Caucasus Business Week #257

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October 23, 2018 - www.cbw.ge

#257

WEEK

Pension System Enforcement will Increase Expenses in Business Sector

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We should Better Use Potential of Georgian Embassies for Attracting Investments

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Planting Vine from Home-Startup MyWay.wine

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Good Neighbors - Connected Businesses

2 October 23, 2018 #257

Auditing Service: State-owned Companies Represent Serious Source of Fiscal Risks

Koba Gvenetadze Received the Best Central Bankers 2018 Award From Global Finance

The Auditing Service demands that liabilities of state-owned companies and assessment of their risk level be registered. This demand is read in the conclusion that the Auditing Service has published regarding the 2019 state budget bill.

In this year’s report cards, Global Finance rates the performance of 89 central bank governors. Global Finance assessed governors on a scale ranging from A (for head of the class) to F (for outright failure), where Koba Gvenetadze, president of National Bank of Georgia received A- and has been listed among 16 best governors.

TBC Bank Held Agro Forum for Farmers in Abasha Audit Office Shares Infrastructure Projects which Funding is Less than 50% The Audit Office publishes the list of projects for which the appropriations allocated for the 8-month period are the lowest.

TBC Bank’s Agro Forums continue in regions. The Seventh Agro Forum has hosted farmers in Abasha after Telavi, Dedoplistskaro, Sagarejo, Gori, Marneuli and Akhaltsikhe.

Budget of the Ministry of Health will be more than 2006 Budget of Georgia in 2019

National Bank Approves Rules for Prospectus of Company Shares and Bonds National Bank of Georgia (NBG) continues reforming the capital market with the aim to develop the securities market. On October 12, 2018 as part of the supervisory framework development process, the NBG approved the rule for prospectus of company shares and bonds.

According to the primary project of the budget presented to the Parliament by the Ministry of Finance, the budget of the Ministry of Health will be 3.863 billion GEL, which is more than 200 million than 2018.

NASA Space Apps Challenge to be Held in Abastumani NASA Space Apps is world’s largest hackathon that occurs over 48 hours in more than 200 locations all over the world. For the first time this year, Georgia is joining Space Apps Challenge.

Production of Solar Panels Begins in Kutaisi Production of solar panels will start in Kutaisi. The project will be implemented by German investment, in particular, the German-Mexican company “AE SOLAR”, with which the contract will be signed in the near future.

Sulkhan Zumburidze Leaves Post as the Chairman of Management Board of GSE Chairman of Management Board of Georgian State Electrosystem, Mr.Sulkhan Zumburidze decided to leave post.

Electric Car Charger Stations can be Found on Google Maps Electric car charging stations are already on Google Maps. If you search in the search engine: “Electric Car Charger”, “Electric Charger Station”, “EV Charging”, “Electric Charging Station”, etc. On the map you will see where the nearest stations are.

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili WWW.CBW.GE Address: Aleksidze Street 1 Sales: Mob: +995 591 01 39 36 Email: caucasianbusiness@gmail.com Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Copy Editor: Ellie Rambo Reporters: Nina Gomarteli; Mariam Kopaliani; Merab Janiashvili, Economic columnist: Andria Gvidiani; Technical Assistant: Giorgi Kheladze;

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Competitive Capacity of Georgian Economy Slightly Improved Georgia Gains One Position in Global Competitiveness Rating and Comes up with Three Leading Countries in Eurasia Region.

According to the 2018 Global Competitiveness Index, Georgia has gain one position compared to 2017. The report describes competitive capacity of 140 countries. According to this report, Georgia has moved to the 66th position from the 67th place.

According to the World Economic Forum’s rating, Georgia improved indicators by 1.1 point and is leader in Eurasia Region due to the transparency indicator.

Among key problems the report authors have named financial system and opportunity for establishing innovations.

For the purpose of improving these components, labour market reformation is one of the mechanisms.

According to Ministry of Economy and Sustainable Development, important methodological changes were carried out in the 2018 report, namely, various indicators were removed from the rating and new indicators were added. Moreover, the rating scale was also changed and the maximum 7-point evaluation system was replaced by 100-point system.

