREFER

Currency

BACK ON TRACK FOLLOWING MARCH OUTLIER

ACT was interested whether or not Tbilisi citizens pay attention to the manufacturing country of various food products that they purchase.

LABOR MARKET DETAILS TO PLAY CRUCIAL ROLE THIS WEEK

TBC BANK: SECURING SNOW FOR THE SKI SEASON

Pg. 9

2 MAIN EVENTS GEORGIAN PRESIDENT TO MEET WITH EU, NATO TOP OFFICIALS

he President of Georgia is preparing for a two-day working visit to Belgium where he will meet Euro-Atlantic top officials and discuss Georgia’s European future. In the capital Brussels, President Giorgi Margvelashvili will meet president of the European Union (EU) Donald Tusk and EU Commissioner for Enlargement and Neighbourhood Policy Johannes Hans on May 11 and 12.

GOVERNMENT NEWS

GEORGIA’S PM, PRESIDENT, PARLIAMENT’S CHAIRMAN ADDRESSES EU BEFORE RIGA SUMMIT WITH VISA FREE REGIME EXPECTATIONS

EXHIBITION REVEALS LIFE OF SOVIET GEORGIAN POLITICAL LEADER VASIL MZHAVANADZE

xclusive photos and the personal belongings of one of Georgia’s most influential political leaders of Soviet Georgia are now on display in capital Tbilisi. An exhibition presenting the personal archive of the late Vasil Mzhavanadze, the First Secretary of the Communist Party of the Georgian Soviet Socialist Republic (SSR), can now be enjoyed by the public. The exhibition involving photographs, documents and personal items opened today at the Exhibition Hall of the Parliamentary National Library in Tbilisi. The exhibition will run for two days.

CYPRUS RATIFIES EU-GEORGIA ASSOCIATION AGREEMENT

he House of Representatives of the Republic of Cyprus has ratified the Association Agreement (AA) between Georgia and the European Union (EU). Members of the Cyprus Parliament voted in favour of the ratification of the EU-Georgia deal yesterday. The document was approved following a majority vote, where only members of the Progressive Party of Working People (AKEL) refrained from voting.

SOLIDARITY FUND FINANCES TREATMENT OF 97 SICK CHILDREN

he people of Georgia have donated more than 2.5 million GEL to a fund that will pay for expensive medical treatment for children with cancer. More than 2 million GEL has been donated to the Government-initiated Solidarity Fund since it was established in July 2014. Already the donated funds had financed the cost of local and international treatment for about 97 young patients living with cancer.

JUSTICE MINISTER: PROSECUTOR GENERAL SHOULD BE ELECTED, NOT APPOINTED

eorgia’s three top officials have voiced their expectations of what they hope the country will achieve at the upcoming Eastern Partnership (EaP) Summit. Georgia’s President Giorgi Margvelashvili, Prime Minister Irakli Garibashvili and Parliament Speaker David Usupashvili addressed European Union (EU) high officials with a joint statement that expressed their hope that Georgia would gain a visa free regime with the EU at the EaP Summit, due to be held in Riga on May 21-22. The joint letter was sent to President of the European

GEORGIA-UNITED STATES PLEDGE FUTURE COOPERATION

he bond between Georgia and the United States (US) is strengthening, as the US side confirmed it intended to continue cooperating with Georgia in a range of sectors at a bilateral meeting between country officials today. Georgia’s Deputy Foreign Minister David Dondua is in the US and attending high level meetings with American officials with the purpose of reaffirming cooperation between the two countries.

Parliament Martin Schulz, President of the European Council Donald Tusk and President of the European Commission Jean-Claude Juncker. “We write to bring to your attention the expectations of Georgian leaders and people from the Riga Summit and appeal for your support and solidarity with those countries which have made the sovereign choice to pursue the vision of European integration. We hope that the European perspective of Georgia will be acknowledged, and, most importantly, that substantial progress will be made with regard to visa liberalisation,” the

joint statement read. In the letter, Georgia’s President, Prime Minister and Parliament Speaker mentioned the importance of visa liberalisation and how vital it was for Georgia to achieve a visa free regime with EU states. “Granting visa free travel to Georgian citizens would mean more tourism, cultural and student exchanges and civil society partnerships. This will help develop Georgia and anchor future generations firmly within the European family of nations.” “With the technical requirements completed, it is our clear hope that the final declaration of the Riga Summit will contain an unambiguous endorsement of a visa free regime with Georgia,” read the Georgian statement. The letter also stressed the active role of the EU in the region, especially in light of Russia’s continuous attempts to infringe on the sovereignty and territorial integrity of its neighbours. “In this context, it is essential that we together reaffirm the Eastern Partnership principles and take concrete steps towards realising our common vision for a free and united Europe,” said the Georgian officials. The Georgia trio also reminded the EU side of the internal reforms Georgia had implemented in the past years, and the support the EU showed Georgia during this process. Over the past two and a half years alone we have, with the support of our EU partners, made great strides in bringing Georgia into line with highest European and international standards.” “We are fully committed to maintaining the momentum of internal reforms – which we believe in and of themselves greatly serve the interests of our country – and pursuing our Association agenda with the EU which strengthens this process,” stated the letter. www.agenda.ge

GEORGIA’S FINANCE MINISTRY PLEDGES TO ATTRACT MORE FOREIGN CAPITAL

eorgia’s Finance Ministry is stepping up its efforts to attract more foreign capital for implementing large investment projects in the country. Georgia’s Finance Minister Nodar Khaduri introduced several ideas that would be fulfilled this year regarding how the Government planned to attract more foreign direct investments (FDI) at yesterday’s Parliamentary meeting in Kutaisi. One of the activities soon to be implemented involved the operation of a new instrument of the World Bank Group’s Global Infrastructure Facility (GIF) in Georgia. This is believed to be an additional source of capi-

tal for investment projects. In addition, the Ministry planned to launch several large Public-Private Partnership (PPP) projects. PPP is a Government service or private business venture that is funded and operated through a partnership between the Government and one or more private companies. Khaduri said the Ministry would also offer Multilateral Investment Guarantee Agency (MIGA) grants to investors. At the same time a “very important” tax reform will be implemented in Georgia this year, which aimed to bring relief to companies that were oriented on investing in the country. Khaduri said additional sources of foreign capital inflow to Georgia would soon come from the Asian Infrastruc-

ture Investment Fund, and an agreement had already been signed by both parties in this respect. This money will be spent on developing infrastructural projects. Another idea Khaduri presented at the Parliamentary meeting outlined how the Georgian Government planned to launch a new program with the International Monetary Fund (IMF) which aimed to increase the reliability of Georgia in international financial markets. While evaluating this year’s budget income, Khaduri said in the first four months of 2015 the state budget income reached 2.99 billion GEL, of which 2.39 billion GEL was generated from tax incomes. www.agenda.ge

EBRD PRESIDENT: “THE EBRD INVESTS FOR CHANGE IN GEORGIA”

eorgia’s judicial system is about to undergo a significant change – soon the country’s Chief Prosecutor will not be appointed but elected. Georgia’s Minister of Justice announced the institutional reform within the Chief Prosecutor Office at today’s united sitting of Legal Affairs, Human Rights, Defence and Procedural Committees. She said for the first time in the “very near future” Georgia’s Parliament will have the possibility to elect the Chief Prosecutor of Georgia. “We have launched a new institutional reform of the Prosecutor’s Office and very soon we will offer a government-approved model, which includes establishment of a Prosecutorial Council.

May 11, 2015 #98

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eorgia’s successful policies and reforms will be presented to the world at the 2015 European Bank for Reconstruction and Development (EBRD) Annual Meeting, held in Tbilisi next week. On May 14 and 15 government officials, international business representatives, economists, financial experts and investors will attend the EBRD’s 24th Annual Meeting. This will be the first time the EBRD Annual Meeting is held in the Caucasus region. Today EBRD president Suma Chakrabarti outlined why Georgia was chosen to host the 2015 EBRD Annual Meeting and how Georgia was the perfect example of this year’s theme – Investing for Change. “Georgia is one of the most innovative of the more than 30 countries of operations where EBRD supports transition to free and open markets. And that’s allowed

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the EBRD to introduce new investment instruments in Georgia before bringing them to other countries in our regions,” he said. Investment has been a positive force for change inGeorgia – and Georgia in turn has encouraged investors with its very successful policies and reforms.” “It has certainly encouraged the EBRD: our total investment in Georgia now stands at €2.6 billion. And last year saw a record investment of €214 million across many sectors of the Georgian economy - from energy to small and medium-sized businesses,” said Chakrabarti. Already this year the EBRD has co-financed the largest ever foreign direct investment project in the Georgian renewable energy sector – the Shuakhevi Hydro Power Plant. “We launched a risk-sharing facility that allowed banks to lend in local currencies. Equity investment lines for small corporates, and a local currency financing facility for agribusiness firms, also started life in Georgia,” said the EBRD president. “At the same time, we’re introducing innovations here which were pioneered elsewhere - such as a credit line for women entrepreneurs that is already popular in Turkey and the Balkans.” Chakrabarti said innovation was not limited by borders and a good example of this was the “unprecedented boost in hydropower investments” brought about by the opening of the Turkish market. He noted the EBRD had co-financed the Black Sea Transmission Line – the first connection between the former Soviet electricity grid of the Caucasus and Turkey. In Georgia, and in all the countries where we invest, we are working towards a more sustainable economic

future by building stronger institutions, promoting regional integration and addressing global economic challenges,” he said. The EBRD Annual Meeting is the most important event in the bank’s annual calendar. A central part is the meeting of the Board of Governors, the Bank’s highest decision-making body, who will assess the bank’s performance and set future strategic directions. This year the EBRD is seeking a mandate from shareholders to step up its response to persistent challenges in the transition economies that it serves. This year’s EBRD Annual Meeting comes against a backdrop of continuing geopolitical tensions and economic uncertainty that are holding back the investments needed to raise living standards and prosperity across the societies of the EBRD regions. During the two-day event, the EBRD’s economists will publish new economic forecasts for numerous countries -- which stretch from central and south eastern Europe, through to the Caucasus and Central Asia and to the southern and eastern Mediterranean.They will show that a return to growth across the regions as a whole “remains elusive” and that economic weakness in Russia is continuing to have an impact well beyond that country’s borders, said the EBRD on its website. In Georgia, the EBRD focused on supporting private sector clients directly and via private banks; investing in energy sector projects which aim to increase production and access export markets; supporting the introduction of modern regulatory frameworks; and investing in infrastructure, logistics, telecommunications and the financial sector to support cross-border economic activities.

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Editor: 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

May 11, 2015 #98

PUBLICITY

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4 HEADLINES GEORGIA PARTICIPATES IN FIRST EASTERN PARTNERSHIP TRADE MEETING

eorgia has participated in the first Eastern Partnership (EaP) ministerial trade meeting, where European Union (EU) Trade Ministers met their counterparts from Georgia, Armenia, Azerbaijan, Belarus, Moldova and Ukraine and explored ways to develop each nation’s trade industry. EU and EaP trade ministers met on May 7 in Riga, Latvia. The event was organised by the Council of the EU (currently under Latvian presidency), in close cooperation with the European Commission on Eastern Partnership Ministerial Meeting on Trade.

