Caucasus Business Week #262

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November 26, 2018 - www.cbw.ge

#262

WEEK

Government to Ensure 1.5 billion GEL Debt Relief for 600 000 Citizens

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Capital Market Challenges in Georgia

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EE Real Estate Forum Promoting Region’s Investment Image

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New Year without Debts

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Georgia’s First Maize Oil Production to Start in Samegrelo Region As part of the joint project of Partnership Fund and Qarva Kolkhuri company, the maize oil and combined forage production will start in Georgia for the first time. Qarva, the Georgian maize oil will appear on Georgian market in 2019.

Georgia’s January-October Exports to EU Market Totaled 599.7 million USD According to Geostat, the national statistics service of Georgia, in January-October 2018 the country exported 599.7 million USD products to EU market, while imports from EU amounted to 2.1 billion USD. January-October Foreign Trade Turnover Rose by 20.5%

Healthcare and Social Direction Costs Increased by 50 Million The budget of the capital city of 2019, ecological, healthcare and social direction expenses have increased significantly, – Tbilisi Mayor Kakha Kaladze said at today’s sitting of the municipality government.

Georgia’s foreign trade turnover in January-October 2018 (without undeclared trade) made up 10 305.9 million USD, up 20.5% as compared to the same period of 2017, including the exports totalled 2 751 million USD, up 24.5% and the imports amounted to 7 555 million USD, up 19.2%. Georgia’s negative trade balance in January-October made up 4 804 million USD, which is 46.6% of total foreign trade turnover.

Medical Tourism Market in Georgia sees 30% Growth

Gita Announces Grants Program for Co-funding Startups Innovation and Technology Agency of Ministry of Economy and Sustainable Development has announced co-financing grant program.

BCSEA Helps to Improve Maritime Safety in Black and Caspian Seas On 12-16 November, 14 Flag State inspectors from Azerbaijan, Georgia, Kazakhstan, Moldova, Turkey, Turkmenistan and Ukraine met in Lisbon for the second session of a training course organised under the EU-funded Black and Caspian Sea Regions Project (BCSEA).

Over 6.8% more Flights Carried out in Georgian Airspace during January-October Ministry of Economy and Sustainable Development of Georgia “Sakaeronavigatsia” served 6.8% more aircraft in the January-October period.

19,500 foreigners arrived in Georgia for medical purposes in the first 9 months of 2018, which is 30% more than in the same period of 2017.

EU and Georgia Summarize Four Years of Work towards Better Skills for Better Jobs On 15 November, the Delegation of the European Union to Georgia and the Government of Georgia highlighted the achievement of four years of cooperation to reform the employment and education system in the country.

Bank of Georgia is the first JCB card acquiring bank in Georgia JCB International Co., Ltd., the international operations subsidiary of JCB Co., Ltd., and Bank of Georgia, the leading bank in Georgia, are proud to announce that Bank of Georgia has started to accept JCB Cards across the country.

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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Government to Ensure 1.5 billion GEL Debt Relief for 600 000 Citizens Georgia’s Major Credit Amnesty to Start in midDecember On November 19 Prime Minister of Georgia Mamuka Bakhtadze put forward a new unprecedented initiative with the aim to tackle the current problem with excessive debts. This initiative calls for pardoning overdue credits to hundreds of thousands of our citizens, the Prime Minister noted.

Today, about 750 000 citizens are recorded in the so-called Black List. The majority of them, about 600 000 citizens of Georgia, will be written off about 1.5 billion GEL through December 31, 2018.

This problem used to burden Georgian society for many years. And today, about 750 000 citizens are recorded in the Black List and they cannot carry out valuable economic activity, in practice, Bakhtadze noted.

“The majority of companies in both the banking and nonbank sectors, as well as loans collection bureaus shared our position, showed social responsibility and took a decision to relieve hundreds of thousands of our families. I would like to express special gratitude to Cartu charity foundation. This initiative would not be implemented without the support of this foundation.

I would like to explain to the society that about 95% of debts in the Black List consist of loans the principal sum of which does not exceed 2 000 GEL. The issue is of financial liabilities of more than 600 000 citizens, who owe overdue loans to commercial banks, online organizations and various financial institutions.

Total amount of these liabilities is about 1.5 billion GEL. By today’s decision, these debts will be written off.

It should be stressed that this category registers about 150 000 socially vulnerable citizens and tens of thousands of persons with disabilities. We continue

working on databases of Debtor Registry. The debts pardoning process will start on December 15 and end on December 31.

More than 600 000 citizens and their families will definitely leave the Debtor Registry through December 31”, Prime Minister of Georgia Mamuka Bakhtadze said.

The Georgian Banks Association has provided additional comments on annulling debts that 600 000 citizens owe to commercial banks. In its statement, the organization specifies who will enjoy the pardoning scheme.

“Preliminary negotiations between Georgia-based commercial banks and Cartu foundation have been finished on sales of a part of loans portfolio. The portfolio mainly consists of small credit liabilities, which were registered as overdue loans as of January 1, 2018 and that satisfy the below criteria: Permanent overdue loans, the principal sum of the credit liabilities not exceeding 2 000 GEL, unsecured loans or the loans secured by real estate - as of November 19, 2018.

