Construction Business 2015 by The FINANCIAL

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Risk of Additional Uncompleted Construction Projects in Georgia The FINANCIAL

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ed projects. Nikoloz Urushadze, Partner at BHP International Georgia, recommends developers to carefully analyze risks associated with oversupply for particular neighbourhoods before starting a new project. The most promising segment of the real estate market appears to be two-three-star hotels. Continued on p. 2

Hospitality and F&B Sectors to Boom on the Georgian Real Estate Market The FINANCIAL

dential apartments - “demand exceeds supply,” said Steve Brown, Managing Partner at Cushman & Wakefield | Veritas Brown. So until this dynamic changes, Brown suggests that most new, well-located and constructed projects should yield returns. “If mortgages become unaffordable the residential sector will become saturated with empty or half-finished buildings. Continued on p. 18

Baku, Tbilisi, Yerevan at the Bottom of Quality of Living Rankings The FINANCIAL

ienna has the world’s best quality of living, according to the Mercer 2015 Quality of Living rankings. Overall, European cities dominate the top of the ranking along with major

cities in Australia and New Zealand. Zurich, Auckland, and Munich are in second, third, and fourth places respectively. In fifth place, Vancouver is the highestranking city in North America and the region’s only city in the top 10. Continued on p. 16

METRA DEVELOPMENT BRINGS INNOVATION TO CONSTRUCTION CONVERTING USD 1 TO GEL 1.75 The FINANCIAL

Unison: “Bonds Insurance will increase investor interest in Georgia” The FINANCIAL

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DISTRIBUTION The FINANCIAL distribution network covers 80 % of key companies operating in Georgia. 90 % is distributed in Tbilisi, Batumi and Poti. Newspaper delivered free of charge to more than 600 companies and their managers. To be included in the list please contact distribution department at: temuri@financial.ge CONTACT US EDITOR-IN-CHIEF ZVIAD POCHKHUA E-MAIL: editor@financial.ge editor@finchannel.com Phone: (+995 32) 2 252 275 HEAD OF MARKETING LALI JAVAKHIA E-MAIL: marketing@financial.ge marketing@finchannel.com Phone: (+995 577) 74 17 00 CONSULTANT MAMUKA POCHKHUA E-MAIL: finance@financial.ge Phone: (+995 599) 29 60 40 HEAD OF DISTRIBUTION DEPARTMENT TEMUR TATISHVILI E-MAIL: temuri@financial.ge Phone: (+995 599) 64 77 76 COPY EDITOR: IONA MACLAREN COMMUNICATION MANAGER: EKA BERIDZE Phone: (+995 577) 57 57 89 PHOTO REPORTER: KHATIA (JUDA) PSUTURI MAILING ADDRESS: 17 mtskheta Str. Tbilisi, Georgia OFFICE # 4 PHONE: (+995 32) 2 252 275 (+995 32) 2 477 549 FAX: (+95 32) 2 252 276 E-mail: info@finchannel.com on the web: www.financial.ge daily news: www.finchannel.com

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KHACHAPURI INDEX AS A PREDICTOR OF STRUCTURAL CHANGES IN THE ECONOMY

n February, the average cost of cooking one standard Imeretian Khachapuri fell to

3.29GEL, which is 3.4% lower month-on-month (compared to January 2015), and 4.8% lower year-onyear (compared to February 2014).

The main ingredient of Khachapuri is Imeretian cheese, and, naturally, its price is the main driver of ISET’s Khachapuri Index. Over the years, we have been observing a sharp upward movement in the price of cheese from July till January, and an equally sharp downward movement from February till June. These seasonal price dynamics are closely tied to the annual production cycle of the Georgian dairy industry. The price of milk is the exact mirror of image of this production cycle. It goes up when there is little production, and goes down when there is plentiful supply. The driving force behind these ups and downs is technological backwardness. In the absence of artificial insemination, the vast majority of Georgian cows calve at roughly the same period, in the three winter months. This is

the time when milk production resumes, applying downward pressure on the prices of all dairy products, including cheese. After peaking in spring, by July milk production starts declining until cows get dry two-three month before giving birth. 2014/15 seems to break away from this traditional roller coaster dynamic. As shown in the chart, the fluctuations in the price of cheese that we observe this year are much less pronounced than in 2013/14. The price of cheese did spike in December, reflecting a one-time sharp increase

in demand just prior to the New Year holiday season. Other than that, however, the price of Imeretian cheese stayed quite flat ever since September 2014, in the 7-7.30GEL/kg band. Likewise, the price of cheese did not decline as much in the March-June 2014 period. What’s going on? One possibility is that improved farmers’ awareness about the advantages of producing (more expensive) winter milk has finally led to the introduction of artificial insemination, smoothening milk production over the four seasons.

Another (complementary) explanation is entry by industrial cheese factories or intermediaries that have the ability to store large quantities of cheese and supply the market in fall and winter time, when supply traditionally falls short of demand. In fact, improved storage would explain both higher summer prices and lower winter prices, consistently with our data. If this is true, the story told by the Khachapuri Index is one of infrastructure improvement and technological upgrading. A story of modernization, in short.

Risk of Additional Uncompleted Construction Projects in Georgia The FINANCIAL By MADONA GASANOVA

recent boom of residential apartments in the Georgian construction market has resulted in an oversupply in this niche. The current financial crisis that has already caused a slump in the population’s solvency carries the risk of an additional wave of uncompleted projects. Nikoloz Urushadze, Partner at BHP International Georgia, recommends developers to carefully analyze risks associated with oversupply for particular neighbourhoods before starting a new project. The most promising segment of the real estate market appears to be two-three-star hotels. “In 2014 we encountered quite a dangerous environment for both developers and buyers. The supply started to gradually exceed demand. Some companies appeared with neither the management, nor the intellect and skills required to run construction projects. They have been making use of the liberal legislation existent in Georgia.

Such legislation contributes to the development of the construction business in the country. Meanwhile it also contains a high risk. Lots of construction projects have appeared, while the prospect of their completion remains questionable, highly dependent on economic processes. Devaluation of the national currency is having a negative impact on processes.

If economic processes do not get stabilized soon the events of 2008 may be repeated. By this I mean the failure to complete many already-started projects,” Nikoloz Urushadze, Partner at BHP International Georgia, told The FINANCIAL. In Urushadze’s words, economic processes are reflected in real estate business as well, however, they do not carry a

direct and instant impact. The business reacts relatively slowly. “Accordingly the years 20122013 were pretty good for this sector. It was quite an active period in terms of sales. Since 2008 crisis period, the residential apartment segment has also revived itself. Development companies backed by commercial banks have contributed to this process. These companies restored the reputation of the sector which was destroyed by developers years ago. Such development companies are characterized with a relatively high level of management. They have the financial resources. Meanwhile, they attract finances not from their mother companies, but manage to successfully cooperate with international finance institutions. Despite a negative PR campaign that was launched on the market against them, their appearance brought a huge, positive shift to the market. The restored reputation of developers contributed to the sales of real estate property and projects under construction. So, during the past three years we Continued on p. 17

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Metra Development Brings Innovation to Construction Converting USD 1 to GEL 1.75 The FINANCIAL By MADONA GASANOVA

urrent economic conditions are having a serious impact on many businesses in Georgia. However, the company Metra Development is launching a new marketing campaign, converting USD 1 to GEL 1.75. The company plans to maintain a stable environment even during the current devaluation of the national currency. Offering unprecedented payment terms is a form of social responsibility that Metra Development will offer to its customers throughout the existing tough financial crisis. Metra Development entered the Georgian market in 2007. Since then the company has gained an important place in the Georgian real estate field. Metra Group has been operating in the real estate market for more than 10 years, overseeing the development of multiple real estate projects with the company’s extensive experience. Metra Group is developing new housing estates, adjusted to modern life, oriented towards both comfort and quality.

NATALIA GLINSKAYA, CEO at Metra Development

The international experience of Metra Group gives a successful reflection of the activities of Metra Development Company in Georgia. The Company is also the coauthor of one of the most advanced residential complex developments in Tbilisi - Park Town. Metra Development’s mission and aim is the development and rehabilitation of new districts. Park Town and Metra Park projects are clear examples of this. Natalia Glinskaya, CEO at Metra Development, talked about the new conditions of purchasing apartments at Metra Development. In her interview with The FINANCIAL, Glinskaya underlined the advantages of Metra Development. Glinskaya was appointed the CEO of Metra Development in 2014. Up until then she was the CFO of the company. Glinskaya has been involved in the development sector since 2008. From 2004-2007 she worked for USAID, and she holds a Master’s degree in finance. Q. The recent dramatic devaluation of the Georgian Lari against the USD has already caused a price growth for construction materials,

which accordingly has caused an increase in the cost of apartments. Against this background, how do you manage to offer such unprecedented conditions? A. Providing different and high quality products has always been the main goal of Metra Development. However, in the existing economic situation we carry the responsibility to create comprehensive and stable conditions of cooperation with consumers. Call it our corporate social responsibility. Q. Is this campaign only valid in the case of single payments, or can consumers that choose a partial payment programme also benefit from it? A. The offer works in the case of a single payment. Consumers are also offered internal interest-free instalments till the complex gets fully filled up. Q. Besides the price, what are the additional advantages of your projects? A. The uniqueness of Metra Development is its location. The Bagebi residence has become the best place to live in Tbilisi for many reasons. Fresh air, space, greenery and being just a short distance from the

centre of the city is a small list of reasons why people should choose an apartment at Metra Development. The project also has other advantages. Specifically, we offer apartments with Metra Standards conditions. This means: a full frame heating system, radiators, air conditioning and fire alarm. Q. Which projects are you offering as part of your campaign? A. As part of the campaign we are offering customers apartments at the Metra Development residential complex (Vake-Saburtalo district, Bagebi). The cosy accommodation of Metra Park consists of twenty 5-6 storey residential blocks. Each of the apartments ranges from 59-215 square meters of living space. All interested individuals will be able to benefit from the terms of our campaign from 1 March.