INTERVIEW caucasian business week

SKYPE DEVELOPER SETS UP TAXIFY COMPANY IN GEORGIA An interview with one of Skype’s developers, Taxify co-founder Martin Vilig

NEW COFFEE FACTORY INVENTS UNIQUE GEORGIAN COFFEE BLEND

he taste of Georgia will soon be available in coffee mugs all around the country and further beyond. A new coffee enterprise soon to open in capital Tbilisi is developing Georgian roasted coffee – a unique blend that only represents Georgia. Local coffee importer BB Company is behind the initiative to open a coffee factory in Tbilisi, supported by their Italian partners. Initially, BB Company will develop a Georgian roasted coffee blend and supply it to the local market before venturing further afield and selling it to foreign markets.

GEORGIA WILL GAIN 14M GEL PROPERTY FROM EBRD ANNUAL MEETING

eorgia has spent more than 17 million GEL on preparatory works to host the European Bank for Reconstruction and Development (EBRD) Annual Meeting, of which movable and immovable property worth 14 million GEL will remain in the state. Georgia’s Prime Minister Irakli Garibashvili announced this today at the session of the Governmental Commission for organising the EBRD’s Annual Meeting, held at the National Youth and Children’s Palace of Georgia. The EBRD Annual Meeting will be held in Tbilisi from May 13-15, 2015.

GEORGIAN WINE EXPORTS SURGES IN APRIL

ore Georgian wine is continuing to be exported to foreign countries and enjoyed by people all over the world. Monthly export figures released today revealed more than half a million more bottles of wine was exported in April 2015 compared to March, while this figure was double what was exported in January and February. In April 2015, Georgia exported 2,878,565 bottles of wine, while 2,198,535 bottles were exported in March, 1,558,631 in February and 1,343,018 in January, said Georgia’s National Wine Agency.

- Your name is associated with the development of “Skype” and “Taxify”. What factors caused the Estonian company’s interest in the Georgian market? - Georgia is a rapidly growing market. In addition, we found here good partners. It is also important that in Georgia the taxi industry is deregulated, there was no management system for taxi companies, so the demand for high-quality, sophisticated service definitely exists. For this reason we decided to enter the Georgian market. Taxify is regarded as one of the fastest growing taxi booking applications in Eastern and Central Europe. Taxify lets you choose a taxi based on arrival time, price list, car model and user feedback ratings. After confirming your order, you can also track your taxi’s pending arrival on a map in real time. - Who are your partners? The Georgian company “Infinite MCG” is Taxify’s official exclusive representative in Georgia. - How profitable is Taxify project and do you have competitors in the Georgian market? - Taxify project has justified in Georgia. In the future, I think it will bring more success. As for the competitors, I know that several Russian and Ukrainian applications are operating in Georgia. But I think that Taxify is an internationally recognized brand which has more potential for the development and improvement of operations than even the Georgian, Russian and Ukrainian appli-

he European Union is supporting the establishment of a sustainable energy information centre in Georgia’s capital Tbilisi to raise public awareness of energy-related issues, such as the benefits of energy efficiency and renewable energy. The centre will open its doors in autumn and be open to anyone who wants to learn more about renewable energy sources. Part of its function will be to contribute to sustainable energy development and improve the level of energy efficiency in Georgia.

is easier to start and develop a business, here or in your country? - This is first time I have been to Georgia, I do not know the local business environment very well. But I noticed that the government encourages start-up funding. It is important when businessmen help each other in startup environment. This is an Estonian experience where the best business environment is created for start-ups. lGeorgia can adopt Estonian experience. Estonian side is ready for it. - What is principal for business development – a perfect business idea , creating innovative products or finances? - Several components are the key to successful business. But in my opinion, the most important is a team. Skype was not the first messenger. We have been able to do what others failed. In my opinion, it was a merit of a good team. - The Georgian experts often talk about the problems of small businesses and name the lack of business education one of the key problems . How important is this argument and what is the situation in your country in this regard? - Appropriate education is very important in business development. Similar problems exist in Estonia. We have a lot of specialists, who can create a good product, however, later find it difficult to sell it. Ie, face difficulties in marketing. Therefore, Estonians try to adopt foreign experience. I think a practical approach is more justified. There should be more communication with successful businessmen in the local market. - What advice would you give the business? - It is very difficult to give specific advice to businessmen. I would advise businessmen working in my field no to think for a long time on product development, as soon as the idea comes, create a prototype and test in the market. It is important to get recommendations from the user as quickly as possible. If you see that this product works, try to develop it quickly, but if you see the opposite, you should stop. I advise Georgian businessmen not to be focused only on the Georgian market. On the contrary, they should think globally.

An interview with Chancellor of the Free University Vakhtang Lezhava

EU SUPPORTS CREATION OF SUSTAINABLE ENERGY INFORMATION CENTRE IN TBILISI

cations operating in Georgia at the moment. We don’t have a rival in Georgia. Many companies enter the Georgian market but close soon. The only company that can be considered as a competitor is the American “Uberia”. Having global approach, the company strives to operate in all countries. Therefore, sooner or later they will come in Georgia. -You have been working in the Georgian market since September 2014. During this period what trends were revealed, what is the interest of the Georgian consumers and what are the prices? - Consumers are active. Prices correspond to market. There may be minor differences, however, I think they are acceptable given the application reliability and service quality. - Are you going to offer any innovation to the Georgian consumers? - Taxify is innovation in itself. In addition, we plan to expand functions. In Georgia there is a very different approach to the taxi industry. Division into zones and fixed rates are out of date. It has no longer been used anywhere. The meter is integrated into our application that will allow more accurately and fairly calculate the tariff. App calculates a fare considering distance and waiting time. - As far as I know, Skype is working on new features for its messenger. How do you see its future, what are the advantages and distinguishing features compared to other similar programs? - Well, I am no longer actively involved in the development and marketing of Skype as before. However, I can tell you that in the near future Skype will be oriented on video calls and video communication. Big changes are planned in this regard. In addition to the sophisticated videocommunication service, the chat service will be maintained. Skype is among the top three companies by the number of users. Facebook’s messaging mission leads, the second is Whatsapp and the third is Skype. - If you are familiar with the business environment in Georgia, how would you rate, where it

VAKHTANG LEZHAVA: UNCERTAINTY IS THE BIGGEST OBSTACLE FOR INVESTMENTS

PRICE OF VEGETABLES, DAIRY PRODUCTS DROP IN GEORGIA he cost of some basic food items in Georgia is dropping thanks to a slight fall in the monthly inflation rate. The news is being welcomed after the price of goods (alcoholic and non-alcoholic drinks, and transport) slowly crept up in recent months. Today, the National Statistics Office of Georgia, Geostat, revealed in April 2015, the monthly inflation rate in Georgia reached 0.3 percent, while the annual inflation rate equalled 2.5 percent. This was a reduction on March figures, where the monthly inflation rate reached 1.2 percent and the annual inflation rate equalled 2.6 percent.

May 11, 2015 #98

- Recently, the head of government has replaced several ministers, but ministers of the economic bloc remained on their posts. What is the reason, especially against the background of the economic crisis? - It is obvious that the economic bloc of the government cannot cope with their duties, as it could not do anything to stop the devaluation of the national currency, which has occurred in the last month. Perhaps the economic space and market participants hoped that the new ministers would come with new energy and new ideas, which would give an impetus to overcome the crisis, but the ministers of the economic bloc remained the same, which means that nothing will change, there will be no positive signal to the economy that will bring negative results. Moreover, some staff changes are insufficient,

even if they took place. We are talking about economic governance as a whole, in which the ministers, who will be changed – Ministers of Environment Protection and Infrastructure, play their role. We are not talking about persons, we are talking about the concept of the team, and as they will not introduce any novelties, it will be very negatively perceived by the market and its players. There may be additional problems with investments, exchange rate, etc. - Both the government and experts made many statements about the lari’s exchange rate. What is your opinion about the currency crisis? - The pressure on the national currency occurred due to one main factor - the decline in economic growth, which in turn was caused by a decrease in the volume of foreign exchange earnings from traditional sources - exports, remittances from abroad, investment, tourism, etc. For example, a volume of money transfers has reduced mainly due to economic problems in the countries from which remittances are mainly received such as Russia, Ukraine and Greece. We should not forget that remittances are not only amounts to consume, very often they are spent for investing - people often receive money from abroad and buy cars, real estate, open a small business, etc. Accordingly, this factor has an impact on the investment pessimism, which

we are now witnessing. Uncertainty in the investment climate, obscure economic policy, unreasonable decisions, and regulations create a problem for large investments, etc. This is a very serious factor, as uncertainty is the biggest enemy of investments. - What is the way out? - Exit from a situation is more clarity, greater certainty, better investment environment, more openness. All this will ultimately lead to economic growth. This is not a situation with only one way out, the government is wrong when is looking for a magic wand that will solve all problems. But it does not exist. There are a range of measures, starting from tightening of the visa regime, ending with various public comments from members of the government. - Accelerated privatization was announced as the way out of the crisis. Is it the right decision? - Privatization can’t be accelerated, because there should be the second party, which intends to buy something. In general, this is the correct method, but its implementation needs more work, including travelling abroad and meeting with investors to convince them of the need for capital investment in Georgia, etc. The government is not doing enough in this direction. That’s why there are no results.

May 11, 2015 #98

ECONOMIX

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POSITIVE CHANGES AHEAD FOR GEORGIA’S WINTER RESORTS

eorgia’s leading ski resorts Bakuriani and Gudauri will meet the next winter season with new trails and upgraded infrastructure, Georgia’s Economy Minister said yesterday. Vice Prime Minister Giorgi Kvirikashvili spoke about the projects that were implemented last year and announced future plans for the two resorts.

“[Last year] we installed artificial snow machines in Gudauri and Bakuriani. This year we will finish installing these on the second ski trail of Gudauri. In addition, we will build two artificial lakes in Gudauri and Bakuriani so that the artificial snow system can function at optimum levels,” he noted. “In addition, we are installing one more ski lift in Gudauri and restoring the Bakuriani Kokhta

piste, which will be even longer. This will definitely give another element to the Bakuriani resort,” Kvirikashvili said. The Minister said rehabilitation of the Kokhta ski trail would be conducted in partnership with Georgian private business representative TBC Group. “I want to note that we have already achieved a model of partnership with a private company. This is TBC Group, with whom we will share the burden of investment and this Group will finance the construction of 500 hotel rooms in Bakuriani. This will be planned by top planning companies that meet the best alpine standards,” he said. Looking ahead a German company planned to install summer attractions in Bakuriani. This would further strengthen the image of Bakuriani as a four-season resort, said Kvirikashvili. Georgia’s winter resorts will be under the global spotlight in 2017 when the country hosts the Europe and Asia Winter Resort Conference. The participation of international guests in this event would help raise the awareness of Georgia as a winter tourism destination and “reinforce the image of Georgian resorts” as among the best in the world.

GEORGIA’S HOTEL SECTOR TO ACQUIRE 2000 ADDITIONAL SUITES

n the next two years, more than 2,100 hotel rooms will be added to Georgia’s already growing hospitality industry, encouraging more guests to visit the developing nation. According to Georgia’s Economy Minister Giorgi Kvirikashvili, accommodation in the country’s capital Tbilisi was becoming more accessible and affordable for travellers of all budgets thanks to the arrival of several international hotel brands in the Georgian market. He welcomed the addition Rixos, Park Inn by Radisson and Moxy, and other international hotels chains to Georgia, which foresaw the creation of an additional 2,182 hotel rooms, but noted the country still needed more three and four start hotels. “In 2016 several hotel constructions will be completed. Among the hotels that are due to open next year are Millennium Hotel, Intercontinental, Kempinski, Starwood, Mercure and Hyatt,” Kvirikashvili said. “The Best Western hotel brand will build 12 ho-

tels in Georgia’s 12 regions. The Best Western is 3-4 star hotel chain, which has already entered Georgia. This will help us to develop the country’s tourism potential,” he added. Last month one of the largest hotel groups worldwide, Carlson Rezidor, revealed it planned to expand its hotel presence in Georgia by opening two new hotels; one in capital Tbilisi and a second in Svaneti in the west. This week Carlson Rezidor announced the opening of the Park Inn by Radisson Tori Tbilisi and the Radisson Blu Mestia Hotel in Svaneti. Tbilisi is soon to join Berlin, Deli, Dubai, London and Paris, as the latest member of the Hyatt Hotels Corporation family. A Hyatt Regency Hotel will open its doors in central Tbilisi in 2017. The new 170-room hotel will be located in the central city and will open in the former Ministry of Justice building on Rustaveli Ave – the city’s main street. The building has an architectural monument status.