If debtors are registered in the database of socially vulnerable citizens or persons with disabilities, the initiative covers the credit liabilities with the principal sum not exceeding 2000 GEL as of October 1, 2018 and unpaid as of November 19, 2018.

According to the agreement between Georgia-based commercial banks and Cartu foundation, the final list of overdue credit liabilities will be introduced on December 3, 2018.

Commercial banks and Cartu foundation have achieved a single-time agreement and this decision is expected to essentially reduce debts volume in the consumer sector. At the same time, the finance sector urges consumers to show more responsibility when taking financial liabilities to be able to serve the credit payments”,

the statement released by the Georgian Banks Association reads.

It is noteworthy that debts pardoning for 600 000 citizens is an unprecedented fact worldwide. For example, so far, Croatia was a leader country in terms of payment of overdue credit liabilities, as 60 000 Croatian citizens were written off debts. And the initiative announced by Mamuka Bakhtadze refers to tenfold more citizens. There is no negative economic affect in this charity act, first of all, because 600 000 citizens will return to normal financial life without terror from crediting institutions. Secondly, these sums will be covered by the non-commercial foundation, not by the state budget.

Consequently, citizens of Georgia will not think that somebody cover others’ debts by means of their own money and thirdly, these debts will be bought off from commercial structures. Consequently, commercial banks and other crediting institutions will be able to immediately get rid of the problematic loan portfolio. As a result, all risks will decrease and loans will be cheapened. Supposedly, this initiative will not apply to interest rates, however, it is expected to somehow reduce their volume.

By Merab Janiashvili

5 November 26, 2018 #262

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EE Real Estate Forum Promoting Region’s Investment Image EE Real Estate Forum & Project Awards event that gathers industry leaders and potential investors to discuss regions investment opportunities, real estate challenges and innovations.

highest ranked economy in the Europe and Central Asia region, followed by Macedonia (10), Azerbaijan (25) and Kazakhstan (28).

Georgia's FDI focuses on financial sector, energy, construction and transport and communication.

As for property market in Georgia, it is interesting to range of investors from various countries. Middle Eastern investors are particularly active in recent years. The residential sector yields quite attractive development returns exceeding 20% in successful cases. Tbilisi residential transactions grew by 10% in the first half of 2018 compared to the same period of 2017. The rapid growth can be observed in previous years as well.

Hotel industry grows rapidly thanks to over 20% growth in tourism. In addition, the GOP and EBITDA margins are relatively high compared to other eastern European countries.

Tbilisi enjoys one of the highest average ADR-s in the region. Thus, hotel developments generate attractive returns of 14-16% on average. ­ How participation in international events can stimulate FDI?

Olga Solovey, URE club ­ lease give your opinion on the region’s P investment attractiveness and name market segments particularly attractive to foreign investors these days. ­ kraine ranks 131 in the BDO International U Business Compass (IBC) 2018, climbing 3 places in the ranking of investment attractiveness compared to the previous year.

Our major problem is the lack of foreign capital. In addition, the market volume is not at its highest level. Unfortunately, no company in Ukraine owns a big real estate portfolio these days. Therefore, for big foreign investors, there is nothing to buy here. Ukrainian market is currently attractive to venture investors only. Soon enough, developer companies, like Ceetrus, will definitely come to Ukraine. They will be followed by investment funds. When it comes to market segmentation, the most attractive targets for investors include office and hotel real estate in Kyiv, as well as retail real estate in the regions.

I­ nternational events provide a platform for countries to exchange information about market development trends and investment opportunities. They also create opportunities for direct dialogue between different stakeholders; conducting professional conferences and discussions and the establishing promising business contacts.

­ ow do international industry-specific H events help to attract investment to the region? ­ aking part in international industry-specific T events helps to get in touch with potential investors, develop the region’s investment image, and promote specific projects.

However, the most important thing is that you can compare your own region with other countries and cities and adopt the best practices they use to attract investors.

Anna Nestulia, NAI Ukraine ­ lease give your opinion on the region’s P investment attractiveness and name market segments particularly attractive to foreign investors these days. ­ kraine is making great progress in improving U the standards of living and increasing wages and retail sales. In the first half of 2018, wages have increased by 34.6% compared to the same period in the previous year. Retail sales increased by 9% in 2017 and by 5.5% in 2018 (January – September 2018). Currently, Ukraine is listed among the European countries with the strongest retail sales growth, which gives us good prospects for the future. In money terms, the volume of retail sales in Ukraine exceeds the retail sales volume in countries like Denmark, Finland, and Hungary. It is close to Norway’s and Greece’s indicators.

In addition to retail sales growth, Ukrainians’ consumer confidence has improved in 2018.

GFK reported August consumer confidence at 60.3. We can see that Ukraine is currently working to restore customer confidence, and its index is growing steadily and consistently. This encourages international companies to bring their brands here. Ukraine has been repeatedly named among top countries international brands are actively expanding to (in 2016, Kyiv left behind cities like Bucharest, Prague, and Taipei).

These positive trends are likely to continue. In the first half of 2018, about 10 more brands hit the market. In August, H&M finally made it to Ukraine. In 2019, we are expecting IKEA to bring the global brand to our country. By the end of September 2018, Kyiv was ranked 12 among the world’s top markets for retail businesses expansion.