Georgia has improved rating points in 12 categories: institutions, readiness for accepting ICT, skills, trade openness, market size, business dynamicity, innovative skills and so on. At the same time, rating of such directions as infrastructure, macroeconomic stability, financial system and labour market have been worsened.

“In the 2018 index, Georgia has made important progress in many indicators. For example, we have significant improvement in media freedom. We have also very good positions in terms of confidence in police, anti-corruption reforms and we surpass even several countries of EU in this respect. It is also noteworthy that we occupy first positions in terms of electrification indicator and trading tariffs, as well as the fastest procedures for business inauguration and property rights protection.

It is also interesting that the country has recorded a leading position in use of fibre internet.

According to the WEF report, such forms of organized crimes as business rocketing and extortion remain on the low level and in this category we surpass such countries as Germany, France, Sweden, United Kingdom and

the USA. The country has to perform serious job in some categories, including the education sector. Graduates of private higher schools cannot satisfy the market requirements and low qualification of professors and teachers is a key reasons, as well as low competitive environment and absence of self-development motivation. Regretfully, we have essential problems in this component”, economist Vakhtang Charaia noted.

It is noteworthy that Vakhtang Charaia was named among three Georgian specialists, who have cooperated with the World Economic Forum as part of the Global Competitiveness Index preparation.

In the regions, better indicators were recorded by Russia, Kazakhstan and Turkey. As to Azerbaijan, this country ranks 69th, Armenia is 70th, Ukraine is 83rd. The WEF launched publishing the Global Competitiveness Index in 2005. It measures the quality of macroeconomic quality, steadiness of public institutions and the level of technological readiness.

It should be noted that Georgia has deserved one of the highest points in the rating of safety and the country ranks 29th with 86.3 point among 140 countries. This direction comprises four components and Georgia has improved positions in all four components.

Improved position in the rating was preconditioned by advancements in factors ensuring favourable business environment. Georgia’s key advantage in relation to other countries of the region is: low bureaucracy and low taxes. Free trade agreements with EU, China and other countries of the Region are also very important as they enable the country to have essential advantage in doing business.

Georgia’s progress in the Global Competitiveness Index signifies that the country has been strengthening its competitive capacity. When thinking of where to make investments in the region, investors pay attention to the Global Competitiveness rating. This is a very good signal for investors to show interest in Georgia and launch business activities in the country, Business Ombudsman of Georgia Irakli Lekvinadze noted.

By Merab Janiashvili

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The pension system reform will be enforced in Georgia starting 2019. Employers, employees and the Government will pay equal deposits to the Pension Fund simultaneously. Namely, employees will pay 2% of the salaries to the Pension Fund. Employers and the Government will also pay 2% each to the employee’s pension account. This signifies total monthly deposit will equal to 6%.

The Caucasus Business Week has inquired whether the business sector is ready for the coming pensions system reforms and whether this reform will increase expenditures in the business sector.

Anzor Melia, head of the Guli cardiology clinic negatively appraises the coming pension system reforms. I do not expect the Government to successfully implement this reform. This scheme may become the source for someone’s enrichment, he said. “I do not know where these accumulated funds will go and how they will be distributed”.

The pension reform will seriously burden honest clinics. The black accounts were rejected long ago, while honest operation will be very difficult, he said.

“This 2% is not much amount for the company, but when the Government pays minimum amount and delays the payment, what I should do. The Government pays due funds as part of the general health program after 5 months and what can I do in this case? I have to issue salaries timely”, Melia noted.

In response to the question, whether he has calculated how much the pension reform will increase expenses in the company and what plans he has after January 1, 2019, Melia noted that he is waiting for the October 28, 2018 presidential elections and government reshuffles after the presidential elections.

“In 2012 I backed Georgian Dream, but I am disappointed, as they have fulfilled no promise. The general health program seems successful, but in reality it comprises a lot of defects”, Melia said.