Meawhile Moxy, the Marriott’s affordable boutique hotel brand, will also open in the coming years in Tbilisi. Furthermore, a five-star Hualing Tbilisi hotel recently opened on the shoreline of Tbilisi Sea.

GEORGIAN RAILWAY WILL OPERATE ON WORLD’S LEADING TECHNOLOGICAL PLATFORM SAP

eorgian Railway and a global market leader in railway maintenance systems SAP signed a cooperation agreement on May 7, 2015. While both companies called the agreement “historic,” the cooperation is expected to transform Georgian Railway’s performance drastically. Georgian Railway is the first company in the post-

Soviet sphere and Caucasus that will implement the innovative technology developed by SAP into its daily operations. “Georgian Railway’s executive board has decided to utilize SAP’s ultrafast technological achievement built on the unique S/4Hanna platform. This technology will provide us with an ability to watch and control the processes in real time. This in turn will make the process of making business deci-

sions much easier,” Director General of Georgian Railway Mamuka Bakhtadze commented during the presentation of the new cooperation. SAP will give Georgian Railway an opportunity to build ultramodern technology into its operating system. This will significantly increase Georgian Railway’s operational profits and decrease the need for new inventory, removing extra financial liabilities and debit loans. “Switching to the modern technological platform represents a necessary step for Georgian Railway’s future stable development. SAP’s decision to implement its leading product in Georgia will give our railway system an effective transparency in its operations, which is a very attractive indicator for our current and future partners, as well the entire economy of Georgia,” – Mamuka Bakhtadze added. “Cooperation with Georgian Railway represents a very important development for SAP’s business development, not only in Georgia but in all the CIS and South Caucasus countries. Transport business, especially railway solutions play a major role in any country’s internal market growth and attracting FDI. Implementation of SAP Business Suite will assist Georgian Railway in achieving new successes in the field and reaching its set objectives in terms of business development strategy,” – Alexander Arnold, SAP’s Eastern Europe representative.

TOP STORY

IBA-GEORGIA’S NET PROFIT RISES BY ALMOST 3 TIMES

he net profit of International Bank of Azerbaijan-Georgia (IBAGeorgia) OJSC amounted to 1.92 million GEL in the first quarter of 2015, which is 2.87 times more than in the same period last year, the National Bank of Georgia told Trend. IBA-Georgia is a subsidiary bank of the International Bank of Azerbaijan, based in the Georgian capital of Tbilisi. The Bank received a total interest income of 3.6 million GEL at the interest expense worth about 1.87 million GEL. Thus, net interest income of IBA-Georgia in the first quarter of 2015 amounted to 1.74 million GEL, which is 59.6 percent more than in the same period last year (1.09 million GEL). Assets of International Bank of AzerbaijanGeorgia (IBA-Georgia) stood at 162.7 million GEL in the first quarter of 2015. The bank’s assets increased by 40 percent throughout the year -- in late first quarter of 2014 the figure was 116.2 million GEL. Some 65.5 percent (106.58 million GEL) of the IBA-Georgia’s assets are placed in the freely convertible currency, while 34.5 percent (56.15 million GEL) is placed in the national currency of Georgia. Some 1.4 million GEL was accumulated in cash and cash equivalents of the IBA-Georgia, which is 17.65 percent less than as of April 1, 2014. The bank’s loan portfolio increased by 4.3 percent and amounted to 97.98 million GEL. For comparison, in late first quarter 2014, this figure was 93.9 million GEL. The bank issued 38.17 percent of loans in national currency (37.4 million GEL), while 61.8 percent of loans worth an equivalent of 60.59 million GEL were issued in the freely convertible currency. Reserves in the bank’s loan portfolio totaled 11.66 million GEL in late March 2015. IBA-Georgia’s total liabilities in the reporting period were 133.27 million GEL, increasing by 49.07 percent over the year. Among the liabilities the funds placed on current accounts and as deposits, increased by almost 2 times and amounted to 21.16 million GEL. The bank attracted fixed term deposits worth 29.33 million GEL. IBA-Georgia’s authorized capital has not changed throughout 2014 and totaled 22.69 million GEL as of late March 2015. Meanwhile, the bank’s total capital stood at 29.45 million GEL (including 6.56 million GEL of retained earnings, and 204,400 GEL from asset revaluation). The total capital’s volume grew by 9.9 percent. For comparison, in late first quarter of 2014, this figure was 26.8 million GEL. IBA-Georgia was registered by Georgian Justice Ministry in November 2006. The bank serves both Azerbaijani and Georgia clients.

BANKS RATING caucasian business week

May 11, 2015 #98

RATING OF COMMERCIAL BANKS IN TERMS OF TOTAL ASSETS, STOCK CAPITAL, TOTAL LOANS, TERM DEPOSITS, NET PROFITS AND RESERVES ON EXPECTED LOAN LOSSES (AS OF 31.03.2015)

ccording to the regulations on financial transparency approved by the National Bank president by N.145 decree in 2006, Georgia based commercial banks must publish quarter financial reports. Therefore, commercial banks have already published the 1Q15 report (31.03.2015). We introduce ratings of commercial banks in terms of main parameters that give comprehensive information on the performance and development tendencies of the whole sector and separate commercial banks.

The previous issue of the Banks&Finances newspaper (N404) has published quarter financial reports of Georgia based commercial banks. Today we introduce ratings of commercial banks based on these reports. We introduce ratings in terms of total assets, stock capital, total loans, term deposits, net profits and reserves on expected loan losses. To better outline the existing dynamics in the bank sector, indicators reflect various periods, namely, the ongoing period (March 31, 2015), the same period of 2014 (March 31, 2014) and the same period of 2013. Consequently, you are able to receive information

Rating of Commercial Banks in terms of Total Assets (in thousands of GEL)

he Georgian bank sector’s upturn made up over 5 billion GEL year on year. A major stake of growth in assets is registered for Bank of Georgia and TBC Bank. Bank of Georgia assets have risen by 1.789 million GEL year on year, while TBC Bank assets have grown by 1.710 billion GEL. Only Silk Road Bank assets have decreased by 32 million GEL in the reporting period. Cartu Bank assets have jumped up by 350 million GEL from 579 million GEL to 920 million GEL. Moreover, Bank Republic assets have increased by 350 million GEL. Basisbank assets have increased by 270 million GEL. VTB Bank Georgia assets have risen by over 200 million GEL. Liberty Bank and ProCredit Bank have increased assets from 100 million GEL to 200 million GEL each. The Batumi Branch of Turkish IS Bank has increased assets by 110 million GEL from March 31, 2013 to March 31, 2015, including 80 million GEL upturn was registered for the last reporting year. Other commercial banks have also recorded growth in terms of assets, excluding Silk Road Bank.

on the bank sector’s development tendencies through the last three years. It should be also noted JSC Bank Constanta has recently merged with JSC TBC Bank and therefore, Bank Constanta is not registered in the Georgian bank sector. The same situation is expected in relation to JSC Privatbank that will merge with Bank of Georgia. Consequently, at this stage, the Georgian Bank sector registers 20 commercial banks and this quantity will shrink to 19 ones in several months. Total assets of commercial banks have considerably increased compared to the same

period of 2014. Namely, the bank sector has increased by over 5 billion GEL year on year. Growth tendency is discerned in relation to total assets and term deposits. Commercial banks have also grown net profits indicators. Namely, the sector’s net profits exceeded 65 million GEL as of March 31, 2013, while the figure marked 95 million GEL as of March 31, 2014 and 105 million GEL as of March 31, 2015. The below charter reflects the existing situation in the bank sector in terms of several concrete important indicators. Analytical Group of the Banks&Finances

Rating of Commercial Banks in terms of Stock Capital (in thousands of GEL)

tock Capital Shrink in Three Commercial Banks. The Bank sector has increased stock capital year on year. TBC Bank has recorded a major upturn and its stock capital has increased by 340 million GEL. Bank of Georgia stock capital has grown by over 160 million GEL. Cartu Bank capital has increased by about 50 million GEL. Bank Republic stock capital has risen by nearly 40 million GEL. Liberty Bank, ProCredit Bank, Basisbank, VTB Bank, Silk Road Bank and Caucasus Development Bank – Georgia have increased their stock capitals by 5-20 million GEL. The reporting period has recorded a contraction in stock capital for three commercial banks: PASHA Bank Georgia (from 99 million GEL to 89 million GEL), KOR Standard Bank (from 93 million GEL to 83 million GEL) and Capital Bank stock capital dropped by 6.77 million GEL to 3.921 million GEL.

May 11, 2015 #98

BANKS RATING caucasian business week

RATING OF COMMERCIAL BANKS IN TERMS OF TOTAL ASSETS, STOCK CAPITAL, TOTAL LOANS, TERM DEPOSITS, NET PROFITS AND RESERVES ON EXPECTED LOAN LOSSES (AS OF 31.03.2015) Rating of Commercial Banks in terms of Total Loans (in thousands of GEL)

n the reporting year TBC Bank and Bank of Georgia have increased their credit portfolios by over 1 billion GEL. The bank sector’s total credit portfolio has also increased. Bank of Georgia credit portfolio has climbed up by 552 million GEL, and TBC Bank credit portfolio has grown by 518 million GEL. Liberty Bank credit portfolio has risen by 178 million GEL. Basisbank and Cartu Bank loans portfolios have jumped up by 157 million GEL and 104 million GEL respectively. After the 2011-2012 losses as a result of political oppression, Cartu Bank seems to be regaining the previous positions. VTB Bank credis portfolio has increased by 96 million GEL year on year, while Bank Republic’s portfolio has risen by 90 million GEL. Only Ziraat Bank, Silk Road Bank and International Bank of Azerbaijan are reported with contraction in credit portfolios. The sector’s total loans have increased by 1.854 million GEL year on year.

Rating of Commercial Banks in terms of Net Profits (in thousands of GEL)

he bank sector’s net profits marked 105 million GEL as of March 31, 2015. The last year has recorded a growth in net profits of the bank sector. The same tendency was maintained in the first quarter of 2015. The sector’s net profits have increased by nearly 7 million GEL compared to the same period of 2014 and equaled 105 million GEL (104 999 328 GEL). TBC Bank net profits marked 31 million GEL and Bank of Georgia net profits equaled 23 million GEL. The report shows an over 50% stake of total net profits is recorded for two leading commercial banks. Cartu Bank net profits have considerably increased by 13.5 million GEL year on year. Liberty Bank’s net profits grew by 3.5 million GEL compared to the same period of 2014. ProCredit Bank’s net profits grew by 2 million GEL and Silk Road Bank net profits climbed up by 3 million GEL. In the reporting period FINCA Bank Georgia net profits decreased by 0.9 million GEL and Caucasus Development Bank Georgia net profits shrank by 0.125 million GEL.