The improvements in the country’s investment climate lead to the increase in foreign direct investments. In addition, according to Doing Business 2018 report, Ukraine was ranked 76 among 190 countries, which is a good result. It took us only a year to earn 1.9 points and climb 4 positions in the ranking. This is due to building

­ hy are you ready to support EE Real Estate W Forum and Awards 2018?

permit costs reduction, as well as payroll tax reduction and simplification. We can see that Ukraine’s investment climate is gradually improving and therefore, we expect more foreign investors to come to Ukraine in the near future.

On the one hand, Ukraine is considered a highrisk country for investors. This severely limits the flow of investment. On the other hand, the return on investment in Ukraine may be several times higher than that in countries with developed economies. In the medium-term perspective, we can expect the flow of investment to traditional sectors, such as infrastructure, energy, and agriculture.

When it comes to real estate, the most attractive segments for foreign investors include office, hotel, and commercial real estate in Kyiv, as well as commercial real estate and logistics facilities in the regions. This is due to the high market capitalisation in commercial real estate: current rates stand at 10-15%, which is significantly higher than cap rates in the European countries.

Andrey Artyushenko, Artyushenko & Partners ­ lease give your opinion on the region’s P investment attractiveness and name market segments particularly attractive to foreign investors these days.

focuses on attracting investment to Kazakhstan.

There is a lot of useful information available on the company’s website.

Irakli Kilauridze, Colliers International Georgia ­ valuate the level of the investment E attractiveness of the region and what segments today are the most interesting for foreign investors? ­ DI flows to the economies of South-East Europe F and the Commonwealth of Independent States (CIS) declined by 27 per cent, to $47 billion in 2017, the second lowest level since 2005. Most of the decline was due to low FDI flows to four major recipient economies of the CIS: the Russian Federation, Kazakhstan, Azerbaijan and Ukraine. In contrast, Georgia, Montenegro and Serbia posted notable gains; however, these were insufficient to compensate for the losses registered in the larger economies in the group.

Prospects for 2018-2019 are moderately positive.

It is notable that the source market countries are becoming more diversified. China is becoming an important source of inward FDI in transition economies. Its FDI stock held in the region has increased almost three times in 2011-2016 making it in the top five source countries.

­ he current tax environment in Kazakhstan T is favourable enough. The government offers investment incentives in the form of return on capital investment (up to 30%) or customs duty exemption for imported equipment. The newly-launched Astana International Financial Centre (AIFC) enables parties to regulate their relationships under the common law. It includes the AIFC Court and the International Arbitration Centre, where English barristers and solicitors act as judges and arbiters. Attractive industries include renewable energy, infrastructure construction, extraction of minerals, and others.

­ ow does participation in international H specialized events help attract investment in the region?

­ ow do international industry-specific events H help to attract investment to the region?

­ lease describe the investment climate P in Georgia and what segments are more interesting for FDI?

­ e go to such events and tell about the benefits W we can offer. We share real-life examples. We have KAZAKH INVEST National Company that

­ articipation in international specialized events P can be a driver of investor interest. It can provide a venue for accessing the information through industry professionals, identifying new opportunities for business and entrepreneurial activity. The opportunities available in international specialized events are particularly important for developing countries that need to bridge the information gap.

­ eorgia ranks 6th in the World Banks Doing G Business Report 2019 which makes Georgia the

­ E Real Estate Forum is a conversation starter.

E It provides a solid platform to showcase country’s development and industry trends.

It gives people from across the countries and business the chance to meet and talk with peers and industry partners in a relaxed environment. ­ valuate the level of the investment E attractiveness of the region and what segments today are the most interesting for foreign investors? ­ DI flows to the economies of South-East Europe F and the Commonwealth of Independent States (CIS) declined by 27 per cent, to $47 billion in 2017, the second lowest level since 2005. Most of the decline was due to low FDI flows to four major recipient economies of the CIS: the Russian Federation, Kazakhstan, Azerbaijan and Ukraine. In contrast, Georgia, Montenegro and Serbia posted notable gains; however, these were insufficient to compensate for the losses registered in the larger economies in the group.

Prospects for 2018-2019 are moderately positive.

It is notable that the source market countries are becoming more diversified. China is becoming an important source of inward FDI in transition economies. Its FDI stock held in the region has increased almost three times in 2011-2016 making it in the top five source countries. ­ ow does participation in international H specialized events help attract investment in the region? ­ articipation in international specialized events P can be a driver of investor interest. It can provide a venue for accessing the information through industry professionals, identifying new opportunities for business and entrepreneurial activity. The opportunities available in international specialized events are particularly important for developing countries that need to bridge the information gap.

7 November 26, 2018 #262

Giga Kharebava: "Branding is Person’s Emotional Proposition" Interview with Senior Consultant of PR and Marketing Communications Company GEPRA Giga Kharebava.

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

When you work for the agency and not in any specific company, this is a constant change. This is a series of several projects, diverse clients, and therefore different directions, which makes the process quite interesting. This gives you an experience that will eventually form you more professional.

to find out exactly what was important for this people and it came out successful case.

What three tips would you offer someone just starting out in PR? 1.PR is a very diverse combination of different disciplines. Therefore, it is necessary to figure it out and choose an appropriate direction; 2. Always try to take into consideration the real demand of the customer, to realize their

What is it necessary to hold successful communication with public?