Irakli Iashvili, head of supervisory board of East Gate Group, noted that the pension system reforms will increase expenses for the business sector. Anyway, this problem should be resolved and certain pensions formula should genuinely function in the country, Iashvili noted.

“This will increase expenses and the effect will be less perceptible. This reform will not bring immediate effect. The effect will be seen after tens of years and therefore, it is less effective”, Iashvili noted.

The businessman also talks about the pension reform risks and explains that there are a lot of questions regarding money management.

“I do not know who will manage this money, how and where it will be placed, how profitable and successful transactions will be made. Will this money be invested in securities or the secondary market or elsewhere? We do not have the secondary market in Georgia, this signifies this money may be directed to other countries. Therefore, I have serious questions in this respect”, Iashvili noted.

As reported, payment of deposits to the Pension Fund will start on January 1, 2019. According to the law on contributory superannuation, citizens under 40 years old are obliged to pay deposits to the Pension Fund, while persons over 40 years old will have the option whether to continue program or not. Self-employed persons will also have the option whether to join the program. The Pensions Fund’s management will be carried out by independent legal entity of public law Pensions Agency.

After the new system enforcement, 6% of salaries of Georgina citizens will be transferred to the special state pension fund.

Pension System Enforcement will Increase Expenses in Business Sector

7 October 23, 2018 #257

Natia Gvazava: "Pr is all about Modern Packaging of Opportunities" Interview with PR of the Union of Oilproducts Importers Natia Gvazava.

Why did you decide to enter this field and what kind of opportunities does it give in terms of career growth?

I graduated from the Faculty of International Relations at a time when this profession was not appreciated and wasn’t considered as a profession of the future. However, the time has come when I had a very important and interesting job. The diploma and the relevant quality are of course an assistant guide.

Experience and professional skills can help fulfill the task, but it is also a fact that only these components are not enough to achieve success. The formula of success is seeking the right key for the door. The seeker manages to overcome all barriers and there is no war from which he is defeated. PR is, in this respect, nothing more than a modern packaging. PR is communication language. The more correctly planned is PR form, the sooner we reach the peak of success. That's why I'm assured that the profession is not the main indicator of success but the motivation to become the maximalist.

What is it necessary to hold successful communication with public?

For successful communication with the community it is easy to have a simple and understandable language, word communication has such meaning. Most importantly, you should be able to understand all the problems of the company, develop the latest methods of solving the dilemma and search for alternative ways, which can be transferred to the company's modernist standards. To succeed, it is necessary to use the time and space for the elements of activity. Exactly felt the rhythm of work and did not reinforce the dynamics of development, and do not be scared of the quick evolutionary faeces.

Three tips you would give someone starting out PR career.

• No recipes are available. Every issue needs

individual therapy; • Public relations need permanent development and study; • The prerequisite and guarantee of success is a well-structured plan. Successful companies share this vision and follow the marketing strategic planning.

What would you wish you’ve known before starting your career?

I would look up someone working on the same position before me, what was her approach, was she able to succeed, which methods were justified and what were the shortcomings. When you know the reasons for the success and failure of the person who is in the same position, it means that you overrun the events by ten steps. So, before starting the career, it is advisable to consider the previous manager's errors too. I would like to expose these issues, so that the same resistance has not taken much time in the future.

Describe your typical week.

In everyday manner I am communicating with journalists. The work week is quite busy but pleasant. On Monday I plan for the schedule of business meetings, but the change in any paragraph does not affect the entire process. I am ready for the momentary changes of this timetable, of course, if it is necessary for company.

The right management of time is very important. A good manager should be able to work in a stressful situation and consider the risks that may be accompanied by her work. Therefore, I do not perceive all barriers to surprise, sometimes I look at it as useful awakening.

What are the ways you find the best contacts and sources?

Professional PR means to have good contacts in a journalistic environment; At the same time, it should be noted that in the relations with the staff, you should be distinguished

with a sense of responsibility and communicability. One needs to take care of journalist base and ‘’Media Map’’ creation.

How do you prioritize to start work day?

I'm starting a morning with a review of the press and I'm preparing digest. I learn about events and developments in our field. I have business meetings noted and TV programmes arranged.