Rating of Commercial Banks in terms of Reserves on Expected Loan Losses (%)

he sector’s outsiders: Silk Road Bank and Privatbank Rating of commercial banks in this category gives valuable information on the health condition of credit portfolio of this or that bank, which have reserved funds from their total loans. The charter shows the indicator of expected loan losses within the acceptable normative (2-7%) is registered for the Batumi Branch of IS Bank and Tbilisi Branch of Ziraat Bank, as well as Halyk Bank, Progress Bank, FINCA Bank, Basisbank, ProCredit Bank, Bank of Georgia, Bank Republic, VTB Bank Georgia, TBC Bank and KOR Standard Bank. Liberty Bank, Cartu Bank and Capital Bank remain within the 10% risk zone. Year on year indicators have worsen for Privatbank (from 10.28% to 18.52%) and Silk Road Bank (from 16.34% to 25.5%).

Rating of Commercial Banks in terms of Term Deposits (in thousands of GEL)

ank of Georgia is leader with terms deposits of 2.057 billion GEL. TBC Bank term deposits account for 1.7 billion GEL. Both leading commercial banks have drawn over 0.5 billion GEL terms deposits each year on year. The system has shown a growth in this category. The bank sector has drawn over 6.2 billion GEL term deposits, up 1.9 billion GEL compared to the same period of 2014. Liberty Bank has showed a 178 million GEL upturn, Basisbank growth marked 157 million GEL, Cartu Bank’s growth totaled 104 million GEL, VTB Bank – 96 million GEL, Bank Republic – 90 million EL and KOR Standard Bank – 75 million GEL. Privatbank, ProCredit Bank and Progress Bank have increased term deposits by 35 million GEL to 45 million GEL. It is worth noting new market players FINCA Bank and PASHA Bank have already collected term deposits of over 3 million GEL. Deposits portfolio have shrunk to three commercial banks: Silk Road Bank lost 6 million GEL term deposits, Ziraat Bank losses marked 0.354 million GEL and International Bank of Azerbaijan losses equaled 4.8 million GEL.

OPINION

caucasian business week

QUOTES

“Joining EU Would Have Dire Consequences for Georgia’s Economy Right Now”

JANOS HERMAN Ambassador of EU to Georgia If Georgia were to become an EU Member tomorrow, this would have dire consequences on the country’s economy –European Union’s ambassador to Georgia Janos Herman spoke on this subject during his talk at the Ilia State University

on “EU and Georgia’s Cooperation.” “In such case, every EU company would join the Georgian market. Georgia has to be prepared for the internal market integration of the EU. This means, first of all, having very many effective players on the market. This way Georgia will be prepared for the competitiveness of our market, which is very tough,” – Mr Herman noted. According to Herman, Georgia’s integration with the EU within the Association Agreement framework will place the country in a totally different context in terms of regulations. This process requires time to settle itself. “There are a lot attractive things out there for Georgia economic terms, however they might turn out dangerous if the country is not ready for them. The economic requirement of the Association Agreement – preparation of a comprehensive free trade environment in the country is precisely the prerequisite for Georgia’s future economic integration with the EU. All of this requires specific reforms that have to be implemented promptly.”

“SOCAR suspended construction in Kulevi due to Disagreements with the Georgian Government”

ROVNAG ABDULLAYEV President of SOCAR Azerbaijani international oil company SOCAR, has temporarily suspended Carbamide plant con-

struction project in Georgia, Azerbaijan news agency Trend released the news relying on the comment of Rovnag Abdullayev, President of SOCAR, made on Friday with reporters. “It has been conditioned because of disagreements with Georgian government”, - Abdullayev has stated. SOCAR has started construction of Carbamide plant in Kulevi on September 18, 2012 and the plant had to come into exploitation before the end of 2016. It should be noted, that Georgian government has issued the decree, according to it, June 27,2019 has been defined as the term of Carbamide plant construction finish. President of Georgia has defined new terms towards the company with this decree, adopted on March 30, 2012 #30/03/08. The plant should produce ammonia of 1 200 t and carbamide of 2 000 t. the investment volume of the project is 100 million USD.

“Cant Keep Current Fuel Prices if Lari Doesn’t Stabilize”

VANO MTVRALASHVILI Chairman of the Union of Oil Products If the factors affecting the Georgian lari rate don’t stabilize, there will be no resources to keep the current fuel prices, the Chairman of the Union of

Oil Products Importers told CBW. According to Vano Mtvralashvili, a decline in the international price is not observed which has recently increased quite significantly by almost $ 80. In his words, prices are increasing today. Mtvralashvili says that the lari rate dynamics are well known and these two factors have a significant impact on fuel prices. Mtvralashvili hopes that the Georgian lari rate will stabilize in the near future and stability will be also observed in the international markets that will be the guarantor that the price will not increase, otherwise, the Chairman of the Union of Oil Products Importers says the companies will not have the resources to maintain the price. Mtvralashvili adds that not only fuel but also all sectors tied to the dollar are in the same situation. In his opinion, the fuel market is patiently watching the situation and prices are reviewed only in urgent cases. Note: Last week, fuel prices in Georgia rose by 5 tetri.

“Business in Georgia does not Have Guarantees of Inviolability”

KAKHA OKRIASHVILI Founder of the Georgian pharmaceutical company PSP Business in Georgia so far has no 100% guarantee of inviolability, says Kakha Okriashvili, an MP and a founder of the pharmaceutical company PSP. Okriashvili says that investors need to

be embraced and only statements cannot attract investors to the country. According to him, it takes some time to create guarantees of business inviolability, as many investors have suffered since the 90’s and this trend still has to be reversed. The MP notes that the instability of macroeconomic indicators and fall of national currencty will have a negative impact on the business. These are the reasons why only modest economic growth indicators are recorded, says Okriashvili. Along with that, Okriashvili believes that the second quarter will be better in terms of growth and expects the Georgian lari’s exchange rate to stabilize. In his words, the 3rd quarter is ahead and it will be good if the economic growth exceeds 4%. Kakha Okriashvili says that the 4% increase is good in comparison with neighbors, but our economy needs a 7-8% growth in the long term.

May 11, 2015 #98

BUSINESS TO BE EXEMPT FROM PROFITS TAX An interview with the Chairman of the Parliamentary Committee on Sector Economy Zurab Tkemaladze - In December last year you talked about the need to introduce anti-dumping legislation that would restrict the import of subsidized products. What is being done in this direction? - We have sent the bill to the Ministry of Agriculture, they gave a positive response, now the document is being studying by the Ministry of Economy. Anti-dumping law stipulates that the protection of the market from products which are imported at dumping prices due to the fact that they are subsidized by the government in the manufacturing country. In addition, we are considering the possibility of adopting another law that will restrict imports of agricultural products in Georgia, which are produced in the country in sufficient quantity and restrictions will not lead to a deficit. This is a more difficult question that needs certain procedures. It does not happen so easily, the question must be thoroughly studied, including at the level of the anti-monopoly legislation. The state must make sure that there really will not be deficit and price hikes, only then restrictions on certain types of imports will be imposed. - What Georgian products have the potential to fully satisfy the demand in the market? - There are many such products, particularly in agriculture. For example, poultry has a very good potential for import substitution as well as vegetable growing. But for example, grain production currently has no such possibility. The import substitution is possible in light industry, in the production of canned food, etc. - One of the most topical issues is the economic growth rate? Obviously, the projected 5% growth is unrealistic, but the government is in no hurry to revise it. What is the reason? - In the first quarter we had a growth of 4%. This outlook is quite positive and the pessimistic sce-

nario is not implemented. It is too early to revise the forecast, as the data for the 2nd quarter are not yet known, and without them it is impossible to predict anything right now. So we have to wait for the data for the second quarter, and only then make a decision on the revision of the forecast for economic growth. - You initiated the abolition of profits tax in case of reinvestment. How is the work going on this project? - We have already sent the initiative to the government and are waiting for their opinions. A number of ministers offer to cancel the profits tax and impose tax only on dividends that is actually the same thing. Ministry of Finance proposes the same version that is being considered. Now we calculate the figures in order the business not to accidentally find itself in a worse situation than it is now. - Recently, a lot of brewers say their products see price hikes due to increased excise taxes and a ban on drinking alcohol in public places. Are there any plans to revise any of these laws? - On this occasion, we had a meeting with representatives of the beer business. Initially, there was a question of increasing the excise tax by 100%, then it was decided to reduce this figure to 50%, as the increase is more or less tolerated. I agree that the ban on drinking beer in public places was wrong. Drinking alcoholic beverages was prohibited before, but beer was included in this list. In many countries, drinking wine in public places is allowed. In what countries beer is considered an alcoholic beverage? We are studying the international experience in this respect. Personally, I believe that there is no catastrophe when people drink beer in the parks. This is normal.

GOVERNMENT CREATED AN UGLY BANKING SYSTEM An interview with an expert Demur Giorkhelidze

- If we look at the data of the banking sector, there is a feeling as if the country is not experiencing economic problems. For many years, banks are developed separately from the country - in conditions when the economy growth are slowing down in the country, the banks’ assets are growing. How can this be explained? - In this case, I cannot blame the banking system because all this is the result of government policy that contributed to the creation of an ugly banking system. Under normal circumstances, the economy can’t be on its last legs and the profit of the banking sector grows. If banks are engaged in a classic banking business, how all this happens? It turns out they make profit from other sources, in particular, the banking system in Georgia has long ceased to be just the banking system, and is involved in the business management, which enjoys the support of the state and acts outside competition. - Due to the devaluation of the national currency, banks began restructuring debts. How do you assess this step? - The elementary responsibility of the bank in the current situation is to offer customers the possibility of debt relief, otherwise they will not be able to cover the loans. Bankers are well aware that if everyone goes bankrupt, then they will get nothing. Banks cannot imprison all the country for nonpayment of loans, or deprive all apartments. So they are interested in giving customers the ability to pay the bills. But restructuring does not apply to legal per-

sons. What should the banks have done in that situation? We are talking about a large number of small and medium-sized companies, which are facing bankruptcy. It would be good if the banks did as banks in Europe in times of crisis, where banks have more sense of responsibility. With regard to small and medium-sized businesses, they are in a difficult position, especially due to a very low level of accessibility to finance. - Georgian lari yet has stabilized for a while several times. With what do you associate this fact? - There is no reason for the lari’s stabilization. All are in a state of uncertainty. Those who are responsible for determining the rate of national currency reckon with this, otherwise the situation would have been much worse. - Since August last year, commercial banks are prohibited from owning non-core assets. Do you think the banks will really refuse from this kind of assets or the problem still remains? - Nobody knows what will happen and how, the banks were forced to get rid of non-core assets till the end of 2015. A very strict control must be carried out over the implementation of this law, commercial banks should fully withdraw from non-core assets and deal exclusively with banking. If we want the country had investment banks investing in projects, they should not be allowed to carry out retail banking service of individuals, and this should also be clearly spelled out in the law. The current ugly banking system is a consequence of the ugly legislation.