Top Reasons to Choose an Apartment at Metra Park

n today’s busy times, the home is the one place where we are guaranteed rest and relaxation. For that reason people do their best to choose the right location and conditions for their home so that it is both close to the industrial centre of the city and at the same time means that they can live in a comfortable and healthy environment. In addition, the devaluation of the GEL has reached a level where there has been a danger that the expectation of inflation could be reflected in price growth. Given the current conditions Metra Development decided to allow consumers to invest in real estate by purchasing apartments with an exchange rate of USD 1 to GEL 1.75.

METRA CLEAN DEVELOPMENT AIR CONVERTS The air quality in Tbilisi not in line with the stanUSD 1 TO GEL isdards stated by the World Health Organization (WHO). 1.75 The content of carbon oxDespite the existing economic conditions, Metra Development is giving consumers the unique chance to purchase an apartment at Metra Park. It will be a wise investment and despite the exchange rate volatility, will avoid foreign exchange risks. Given the fact that the GEL devaluation trend has increased, the company decided to return a stable monetary rate to consumers - with USD 1 worth GEL 1.75.

ides and nitrogen dioxide in the air are especially high on Rustaveli, Agmashenebeli and Tsereteli avenues, as well as in the Gldani and Isani districts. A total of 71% of air pollution is estimated to come from vehicles. According to the data of 2012, over 900,000 vehicles are moving regularly in Tbilisi. Most of them are over 10 years old. As of yet, the issue remains out of control. In 2014 WHO published new data on the issue. Ac-

cording to it, over 7 million people have died worldwide as a result of the effects of air pollution. Bagebi is not overloaded with transport vehicles. Accordingly, the environment there is less polluted. Consequently, the health of Bagebi residents is not at risk of diseases caused by pollution.

Pinophyta trees. These are especially good for children. The green cover of Bagebi is clearly visible even on Google Maps. According to a certain U.S. environment protection NGO, one tree can absorb 21.7 kilograms of carbon dioxide per year while one large tree can provide enough oxygen for two people.

MORE GREEN COVER

PROXIMITY TO THE CITY CENTRE

The number of parks and green areas is increasingly shrinking in the central areas of Tbilisi. Meanwhile, Bagebi is located on a hillside. There are lots of deciduous trees there, as well as

Some people may have the impression that Bagebi is far away from the central districts, rather than some of the streets in Saburtalo for

example. However, this is absolutely not true. Bagebi is just a few minutes’ drive from the central districts. It takes about 10-15 minutes to get from Freedom Square to Bagebi by car. Meanwhile, to get from the same place to Nutsubidze Street, it will take 15-20 minutes by car. According to Google Maps, Bagebi is 7 kilometres from Freedom Square. In addition, all modes of public transport, including minibuses, frequently travel to and from Bagebi, taking around 20 minutes to get from there to the centre of the city.

Continued on p. 7

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Unison: “Bonds Insurance will increase investor interest in Georgia” The FINANCIAL By MADONA GASANOVA

UNISON IMPROVED ITS POSITION IN THE RANKINGS AND WENT FROM 8TH TO 3RD PLACE OVERALL. THIS WAS ACHIEVED BY A GROWING PORTFOLIO. WE ATTAINED A MARKET SHARE OF 19%, WHICH IS SIGNIFICANT.

ontract and customs bond insurance will attract more investors to Georgian construction and infrastructural projects, believes Vasil Akhrakhadze, Director General at insurance company Unison. With more than USD 48 million written premium, Unison advanced its position in the country from 8th to 3rd in 2014, taking 19% market share. Isolation from universal healthcare insurance and good management are what helped Unison to end the last year with profit. The separation of insurance companies from other sectors and implementing compulsory types of insurance are the main challenges that the Georgian insurance sector currently faces. “Since its establishment Unison has always chosen the right strategy. That led to it passing through this difficult period successfully. We have gained the status of an important player in the market. The proper approach of the management is based on 15 years of working experience in the insurance field. Having a diversified portfolio has always been our main strategy. We never depend on just one source of funding, even if it is state funding. We were initially against involvement in the universal healthcare insurance project. It was clear for us that it would not be profitable. In our case, this strategy worked. Our company is growing, and turning a profit from year to year. Profits, as well as the gross premium, are increasing,” Vasil Akhrakhadze, Director General at Unison, told The FINANCIAL. Unison was established in 2011. The company soon managed to become one of the most prominent players on the Georgian insurance market. The company is leader in the property insurance business segment and positions itself as pure insurer. The company is a partner of strong international financial institutions and cooperates with leading and well-known reinsurers such as (Lloyd’s Syndicate, Hannover Re, Polish Re, SCOR, Transatlantic Re, Ace European Group, VIG Re) which ensures their reliability and gives the possibility to provide full coverage for high capacity risks. “The reinsurance of contract and customs bond insurance is one of the most difficult areas. It is linked to the stability of the country. Georgia is the exception and pioneer among its neighbours in that it managed to achieve this deal with its foreign partners especially on UK (London) market. A good accounting system of the banking and insurance sectors contributed to it. Our cooperation with premium list reinsurance companies is not only our advantage, it is a big benefit for the whole country. Contract and customs bond insurance simplifies the relationship between investor and developer. It encourages investors to issue funding for a project which exists as a draft of a business plan. The investor receives a high level of performance guarantee, which significantly minimizes the risks. It is in essence equivalent to the guarantee provided by a first class European bank. This service is a great benefit for the state as well, because it is more flexible and better than a local bank guarantee,” said Akhrakhadze. Over 85% of Unison’s customers are from the corporate sector. For 2015 the company plans to increase its market share in the retail as well as corporate sector. Modern and technologically developed services will be issued soon. Offering more flexible services to its consumers is the main goal of the company. In his exclusive interview with The FINANCIAL, Akhrakhadze evaluated the insurance market of Georgia and named the main steps that need to be implemented for the development of the sector. Q. 2014 was difficult for insurance companies. Many of them ended the year with losses. How would you evaluate it for Unison? A. 2014 was a challenging year for Unison. Great changes

VASIL AKHRAKHADZE, Director General at Unison

CONTRACT AND CUSTOMS BOND INSURANCE WILL ATTRACT MORE INVESTORS TO GEORGIAN CONSTRUCTION AND INFRASTRUCTURAL PROJECTS, BELIEVES VASIL AKHRAKHADZE, DIRECTOR GENERAL AT INSURANCE COMPANY UNISON. on the financial market, as well as the legislative level, took place. However, we managed to strengthen our positions on the corporate and retail levels. It was a year of success for us. Unison improved its position in the rankings and went from 8th to 3rd place overall. This was achieved by a growing portfolio. We attained a market share of 19%, which is significant. Q. What was the volume of attracted premiums? A. The volume of attracted premiums exceeded USD 48 million

in 2014. Unison is one of those companies which collaborates with reinsurance companies in a big way. We are named as the most reinsured insurance company in Georgia. We only cooperate with ‘A’ class companies. Our principle and strategy lies in having a more balanced portfolio and being closely linked to financial institutions. It ensures we are able to compensate any loss when it becomes necessary. So compensation does not carry significant risk for our portfolio. It is provided by our reinsurance partners. All this

THE COMPANY IS A PARTNER OF STRONG INTERNATIONAL FINANCIAL INSTITUTIONS AND COOPERATES WITH LEADING AND WELL-KNOWN REINSURERS SUCH AS (LLOYD’S SYNDICATE, HANNOVER RE, POLISH RE, SCOR, TRANSATLANTIC RE, ACE EUROPEAN GROUP, VIG RE) WHICH ENSURES THEIR RELIABILITY AND GIVES THE POSSIBILITY TO PROVIDE FULL COVERAGE FOR HIGH CAPACITY RISKS.