What skills are needed for a successful PR-manager?

PR is a combination of several professions, one cares about the company's reputation as well as its promotion, I think being sociable is a must-have to become a successful PR manager. PR specialists are people who form the image of the organization. Their function is to disseminate interesting information in the media, which creates the reputation of the organization.

What traits do you value in your co-workers?

Punctuality is important to me, the principle of teamwork and professionalism: - In other ways, the result can not be achieved. The correct approach to the case is the guarantee of a successful bid.

What is the best PR practice that technology can not change?

Technology will never change the personal echo. Technology can not replace a good PR manager. Therefore, technology develops to serve me; I am accountable to the employer company. The best PR practice is to maintain individuality, even with teamwork.

8 October 23, 2018 #257

Business News Georgia Named Among Successful Countries for Regus

Watch of Georgian Students to Measure Air Pollution

“As a representative of Regus, I am proud that based on last year’s results, Georgia has been named among successful countries for the company,” states Ruska Chakvetadze, the Georgian branch manager of the British firm Regus.

BM.GE has contacted Ramaz Javakhishvili, one of the founders of Airadi start-up company, which has won Social Impact Award. The students took part in several projects, but in.

Only Social Impact Award gave them the chance to win 2000 EUR. The students will use this money to improve and refine the prototype.

Iago’s Biowines Chardakhi Exports to New Zealand

Financial Institutions Receive 4 610.9 million GEL Incomes

Chardakhi, biowines by Iago Bitarishvili will be exported to New Zealand. The first consignment of biowines will be exported in November 2018 Green Valley International Real Estate Group Suspended Multi-Million Dollar Projects

A total of 2379 financial entities were operating in 2017 and their declared incomes made up 4610.9 million GEL.

Green Valley International Real Estate Group, one of the largest real estate companies in the United Arab Emirates (UAE), has suspended multimillion-dollar projects in Tabakhmela and Gonio. In particular, the Green City in Tabakhmela and Tower – in Gonio.

We should Better Use Potential of Georgian Embassies for Attracting Investments Georgia should employ the potential of its embassies abroad to draw more investments to the country, Nona Mamulashvili, president of Georgia-Swiss Business Association, told BM.Ge when appraising the institute of commercial attaches.

Planting Vine from Home-Startup MyWay.wine Regional Innovations Center to be Build in Kaspi According to the tender announced by the Municipal Development Fund, the estimated cost of procurement is 2 156 093 GEL. The project is funded by the European Investment Bank (EIB).

Tbilisi Hosts 18th Season of Fashion Week On October 18, the opening of the eighteenth season of Tbilisi Fashion Week is held, which is supported by the Ministry of Economy and Sustainable Development of Georgia “Produce in Georgia” that now supports the development of Georgian textile industry.

Gurjaani Wine Festival Featured Products of 80 Wine Cellars and Companies Gurjaani Wine Festival was held in the frames of Georgian wine days “Gvinobistve 2018”, featuring 80 wines, family and small wine cellar product, chacha and other drinks.

Georgian wine lovers and viticulture followers are able to plant vines from their own homes and select desirable names for them.

The service users will be able to carry out winegrowing and vintage process in distance – they will supervise the growing of their own vines and receive harvest in autumn without leaving home.

9 October 23, 2018 #257

Good Neighbors Connected Businesses

As part of the project “Young Entrepreneurship Synergy - Network for Georgia-Azerbaijan Cross-Border Cooperation,” the Civil Development Agency (CiDA), a civil society organization (CSO), organized a two-day agro and cultural tour in the regions of Kakheti and Kvemo Kartli in Georgia.

The delegation from Azerbaijan included entrepreneurs and representatives from CSOs and self-government bodies visited small- and medium-sized entrepreneurs in said regions and became acquainted with their businesses and market opportunities. The goal of the tour was to strengthen cooperation and business relations between selected adjacent regions of Georgia (Kvemo Kartli, Kakheti) and Azerbaijan (Gazakh, Ganja) through social and cultural interaction.