May 11, 2015 #98

BANK

caucasian business week

TBC BANK’S COMPETITIVE ADVANTAGE: LEADING CUSTOMER EXPERIENCE AND SATISFACTION

BC Bank is a market leader in customer experience among Georgian banks. Focusing on customers’ needs is a priority that is vital to the Bank’s success. TBC Bank has one of the best-known and most trusted brands in Georgia. This is largely due to its high quality customer experience, strong reputation, long-standing relationships with customers, and innovative marketing campaigns. According to internal and external research, TBC Bank maintained market leading positions in customer experience in 2014. A “Mystery Shopping” study conducted by IPM named TBC Bank as the friendliest provider of banking services in Georgia. IPM is a leading market research company in Georgia with 15 years of experience of the market and 12 years within the financial services industry. IPM’s Mystery Shopping survey evaluates the service quality of the Bank’s branch and call center employees according to approximately 80 different parameters, each one earning one point for the assessed employee when fulfilled. Parameters cover such important qualitative and quantitative criteria as professionalism, meeting/ closing skills, responsiveness, perceived service quality, etc. The final score is a percentage total of scores achieved by all employees out of the maximum 100%. TBC BANK’S CUSTOMER EXPERIENCE GROUP In the current market, provision of superior customer experience is a key differentiating factor for TBC Bank among other banks. The head of customer experience at TBC Bank, David Japaridze, notes the heart of the Bank’s policy is to provide more than even the customers expect. To achieve that, TBC Bank has created a Customer Experience Group and a well-defined, structure process to ensure that TBC Bank delivers more to its customers than any other bank in Georgia.

“Historically, TBC Bank has been exemplary with its services. The people who serve you at our branches are always kind, they are smiling and they have a positive attitude. The market has always reflected that attitude and reacted adequately,” Japaridze said. TBC Bank serves over 1.2 million customers through its country-wide network. “For the last 10-20 years, banks around the world have tried different instruments to compete for the global market. They found that diversified products alone were not enough. TBC Bank has this niche – customer experience and services - where it differs from, and is better than, its competitors,” Japaridze noted. He added that good service is not just about polite and smiling personnel: “It is also about providing an environment that brings comfort. We have a branded scent that no other bank in Georgia has; we have special acoustic music in our branches, which soothes clients; we have mobile and internet banking that is user-friendly and performs well; we have a diversified network of terminals that are readily available – all of this creates great experience and satisfaction for TBC Bank’s customers,” Japaridze said. He underscored the role of TBC Bank’s internet banking in creating a rewarding experience for clients. In 2013, Global Finance named the site the Best Integrated Bank Site in the world. This was the first global award for a Georgian bank. Fast forward two years and global awards for technical services have become a TBC Bank trademark. A BENCHMARK FOR QUALITY AND ATTENTION At the heart of its services for local customers, TBC Bank works hard to maintain and build on its reputation as a trustworthy institution that honors its word and pays attention to its clients’ needs.

Going forward, TBC Bank plans to reinforce its core value of putting the customer at the center of the Bank’s corporate culture. The Bank will also continue to invest in staff training and improve clients’ mobile banking experience by introducing simpler, more uniform designs and navigation – as well as new and improved processes for managing clients’ experience across every channel and segment. “We can wow our clients by providing them with more sophisticated mobile banking services and smarter pay boxes. We know that in the coming years, TBC Bank will offer many more services to allow our clients to stay connected and take care

of their business with the Bank without actually having to come to the office,” Japaridze said. Now TBC Bank plans to enhance the Bank’s position as Georgia’s leading, universal banking group. TBC Bank also continues to strengthen its competitive advantage as a strong brand, with outstanding customer service and the best regional multichannel capabilities. “As the customer experience department, we have a strategy that we follow. One of the measures of our success is customer satisfaction. All our studies show than we have excellent dynamics in this direction. We are the leaders in the market,” Japaridze said.

TBC BANK: SECURING SNOW FOR THE SKI SEASON project for Georgia. This equipment enabled us to start the season early last year, in the middle of December. This resulted in a historic number of tourists: in Gudauri alone, the number of visitors increased by 40% compared to the previous best winter season in 2012.” TBC BANK SUPPORTS TOURISM Strong tourism growth translates into the country’s ability to improve its economy by adding jobs, attracting investment and raising its international image. The EU Association Agreement presents further economic opportunities- especially in tourism, which is one of the government’s target strategic sectors. According to 2012 figures, data from the National Tourism Administration Tourism accounted for 7% of national GDP and 58% of the revenue from Georgian services. Approximately 170,000 people were employed in the sector - nearly 10.3%

he Trade and Forfaiting Review (TFR), a leading trade and supply chain finance information publication, named a TBC Bank transaction as one of world’s top 15 deals

in 2014. For TBC Bank, the winning transaction was a Letter of Credit issued for the import of the artificial snowmaking equipment, which enabled Georgian Mountain Resorts Development Company to make skiing at two popular Georgian ski resorts, Gudauri and Bakuriani, possible regardless of the volume of snow fall. Clarissa Dann, the editor of Trade & Forfaiting Review, said the TBC Bank deal was a “shining example” of how banks can use letters of credit to “transform” local economies. “This deal was a shining example of how a letter of credit, a crucial trade finance instrument, could transform a local economy, bringing much-need-

ed forward bookings to the Gudauri Ski Resort. It was so good to see the EBRD and Raiffeisen Bank’s support in such a transforming project. When we saw this entry, the judges and I knew that this was something special – and it made us want to come skiing in Georgia!” Dann said. Alexandre Onoprishvili, the head of the Georgian Mountain Resorts Development Company, credited TBC Bank with making the deal possible. “TBC provided the consultancy-based services that the Georgian government was looking for during the negotiation of the contractual terms of the project, including the terms of the actual financing. This was an LC for €2.28m with postfinancing to cover the import of the artificial snowmaking equipment. The interest-rate was very low,” he said. “We have long time business relations with TBC Bank and this was one of the main reasons why we turned to TBC for supporting the unprecedented

of all jobs in the country. “The sector is one of the top priorities for the government” noted Davit Tsiklauri, the head of TBC Corporate Banking. Tsiklauri added that the TFR award recognized TBC Bank for supporting an economic area that is vital for the country’s development. “This award shows TBC that the bank is moving in the right direction”, Tsiklauri said. Corporate Banking represents 34% of the Bank’s total loan portfolio and 25% of the total deposits portfolio as at March 2015. TBC Bank serves approximately 1,500 corporate clients in Georgia, offering a wide range of products, including balance sheet finance, trade finance, asset finance, working capital, syndicated loans and project finance. Under project financing, TBC Bank provides medium to long term loans to finance the purchase of equipment, acquisitions, construction, as well as expanded production, administrative and trade facilities.

BUSINESS

caucasian business week

May 11, 2015 #98

CIGARETTE SMOKERS SWITCHING TO CHEAPER CIGARETTES

MINICREDIT OPENS NEW SERVICE CENTER AT GLDANI MALL

iniCredit has opened the MiniCredit Café innovative service center at the Gldani Mall, where clients receive interestfree credits starting May 2015. The MiniCredit Café staff provides a full package of services to clients, 50 GEL to 700 GEL credits on plastic cards and a variety of coffee during the application discussion period. At the service center clients are able: • To get registered at MiniCredit.ge; • Fill out applications with desirable maturity period and amount;

• Select desirable design for the credit card and receive it free of charge. • Make credit payments by ATMs. In 2011 MiniCredit introduced an innovative product on the market – immediate internet credit. Since then the company permanently offers various innovations to the clients. Customers are able to visit MiniCredit service centers from 10 o’clock to 20 o’clock every day. • Near Akhmeteli underground station, Gldani Mall, Floor 0. • Kavtaradze Street N1 – Saburtalo Goodwill, II Floor; www.MiniCredit.ge – Fill your Wallet!

SOCAR EXPORTED 95% OF AZERBAIJAN OIL VIA GEORGIA

ccording to Marketing and Economic Operations Department of SOCAR, export of Azerbaijan oil is grown by 3,4% in a month. As of SOCAR, oil of 1709,747 thousand t has been exported in April. However, export by Baku-Novorossiysk pipeline has amounted to

84,701 thousand t, while Baku-Supsa pipeline – 254,164 thousand t, Baku-Tbilisi-Ceyhan pipeline - 1370.882 thousand t. It should be noted, that export has made up 7450,221 thousand t through 4 months of 2015, while 24372,793 thousand t – in 2014. In 2015, as in 2009-2014, SOCAR has not made export via Baku-Batumi rail way.

TOURISM ADMINISTRATION WORKS ON ATTRACTION OF MORE TOURISTS FROM IRAQ

lights will be renovated towards Iraq, Georgian Tourism Adminsitration declares. Air company “Georgian Airways” will perform flights Tbilisi-ErbilTbilisi. To note, 32 regular flights are planned to be performed in a month. George Chogovadze, head of National Tourism Administration of the Ministry of Sustainable Development has met representatives of Iraq government and head of the biggest tour company “StarAlliance”. They discussed issues about

for GEL 3 and cheaper. Although at this stage it is difficult to specify a percentage of consumers who changed their choice, “- he explains. In his words, the situation will be worsened due to the introduction of ad valorem tax which is 5% on each pack. “It will lead to a growth in smuggling and may lead to a loss of state revenues. In neighboring Armenia cigarettes are much cheaper than in Georgia, and therefore, the more prices rise on tobacco products in Georgia, the more apparent difference becomes. Accordingly, the motivation of potential smugglers increases. Illegal supply of cigarettes will cause great damage to both the state and bona fide importers and producers who pay all taxes, and therefore cannot compete with cheap contraband. As a result, our products will not be sold, and the state will receive less revenues in the budget, “- Khasia adds. He says that representatives of the tobacco business had several meetings with the heads of the Revenue Service and raised the question of postponing the introduction of the ad valorem tax at least for six months to avoid price hikes twice a year. However, the decision in this regard has not been taken.

GEORGIAN SEAPORTS SHOW MAJOR GROWTH IN THROUGHPUT IN REGION

he volume of container throughput by Georgian ports is distinguished with the highest dynamic (+13%) in 2014 among the Black Sea Countries. According to PortNews.ru, the Black Sea Container Terminals (Romania, Ukraine, Russia, Georgia and Bulgaria) handled TEU container cargo of 2 610 623 and totally, the growth of cargo container throughput has amounted to 0,5%. The highest growth has been fixed in Georgia and Romania. While, drop of 13% is noticed in Ukraine. At that, 58,51% is import of containers, while 41,49% - export. The volume of loaded containers export from the Black Sea Countries is increased by 7,85% in 2014 comparing to 2013 and Georgia had the main role, which has fixed the highest growth –

annual 32,16%, Russia is on the 2nd position – with an increase of 16,17%. It should be noted, that countries shares are as follows by throughput of loaded containers: Ukraine - 29.78%, Russia - 25,65%, Romania 22.42%, Georgia - 13.8%, Bulgaria - 8,35%. Rating of top 5 terminals by throughput of loaded containers is changed. Namely, DPW (Constanza) has sustained the first place, ГПК Ukraine (Odessa) us shifted from the 2nd placed to the 5th position, APMT Poti (Georgia) is advanced from the third to the second place. Novorosleseksportma (Russia) and НУТЭП- m (Russia) moved from the 3rd place to the 4th position. It should be noted, that the throughput by Poti Port has amounted to 384 922 containers, while Batumi Port – 61,980 units.

the renovation of flights between Georgia and Iraq and to attract tourist stream in Georgia. According to Emad Rashid, general manager of Iraq tour company “StarAlliance”, travel of Iraq citizens gets simple after introduction of electronic visa portal. Electronic visa portal www.evisa.gov.ge has been introduced from February 10. Foreigners, who want to apply Georgian Visa have a possibility to fill online application and to take electronic visa without visiting Georgian Embassy.