In case of successful branding, two main factors should be considered. The first customer should be aware of the necessity of service and the second, we must provide him with appropriate methodology.

Ideally, research is conducted, together with the concept of branding we determine the brand platform, and after that we go to certain tangible sides such as logo, slogan, name and so on. When the customer does not know this methodology, he is always ahead of events, wants to see the logo and so on, in this regard, cooperation and involvement in the process is a bit difficult. The product created must meet the needs of the people for whom it is created.

Tell us about your most successful campaigns you, and what was they key to success?

For GEPRA and personally me, good example is branding for GNERC, where many people were involved. Work meetings were conducted on the formation of the mission, in fact we were studying all the words and looking for accurate formulation of everything. At last we managed

need and plan activities accordingly, not to be focused on external effects, as often their benefits are shallow and shortterm; 3. Being constantly developing.

What has changed in the PR industry over the last five years?

Channels have changed. The active invasion of social media started over 5 years ago. It was the most important and essen-

tial thing. After this there has been a need for new changes, there may be some new technology, but the qualitative similarity has not happened in recent years.

What are your prediction on PR industry, what challenges will this field face in 5-10 years?

Overall, the global issue is still a more accurate assessment of efficiency. This is a global problem in marketing communication, including PR. Competition in Georgia is very specific. To sum up PR services, you may find out that other types of agencies do more PR activities than PR agencies, who offer such services. Internal structures of organizations might be doing more themselves. In any case, it would be nice companies to realize how important it is to have internal company for that, to operate properly. Hopefully, outsourcing will increase. In fact, I think that this scheme will be more optimal.

As for the PR industry, the challenge of the field is a very abstract concept. Those organizations who need our services have challenges and we should be able to offer an appropriate solution.

Today, when most companies are focused on the customer, how do you create personalized branding for multichannel marketing campaigns?

Branding as a disciple has acquired the actuality when it came to competition. The fact that your shoes are not too tight, or car operates normally, is not enough for customer to make his choice. The vision is that people have an emotional attitude to what they are offered. Branding is person’s emotional proposition.

8 November 26, 2018 #262

Business News M² Real Estate Presented New hotel Concept in Telavi

Company Shelf – who’s co-founder is a young entrepreneur Lasha Antadze, has being on the market around a year, but for this short period of time, it has gained worldwide recognition and popularity in blockchain technology use-cases.

The event was held at Telavi Vazha Pshavela State Drama Theater (Erekle II Ave. 7). The presentation was attended by m² partner organizations, local and central government representatives and media.

Ajika is Granted Status of Cultural Heritage Monument The technology of Abkhazian and Megrelian Ajika now has a status of intangible cultural heritage.

Luka Chachibaia: GWP will Invest 200 million GEL in Three Years for a period of one year.

Travel Industry to Record 2.4 Billion International Trips by 2030

Barambo Grows its Exports to China Barambo signed a contract worth of $ 1 million to one of the largest Chinese companies.

Market research company Euromonitor International released today new data on the future of the travel industry.

Art Up Gallery to Feature Georgian Graphic Designers in Batumi Art Boxes

A new exhibition by five Georgian graphic designers opens from November 25, in Batumi art boxes.

XIX Business Rating Award Supporters are Already Known On December 14, Georgian Media Holding “Georgian Times” will hold a traditional XIX event of business rating Awards at Tbilisi Garden Hall.

Businesses and Startups Offered Work space for GEL 1 by Dirsi Development firm AS Georgia-Dirsi has a special offer for businesses and startups. As part of its corporate social responsibility, Dirsi will offer new businesses workspace for the price of GEL 1

Blockchain Solution: Shelf Receives $1.1 million Investment from Public Japanese Automotive Software Giant

The company “Georgian Water and Power” talks about the activities carried out in 2018 and plans for 2019.

Prime Minister Observes Final Stage of M2 Zestaponi Construction College Konstructori

Mamuka Bakhtadze, Prime Minister of Georgia visited the construction site of Zestaponi Construction College Konstructori today to get updated about the progress of its construction.

9 November 26, 2018 #262

New Year without Debts Government of Georgia plans to write off the debts of Georgian citizens. The process will start on December 15 and end on December 31 with the support of Cartu foundation, Prime Minister of Georgia Mamuka Bakhtadze noted.

The debts pardoning process includes 3 various groups: First Group – Liabilities up to 2000 GEL; This category implies unsecured retail loans, credit cards, overdrafts (besides liabilities secured by real estate, valuables and money resources); The government initiatives will apply to overdue loans fixed as of January 1, 2018 and unpaid as of November 19, 2018. The principal sum of these loans must not exceed 2 000 GEL as of November 19, 2018; Group 2 – Old Liabilities; Old liabilities include: Overdue liabilities unpaid over the past 3 years and free of court trials, despite the amount of the principal sum and the guarantee of the liabilities; Liability – any retail loan, credit card, overdraft; Group 3 – liable bodies with social status The debts pardoning program applies to: Loans of socially vulnerable bodies and/or persons with disabilities; The list and criteria of the mentioned bodies will be specified before December 15; The Caucasus Business Week (CBW) has inquired whom the mentioned decision will apply to and whether the government has taken a reasonable decision. „Pardoning bank debts of more than 600 000 citizens includes the sad positive and professional negative”, economic expert Gia Khukhashvili has appraised the government decision in this way.