provides maximum harmonization. On its side these benefits extend to our consumers. This is how we understand implementation of global practice locally. So, with our standards we are close to European practice. Meanwhile, we should not judge a company by its gross premium alone. The number of complaints and cases of suing and compensation for loss are what determines the success of an insurance company. Unison has one of the lowest numbers of complaints. In our practice we have compensated GEL 1.5 million per policy. It was linked to a huge infrastructure project which was not completed on time. Q. Which are the most popular insurance products amongst your customers? A. Corporate property insurance is dominating in our service portfolio. It is followed by health insurance and auto insurance. Unison is the rare exception in that it has big experience in cooperation with the energy sector. Property insurance even on the corporate level is fairly low. Companies founded with foreign investments are rare. They make up over 90% of this segment. I would like to see more local companies and individuals using property insurance. We live in a highly seismic zone. We all remember the incidents that took place in our neighbouring countries several years ago. Accordingly, property insurance in such a region should be compulsory like it is in Turkey, Iran and etc.Q. You support the implementation of compulsory insurance. Meanwhile, the general solvency of Georgians is quite low. Therefore don’t you think that it is a little too early? A. On the contrary. Not being insured contributes to impoverishment. Healthcare insurance is a good example of that. Today it is clear to everyone that medical treatment with insurance is much cheaper than without it. Insurance companies are living in an unstable environment as the legislative level is quite weak. Bills are made without any consultation with the representatives of the sector. There is still the opinion that compulsory insurance will be a heavy burden for the population. This is absurd. There are various types of compulsory insurance in all developed countries. There was the same opinion

regarding the state’s compulsory healthcare programme which was initiated in 2007. Although it did have some faults initially, it did a really great job of developing awareness, the culture of the insurance sector and trust towards companies involved in this business. Eight years later, we can say that medical insurance is a useful product. Today we cannot find a company in which the health insurance of employees is not on the agenda. However, eight years ago it was unimaginable that it would develop on such a scale. Currently we hear the same concerns about whether thirdparty car insurance should become compulsory. We hear the same arguments - that an additional USD 120 per year will become a heavy load for citizens. However, we need to realize that insurance brings relief to its owners especially those who have low incomes. Over 50% of Georgians presently live under the poverty line. The latest statistics show that the number of car accidents has increased approximately by 23% during last 4 years. So, let’s imagine a person responsible for compensating not only his car, but the damage of a second party. It directly contributes to impoverishment. This can only be solved by state regulation. Therefore, I believe that our new regulator has a very positive attitude on this issue. There is a promise from his side that the case will be solved with the Government. Over 5-7% of the private auto park is insured for now. More than 90% of vehicles are not insured. This is a catastrophe. Implementing this law will be a calling card of our country, aiding integration with the EU. Compulsory auto insurance will increase the industry by USD 100 million and will create many job opportunities. Q. Have the reinsurance companies revised their tariffs due to the ongoing instability in the region? A. The rating of Georgia has not been downgraded. In general, the revision of tariffs in the field of insurance takes place when talk worsens in respect to a particular danger. Today we have very good status, and therefore it does not touch us. Q. How would you evaluate the insurance culture of the population? A. The culture of insurance in Georgia is on a lower level than

and transparent law is essential. We should move from superficial regulations to fundamental initiatives and changes. The separation of insurance companies from the banking, medical and pharmaceutical sectors is also necessary. This system firstly diminishes the quality of the insurance sector. When a consumer borrows from a bank, he becomes obliged to get insured by the company stipulated by that very bank. So, consumers are left no choice, which is against their rights. Today, we have leading companies which are affiliated with one of the groups, which include a bank, insurance company, the hospital sector and pharmaceutical group. In this case, these financial institutions are guided by their own financial interests. There is no link remaining to protect the rights of consumers in the event they complain. Each of the fields will protect the other as they are guided by one holding. All the above mentioned not only damages the insurance but medical service quality and other services as well. Lots of mistakes which occur in the medical sector are as the result of that. Problems are not dealt with on a proper level. Such interventions in the insurance industry should be carried out. The advantage of Unison is that we are independent decisionmakers in the market. We offer wider choice to our customers. We have a lot of providers, so consumers can freely choose and get the highest quality. We cooperate with all providers of high-quality service. Those individuals that are insured with us do more than just make a choice, but are free in their decision-making. Q. What are the main challenges of the insurance sector in Georgia? A. Separation of the insurance field from other sectors is necessary at the moment. Otherwise we will face dire consequences. The insurance industry is gradually coming out of the previous recession period. One of the requirements of EU integration is the significant growth of the capital of the insurance sector. A large number of insurance companies are still not managing to generate profit. This is being made with their non-core assets. It means that insurance business is not profitable, and this is the main challenge of the industry. Mandatory insurance products

UNISON HAS ONE OF THE LOWEST NUMBERS OF COMPLAINTS. IN OUR PRACTICE WE HAVE COMPENSATED GEL 1.5 MILLION PER POLICY. IT WAS LINKED TO A HUGE INFRASTRUCTURE PROJECT WHICH WAS NOT COMPLETED ON TIME.

in developed countries as well as solvency. Moreover, we are even behind our immediate neighbours. State regulations are the main determinant of insurance culture in any given country. In Georgia there is no mandatory insurance law. Meanwhile, some types of compulsory insurance do exist in our neighbouring countries. It provides serious insurance compensation for the population and entrepreneurs. The low solvency of our citizens also contributes to the low level of insurance culture. Q. Which exact regulations need to be implemented for the development of the insurance sector? A. A regulating sector with clear

should be implemented in the country, this will result in massive development of the industry. Finally, this will encourage businessmen to invest in the sector.

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Top Reasons to Choose an Apartment at Metra Park

Continued from p. 4

NECESSARY FACILITIES Some believe that as Bagebi is a new district, there is a lack of useful facilities. This is an incorrect belief and we will prove the opposite. There are several private schools in the territory of Bagebi. Shopping facilities, supermarkets and sports centres, for example Vake swimming pool, an open swimming pool and fitness centre, and a football field are located nearby as well. And Vake Park and Turtle Lake are also close.

COMFORT It is very difficult to live in the city centre and avoid the noise of the streets. However, Bagebi is an exception in this regard. Living in Bagebi is the same as living in the countryside in that respect. It is about ten minutes away from the central districts of Tbilisi. At the same time it is away from the city’s noise and dust. It is a clean place and the air is fresh. As well as these benefits, purchasing apartments is another reason. It is a very good investment. About 10 years ago the price per square metre in Bagebi was USD 280. Today, the cost in the same area per square metre is more than USD 950.

THE LOWEST PRICE ON THE CONSTRUCTION MARKET Metra Development always tries to consider customers’ needs. Today, the main problem affecting all of us is the depreciation of the Georgian Lari. It is itself a subject of anxiety. The situation frightens any buyer. They are avoiding making any major decisions. Taking this into account, we developed a user-friendly system - at Metra Development USD 1 = GEL 1.75. In these circumstances buyers can purchase an apartment with a stable exchange rate.

METRA PARK GREEN DISTRICT A green area near the city centre is the concept of Metra Park. The residential complex area of 5.5 hectares of land is mainly populated with Pinophyta trees. In addition to the natural vegetation, the project envisages the construction of additional green squares and playgrounds for children. A large part of the residential complex will be a green area. It is one of the main advantages of the project. Metra Park’s existence means that it is now possible to live in envi-

ronmentally protected conditions without leaving the city centre.

20 RESIDENTIAL HOUSES Metra Park is a settlement of 20 houses. Their number of storeys is from two to six. The fact that the buildings are all low-rise is no coincidence. The company’s management believes that it creates greater comfort, which is a central concept of Metra Park. Flats vary from 59 to 215 square metres. Underground parking is also provided, which is connected to the residential floors by elevator.

EUROPEAN BUILDING MATERIALS Another advantage of Metra Park is its European high-quality building materials. The plastic windows of German REHAU, energy efficient water pumps of German WILO, Italian water pipes, passenger and freight elevators of OTIS, and sound isolating floors are materials which Metra Development uses during construction. As for the acceptance conditions, the starting condition is Metra Standard. It includes a white-frame with other conditions: heating system and radiators, air conditioning and fire alarm.

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HEIDELBERGBETON GEORGIA The FINANCIAL

eidelbergCement is the global market leader in aggregates and a prominent player in the fields of cement, concrete and other downstream activities, making it one of the world’s largest manufacturers of building materials. The company employs some 52,500 people at 2,500 locations in 40 countries. At a local level HeidelbergCement Georgia is a leading brand in the Georgian cement market. The company has been carrying out its activities in Georgia since 2006 and up to date has made more than 200 million Euro investments that were mainly oriented on the modernization of existing cement plants and expansion of the concrete business line. The company supplies cement and concrete to almost every major construction project in Georgia. Today the company operates 4 cement plants with a total capacity of 2 million tons of cement. HeidelbergCement Georgia meets European standards in all its fields of management and production activities. The company is working according to 3 pillars on sustainable development: Economy, Ecology and Social Responsibility. The installation of new filters, scientific project “Quarry Life Award”, charitable event “TbilisiMarathon”, waste management - all of these are in response to HeidelbergCement’s mission and sustainable development guideline. In 2008, HeidelbergCement established the company HeidelbergBeton Georgia Ltd and began concrete production. Since its establishment, HeidelbergBeton started solid and stable development on the local market. The First concrete

plant started operation in Ponichala in 2009. In 2010 two plants (Ponichala and Gldani) supplied Tbilisi and nearby territory with concrete. In 2011 the company started offering the construction sector a mobile plant service that means concrete production locally, and the first mobile plant started operation in the city of Rustavi. At the end of 2012 the company expanded its operation area, and on the 1st of February 2013 officially opened a new concrete plant in Batumi. Two concrete plants for the construction of the RuisiAgara highway section and plants in Kakheti and Tbilisi for the construction of HPP and a large shopping mall respectively followed. 2014 saw further expansion with the new mobile concrete plants in Tsalka and Rustavi. Currently, HeidelbergBeton runs 10 concrete batching plants all over Georgia and has annual production of 0.5 million cubic meters (2014). Being customer-oriented, the company offers a full package of services related to ready-mixed concrete and special products. It is the first time in Georgia of a concrete heating system being used that gives the possibility to produce and deliver “warm“ concrete even in wintertime. Among the major projects of HeidelbergBeton Georgia are: the South Caucasus Pipeline Extension project run by BP (Rustavi, Tsalka, Akhaltsikhe); Agara Ruisi section of the E60 highway; Poti Terminal; Millennium Hotel in Tbilisi; and Babillon Tower in Batumi. In spite of its solid position in the regions, HeidelbergBeton is continuing its development on the local market and in 2015-2017 plans to add several more mobile concrete plants.