NEW FITNESS BAND INVENTED BY GEORGIAN CLAIMS TO BE THE FIRST THAT CAN COUNT CALORIES DIGESTED he band, priced individually at $299.99 (£196 plus international postage), raised well over its $1 million fundraising target on Indiegogo in April last year, but estimated shipping dates were pushed back ‘due to unforeseen delays in production.’ However, Healbe co-founder George Mikaberidze says he has worked with several medical institutions in both America and Russia on the technology and testing of the product, which he claims to be between 84 and 93 per cent accurate. This is the year we’re predicted to fully embrace wearable tech. And first up is the Healbe GoBe, a new fitness band which claims to be able to count the calories you’ve digested. That’s right. Instead of all the faff of keeping food diaries, scanning bar codes, or taking photos of your dinner, this band will apparently automatically measure calories consumed through your

fter the cigarette price increased due to the growth of excise taxes, local manufacturers and importers speak about a reduced consumption in the first quarter of 2015 amid a significant rise in prices. According to Director of “GG 2011” Ilya Zhgenti, at this stage sales fell by 10-15%, but in the near future a further decline is expected. “Consumption will decline primarily due to the gradual rise in price of cigarettes. A situation will worsen after July, when a new - an ad valorem tax will be introduced, which will further increase the prices of tobacco products. At this stage, we are waiting for a 20% reduction in consumption, and it is impossible to say what will happen after July,”- he says. Iva Khasia, Director of “GTI” company, notes that in fact the number of smokers has not decreased, but they are spending less money on cigarettes and have switched to cheaper brands. “Consumption is not reduced, now people are trying to buy cheap cigarettes. For example, those who smoked cigarettes for GEL 4 per pack have switched to cheaper products, for example,

skin. According to the team behind it, GoBe will also precisely calculate how many calories you burn in a day through exercise, sleep etc, watching EastEnders etc., along with metabolic rate, with no logging, tracking, or guesswork required. And it delivers all the info straight to your phone. GoBe is the only fitness band to use what has been named Healbe FLOW™ Technology, which involves three in-built sensors: a pressure sensor to measure blood flow and heart rate, a sensor to measure fluid levels in tissue (your cells’ changing glucose concentrations are used to calculate calorie intake), and a sensor measuring body movement and activity. Currently on show at the world’s biggest technology show – the International Consumer Electronics Show – in Las Vegas, the band has been criticized by many in the medical community who claim it simply cannot work in the way it’s being marketed. Others have dismissed it as a ‘scam’.

TBC GROUP AND ITS PARTNERS MIGHT BUILT ANAKLIA SEA PORT

inistry of Economy confirmed GBC, that one of the consortiums, which has overcome the first stage is JSC Anaklia Development Consortium, which is founded by TBC Holding and American Conti International LLC. The second candidate is Anaklia Industrial Eco Park and Port ltd and Power Construction Corporation of China Ltd. Direct negotiations are carried out with the company. As Economy and Sustainable Development Minister candidate George Kvirikashcili has declared at the session held on Thursday, while submitting the government program, investor’s selection is on the final stage. According to Ministry of Economy, construction company of Ankalia Deep Water Port must be revealed before September, 2015. Construction of the Port will start in June, 2016 and it should be carried out in 7 stages. Cargo capacity of Deep Water Port should be 100 million t per year. Construction will be implemented in several phases in accordance of port capacity

growth. To remind, 12 investors have expressed interest in construction of Anaklia Port. However, 7 companies have overcome the first stage: 1. BOUYGUES TRAVAUX PUBLICS S.A (FRANCE); 2. MITSUI & CO., LTD (JAPAN); PORTEK INTERNATIONAL PRIVATE LIMITED (JAPAN) (CONSORTIUM); 3. JSC ANAKLIA DEVELOPMENT CONSORTIUM (GEORGIA); 4. TERMINAL INVESTMENT LIMITED (LUXEMBOURG); 5. ANAKLIA PORT AND INDUSTRIAL ECO PARK (GEORGIA); POWER CHINA - HUBEI HONGYUAN POWER ENGINEERING CO., LTD (CHINA); BRITISH ECO POWER LTD (GREAT BRITAIN); SPARTAK ERAGIA - (Physical Person); (CONSORTIUM); 6. AECOM TECHNICAL SERVICES INC (USA); DIA HOLDING FZCO (UNITED ARAB EMIRATES); (CONSORTIUM); 7. CHINA HARBOUR ENGINEERING COMPANY LTD (CHINA)

May 11, 2015 #98

ANALYTICS

caucasian business week

GLOBAL ENERGY POLICY AGAINST GEORGIAN INTERESTS

ZURAB GARAKANIDZE Doctor of Economics GROWING PERSPECTIVES OF SHALE GAS IN THE USA Inauguration of US liquid gas exports to Europe becomes more and more relevant to shrink Brussels’s dependence on Russian energy resources. US liquid gas exports to Europe is considered as a main leverage for maintaining the global security. At the end of 2013, only two companies had been licensed to export liquid gas from the USA. Therefore, the competition against GazProm sharpened on the European energy market, even more so the Russian Federation suspended gas transit to Ukraine and announced the new Turkish Stream. The number of the exports license seekers extremely grows in the USA. Therefore, liquid gas exports to Europe poses threat to both GazProm and the EU’s Gas Fourth Corridor crossing the Georgian territory. On April 26, 2015 the Telegraph published a letter by Evans-Pritchard: The US gets engaged in gas exports for global energy dominancy. The article reads in 2015 the US Department of Energy will issue huge number of liquid gas exports licenses to shrink the Russian domination on the global market (according to the recent report, Russia’s ratio on the European gas market makes up 39%). The Telegraph asserts in this way the US will generate geopolitical flood of liquid gas on the energy market. Ernest Moniz, the US Secretary of Energy, says the construction of four liquid gas terminals will end in the US in the near future. At the Huston energy summit he noted the first wave of tankers will transport liquid gas to Europe at the end of 2015. At the end of the current decade the US will catch Qatar in terms of liquid gas exports. Qatar today is the world leader in terms of liquid gas exports with annual 100 billion cubic meters. Australia will soon catch Qatar that will extract gas from Gorgon giant offshore field. At the meeting Moniz stressed extreme upturn in gas extraction in the USA has already affected the global gas market. Importers have already directed the gas for the USA to Asia and Europe and caused important changes on the market. It should be noted for Russian energy pessimists that the USA joined the 150 year global gas extraction process only 15 years ago. Only Marcellus shale gas fields stretched to western Virginia, Pennsylvania and New York gives 113 billion cubic meters of gas a year that is about 40 billion cubic meters a day, that equals to consolidated supply volume through Northern Stream, Yamal and Soyuz gas pipelines to the European market. At the same time, for the last three decades the extraction cost price at the Marcellus field has shrunk five times. Even if one million British thermal unit equals 3 USD, gas profitability will not fail in the USA. The price of American gas in Europe is 7 USD, Asia – 10 USD. In Europe the price of Russian

gas is 12 USD for 1 million British units. Despite this advantage, according to the GazProm 2014 results, net profits shrank by 86% compared to 2013 and totaled 159 billion Rubles. The US Energy Information Agency expects by 2020 in the USA domestic market price for the British unit will rise to 4.88 USD, by 2040 – 7.85 USD. American experts say today 280 drills can extract by one/third more gas than 1200 drills did in 2009. Currently, the USA extract 350 billion cubic meters of shale gas a year and this is over a half part of the US gas extraction total volume. Starting 2011 a total of 33 oil chemical plants was built from Huston to New Orleans and the value of each of them marked 1 billion USD. In this region, before 2023 the US chemical safety board expects 130 billion USD investments. According to the existing information, the US department of energy will soon issue licenses for exports of 70 billion cubic meters of gas to four gas liquefying terminals, including, the construction of the major one Cheniere with 18 billion cubic meter output terminal will end in the near future in Louisiana. THE WEST’S PROBLEMS IN THE CASPIAN REGION Amid similar tendencies, it is not surprising western companies show less and less interest in the Caspian Region, consequently, in carbon dioxide transportation through Georgia. Namely, BP has purchased only 12 % stake in SOCAR’s 80% stake in TANAP, while Total and StatOil refused buying 10% stakes. Turkish Botas has bought a 10% stake from SOCAR in this consortium.

TANAP shares are distributed in the following way: SOCAR – 58%, BP – 12%, BOTAS – 30%. At the same time, in 2014 German E.ON sold its 9% stake in TransAdriatic Gas Pipeline (TAP), an extension of TANAP, while French Total sold 10% stake. The stakes were purchased by Belgian and Spanish companies that have no relation with the Caspian basin. According to the recent information, in June 2015 ASCO Caspian Holding, a see platforms construction company, a subsidiary of ASCO Logistics Company, will leave Azerbaijan. This company has failed to receive orders from ShahDeniz 2 field and about 400 citizens of Azerbaijan employed in May will be expectedly fired. Norwegian StatOil is also expected to leave the Caspian Basin. In 2014 the company sold its stakes in Shah Deniz field and South Caucasian Gas Pipeline to Malaysian Petronas. Despite antiRussian sanctions, this company broadens business in western Siberia and two offshore projects of the Okhot Sea. EUROPE’S ATTITUDE TO CHANGES IN CASPIAN REGION Europe’s energy commissioner Maroš Šefčovič plans to visit Ashgabat concerning TransCaspian project of the South Gas Corridor through which Turkmenistan will transport 30 billion cubic meters of gas to Europe. In March 2015 Turkish President Erdogan visited Turkmenistan and offered Turkmen President Gurbanguly Berdimuhamedov to join the TANAP project. Ashgabat

refuses allocating 3-5 billion USD for constructing TransCaspian Gas Pipeline. It is interesting even the EU does not show much support to TransCaspian project. Negative appraisals derive from the status of the Caspian Sea, problems with delimitation borders on the shelf and ecology. In 2016 a new summit of the Caspian Countries will be held in Astana where the mentioned problems will be discussed. Before, experts expect Iran’s activity amid expectations the west will remove sanctions and warm relations with Iran. Teheran plans to join TANAP and this country does not want competitors in this respect. This signifies Iran will try to thwart implementation of Trans-Caspian projects in Georgia. For the same reason, Iran will not concede its territory to Turkmenistan for gas transit. The European Union has changed its attitude to the South Gas Corridor too. After the Arabian spring Brussels has revised the Neighborhood Policy and in 2011 developed strategy of A New Response To a Сhanging Neighborhood. EU sets an implementation of deep democratic reforms as a main precondition for economic cooperation. Turkmenistan does not participate in the Neighborhood Policy, but Europe stresses an authoritarian character of the Ashgabat regime. CHINESE COMPETITION Unlike the European Union, China has no problems with internal political problems. The country receives 50 billion cubic meters of Turkmen gas a year. Beijing will increase financial participation in the Turkmen gas transportation networks

construction to 10 billion USD in Asian countries so as to receive 80 billion cubic meters of gas a year starting 2017. Turkmenistan covers credit liabilities to Beijing in the form of gas. The EU report on European Alternatives for Russian Gas reads Turkmenistan has changed exports policy in the interests of China. Surprisingly, a new competitor has appeared in the face of the USA to Europe in the Caspian Region. Along with military evacuation from Afghanistan, Washington supports the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline (TAPI) project. Hence, EU competes with all regional players in the Caspian Region. Therefore, only BP remains from European companies in the EU South Gas Corridor that unites South Caucasian and TransCaspian gas pipelines crossing Georgia. Azerbaijani and Turkish energy companies are main players in this corridor instead of European companies. On the other hand, the same Turkish company Botas actively cooperates with GazProm on the new project of the Turkish Stream connecting Russia and Turkey. It is not occasional Russia has replaced Russia-Bulgaria route by South Stream gas pipeline. The point is that Russia and Turkey are not EU member countries, that is, the EU requirements for the third energy package on admitting third party to the gas pipeline does not refer to them and this factor has suspended the South Stream construction in practice. But the extension of this gas pipeline in Greece is related to the requirements of the third energy package.