This fact may be appraised in various aspects, he said. The first one – social aspect and naturally, tackling this very serious social problem is considered as the positive step. Another aspect is – economic aspect, because similar decisions establishes the sense of irresponsibility in our society.

“Current honest borrowers may be provoked to shape a new Black List. I have controversial feelings - Gratitude, on the one hand, and unclear expectations, on the other hand. Similar feelings have generated unhealthy tendencies in society”, Khukhashvili said.

How this decision may affect the banking and financial sector.

Part of these so-called Black Lists would have been written off anyway, because commercial banks have no leverages for collecting bad loans, Khukhashvili noted.

Consequently, this decision is rather beneficial for commercial banks than enslaving, because someone will tackle their problems with bad loans. This is a game without losses for commercial banks and they will make benefits of this decision, but in longterm perspective this precedent will bring problems to the financial sector, he added.

In response to the question, whether this decision is to bribe electors, Khukhashvili noted that similar decisions should not be taken in pre-election period if you want to make genuine charity.

“Since this is a serious social problem, I would see the positive too. This fact has both the sad positive and the professional negative”, Khukhashvili noted.

Aleksandre Dzneladze, president of Georgian Banks Association, explains that consultations were held with the Government on the mentioned issues and the coming regulations were also discussed.

As a result, Cartu foundation has bought the credit portfolio from commercial banks and the whole finance sector. Dzneladze welcomes this fact and positively appraises this decision.

The initiative calls for pardoning overdue loans not exceeding 2000 GEL, namely, consumer loans without mortgaged real estate, gold or deposit.

In response to the question whether the mentioned project will apply to the primary loan of 2000 GEL or the remaining principal sum, Dzneladze noted that the amnesty will apply to the principal sum fixed as an overdue loan as of November 19, 2018, in the amount of no more than 2000 GEL. Debts will be also halved to persons with disabilities and socially vulnerable bodies, whose loans were overdue as of October 1, 2018.

The president of Georgian Banks Association explains that commercial banks used to sell loans by selection, in relation to certain portfolios. Today, the whole system has sold these loans and naturally, this is a positive fact.

Will this fact generate risks and stimulate insolvency? Dzneladze explains that this is difficult to determine, but governmental projects were implemented and this initiative is not the first one. The matter is that the maximum interest rate was limited.

Regulations’ are specified for retail credits and this is a singletime action to recover the existing situation. „After Seizure of salaries as a result of unpaid fast and online loans, several employees left RICO and started taxi driving”, Lasha Nikolaishvili, head of RICO Credit supervisory board appraised the government’s initiative in this way.

Nikolaishvili explains that this decision applies to mainly borrowers of fast and online loans.

As to the ratio of overdue loans in Rico Credit portfolio, this is a very small figure, Nikolaishvili said.

“This is the minus of fast loans. Over the past 7-8 years, I have said that online and fast loans would bring awful results. Salaries were seized and now these people will have the opportunity to start life anew. We had an employee, who left the job place after his salary was seized by an online company, whilst he had good salary. This person quitted the job and started driving taxi”, Nikolaishvili noted.

Will this government initiative incentivize people not to pay debts? Nikolaishvili noted that it is wonderful, when people have the second chance and this initiative will not provoke irresponsibility.

Former Economy Minister Lasha Zhvania, head of Green Village consulting company, says that the government has proposed an unprecedented decision. This is a very important decision for our people, who cannot attract additional resources because of the so-called Black List, including a lot of students, who cannot take credits for their studies and the category of people, who cannot launch entrepreneurship because of overdue loans.

Moreover, there are a lot of people, who, before universal insurance component enforcement, took loans from financial institutions for buying medicines and treating their ill relatives and then failed to pay them.

“This decision will bring relief to these people, definitely. This is a genuinely honourable mechanism that was discussed for several months. This is the best mechanism for freeing a lot of people from depression”, Zhvania said.

In response to the question whether this government decision will provoke people not to pay loans in long-term perspective hoping that someone may pardon their loans, Zhvania noted that under this logic, social allowances should be also removed and the state should be responsible for nothing.

“We had similar policy before 2012 and this policy made many citizens leave the country, they and their families were led to misfortune. The state must take similar decisions, because all of us constitute the state. This single-time government decision is very important. As to its relations with the election, I would note that this is not correct. This decision is not related to the current elections. If the Government wanted populism, it would take the decision for the first round. This issue was under discussion and it was voiced after its completion”, Zhvania said.

As to the current statistics, in September 2018, the volume of overdue loans at commercial banks decreased by 6.7 million GEL and totalled 397.6 million GEL. According to the National Bank of Georgia, their ratio in the credit portfolio of commercial banks was 1.6%. The 51.9% ratio of overdue loans are denominated in the national currency. At the same time, according to the NBG, in the reporting period, the credit portfolio’s dollarization coefficient declined by 0.3% and totalled 55.7%.

As to overdue loans before online loan organizations and other financial institutions, such statistics remains unknown.