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Planning to Purchase an Apartment via Mortgage Loan? TBC BANK MORTGAGE CENTER Anastasia DGEBUADZE

or those planning to purchase an apartment via mortgage loan, TBC Bank offers a solution that saves both time and energy. Mortgage Center opened in Tbilisi some months ago. The Center’s employees help Georgian as well as foreigner customers to choose their desired apartment and offer loans with special conditions, adjusted to their income. TBC Bank’s Mortgage Center offers customers simplified procedures for finding and financing an apartment. The new Center is located in Vake, at 11 Chavchavadze Ave., and at the TBC Bank branch located inside the Public Service Hall. Those who plan to purchase an apartment will be able to use this service in one space, as well as receive loan statements. To obtain a loan, a 30% down payment is needed. As a guarantee the real estate to be purchased can be used. It is possible to receive a mortgage loan without a time-consuming income review. TBC Bank’s Mortgage Center is already cooperating with more than 20 development companies, which recommend newly-built and under construction apartments to customers. By the end of the year it is planned number of proposals to increase till 100 projects. Those who want to purchase a secondary apartment will not be disappointed either, as they will be referred to a brokerage company. Customers arriving at the Mortgage Center are consulted by managers, who assist them in finding the apartment of their choice with a mortgage loan based on their income. TBC Bank’s Mortgage Center employees are already negotiating with interested customers. Among them are foreign residences that are interesting in purchasing an apartment in Georgia. Conditions and offers are slightly different for them. David Nozadze visited the Center after deciding to buy a newly-built apartment. The Center’s Manager Nana Chubinidze talked with him and noted his requests. David’s only requirement was to find an apartment in the suburbs. The negotiations were concluded within 20 minutes. Nana promised to find an apartment according to David’s needs, an interest rate was agreed upon, and a follow-up meeting was scheduled for a few days later. “We have agreed that the manager will find an adapted option for us. We have already calculated the percentage of the mortgage loan and it is a very low percentage. Banks do not offer such comfortable loan conditions,” explained David, noting that he has never obtained a loan with such convenient conditions. “So far, the most popular districts are Saburtalo and

Didi Digomi,” Head of Mortgage Center Teona Bragvadze pointed out. She says that “the majority of those who desire to buy an apartment are looking for apartments that are about 60-70 sq.m, which cost around USD 50-70,000.” Mortgage Center’s partner development companies offer a large variety of apartments and customers can buy affordable, as well as luxury upscale apartments. The Center’s proposals include 7 districts in Tbilisi, although it also has projects in Batumi, Gudauri, Bakuriani and Marneuli. Through its help, you can buy apartments there too. The partner companies of Mortgage Center only cooperate with TBC Bank which means that if you want to buy an apartment from one of the companies’ projects, you need to enquire through Mortgage Center. Before cooperating with a developer company, Mortgage Center studies the financial history of the companies. Mortgage Center is a reliable intermediary, and its cooperation with TBC Bank is comfortable for both sides. Using Mortgage Center is free; consultations and other services can be obtained without a fee or charge.

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FactCheck Davit akradze: “Amendments to the law not an an on advertising are not essiity.” immediate necessity.”

Memorandum of Understanding in Support of Micro and Small Business

Tamar JIKIA FactCheck

n 30 December 2014, guests of the talk show, Archevani,, the show’s vani host asked Davit Bakradze, one of the leaders of the United National Movement, a question about the legislative amendments to the law on television advertisements. Mr Bakradze replied: “We are told that we have to adopt this law (on broadcasting) as soon as possible because the EU demands it so. It is a lie. The Association Agreement signed with the EU says that the law should be adopted after three years from the start of the period when the Agreement has been ratified.” The European Union and Georgia signed the Association Agreement on 27 June 2014. Chapter XVIII of Title VI of the EU-Georgia Association Agreement envisages cooperation in the audio-visual and media fields. On that ground, Georgia made a commitment to harmonise its national legislation with the legislative acts of the EU; namely, according to Appendix 33 of the Association Agreement, Georgia is required to harmonise its legislation with Directive 2010/13/EU of the European Parliament and of the Council on Audio-visual Media Service which was adopted on 10 March 2010. Georgia has a three-year period after the Association Agreement is ratified to fulfil this obligation. The only exception concerns one specific regulation which should be implemented within a five-year period. According to Section 2 of Article 431 of the Association Agreement, this particular regulation enters into force following the ratification of or after depositing the approval instrument. It is true that the provisional use of some chapters of the Association Agreement started from 1 September 2014. That said, however, the norms envisaging cooperation in the audio-visual and media fields remain inactive. Additionally, as not all of the EU member states have finished the ratification process, the countdown for Georgia’s commitment has not yet begun. The Law of Georgia on Broadcasting defines the precise intervals when TV companies are allowed to air telemarketing and commercials. It is much stricter when it comes to the issue of airing commercials than the EU directive. The Law prohibits interrupting the broadcast of an

official state event, an official speech of a top government official, a religious ceremony or any socio-political, religious or pre-election debate as well as any programme whose duration is less than 15 minutes with any advertising or telemarketing. According to Section 2 of Article 20 of the aforementioned EU directive, the airing of commercials is prohibited only in the case of a broadcast of a religious ceremony. There are no further restrictions. According to the Law of Georgia on Broadcasting, a news programme may be interrupted with advertising or telemarketing for a maximum of once every 15 minutes whilst a feature film, TV film or film series may be interrupted every 30 minutes. The EU directive, however states that a 30-minute interval is required for a news programme instead of a 15-minute interval. The most important restriction envisaged by the Law of Georgia on Broadcasting concerns the total duration of advertising time. According to the Law of Georgia on Broadcasting, commercials and telemarketing should not exceed a 20% threshold of a broadcasting hour, limiting them to 12 minutes accordingly. The same restriction is envisaged by Section 1 of Article 23 of the directive. However, the Law of Georgia on Broadcasting rejects Section 2 of Article 23 of the directive which says that the 12-minute restriction rule will not apply to announcements made by the broadcaster in connection with its own programmes and ancillary products directly derived from those programmes, sponsorship announcements and product placements. It must be noted that Georgia was given the previously mentioned five-year implementation time precisely for this regulation. In fact, the Law of Georgia on Broadcasting envisages harsher restrictions in contrast to the directive and says that TV companies have to put programme-related announcements in the 12-minute period. Of mention is the fact

that there was no need to accelerate the implementation of this norm in the directive as it was possible to reduce the time for commercials to 12 minutes in the given five-year period. Additionally, a closer look should also be taken as concerns a restriction imposed upon those programmes which are fully or partially financed by a sponsor. Until 15 January 2016, information about sponsors must not exceed 5% of a broadcast hour; that is, three minutes. From 15 January 2016, this time will be further reduced to 90 seconds. Contrary to the Law of Georgia on Broadcasting, the directive does not envisage such a type of restriction at all. On 5 February 2015, the first hearing of the Law of Georgia on Broadcasting took place at the Parliament of Georgia and produced lively debates. Members of the Parliamentary Minority assessed the initiative as an assault to independent media and accused the ruling party of curbing media freedom. The Parliamentary Minority assumes that the Law is against one specific TV channel, Rustavi 2, as its revenues from commercials well exceed the same advertising revenues of other TV companies. Therefore, Rustavi 2 will suffer the most if the Law of Georgia on Broadcasting is implemented. It must be noted that even members of the Majority, whilst talking about the Law, have also often mentioned Rustavi 2, thereby fuelling the beliefs of the Parliamentary Minority that the Law is of a politicised nature. Finally, after time-consuming deliberations, the Law of Georgia on Broadcasting was adopted at the first hearing – 63 votes were cast in favour and 30 votes were cast against. The Parliament of Georgia also did not take the resolution of the Council of Europe’s Parliamentary Assembly into account which declared that the amendments to the Law of Georgia on Broadcasting were poised against the financial and editorial independence of private TV channels.

CONCLUSION Therefore, FactCheck concludes that Davit Bakradze’s statement is TRUE.

TRUE

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BC Bank, Entrepreneurship Development Agency (Enterprise Georgia) and IFC, a member of the World Bank Group, on March 5th signed a Memorandum of Understanding in TBC Bank’s Tbilisi headquarters. Vakhtang Butskhrikidze, TBC Bank CEO, George Tsikolia, CEO of the Entrepreneurship Development Agency (Enterprise Georgia), and Thea Gigiberia, IFC’s Georgia Country Representative, co-signed the agreement. Trilateral cooperation will be a key part of the new SME support project of the government’s Produce in Georgia program. The new project

aims to support of micro and small entrepreneurs. To encourage local production, individuals in remote and rural regions interested in starting a new business will receive financial and technical support from the Entrepreneurship Development Agency. IFC will work with both partners to disseminate online resources available through the SME Toolkit, a free online business portal launched by TBC Bank and IFC in Georgia in 2013. This web platform is available in Georgian at www. tbcbusiness.ge. The platform offers a special application to TBC Business Academy, which can help new entrepreneurs gain much needed knowledge on starting and running a busi-

ness. The application offers lectures and other materials on management, the fundamentals of finance, creating a business plan, and launching a business. In addition, TBC Business Academy applicants can check their knowledge via tests and receive certificates. The SME Toolkit, an innovation of IFC developed in partnership with IBM, provides smaller businesses with tools and educational resources that will help them become more profitable and competitive. The SME Toolkit is part of IFC’s effort to support the private sector in Europe and Central Asia. The work is funded by the Swiss State Secretariat for Economic Affairs.