Therefore, it will be necessary for Russia that its European clients purchase gas from the hub on the Turkey-Greece border. NEW EUROPEAN HUB The new left-wing government of Greece welcomes the Greek extension of the Turkish Stream. To this end GazProm needs the already forgotten Turkey-Greece-Italy InterConnector, TransAdriatic Gas Pipeline, one of the projects of the South Gas corridor. In this case, the Russian giant will need to use DESFA-Greece national transportation network (NGTS). By the way, the European commission has been investigating the lawfulness of the deal, when SOCAR purchased 35% stake in this network in 2013. According to the existing information, the Turkish stream gas pipeline will reach the Ipsala District of Turkey to the border with Greece, where TANAP will be connected to TAP. This fact will generatedgrowing competition between these two systems because of market stake if we take into account an expected growth in the output of TANAP (16 to 31 billion cubic meters) and TAP (10 to 20 billion cubic meters). In practice, Russia has got the chance to transport gas through TAP from the Turkish Stream without violation of the EU requirements for the third energy package, because: 1) Russia does not hold a stake in TAP; 2) Initially TAP’s output will be 10 billion cubic meters a year and the volume will increase to 20 billion cubic meters at the second stage (100%); 3) The European commission has left 50% of the TAP’ total output open for admitting the third party to the second stage; 4) Under the EU regulations, TAP must unveil additional ingoing and outgoing points for ShahDeniz gas reception by the request of the third party. Under the third energy package Russia may receive access to TAP as supplier to the second stage ( not as owner) or request for creating ingoing and outgoing points for additional pumps in TAP. If Russia only sells gas at the Turkey-Greece border without having its own infrastructure, it will not violate the requirement of the EU third energy package (contrary to the South Stream). However, Shah-Deniz consortium has ensured to fill TAP with 10 billion cubic meters of Azerbaijani gas at the first stage until 2018 as part of the 25 year contract. Russian gas will not be admitted to TAP for at least 25 years. Even more so Azerbaijan plans to increase gas exports from Azeri-Chirag-Guneshli, Absheron and ShahDeniz fields. . Greece wants the Turkish Stream to be extended to Europe through InterConnector TurkeyGreece-Italy (ITGI) route. After the Turkish Stream operation, the transit agreement with Ukraine until 2019 will not be expectedly continued. Therefore, the Russian TransBalkan gas pipeline (TBP – called as Progress in the Soviet Union) constructed to the west part of Turkey becomes useless, because it will be replaced by Turkish Stream with 300% higher output compared to BP’s. GazProm is expected to transform TransBalkan Gas Pipeline into a reverse regime after cessation of gas transit through Ukraine and supply Russian gas to Balkan countries through Turkish Stream pipeline. Through this step Russia will emerge as competitor to the Caspian gas where it had got the least chances after suspension of NABUCCO and inauguration of TANAP and TAP. At the same time, the advantage of Turkish Stream gas pipeline compared to the South Stream is that is does not violate the EU’ requirement for third energy package and proves its loyalty to Brussels. Hence, Russia is expected to use Turkish Stream to hinder Azerbaijani gas exports via Georgia to EU through the fourth gas corridor so as Turkish Stream be put into exploitation ahead of TANAP and TAP (2020). Moscow will easier implement these plans as the interest of the USA and EU multinational companies shrink in the Caspian Region.

CURRENCY

May 11, 2015 #98

caucasian business week

BACK ON TRACK FOLLOWING MARCH OUTLIER

LABOR MARKET DETAILS TO PLAY CRUCIAL ROLE THIS WEEK

MADS KOEFOED Head of Macro Strategy / Saxo Bank Denmark • CONSENSUS PREDICTS RETURN TO NORMAL WITH 230,000 JOBS • UNEMPLOYMENT EXPECTED TO FALL TO LOWEST SINCE MAY 2008 • HEAD OF MACRO STRATEGY CALLS IT AT 222,000 NEW PAYROLLS IN APRIL • GROWTH OF 200,000-225,000 EXPECTED IN COMING MONTHS • TRADINGFLOOR’S NFP COMPETITION STARTS NOW

ast month an unexpectedly poor US employment report sent the S&P 500 index falling more than 1% with the US dollar down by nearly the same. The selloff was understandable when you dig into the numbers. Just 126,000 jobs were added in March, said the Bureau of Labor Statistics a month ago, well below elevated expectations of 245,000, and the January and February figures were revised lower by a total of 69,000. The unemployment rate managed to stay unchanged at 5.5%, but only because people fell out of the labour market, as evidenced by the participation rate’s drop to a new multi-decade low of 62.7%.

With the shocking March numbers in mind, let us fast-forward to the upcoming April release, due today at 1230 GMT. Consensus looks for a restoration of normality with a 230,000 prediction for the (change in) payrolls while the unemployment rate is seen falling to 5.4%, which will be the lowest rate since May 2008 if it materialises. Compared to the rest of the US economy there is no doubt that the labour market has been running a bit too hot recently, but the sharp deceleration witnessed in March also does not equate with the situation in other sectors. Taking other timely indicators into account, average payrolls growth of 200,000-225,000 over the coming months is expected. Considering the broader economy’s performance, I look for an addition of 222,000 payrolls in April. This is, I think, supported by the labour market indicators, so let us have a look: • Initial jobless claims continue to signal a very solid labour market. In the NFP survey for April claims for first-time benefits stood at 296,000 compared with an average of 293,000 for the first three months of the year. What is more, the four-week average of claims has resumed its decline following a spike in late February-early March. • The non-manufacturing ISM report showed solid job growth with the index climbing a tad to 56.7 last month from 56.6 in March. (note that neither jobless claims nor this index supports the very low March NFP print.) • The manufacturing ISM report contained a rather poor employment reading last month. The index fell to 48.3 from 50, the first contraction in manufacturing employment (according to the ISM manufacturing report, that is) since May 2013. • The Conference Board’s labour differential weakened somewhat to -7.3 last month from -4.5. This index shows the difference between those finding jobs plentiful and hard to get. • The ADP employment report suggests that the private sector generated 169,000 jobs in April, down from 175,000 in March and below the consensus estimate of 200,000.

ast week, the US Dollar Index (I.USDX) registered its consecutive third weekly decline as disappointing US economics, coupled with not-so-hawkish FOMC, continued shadowing the expectations concerning near-term interest rate hike. The EURUSD secured highest gains in seven weeks as market players expect ECB’s QE is paying out the troubled region with improved economics and could help avoid the deflation soon. Further, uncertainty ahead of the UK general election, coupled with weaker GDP and Manufacturing PMI, pulled back the GBP gains while dovish comments during recent monetary policy meetings of the BoJ and the RBNZ, in addition to the downgraded inflation forecast by the BoJ, hurt currencies of Japan and New Zealand. Moreover, speculations concerning the cut in benchmark interest rate by the RBA strengthened during last week, on the back of lingering Chinese economics, and damaged the Australian Dollar. During the first full week of May, labor market details from US, Australia and the New Zealand are likely to fuel considerable volatility in the forex market. Moreover, monetary policy meeting by the Reserve Bank of Australia (RBA), Chinese Inflation and Trade details together with the UK Trade Balance and Construction and Services PMIs, are some of the crucial events that could provide busy days to the Forex market participants. There isn’t any important announcement out of the Euro-zone except the on-going efforts of the Greek government to please international creditors to avail emergency funds ahead of its May 11 meeting. Even if the monthly reading of Factory Orders, scheduled for Monday, and the ISM Non-Manufacturing PMI, scheduled for Tuesday, could reveal important details about the world’s largest economy, Friday’s NFP and Unemployment Rate for the month of April, also the ADP Non-Farm Employment Change, scheduled for Wednesday, are crucial releases to help determine the chances of Fed’s near-term interest rate hike. As said earlier, the US labor market details have played a crucial role in determining the future monetary policy actions by the Federal Reserve and hence will be important for the Forex market players to determine near-term USD moves. Having registered the lowest reading in more than a year, the 126K mark, in its March announcement, the US

near-term moves of both these antipodean currencies. The New Zealand Employment Change is likely to soften a bit to 0.8% from its prior release of 1.2% while the Unemployment Rate is expected to shrink to 5.5% after rallying to the 5.7% previously. Moreover, the Australian Employment Change is expected to print the lowest reading in three month, to 4000 against previous addition of 37,700, and the Unemployment Rate could increase a bit to 6.2% after releasing 6.1% level previously. With the recent dovish tone of the RBNZ, weaker labor market numbers from New Zealand could magnify the NZD losses while the AUD is likely to witness considerable downside should the employment details match consensus. Monetary policy meeting by the Reserve Bank of Australia (RBA), scheduled for Tuesday, is also an important event to determine near-term AUD moves in addition to the labor market numbers. The RBA avoided cutting down its benchmark interest rate in April meeting and fueled the AUD; however, with the pessimistic outlook for China, Australia’s largest trading partner, the central banker is more forced to introduce another interest rate cut in order to sustain the economic growth. Other than the rate decision, quarterly economic forecast, to be made public during next week, could also provide meaningful information relating to central banker’s overview of the economy. The bank did downgrade its economic outlook in its recent monetary policy and a reflection of the same in quarterly report could provide considerable downside to the AUD. Should the central banker avoid cutting down the interest rate, asking for some more time to reflect on weaker Chinese details, the AUD is likely to witness a knee-jerk up-move, followed by the stronger decline, while a cut in the benchmark interest rate could magnify the AUD decline. Having witnessed weaker reading of HSBC Final Manufacturing PMI, details relating to Chinese Trade Balance and inflation numbers, scheduled for Friday and Saturday respectively, become important to foresee the moves of AUD, CAD and NZD. After plunging during the month of March, to 3.1B, Chinese Trade Balance is expected to print 34.5 billion of Trade surplus for the month of April. Moreover, consensus relating to the CPI reveals that the inflation fuelled by 1.6% against its previous reading of 1.4%. With the Chinese central bank rolling its sleeves to do whatever it takes to fasten the economy, weaker read-

NFP is likely to reimburse its previous losses and could print a 231K number, coupled with the lowest unemployment rate since May 2008, to 5.4%. Moreover, the ADP also signals an improvement from its previous 189K to 192K in its Wednesday’s announcement. Considering the recent improvement in quarterly wage detail, released last week, a healthy print of these employment details signals toward improved US fundamentals and a near interest rate hike by the Federal Reserve. Factory Orders’ detail is likely to reveal the highest order growth since September 2014, by printing 2.1% number, against its previous reading of 0.2% which was the first positive number in six months, while the ISM Non-Manufacturing PMI is likely to print a bit softer number, to 56.2 against 56.5 prior. Moreover, weekly Jobless Claims is also expected to print a hard number of 275K as compared to its previous reading of 262K. Given the headline employment details’ ability to match the consensus, together with the improvement in Factory Orders, pessimism surrounded by the recent weakness in US economics can be countered and the FOMC becomes more likely to practice an interest rate hike sooner than expected, that in-turn could trigger considerable US Dollar advance. Other than the US employment details, numbers from the New Zealand and Australian labor markets, scheduled for announce on Tuesday and Thursday respectively, are also likely to provide meaningful information to determine

ings could again force the central banker to announce additional measures, avoiding the recent ones introduced in previous week. Hence, weaker readings out of China is likely to provide additional drag to the commodity currencies; however, readiness on the part of Chinese central bank to fuel the economy could lessen this damage in expectation of more easing. UK PMI details, namely the Construction PMI and the Services PMI, scheduled for release on Tuesday and Wednesday respectively, together with the UK Trade Balance, schedule to release on Friday, are likely important details to help determine near-term GBP moves. Both these PMIs are likely signaling a weaker reading as compared to their previous releases. While the Construction PMI could print a 57.6 against 57.8 number, the Services PMI, important to determine UK GDP, is likely soften to 58.6 against its 58.9 prior release. Moreover, the Trade Balance is expected to reveal improved trade deficit to -9.8B against 10.3B. Other than the economic details, the UK General Election, becomes an important event to foresee moves of UK currency. Opinion polls ahead of the election continue supporting the coalition government and an uncertain political environment. Given the actual economic readings meet market expectations, and the election outcome matches opinion poll, it could become a strong deterrent factor for the GBP as the coalition government could be failed to support the UK economy.