The first destination of the tour was the Public VET College “Aisi” where the delegation met with managers of the center and were informed about their activities, particularly about the professional programs they offer to local students and the entrepreneur activities they carry out on a daily basis.

Sisters return to their home village to launch wine tourism business In the village of Akhalsopeli in Kvareli municipality, three sisters run a small business; they have created an open space in their house – wine year #1 which is a tourist attraction that includes a traditional wine cellar, house, and yard.

“Our family used to be wine makers and we have grown up in the environment of a traditional Kakhetian family. We are three sisters and left our village

after graduating from school. In recent years we saw potential and thought we could do much more with our house. We decided to come back here and arrange an open, pleasant space for tourists and visitors so they can fully enjoy and value their stay in Kakheti,” said one of the sisters (founders) Tika Dughashvili.

The Dughashvilis welcomed the delegation to their wine cellar and revealed the motivation behind their start-up business and the challenges they faced.

“It was a challenging step but we are happy that we came back to our village and let our guests enjoy their stay here.

We opened recently and to our surprise the flow of tourists has not stopped; we host tourists daily from different countries, which motivates us to do more and offer better service for the season ahead,” added Tika.

The delegation from Azerbaijan expressed its interest in: how the startup grew into a successful business; what needs to be considered if opening a similar business in a similar location; and how they may cooperate to attract more visitors from both countries.

New opportunities, new trade markets The final destination for the delegation’s visit was Aroma Wine Cellar (AWC) in Sartichala, a town situated a few kilometers from Tbilisi. AWC was founded about 10 years ago and its products, most of which are exported, include churchkhela, tea and other delights which are produced using natural ingredients.

Head of the Azerbaijani delegation Ramil Goyushov said that the tour taught

him and the rest of the delegation some valuable lessons. “We spent a very fruitful couple of days in Georgia and now we leave this beautiful country full of new ideas and offers which will be beneficial for people from both countries. This is very important for us to strengthen business cooperation with our Georgian friends and share experience with each other,” said Goyushov.

Nino Chitorelidze, Project Manager of the CiDA, described the event as “mutually beneficial” and said that CiDA will continue its efforts to connect businesses from both countries to boost local enterprise. “Thanks to our colleagues from Azerbaijan who expressed so much interest in coming here and getting acquainted with Georgian businesses. Our project is full of joint activities with our counterparts in Azerbaijan and we really hope that as neighboring nations we can find common interest in running their own businesses,” said Chitorelidze.

The next agro and cultural tour will be held in Azerbaijan at the end of October and Georgian businesses and CSOs are invited to attend.

The project „Young Entrepreneurship Synergy (YES) – Network for Georgia Azerbaijan Cross border cooperation” is implemented by Civil Development Agency (CiDA) in Georgia and West Resource Public Union (WRPU) In Azerbaijan. The project is co-funded by the European Union within the framework of the Eastern Partnership Territorial Cooperation (EaPTC).

World News 10 October 23, 2018 #257

HUAWEI Mate 20 Series – Smartphones with Strongest and REfied Technologies On October 16 London hosted the year’s main event - HUAWEI company introduced a new top-of-the-line smartphones of Mate 20 series. Based on the most refined and flexible technologies of the industry, HUAWEI Mate 20 and HUAWEI Mate 20 Pro represent the highest achievement in innovative technologies.

Oracle is Acquiring a Tiny Cloud Startup Backed by Qualcomm to Build out Its Health Science Product Suite Japan Eyes Using 'One Belt One Road' to Trade with Azerbaijan The EBRD is urging a step change in levels of investment in renewable sources of energy. Competitive pressures have led to a significant reduction so that renewables are often the cheapest sources of energy.

Oracle is making moves to grow its health science platform with its acquisition of goBalto, a cloud startup focused on streamlining the clinic trial process.

Armenia Wine Company to Increase Its Investment Program Armenia Wine Company will add to its investment program, the acting Minister of Economic Development and Investments Tigran Khachatryan said during a government meeting today. The government decided today to provide the company with benefits regarding customs duties on imported equipment and raw materials.