EU News GDP up by 0.3% in the euro area and by 0.4% in the EU28

easonally adjusted GDP rose by 0.3% in the euro area (EA18) and by 0.4% in the EU28 during the fourth quarter of 2014, compared with the previous quarter, according to a second estimate2 published by Eurostat, the statistical office of the European Union. In the third quarter of 2014, GDP grew by 0.2% in the euro area and by

0.3% in the EU28. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 0.9% in the euro area and by 1.3% in the EU28 in the fourth quarter of 2014, after +0.8% and +1.2% respectively in the previous quarter. During the fourth quarter of 2014, GDP in the United States increased by 0.5% compared with the previous

quarter (after +1.2% in the third quarter of 2014). Compared with the same quarter of the previous year, GDP grew by 2.4% (after +2.7% in the previous quarter). Over the whole year 2014, GDP rose by 0.9% in the euro area and by 1.3% in the EU28, compared to -0.5% and 0.0% in 2013. In the United States, GDP grew by 2.4% in 2014 and by 2.2% in 2013.

GDP growth by Member State

mong Member States for which data are available for the fourth quarter of 2014,

Estonia and Sweden (both +1.1%), Hungary (+0.9%), Germany, Spain and Poland (all +0.7%) recorded the highest growth compared

with the previous quarter. Cyprus (-0.7%), Greece (-0.4%), Austria and Finland (both -0.2%) registered decreases.

GDP components and contributions to growth

uring the fourth quarter of 2014, household final consumption expenditure rose by 0.4% in the euro area and by 0.5% in the EU28 (after +0.5% in both zones in the previous quarter). Gross fixed capital formation increased by 0.4% in both the euro area and the EU28 (after 0.0% and +0.3%).

Exports rose by 0.8% in the euro area and by 1.3% in the EU28 (after +1.5% and +1.1%). Imports increased by 0.4% in the euro area and by 0.8% in the EU28 (after +1.7% and +1.6%). Household final consumption expenditure had a positive contribution to GDP growth both in the euro area and the EU28 (+0.2 and +0.3 percentage points

respectively). Gross fixed capital formation also had a positive contribution to GDP growth in the euro area and the EU28 (+0.1 pp for both zones). The contribution of the external balance to GDP growth was positive for both zones, while the contribution of changes in inventories was negative (-0.2 pp in both the euro area and the EU28).

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FactCheck

IMF Says Georgia Will Face Inflation in Coming Months The FINANCIAL

nternational Monetary Fund mission led by Mr. Mark Griffiths have called Georgian government for preserving Independence of the National Bank of Georgia. Statement was made in response to the recent currency crisis in Georgia and the attacks on NBG President Giorgi Kadagidze, with demands to sell more reserves and keep GEL rate unchamged. Georgia’s former Prime Minister Bidzina Ivanishvili, who still has a great influence on current government said the nation-wide monetary crisis was brought about by the mistakes and inactivity of Giorgi Kadagidze, Head of National Bank who was appointed by the National Movement party, political opposition of current ruling party. On February 24, the Georgian Lari saw its biggest single-day fall since September 2004. The national currency lost 3% of its value in one day. The National Bank was forced to sell 40 million USD to stop the currency’s devaluation against USD. The National Bank set a new rate on February 24 (2.29 GEL), while commercial banks offer 1 USD for 2.34-2.38 GEL. By selling part of its reserves NBG managed to stabilize GEL rate at 2.10. But Experts predict the currency will continue floating. During the last 10 days the mission met with Prime Minister Irakli Garibashvili, Minister Giorgi Kvirikashvili, Finance Minister Nodar Khaduri, Governor Giorgi Kadagidze, other Georgian officials, representatives of the international community, civil society, and the private sector. While making final statement on situation, Mr. Griffiths said Georgia’s economy has been hit by a combination of severe external shocks: the RussiaUkraine crisis, the deepening recession in Russia (both of which create rippleeffects through the region) and currency devaluations in trading partner countries. Because of these shocks, Georgia’s exports are 30 percent lower than one year ago, and remittances from Georgian workers abroad are down 25 percent.

“The economy is slowing as a result. In January, output grew by only 0.5 percent compared to one year ago. While growth this year could reach 2 percent, this projection is subject to risks. The economies of many of Georgia’s main trading partners are slowing by even more, and the depreciation of their exchange rates is hurting Georgia’s competitiveness”, Mr. Griffiths said. “Lower exports, remittances, and tourism receipts have increased the current account deficit in 2014 to around 9.5 percent of GDP. Because foreign earnings are lower, the Lari has depreciated by more than 20 percent against the US dollar since January 2014. Although this depreciation is large, it is in line with the depreciation experienced by many other countries, given the strength of the US dollar. Indeed, most currencies in the region have depreciated by even more. That said, the Lari’s depreciation against the US dollar will increase costs for those who have borrowed in foreign currency. This will slow down economic growth”. “Because of the depreciation, inflation will likely pick up somewhat in coming months, towards the National Bank of Georgia’s (NBG) inflation target of 5 percent. But this increase in inflation will take place from a low starting point: inflation in February was only 1.3 percent, in part because of lower oil prices. Lower import prices should also contain inflation”. Mr. Griffiths said the government and the NBG need to work together now—in a way that respects each other’s areas of responsibility and central bank independence—on a comprehensive action plan to address these new challenges. Because of its solid fundamentals, reform-minded authorities, and the Association Agreement with the EU, Georgia is well placed to overcome the current challenges. “The government deserves credit for keeping the budget deficit to 3 percent of GDP in 2014, well below the program target. However, for 2015, lower growth means that tax revenues will be less than projected in the budget. The government will therefore need to take measures to keep the budget deficit under

control. The government has appropriately taken steps in this direction, including by limiting employee bonuses and by taking efforts to contain administrative spending. The government needs to build on these decisions and pass amendments to the budget that include specific tax increases and spending cuts to limit the increase in the budget deficit. However, spending on the social safety net should be maintained and targeting improved to protect the vulnerable and the poor”. “The mission fully supports the NBG’s policy to refrain from intervening in the foreign exchange market and to allow the Lari to float. The main objective of the NBG is to ensure price stability: achieving this goal depends on having a floating exchange rate. In addition, the floating rate allows the exchange rate to absorb external shocks. Intervening to resist shocks that will likely be long-lasting would only waste Georgia’s foreign currency reserves and slow the reduction of Georgia’s trade deficit with the rest of the world”. “Independence of the NBG should be preserved and respected, so that it is free to pursue its main objective of price stability, and to make sure that the financial sector stays healthy, which will support long-term, stable economic growth”. “Finally, we look forward to plans to accelerate reforms to make Georgia a more attractive place for doing business and for investing, for creating jobs, and for boosting growth in the future. These should include easing recent restrictions on foreign businesses, seeking out new private investment, boosting saving through pension and capital market reforms, and raising educational standards. The mission would like to thank the government and the NBG for productive discussions. We look forward for the government to prepare specific amendments to the budget that will limit the budget deficit, and for the authorities to continue adhering to their floating exchange rate policy. We hope that these steps will be taken quickly, so that the IMF mission can return soon to Georgia for the Second Review”.

Giorgi Kvirikashvili: Minister of Economy and Sustainable Development of Georgia

“Visa regulations have significantly hindered the influx of both botth tourists tourists and labourers from m China.” China.”” Giorgi GATENASHVILI FactCheck

n 15 January 2015, as a guest on Maestro TV, the Minister of Economy and Sustainable Development of Georgia, Giorgi Kvirikashvili, stated that the new visa regulations have significantly hindered the influx of both tourists and labourers from China. Since September 2014, Georgia has introduced a new law entitled the Law on the Legal Status of Aliens and Stateless Persons. According to the Law, a C1-type visa will be issued for those persons who visit Georgia for tourism purposes and a C2-type visa will be issued for those individuals who plan to visit family members. One has to obtain a C3-type visa to come to Georgia for business meetings and other activities or to perform journalistic work. D1-type visas will be issued for those who visit Georgia to conduct labour activities and a D2-type visa is required to conduct entrepreneurial activity in the country. Visitors were able to obtain all of these types of visas at the state border of Georgia and at Public Service Halls before 1 September 2014. However, after the new Law went into force visitors have to apply for their visas at Georgia’s diplomatic representations and consulates abroad. As a result of legislative changes, the duration of stay for foreigners who have obtained

those aforementioned visas is a maximum of 90 days within a 180-day period. Visa free nationals are subject to the same duration of stay conditions. Visas are also divided into long-term visas and short-term visas, single entry visas and multiple entry visas. Multiple entry visas are issued for no more than five years but even in this case, the duration of the stay for a visitor is limited to a maximum of 90 days within a 180-day period. For instance, if a visitor is able to obtain a multiple entry D1-type visa, he or she has to leave Georgian territory after 90 days and come back after a further 90 days which is a significant problem for those labourers who work on a contractual basis. With respect to tourist visas, they are issued for 30 days. A C1-type visa for 90 days can be issued in the case of a person visiting the country for a second time. If we look at the particular issue of Chinese tourists travelling to Georgia on the Urumqi-Tbilisi flight, the fact that there is no Georgian consulate in Urumqi means that a visitor

must first go to Beijing, some 3,177 km away, and spend ten-to-30 days there while the visa is being processed and then issued before returning to Urumqi and flying to Tbilisi. Naturally, this creates a very complicated set of procedures for a tourist who typically has both limited time and resources. According to statistical data of the National Tourism Agency of Georgia, a total of 8,830 visitors from China came to Georgia in 2013. The number dropped to 8,598 in 2014 which is a 3% decrease as compared to the previous year. It must be noted that the period of the very sharp reduction in the number of visitors coincides with the fourth quarter of the year; that is, when the new Law went into force (Graphs 1). As illustrated by the graphs, Georgia received 48% less visitors from China in the fourth quarter of 2014 as compared to the third quarter of the same year immediately after the new regulations went into force. Comparing these data to those of 2014, this represents a 41% decrease.