10 November 26, 2018 #262

Capital Market Challenges in Georgia What the capital market is and why it matters for the state economy The capital market, that is, the securities market industry, as well as banking sector, is an integral part of the financial market.

It enables physical and legal bodies to seek desirable capital, on the one hand, and invest free money resources favourably and successfully, on the other hand. Moreover, it should be also noted that the capital market and the banking sector are competitor fields.

Development of one direction signifies that another segment will lose positions and inversely. The banking mechanism mobilizes investors’ funds in the form of deposits under certain interest rates and later, commercial banks issue these money resources in the form of credits for higher interest rates. In case of the capital market, money resources are immediately directed from investors to economy, in exchange for securities issued by companies or other institutions.

In this situation, if the regulator institution gives preference to one party and demonstrates disproportional approaches, development of one of the segments will result in stagnation of another segment.

The capital market has exceptional economic importance for economic development and for diversification of the financial sector.

and the GSE suspended development, in practice. For example, in 2018 the stock exchange capitalization was 3% in GDP, whilst, according to the capital market state development strategy, this figure is to rise to 4% up to 2025.

Securities of 62 varieties are registered in all 3 listing groups (A, B, C). The A Group, the highest listing group, includes bonds of Black Sea Trade and Development Bank (BSTDB), European Bank for Reconstruction and Development (EBRD), the Netherlands Development Finance Company (FMO), Silknet and Bank of Georgia. The B listing group includes bonds of 6 Georgian companies both in GEL and USD. The C listing group includes GEL-denominated shares of Georgian stock companies. This is not a short list, but the main thing is the market capitalization and liquidity. Brokerage companies belong to other category, which are represented in 6 companies, including brokerage companies of commercial banks.

And now let’s see the demand for Bank of Georgia shares and its liquidity. The last 5

Recommendations For the purpose of developing the securities market, the following measures should be taken:

Overview of Georgian Stock Exchange The Georgian Stock Exchange (GSE) was founded in 1998, as part of the USAID program. Under recommendations of leading American specialists, the field regulator – Securities Market Law was developed, based on which, the key infrastructure of securities was shaped – stock exchange, central depositor, several registrars and brokerage companies.

According to the law, the securities industry must be separated from its natural competitor – banking sector so as the new mechanism of securities market could independently develop. This differentiation was expressed in a n umber of aspects: commercial banks could not immediately participate in the market (only through affiliated brokerage companies); no owner of the stock exchange was entitled to hold more than 10% of the stock exchange, while commercial banks could not hold 50% of the stock exchange; The securities market and its participants were supervised by the independent regulator – Georgian National Commission for Securities, which was a body for collegial management and besides supervision, was to foster the industry development.

Formation of such an equal competitive environment was the ground for rapid development of the securities market and its market capitalization in relation to GDP made up 14% in 2007. However, in this period, as a result of active interreference of the banking lobby, the law was liberalised

development.

Uncompetitive environment in Georgia’s financial sector was driven by the 20072008 legislative changes, under which the independent regulator was abolished and the securities supervision was assigned to the National Bank of Georgia (NBG), whilst the latter institution have always acted on behalf of the competitor banking sector . As a result, commercial banks were allowed to immediately engage in this business, restrictions on the stock exchange ownership were removed and commercial banks were allowed to fully control the infrastructure of the competitor sector. Moreover, prior to the amendments, deals on securities admitted to the GSE were to be made in competitive and transparent environment – in an exchange format. After the mentioned amendments, this obligation was annulled. As a result, 95% of the deals moved to off-exchange format, into shadow and non-transparent environment.

All the abovementioned factors, naturally, have caused distrust among foreign investors regarding our securities market. As a result, both the market capitalization and turnover considerably declined.

deals were made from November 2017 up to September 5, 2018, that is, over the past 10 months. The averaged duration of the deal is 2 months, this signifies, on average, deals are made every two months on shares of successful companies, like Bank of Georgia shares. It is noteworthy that the Georgian Stock Exchange Index (GSX) has fallen to 140 point. The lowest point was recorded in June – 131 point. The largest deal was made in May 2018, in an off-exchange format and the deal constituted 98.5% of the total deals. This fact outlines gaps in the current legislation that took effect in 2007. Exchange index is the leading indicator of economy, not capitalization of off-exchange deals.

Uncompetitive Environment in Financial Sector The strategic paradigm for evident and clear differentiation of exchange business from deposit, crediting and payment businesses, that is, the banking sector on legislative level is the main precondition for the financial market

• Decision on the securities market regulator; • Carrying out the principle of “Centrality of Trade” and ensuring the unbiased pricing mechanism; • The exchange should be allowed to adopt obligatory trading regulations for the exchange members; • The fixed tax should rise for off-exchange deals; • IPO of state-owned companies on the domestic exchange; • The exchange ownership should be broadened and diversified. We will get more benefits by preventing the situation when a brokerage company affiliated with one of the commercial banks keeps dominant control over the whole industry of the stock market; • If Georgia genuinely wants to ensure the more diversified financial system, it should ensure equal opportunities for those institutions, which are not affiliated with commercial banks. This is the principle of fair play;

By Shota Gulbani President of Association of Young Financiers and Businessmen

Reasons behind the Unconditional Leadership of the HUAWEI Mate20 Series The presentation of the HUAWEI Mate20 series and its unique opportunities has been well-spotlighted by international media and it has received both positive reviews and awards from them.