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

May 11, 2015 #98

RESEARCH

WHICH COUNTRY’S FOOD ENERGY SECTOR - 2014 PRODUCTS RESIDENTS OF TBILISI PREFER

CT was interested whether or not Tbilisi citizens pay attention to the manufacturing country of various food products that they purchase. The majority of the respondents (63%) stated that they almost always check for the origin country of the purchased food products; one fourth of surveyed individuals (23%) said that they pay attention to it sometimes and approximately one tenth (13%) said they are never interested in the manufacturing country.

NEIGHBORHOOD

Azerbaijan Central Bank reserves fall to $8billion

oreign exchange reserves of the Central Bank of Azerbaijan fell to $8.39 billion as of April 30 from $14.9 billion year earlier, according to the CBA data published on May 8. The Central Bank’s foreign exchange reserves declined by $1.08 billion (11.4 percent) in April and by $6.48 billion (43.6 percent) compared to the same period of 2014. The decline in the CBA foreign exchange reserves has been observed since July 2014. Earlier, this happened slowly (around $20-50 million). But their volume has sharply reduced (more than $1 billion monthly) since December. This is associated with an increase in demand for dollar supply in the country.

U.S., Armenia Sign Framework Trade Deal

T The research also showed which countries’ food products are the most and most and the least trustworthy according to the citizens of Tbilisi. The picture looks as follows: even though Germany is a leader among the trusted countries, it is interesting that every second citizen (54%) also trusts Georgian production. The least trustworthy products, according to the residents of Tbilisi, come from Turkey and China.

he United States and Armenia have signed a framework trade deal aimed at boosting bilateral investment and commercial ties. Armenian President Serzh Sarkisian attended the May 7 signing of the agreement in Washington by his foreign minister, Eduard Nalbandian, and Dan Mullaney, the assistant U.S. trade representative for Europe and the Middle East. U.S. officials have cited a flawed business environment in Armenia as a barrier to investment in the former Soviet republic, which is a member of the Russia-led Eurasian Economic Union. According to Armenian government data, bilateral trade with the United States totaled $221 million last year, less than 4 percent of Armenia’s foreign trade.

Gazprom, Ankara agree to start Turkish Stream gas deliveries in Dec 2016

T Note: respondents could name up to three countries; consequently, the sum of the responses exceeds 100%. The research was conducted on 419 adult residents of Tbilisi in March, 2015. The statistical error of the results does not exceed 4.9%. The survey was conducted exclusively for internet magazine “Marketer”. Third party must give a notice before using the given information fully or partially.

HOW MUCH?! GLOBAL SPENDING ON CANCER MEDICINES HIT $100B LAST s YEAR concerns mount over outlays run by drug makers.

for prescription drugs, a new report finds that global spending on oncology treatments reached $100 billion last year, which represented a 10.3% increase from the previous year and a substantial rise from $75 billion spent five years ago. The increased spending worked out to a compound average growth rate of 6.5% globally over the past five years, although the growth in spending was 5.3% in the U.S., according to the IMS Institute for Healthcare Informatics. On a worldwide basis, cancer drugs accounted for 10.8% of spending on all medicines in 2014, up from 10.1% in 2010. In the U.S., spending on cancer meds accounted for 11.3% of all drug spending last year. On a per capita basis, spending in the U.S. reached $99 in 2014, up from $71 in 2010, with similar increases occurring in other major markets. The rise in spending was attributed to earlier diagnosis, longer durations for treatment and improved effectiveness for some therapies. Notably, targeted therapies now account for almost 50% of total spending and grew at a compound average growth rate of 14.6% over the past five years. We should note that the IMS data includes not only the cost of cancer medicines, but also other drugs administered during care. In addition, the data does not reflect discounts, rebates and price reductions attributed to patient access programs

caucasian business week

Going forward, increased demand and newer therapies are expected to fuel annual spending growth for oncology drugs between 6% and 8% annually through 2018, according to IMS. Over the next six years, newer combinations incorporating targeted and immune-oncology agents are expected to launch. “We’re sitting on the edge of an enormous amount of new treatment options coming through the pipelines,” says Murray Aitken, the executive director of the IMS institute. He points to the PD-1 inhibitors, such as those sold by Merck and Bristol-Myers Squibb, as ushering in a new treatment era. But while he says he “certainly” expects spending on cancer medications to rise over the next few years, he also suggests that the impact on overall spending, at least in the near term, will “not be as much as some might imagine.” Why? He cites several reasons, such as increased competition among drug makers. Aitken also points to lower-cost options, such as biosimilars and small-molecule compounds that lose patent protection, paving the way for generics. And he notes that biomarkers will yield more select patient populations. “The number of patients they will reach and are indicated for is still relatively small,” he explains. “They are measured more in the thousands or tens of thousands. It also takes a while for new treatments to become widely accepted and used.”

he Turkish Stream pipeline will become operational in December 2016, said head of Gazprom Aleksey Miller. “An agreement [between Russia and Turkey] has been reached on operational commissioning and the start of gas deliveries via Turkish Stream in December 2016,” said Miller, according to a statement released by Gazprom. The agreement was signed by Miller and Turkish Minister of Energy and Natural Resources Taner Yildiz during a meeting on Thursday. “Gazprom will regard today’s agreements as a basis for the schedule of its work on the Turkish Stream project,” the head of Gazprom said.

China throws Russia financial lifeline

hina and Russia have signed a slew of business deals in Moscow. For the Kremlin, increased cooperation with the Asian country means the influx of urgently needed investments as Western sanctions continue to bite. Russian and Chinese leaders - meeting in Moscow Friday to mark the 70th anniversary of the defeat of Nazi Germany – inked a broad range of deals, including billions in infrastructure loans for Russia. Russian President Vladimir Putin and his Chinese counterpart, Xi Jinping, oversaw the signing of 32 different contracts, one of the most important being the granting of a $6-billion (5.3billion-euro) loan to build a high-speed railway link between Moscow and Kazan. The Russian government website said the project was “a priority and utterly important in creating a high-speed transport corridor between Moscow and Beijing.”

Uzbekistan to sell major enterprises’ state shares to foreign investors

zbekistan plans to sell the state share and the share of the economic board in 68 large enterprises of the country to the strategic foreign investors. This is envisaged by the President of Uzbekistan Islam Karimov’s decree “On measures of increasing the share and the value of private property in the economy”, published in the local media.

WORLD NEWS

Global cancer spending tops $100bn in 2014

he global market for oncology drugs increased 10.3 percent last year and may reach $147 billion by 2018, according to IMS Health. Spending is rising due to better treatments and higher survival rates. Global spending on cancer medication in 2014 rose to $100 billion, up from $75 billion four years ago, according to the Global Oncology Trend Report 2015, released Tuesday by the IMS Institute for Healthcare Informatics. “The increased prevalence of most cancers, earlier treatment initiation, new medicines and improved outcomes are all contributing to the greater demand for oncology therapeutics around the world,” said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics. The US contributes 42.2 percent of the total spending, while European markets like Germany, France, Britain, Spain and Italy stay close behind. Spending on oncology in these five leading EU markets was 13.3 percent of total drug spending in 2010, and increased by 14.7 percent in 2014. Total drug spending in the US in the same period enlarged from 10.7 percent to 11.3 percent.

Brent oil price hits fivemonth record, highest in 2015

he price for Brent futures reached a new high for 2015, rising above $68 a barrel on the London ICE stock exchange. The recovery in oil prices prompted a strengthening in Russia’s currency, causing the dollar to fall below 51 rubles. The price for Brent futures reached a new high for 2015, rising above $68 a barrel during trading on the London ICE stock exchange. At the same time, the recovery in oil prices prompted a strengthening in the Russia’s currency, causing the dollar to fall below 51 rubles. AT $68.22 per barrel, Brent crude prices are the highest since the beginning of December 2014 and 2.66 percent higher than at the close of the previous trading session. WTI June futures added more than 2 percent, reaching $60.67 at 18:20 MSK.

World food prices at 5-yr low, unlikely to rise – UN

lobal food prices continued to decline and fell to their lowest since 2010 on lower agricultural commodities prices the UN Food and Agriculture Organization (FAO) said. More supplies and a strong US dollar have kept prices under downward pressure. Food prices averaged 171 points in April, down 1.2 percent from March and 19.2 percent below their level in April 2014, according to the FAO price index in the biannual Food Outlook issued on Thursday. Dairy prices fell the most, charting a 6.7 percent drop from March, sugar, cereals and vegetable oil prices also declined. Meat price was the only gainer in April, rising 1.7 percent from its revised March value. Higher import demand in China, Japan, the United States and Vietnam was the main factor underpinning the overall meat market.

Wave of future: 3D printing industry to quadruple by 2020

D printing can produce almost everything from human stem cells to a car,and is at its most popular in the industry’s 29–year history. It has grown by 35.2 percent in 2014 and is expected to become a $20.2 billion global industry by the end of the decade. The global industry for 3D printing, or additive manufacturing as it is sometimes called, was worth $4.1 billion last year, following a 34.9 percent growth on 2013, according to Wohlers Report 2015. The industry has experienced a compound annual growth rate of 33.8 percent over the last three years. It’s impossible to find another industry with more than 25 years of experience that could have such kind of growth, says consultancy founder Terry Wohlers, who has been tracking the growth of the additive manufacturing industry since the 1980s.

Email: shpskhidi@yahoo.com Tel: 2 43 63 33 Adress: 6a, Uznadze Str. Tbilisi, Georgia Postal Code 0102

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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

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

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

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

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

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,

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

Real Estate IREC (International Real Estate Company) Tbilisi. 9 P. Aslanidi St. Tel: +995 32 238 058 Mob: 599 95 76 71 Email: Info@irec.ge www.irec.ge

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

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

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METRO ATLAS GEORGIA JSC The project Metro City started its implementation in 2015. It takes place on the Black Sea coast in Batumi, in new boulevard. It integrates two hotels with different concepts, two casinos, a shopping centre, conference halls, dining area, cinema, bowling center and apartments consisting of two buildings. Investment costs:

100,000,000 USD Project completion date: May 2017

Residence - apartments The residence consists of two buildings. Within the project Metro City, there are represented 471 apartments with an amazing sea view, residence pool and special playing area for kids +pool. Prices for apartments are defined according to the 2015/2016 years and the final 2017 year. The height of floors and sea view will also impact on prices. Address: Mtsvane Street N1, Batumi Tel: +995 577 14 17 14 info@metrocity.ge www.facebook.com/MetroCity.GE

www.metrocity.ge

May 11, 2015 #98