Graph 1: Monthly Statistical Data of Visitors from China for the Period of 2013-2014

CONCLUSION The number of Chinese visitors coming to Georgia was stable throughout 2013. The number of visitors showed a steady increase upon a quarterly basis in 2014 as well. However, the number of visitors dropped by 48% in the fourth quarter of 2014 as compared to the third quarter of the same year and by 41% as compared to the same quarter of the previous year. The fall in numbers is attributed to the new visa and emigration regulations imposed by the Government of Georgia. FactCheck concludes that Giorgi Kvirikashvili’s statement:“Visa statement: Visa regulations have significantly hindered the influx of both tourists and labourers from China” is TRUE.

TRUE

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elow is a detailed summary of the procedures, time and costs to build a warehouse in Georgia. This includes obtaining necessary licenses and permits, completing required notifications and inspections and obtaining utility connections. This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014. No. Procedure 1 Request and obtain extract from the National Public Registry Agency: National Public Registry The extract is proof of the registered ownership right and is the basis for the right to build on a plot. The extract is presented only once, at the beginning of the permitting process. 2 Request and obtain terms of construction from Tbilisi Architecture at the Tbilisi Hall Agency: Tbilisi Architecture at the Tbilisi Hall Governmental Decree # 57 of March 24, 2009 on the Procedures and Conditions of Issuance of Construction Permit established that the Legal Entity of Public Law - Tbilisi Architecture under Tbilisi Hall has been created on the basis of Tbilisi Urban Planning Service. All applications regarding construction permits shall be submitted with Tbilisi Architecture. The process of obtaining construction permit is facilitated due to the introduction of online application system. 3 Request and obtain building permit from Tbilisi Architecture Agency: Tbilisi Architecture The cost is determined by the project value. According to Tbilisi Government Resolution No 2-21, as of February 28, 2008, the fee has been increased to GEL 1.00 per sq. m. and only the ground floor space is counted. Thus, the breakdown in the case considered here is 1300.6/2 x GEL 1.00 = GEL 650.30. According to GOG Resolution No. 57 as of March 24 2009, construction projects are classified into risk-based categories. Depending on the complexity of each category, different types of procedures are to be followed by applicants. The first category is the lowest risk, and the fifth is the most complex one. The Doing Business case study warehouse falls under category III, which does not require project expertise and entails a simplified process of approval that also excludes the need for approval of Architectural-Construction Design. 4 Request and receive connection to water and sewage service Agency: Georgian Water and Power Having obtained the conditions from the water authority, BuildCo starts building the water and sewage pipes to the main water pipeline. Once there is a connection to the main pipeline, the inspector from private water company (Georgian Water and Power) comes to confirm the connection and sign the protocol. 5 Request and obtain layout survey and protocol from a private survey company Agency: Private survey company This procedure is part of the architectural planning contract. 6 Request and obtain protocol of completion of major building structure from the Technical and Constructions Inspection Agency: Technical and Constructions Inspection At the end of construction, BuildCo must request this permit and submit all the inspection certificates obtained in the previous procedures. 7 Request and obtain exploitation of building construction from Tbilisi Supervisory Service Agency Agency: Tbilisi Supervisory Service Agency After the completion of construction and prior to registration at the Public Registry, BuildCo submits a request to the Department of Supervision of Tbilisi for a certificate of completion. The list of documents required for the submission are approved by the Resolution of Government of Georgia № 57 on March 24, 2009 “On the Procedures and Conditions of Issuance of Construction Permits”, Article 96, Paragraph 3. 8 Register the building with the National Public Registry Agency: National Public Registry The company must submit the document obtained in the previous procedure and the exploitation permit. The time line is faster under the Georgian Law on Registration of Rights on Immovable Property (December 28, 2005).

Time to Associated Complete Costs 0.5 days GEL 40

30 days

no charge

10 days

GEL 650

10 days

no charge

1 day

no charge

1 day

no charge

15 days

no charge

1 day

GEL 150

Georgia one of the world’s most sober nations, publically at least MERAB PACHULIA GORBI

Chart 1:

Top countries where one can witness alcohol consumpƟon in the streets (Figures are given in percentages)

t always makes me proud to read or hear some information about my country’s rich cultural heritage. As with many other ancient countries that have survived in one form or another till present, wine is often an enduring theme. Some estimate that the earliest wines were consumed in Georgia circa 6,000 BC. In the modern era, public consumption of alcohol is restricted and in many countries, including in Georgia, where one can now get slapped with a small fine for drinking in public. However, the law and cultural nuances do not always deter people from enjoying a bottle of beer on the streets. The 6th and the most recent wave of the World Values Survey (WVS) asked representative population samples in 60 countries how frequently alcohol was consumption in the streets in their neighborhoods. Certainly this question, along with the 200 plus others in this survey, has academic theories behind it and are tested and assessed by scholars and policy makers. In this column, however, I will only present raw data on

Source: World Values Survey, 2014

visibility of alcohol consumption in the streets to present top countries worldwide where such behavior is still visible and common, as well as where it has been eradicated or is likely to rise. Among the top 10 countries (actually there are 13 because three have an identical percentage) Russia and Mexico are the leaders, with 7 out of 10 respondents saying that drinking in the streets occurs very or quite

Chart 2:

Visibility of alcohol consumpƟon in the streets among Ex Soviet states (Figures are given in percentages.) p g )

Source: World Values Survey, 2014

frequently in their neighborhood. Two former Soviet republics, Belarus and Ukraine, are also among the “champions” in this poll. The champions represent 4 continents and are predominantly Christian countries. One of the most interesting institutions that I remember from Soviet times was the so-called “drunk tank” (Vytrezvitel, in Russian). This was a sobering-up station and although I was fortunate

enough never to have been taken there, I know some individuals who spent a night under cold shower and ended up paying 2 kopeeks (cents) for their hangover treatment. In some countries, they are still in service and interestingly these are topping the list of champion countries. In the Chart 2 I listed ex Soviet states where people frequently witness others drinking openly in the streets. Azerbaijan and Georgia are

those two countries were only 6% of respondents reported seeing alcohol consumed in the streets of their neighborhood, the lowest figure not only among the former Soviet Union but worldwide! Truth to be told, the most publically sober country inlcuded in this survey was Yemen - only 5% witness people dirinking in the streets.

GORBI is a regional hub for partner organizations

and international clients. GORBI is an exclusive member of Gallup International research network since 2003 and has over two decades of experience in survey research in the former Soviet Union, as well as Mongolia and Iraq.

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Baku, Tbilisi, Yerevan at the Bottom of Quality of Living Rankings riencing a considerable drop in the rankings following political instability and violence in Ukraine overall. In the UK, London (40) is the highest-ranking city, followed by Birmingham (52), Glasgow (55), Aberdeen (57), and Belfast (63). “UK cities overall enjoy high standards of quality of living and remain stable and attractive locations for businesses,” said Ellyn Karetnick, Principal at Mercer. “Security has been tightened in many major European cities following the attacks in Paris and Copenhagen, and Mercer is closely monitoring any potential impact on the living standard for expatriates and their families in these locations.”

The FINANCIAL

ienna has the world’s best quality of living, according to the Mercer 2015 Quality of Living rankings. Overall, European cities dominate the top of the ranking along with major cities in Australia and New Zealand. Zurich, Auckland, and Munich are in second, third, and fourth places respectively. In fifth place, Vancouver is the highest-ranking city in North America and the region’s only city in the top 10. Singapore (26) is the highest-ranking Asian city, whereas Dubai (74) ranks first across the Middle East and Africa. Montevideo in Uruguay (78) takes the top spot for South America. Mercer conducts its Quality of Living survey annually to help multinational companies and other employers compensate employees fairly when placing them on international assignments. Employee incentives include a qualityof-living allowance and a mobility premium*. Mercer’s Quality of Living Reports provide valuable information and hardship premium recommendations for over 440 cities throughout the world; the ranking covers 230 of these cities. “Taking a short- or longterm work assignment in a new country is both an exciting and challenging experi-

AMERICAS

ence for employees and their families,” said Slagin Parakatil, Principal at Mercer. “Cultures, societies, and comparatively different climates, as well as political instability, high crime rates, and poor infrastructure can be difficult to navigate and settle down in for employees and their families. Employers need to assess whether their staff and families will encounter any drop in quality of living when relocating and ensure they are fairly compensated for it.”