The best camera is the one that you have, and if you are choosing, choose the HUAWEI Mate20.

It was unexpected for everyone when Huawei beat Apple's sales and occupied second place in the world, but after the presentation of the new Mate20 series, experts predict HUAWEI will make first place and replace Samsung. The experts' opinion is shared by various well-known media outlets, and their opinions are not groundless.

According to the latest data of 2018, the HUAWEI Mate20 series has received positive reviews and awards from the media. In a short period, up to 41 top reviews were received from global and regional media and it is expected that this will only continue to grow.

HUAWEI strengthens competition because it finds ways to surprise, pamper and please its customers. The company focuses on daily functions such as durable and long-lasting battery and

new color variations.

The presentation of the HUAWEI Mate20 series and its unique opportunities has been well-spotlighted by international media.

“The HUAWEI Mate20 Pro is a smartphone that will get Apple and Samsung worried. This is a smartphone with the world's best camera, powerful processor and a powerful battery. These are added to other unique features like the wireless charging and the fingerprint scanner placed in the display,” read an ambitious and not groundless statement published by Hi-tech.mail.ru.

In addition, according to the October data, the HUAWEI Mate20 series has received positive reviews and awards from the media. In a short period, up to 50 top reviews were received from global and regional media and it is expected that this data will only continue to grow.

The fact is that HUAWEI strengthens competition because it finds ways to surprise, pamper and please its customers. The company focuses on daily functions such as durable and long-lasting battery and new color variations.

Recombu reports: “The Mate20 Pro is the candidate for best smartphone of the year due to its smart technology and original features.”

Tech Radar, it made quite a loud statement, saying: “That year when every new phone lays a margin above its predecessor, the

HUAWEI Mate20 Pro turned out to have enough premium features to be distingushed from the rest. This is a powerful smartphone with three rare cameras, and it's a sample of distinguished style, but its handwriting is the new "trick" that won’t be found anywhere else until next year.”

“The Mate20 Pro is a distinctive phone. The camera is important for many people, but with the best screen, super fast, wireless charging, and the strongest battery, it's an extraordinary phone,” Tech Advisor said, highlighting the advantages of the HUAWEI Mate20 series.

“The HUAWEI Mate20 Pro is a masterclass of how to bring technological development of a phone to the maximum level,” said Stuff Magazine. “The HUAWEI Mate20 can be seen as a triumph.

It is the most impressive, perfect phone, including what has been created by HUAWEI to date.” T3 Magazine says of the model's uniqueness.

“With the combination of high quality designs, best cameras, extraordinary batteries and future-oriented functions, such as the fingerprint scanner on the screen, the Mate20 Pro occupies the position of the best smartphones of 2018,” says Pocket-lint.

“It's something different, it's strong, it's fun and modern ... It’s a monster in a good sense!” read the emotional address from The Inquirer.

“The HUAWEI Mate20 Pro is fast, with a beautiful design and screen. It has an especially durable battery, a super-fast charging feature and one of the best cameras,” writes Phone Arena.

“The Mate20 is a wonderfully designed phone, with an unusual camera, sensational battery and huge power,” says TechRadar.

“If something is obvious as a result of discussing the HUAWEI Mate20 Pro, it should be its phenomenal camera,” is Bigtechquestion.com's position.

One of the most famous magazines, Forbes, writes: “My first impression of Huawei Mate 20 Pro was positive from the start.

Just like other editions that write about technologies, I was excited by its features, as they cover everything you could ask from mobile phone in 2018. After uisng the smartphone for one week, I can confirm that the first excitment and expectations are totally justified.”

PC World published an article and offered the best choice to its readers: "If you are facing a dilemma and you have to make the best choice, make it a Mate 20 Pro. This is a smartphone with a new, wide-angle camera, night regime and 5x hybrid zoom. The new series promises more exciting photos. The best camera is the one that you have, and if you are choosing, choose the HUAWEI Mate20 Pro.” Gulf News writes: “HUAWEI has moved to another level with the presentation of its Mate20 series, making it a danger to its rivals.”

ZDNet evaluates the HUAWEI Mate20 series: “The HUAWEI Mate20 includes all the best features in one device and it will be definitely hard to beat."

“The HUAWEI Mate20 is an amazing phone, with an improved camera that captures the pictures you once only dreamed about. It has the best balance between actual optics and processing power,” writes Digital Camera World.

The unique features of the HUAWEI Mate20 Pro are spotlighted by the publication Metro: “The HUAWEI Mate20 Pro is an example of aleading phone in 2018. It has the best hardware, smart software and several notable functions, such as In-screen Fingerprint.”

Mighty Gadget reports: “Through the special camera and battery of HUAWEI Mate20 series, now I can get the majority of my work

11 November 26, 2018 #262

without the additional camera and without the fear that the battery will not last until the shooting is done. Even just because of that, this phone is worth paying money for.”

And still, what are the reasons behind the unconditional leadership of the HUAWEI Mate20 series?

The most refined and attractive design, unique and innovative colors.