Trade between Russia and Uzbekistan may Reach $5 bln in 2019 The volume of trade between Russia and Uzbekistan may reach $5 bln in 2019, President of the Chamber of Commerce and Industry of the Russian Federation Sergey Katyrin told TASS said on the sidelines of the Forum for Interregional Cooperation, which is under way in the Uzbek capital of Tashkent.

EU Launches Mobility Partnership with Belarus On the margins of a Justice and Home Affairs Council meeting in Luxembourg in mid-October, the European Union launched a Mobility Partnership with Belarus to set up effective cooperation in the management of migration.

China’s Growth Hits Slowest Pace in a Decade Slowdowns in investment and retail sales are cooling one of the world’s most important economic engines. As the trade war with the U.S. intensifies, the downturn could get worse.

Turkey Sells $2bn of International Bonds Tesla Has Finally Released Its Long-Promised $35,000 Model 3.

Tesla’s Model 3 was originally supposed to be the company’s mass-market offering, with prices starting at $35,000 before incentives. But that hasn’t happened yet.

The version on sale for the last year—the long-range version—costs between $49,000 and $78,000.

Turkey has returned to the international borrowing market with the sale of a $2bn dollar-denominated bond, just days after Ankara sought to end a bitter row with Washington following the release of a detained US pastor.

11 October 23, 2018 #257

Borjomi Hero Award Transmitted to about 30 Participants On the territory of Plateau, Borjomi Hero award transmission ceremony was held. As part of Borjomi Woodland Restoration Project, nominees of Borjomi Hero award were named – people who have fought the fire in Borjomi Gorge in 2017.

Nitsa Cholokashvili, PR manager for IDS Borjomi Georgia company noted that the Borjomi Hero award is to encourage persons, who serve the public interests: “Borjomi company has initiated Borjomi Hero annual award. This year we have transmitted this award to persons, journalists, volunteers, colleagues and services, who have fulfilled their office without a break during the disastrous conflagration in Borjomi Gorge in 2017”.

The Borjomi Hero award was also conferred to ranger Ivane Kupradze, died on September 5, 2018 when fighting the fire in Borjomi Gorge.

Besides the award, Borjomi company transmitted 5000 GEL assistance to the ranger’s family.

Natia Muladze, the spouse of ranger Ivane Kupradze stressed the contribution that her husband has made to protecting the nature in Borjomi Gorge and thanked Borjomi company for remembrance of her died spouse: “My husband has served environment protection, protection of nature, maintaining each tree and this is genuinely much honour for me that his contribution is appreciated so much and his memory is honoured. I want to express deep gratitude to Borjomi company”.

Fall Planting Underway as Part of Borjomi Woodland Restoration Project Borjomi Hero award was transmitted to: Services: Interior Ministry, 112, Emergency Management Agency, Ministry of Environment Protection and Agriculture, National Forestry Agency, Ministry of Defense, Ministry of Health and Social Protection, Prime Minister’s Office, Samtskhe-Javakheti Region’s

Administration and Borjomi Municipality Board.

Volunteers: David Abramashvili and Tengiz Kikacheishvili – employees of IDS Borjomi Georgia company.

News services of TV companies and their teams: Rustavi 2, Imedi, Georgian Public Broadcaster, Maestro, TV Pirveli, Iberia, Akhaltsikhe Channel 9 and Borjomi TV company.

“We had gravest situation and we have not spared ourselves to transmit genuine and unbiased information to our audience about Borjomi developments”, GPB report Salome Kokiashvili said.

All persons fighting the fire in Borjomi Gorge unanimously noted that in that moment they were fulfilling their professional duty and they did not care for their lives and safety.

The youngest Hero was Temo Gelashvili, who had fought the fire with bear hands without shovel.

Prior to the award ceremony, 1850 pine seedlings were planted on the Plateau territory/.

Borjomi Woodland Restoration Project is being carried out as part of corporate social responsibility project of Borjomi company since 2015.

As a result, the company has managed to restore woodland on 3 hectares and planted 7 500 seedlings.

Photographer: Giorgi Kakulia