EUROPE Despite concerns about economic growth, the cities of Western Europe continue to offer a stable environment for employees and employers. Vienna (1) is followed by Zurich (2), Munich (4), Düsseldorf (6), and Frankfurt (7). With Geneva and Copenhagen in 8th and 9th places, respectively, Western European cities take seven places in the top 10. The lowest-ranking

cities in Western Europe are Belfast (63) and Athens (85). Cities in Central and Eastern Europe have a wider range of quality-of-living standards. The highest-ranking cities are Prague (68), Budapest, and Ljubljana (both ranked 75th). Emerging city Wroclaw (100), Poland, has a thriving cultural and social environment and good availability of consumer goods. The region’s lower-ranking cities are Kiev (176), Tirana (180), and Minsk (189), with Kiev expe-

In North America, Canada and the United States continue to offer a high standard of living. Vancouver (5) tops the list for this region, followed by fellow Canadian cities Toronto (15) and Ottawa (16), whereas San Francisco (27), Boston (34), and Honolulu (36) are the highest-ranking US cities. Mexico’s highest ranking city is Monterrey (109), while Mexico City is ranked 126th. The lowestranking cities in the North American region are Havana (193) and Port-au-Prince (228). In South America, Montevideo (78), Buenos Aires

(91), and Santiago (93) are the highest-ranked cities, whereas La Paz (156) and Caracas (179) rank lowest. In Brazil, Mercer has identified Manaus as an emerging city –it is ranked 127th. The city is already a thriving industrial centre and has a free economic zone – its good supply of consumer goods and relatively advanced infrastructure partially counteract the impact of Manaus’ lack of international schooling options for expatriates and remote location.

ASIA-PACIFIC Asia is the region with the largest range in quality-of-living standards, with the highest-ranking city, Singapore, in 25th place and the lowestranking, Dushanbe, Tajikistan, in 214th place. Topping the ranking across East Asian cities is Tokyo in 44th place; Other key cities in this part of the region include Hong Kong (70), Seoul (72), Taipei (83), Shanghai (101), and Beijing (118). Notable emerging cities in this part of Asia include Cheonan (98), South Korea, and Taichung (99) in Taiwan. Chinese cities Xi’an and Chongqing (both ranked 142nd) are also emerging as business destinations. Their main challenges to improving quality-of-living standards are clean water provision and air Continued on p. 20

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FINANCIAL HEADLINE NEWS & ANALYSIS

FINCHANNEL.COM | 9 MARCH, 2015

energy prices in europe

Risk of Additional Uncompleted Construction Projects in Georgia Continued from p. 2

had a boom in real estate business. In fact, we have witnessed a huge rise in the number of constructions, similar to before the crisis in 2008,” said Urushadze. Q. What is the reason why the most responsible developers operating in Georgia are backed by other industries, in particular, by banks? A. The name of the bank might be backing a developer. However, it is significant that such developers are not relying on the financial resources of that bank. High intellectual management is the main distinguishing feature of such development companies, in comparison with their competitors. The average Georgian developer acts as an architect, project manager, construction company, sales office and a cost manager, basically as Jack of all trades and master of none. In reality they lack expertise in all of it. Accordingly they often make improper planning and calculations. They fail to control quality and expenditure. Finally, all of this negatively reflects on the welfare of the company. They fail to attract financial resources. Therefore, to complete projects they are often dependent on the sale of unfinished spaces to buyers. In this system, a project can be completed successfully if there is an economic boom in the country. As soon as negative processes appear in the economy such companies start facing problems putting buyers in risky situations as well We have already experienced this during post war period when a large part of the population was affected. The same is happening now. The problem with society is that it relies on friendships and acquaintances; The management of a company and its financial standing , the risks associated with development projects are not considered by them. Today, buyers appear to be approaching same risks as in 2008. Some will be lucky, some may not. Q. As you say - there might be new cases of people who have paid for apartments, but whose developers will not meet their responsibilities. Don’t you think that these processes should be regulated by the Government? A. Regulation has its advantages and disadvantages. It always leads to business restrictions. If the Government stipulates the completion of a project by a developer or limits the reduction of issuing licenses, this will result in reduced projects, reduced employment and investments. Protecting buyers will be the positive side of this however. In many U.S. states there is a law which prohibits the sale of apartments before their completion. This is a guarantee that the project will be completed - for the population as well as the developer. So, implementation of such legislation would restrict and affect negatively the real estate market on the one hand, but protect buyers on the other. Some middle ground should be reached. The regulations should be implemented gradually so that they protect buyers but do not hamper the development of the sector. When the state sees some upcoming risks due to ex-

ternal factors, it should interfere with some regulations. Q. According to the recent initiative of the Government - projects started before 2008 are free from VAT taxes and the K2 coefficient fee. Do you think this will encourage developers to complete already-started projects? A. The profitability of a project is the key issue for developers. If the earnings will be less than the fine, then it is clear that the company will not complete it. Especially when personal responsibility does not come into play. It is the company’s responsibility to complete the project but when they see that the project is becoming infeasible they abandon it. Consequently, the initiative of the Government will make some projects seem positive from a financial point of view. So, overall it is a very positive step. Q. Which segment of real estate seems the most profitable for investing in? A. Contrary to residential apartments there are some segments of real estate which will be more profitable and less risky. There is demand for branded two-three star hotels as well as affordable office space. The demand for hotels has been maintained and the crisis has not yet been reflected in this segment. There are currently some two-three star hotels under development and construction. Many investors are trying to initiate a similar development. The construction of some fivestar hotels has almost been completed. After their completion the market of the luxury hotel niche will be fully saturated. As for other segments, the industrial real estate market is still dead. The situation is stable for office space. The demand and supply is in a balanced state. Q. How would you estimate the Georgian investment climate in terms of real estate business? A. The investment environment has not altered greatly recently. There is a crisis in the whole region. If we look at other countries, we will see that the situation is equal to Georgia. Our neighbour countries are our major trading partners. Accordingly, the situation in the region affected Georgia. Besides external factors, there was internal policy as well. When a country has a social dimension, a lack of capital investment is issued in infrastructure. It is reflected in the economy. If the state gives priority to infrastructural projects and not to social ones, it will have a better result on the economy. The negative impacts on the market are being caused by other factors. Devaluation of the GEL will have a negative impact on the purchasing power of society.. It has already resulted in a reduction of the solvency of the population. It definitely affects the number of bank qualified buyers of a real estate. The risks are higher this year to start a new residential development and more money needs to be invested in preliminary feasibility studies. Q. If the Government had a different policy, do you think we would avoid external risks? A. I cannot say that the state has no business-friendly poli-

cies. The business legal environment is not worse than in previous years. The only change is that priority is being given to the social sphere and not to infrastructure development. Today, the state does not invest in the economy. It spends the budget on pensions and other social benefits. The spending appears in the fields where social wealth is not created. This inevitably leads to problems in the economy. The Government’s shift to spending in the economy is not a popular step since it does not have immediate affect on poor population though it has long term effects. Q. A labour inspection process will come into force this year. What will be its impact on businesses? A. There is no event without negative implications. More regulation, more monitoring will be negatively reflected on businesses. However, there might still be some companies in Georgia where the rights of employees are being violated. So it will bring positive results in these terms. Actually the problem is not what is done, the problem is how it is done. The success of any reform depends on the mechanisms and their implementation. Q. What kind of regulations should be implemented in the construction business? A. I welcome regulations in areas such as harmful and dangerous construction materials that affect the health of the population. The usage of zinc roofs and asbestos-containing materials, lead paints should be not only banned but strict mandatory procedures need to be implemented for the removing of such materials and creating special waste territories. These have very serious effects on health. Banning the usage of materials that are prohibited in many countries is crucial. Regulations are necessary when health risks are in question. Q. There are lots of uncompleted constructions in Georgia. What is the solution to this problem? A. Tax exemption is one of the positive steps in this regard. Unfortunately, courts in Georgia have no mechanism to deal with such problems, while in many countries cheated buyers can unite and and have the court oblige the company to meet their responsibilities. The court should force the developers who, not due to a crisis, but because of poor management have failed to complete a project resulting in financial losses of buyers. The law of bankruptcy is quite complicated in Georgia. I have never heard of the precedent of the bankruptcy of a developer company in Georgia. By the current bancruptcy law nobody benefits but the state bancruptcy agency. This is quite a meaningless law.

FUEL PRICES ELECTRICITY HOUSEHOLDS FUEL TAXES

FUEL PRICES January 5, 2013

Unleaded (Superbleifrei, Euro sans plomb, Euro95) Retail Price

Country

Diesel (Gazole, Gasóleo)

Price (Excluding VAT)

Retail Price

Price (Excluding VAT)

Austria

€ 1.390

€ 1.158

€ 1.359

€ 1.133

Belgium

€ 1.636

€ 1.352

€ 1.492

€ 1.233

Bulgaria

€ 1.265

2.49 лв.

€ 1.054

2.08 лв.

€ 1.304

€ 1.087

€ 1.407

2.13 лв.