• It is equipped with the most innovative and small 7-nanometer processor - Kirin 980, that uses a processor based on Cortex-A76 and Mali-G76 GPU. Through the perfect combination of Dual-NPU and Cat.21 modem, they work more efficiently and use less energy.

• Through the new Kirin 980, it is already able to capture 46% improved graphic images. In addition, while playing games, AI can determine the workload and provide the resources for optimal image and quality. In comparison with the previous generation, the Kirin 980 provides the fastest loading of applications.

• The old tradition is preserved in the new smartphone, and all three main cameras are created in collaboration with Leica, giving users an opportunity to capture objects at a minimum distance and focusing at even 2.5cm from the lens. Unlike the previous models, there is a more enhanced lens with a broader view (16 mm).

• The HUAWEI Mate20 series is equipped with operative system EMUI 9.0 based on Android Pie, through which users can access all the working and entertainment functions of the smartphone with a simple touch to the screen. EMUI 9.0 is followed by the GPU Turbo 2.0 – with more support for game-lovers.

• Yet another important function of the system is HiVision, which enables the camera to capture famous attractions or paintings and deliver users information about them.

• Enhanced battery: the working time of the battery is improved and enhanced in the new models of HUAWEI. Through the 4200 mp battery, it is now possible to charge the phone up to 70% in 30 minutes.

• The HUAWEI Mate20 Pro is the first smartphone in the world to have support relevant to 4.5G LTE Cat. 21 standard, giving users a chance to benefit from a 1.4 GB/s download speed. It also has the fastest Wi-Fi connection, allowing for max. 10 seconds downloading.

Treatment for Patients with Metastatic Breast Cancer to be Available from 2019 The European Breast Cancer Coalition, Europa Donna Georgia, held a press conference within the framework of an informational campaign “Target for Life,” the aim of which is to support patients with metastatic breast cancer.

Through Europa Donna Georgia, thanks to the support of the Ministry of Health, treatment of HER2 positive breast cancer is to become available in the Georgian regions.

On the decision of the Ministry of Health, from January 1, 2019, the provision of breast cancer medicines is to expand. Through the joint collaboration of the government and private sector, treatment of patients with all stages of breast cancer will be available. Through an agreement between Ministry of Health and a pharmaceutical company, patients with 4th stage breast cancer will get medicines such as Perjeta-Herceptine at an 80% discount.

The patients, doctors and supporters gathered at the press conference once again summerized the existing problems. Ana Mazanishvili, President of Europa Dona Georgia, Khatuna Chachava, the Head of Organizational Section of Healthcare Department, Maka Asatiani, Director of pharmaceutical company “Rosh Georgia” and other invited guests addressed the audience.

Representatives of Tbilisi City Hall, Tbilisi City Council, NGOs and business companies, specialists, doctors, campaign supporters and patients were also invited to the press conference.

According to the current statistics, breast cancer is the most common illness in Georgia. The patients and supporters with problems related to this illness joined the campaign “Do not differ,” launched on October 15. The campaign was aimed at increasing the availability of treatment for women who live in the regions and have 4th stage breast cancer. Within the framework of the campaign, the stories of a few patients with breast cancer were published in social media. Their open letters were sent to the representatives of governmental institutions to tell them about

patient requirements.

On November 12, Minister of Health of Georgia David Sergeenko, stated that from January 1, the provision of breast cancer medicines is expanding and treatment of patients with all stages of breast cancer is going to become available.

“Financing the corresponding medicines for the treatment of breast cancer was one of the main problems in the regions. Through

collaboration between healthcare institutions and Ministry of Health, we achieved our goal. The Ministry of Health is starting to finance the treatment of patients with breast cancer. Timely treatment is important for such patients. Through the agreement, the duration of patients’ lives will increase and their living conditions will improve. Breast cancer is not a judgment! We have

proven it many times already through the support and empathy towards each other. We should not lose hope or motivation to fight.

We lose the battle against illness when someone reduces our rights to live, when we are divided according to certain characteristics: #donotdiffer, it should not happen again,” notes Ana Mazanishvili, President of Europa Donna Georgia.

The breast cancer program started in February 2016 with the aim to expand the affordability of corresponding medications.

In 2015, the campaign “Target for Life” was launched. The campaign was aimed at increasing awareness about breast cancer and providing support for ensuring access to targeted therapy.

At the beginning of 2016, Tbilisi City Hall and City Council launched a co-financing program for patients with early stage breast cancer (I, II, III), which also covered patients with metastatic breast cancer. At the first stage, the above-mentioned program included only the residents of Tbilisi; in 2018, Adjara region started targeted treatment of patients with metastatic breast cancer with corresponding medicines. Throughout the whole of Georgia, the implementation of the program was still at the discussion phase.

"Europa Donna Georgia" joined the European Coalition "EUROPA DONNA" founded in 1994 in Milan, the main goal of which is to fight breast cancer. The organization has been trying to save sick women since the day of its establishment. Members of "Europe Donna Georgia" are certified lawyers of the European Coalition "EUROPA DONNA", as well as women who have been healed from this illness. One of their main goals is to assist patients with breast cancer and spread the relevant education among Georgian women to timely prevent the disease. The aim of the organization is to prevent the disease, protect the interests of women with breast cancer, increase access to healthcare based on high quality guidelines to reduce the incidence of breast cancer deaths and increase recovery rates.