Cyprus

€ 1.348

Czech Republic

€ 1.393

35.00 Kč

€ 1.151

28.93 Kč

€ 1.433

36.00 Kč

€ 1.184

29.75 Kč

€ 1.607

11.99 kr

€ 1.286

9.59 kr

€ 1.460

10.89 kr

€ 1.168

8.71 kr

Denmark

€ 1.152

2.55 лв.

€ 1.203

Estonia

€ 1.239

€ 1.033

€ 1.293

€ 1.078

Finland

€ 1.603

€ 1.293

€ 1.521

€ 1.227

France

€ 1.650

€ 1.380

€ 1.493

€ 1.248

Germany

€ 1.577

€ 1.325

€ 1.453

€ 1.221

Greece

€ 1.681

€ 1.367

€ 1.411

€ 1.147

Hungary

€ 1.387

Ireland

€ 1.590

Italy

407 Ft

€ 1.092

320 Ft

€ 1.424

€ 1.293

€ 1.752

418 Ft

€ 1.121

€ 1.531

€ 1.448

329 Ft

€ 1.245

€ 1.697

€ 1.402

Latvia

€ 1.319

Ls 0.922

€ 1.090

Ls 0.762

€ 1.321

Ls 0.923

€ 1.092

Ls 0.763

Lithuania

€ 1.360

Lt 4.70

€ 1.124

Lt 3.88

€ 1.299

Lt 4.49

€ 1.074

Lt 3.71

Luxembourg

€ 1.317

Malta

€ 1.500

Netherlands

€ 1.782

Poland

€ 1.347

Portugal

€ 1.749

Romania

€ 1.271

€ 1.145

€ 1.218

€ 1.271

€ 1.380

€ 1.473 5.49 zł

€ 1.095

€ 1.025

€ 1.169

€ 1.491 4.46 zł

€ 1.364

€ 1.422 5.66 lei

€ 1.059 € 1.232 5.56 zł

€ 1.109

€ 1.489 4.56 lei

€ 1.309

5.83 lei

€ 1.056

Slovakia

€ 1.504

€ 1.253

€ 1.431

€ 1.193

Slovenia

€ 1.486

€ 1.238

€ 1.385

€ 1.154

Spain

€ 1.372

€ 1.134

4.52 zł

€ 1.211

€ 1.343

4.70 lei

€ 1.110

Sweden

€ 1.646

14.18 kr

€ 1.317

11.34 kr

€ 1.642

14.14 kr

€ 1.314

11.31 kr

United Kingdom

€ 1.624

£ 1.321

€ 1.353

£ 1.101

€ 1.714

£ 1.394

€ 1.428

£ 1.162

EU AVERAGE

€ 1.496

€ 1.234

€ 1.181

€ 1.432

ELECTRICITY HOUSEHOLDS Retail (end-user) energy prices for households. Two consumption levels are identified. Research methodology. Consumption: 3,500 kWh/year (± 25%)

Consumption: 7,500 kWh/year (± 30%)

Country

€ per kWh Electricity

Country

€ per kWh Electricity

Austria

€ 0.1988

Austria

€ 0.1798

Belgium

€ 0.2134

Belgium

€ 0.1940

Bulgaria

€ 0.0829

Bulgaria

€ 0.0823

Cyprus

€ 0.2850

Cyprus

€ 0.2800

Czech Republic

€ 0.1480

Czech Republic

€ 0.1276

Denmark

€ 0.2982

Denmark

€ 0.2562

Estonia

€ 0.0989

Estonia

€ 0.0948

Finland

€ 0.1566

Finland

€ 0.1369

France

€ 0.1412

France

€ 0.1279

Germany

€ 0.2541

Germany

€ 0.2406

Greece

€ 0.1265

Greece

€ 0.1553

Hungary

€ 0.1708

Hungary

€ 0.1616

Ireland

€ 0.1920

Ireland

€ 0.1604

Italy

€ 0.2031

Italy

Latvia

€ 0.1187

Latvia

€ 0.1193

Lithuania

€ 0.1200

Lithuania

€ 0.1201

Luxembourg

€ 0.1707

Luxembourg

€ 0.1587

Malta

€ 0.1695

Malta

€ 0.1829

Netherlands

€ 0.2208

Netherlands

€ 0.2439

Poland

€ 0.1488

Poland

€ 0.1419

€ 0.2485

Portugal

€ 0.1689

Portugal

€ 0.1547

Romania

€ 0.1095

Romania

€ 0.1074

Slovakia

€ 0.1677

Slovakia

€ 0.1501

Slovenia

€ 0.1447

Slovenia

€ 0.1335

Spain

€ 0.1959

Spain

€ 0.1777

Sweden

€ 0.2098

Sweden

€ 0.1821

United Kingdom

€ 0.1419

United Kingdom

€ 0.1265

Notes: - Amount is in euro (€) per kiloWatthour (kWh). - Price data for non-eurozone countries are in euro. The average exchange rate valid for the referenced month is applied. - Prices include: market price, transmission through main and local networks, administrative charges and all taxes.

FUEL TAXES January 5, 2013

Country

Unleaded (Superbleifrei, Euro sans plomb, Euro95) Crude

Margin Excise duties

VAT

Retail price

Diesel (Gazole, Gasóleo) Crude

Margin Excise duties

VAT

Retail price

Austria

€ 0.512 € 0.164

€ 0.482

€ 0.232

€ 1.390

€ 0.512 € 0.224

€ 0.397

€ 0.227

Belgium

€ 0.512 € 0.226

€ 0.614

€ 0.284

€ 1.636

€ 0.512 € 0.293

€ 0.428

€ 0.259

€ 1.492

Bulgaria

€ 0.512 € 0.179

€ 0.363

€ 0.211

€ 1.265

€ 0.512 € 0.253

€ 0.322

€ 0.217

€ 1.304

€ 1.359

Cyprus

€ 0.512 € 0.281

€ 0.359

€ 0.196

€ 1.348

€ 0.512 € 0.361

€ 0.330

€ 0.204

€ 1.407

Czech Republic

€ 0.512 € 0.123

€ 0.516

€ 0.242

€ 1.393

€ 0.512 € 0.232

€ 0.440

€ 0.249

€ 1.433

Denmark

€ 0.512 € 0.187

€ 0.587

€ 0.321

€ 1.607

€ 0.512 € 0.212

€ 0.444

€ 0.292

€ 1.460

Estonia

€ 0.512 € 0.098

€ 0.423

€ 0.207

€ 1.239

€ 0.512 € 0.173

€ 0.393

€ 0.216

€ 1.293

Finland

€ 0.512 € 0.131

€ 0.650

€ 0.310

€ 1.603

€ 0.512 € 0.245

€ 0.470

€ 0.294

€ 1.521

France

€ 0.512 € 0.261

€ 0.607

€ 0.270

€ 1.650

€ 0.512 € 0.308

€ 0.428

€ 0.245

€ 1.493

Germany

€ 0.512 € 0.159

€ 0.654

€ 0.252

€ 1.577

€ 0.512 € 0.239

€ 0.470

€ 0.232

€ 1.453

Greece

€ 0.512 € 0.185

€ 0.670

€ 0.314

€ 1.681

€ 0.512 € 0.223

€ 0.412

€ 0.264

€ 1.411

Hungary

€ 0.512 € 0.161

€ 0.419

€ 0.295

€ 1.387

€ 0.512 € 0.223

€ 0.386

€ 0.303

€ 1.424

Ireland

€ 0.512 € 0.193

€ 0.588

€ 0.297

€ 1.590

€ 0.512 € 0.254

€ 0.479

€ 0.286

€ 1.531

Italy

€ 0.512 € 0.232

€ 0.704

€ 0.304

€ 1.752

€ 0.512 € 0.298

€ 0.593

€ 0.295

€ 1.697

Latvia

€ 0.512 € 0.170

€ 0.408

€ 0.229

€ 1.319

€ 0.512 € 0.250

€ 0.330

€ 0.229

€ 1.321

Lithuania

€ 0.512 € 0.178

€ 0.434

€ 0.236

€ 1.360

€ 0.512 € 0.260

€ 0.302

€ 0.225

€ 1.299

Luxembourg

€ 0.512 € 0.171

€ 0.462

€ 0.172

€ 1.317

€ 0.512 € 0.217

€ 0.330

€ 0.159

€ 1.218

Malta

€ 0.512 € 0.290

€ 0.469

€ 0.229

€ 1.500

€ 0.512 € 0.276

€ 0.382

€ 0.211

€ 1.380

Netherlands

€ 0.512 € 0.231

€ 0.730

€ 0.309

€ 1.782

€ 0.512 € 0.289

€ 0.431

€ 0.259

€ 1.491

Poland

€ 0.512 € 0.203

€ 0.380

€ 0.252

€ 1.347

€ 0.512 € 0.267

€ 0.330

€ 0.255

€ 1.364

Portugal

€ 0.512 € 0.326

€ 0.584

€ 0.327

€ 1.749

€ 0.512 € 0.333

€ 0.366

€ 0.278

€ 1.489

Romania

€ 0.512 € 0.153

€ 0.360

€ 0.246

€ 1.271

€ 0.512 € 0.228

€ 0.316

€ 0.253

€ 1.309

Slovakia

€ 0.512 € 0.227

€ 0.515

€ 0.251

€ 1.504

€ 0.512 € 0.295

€ 0.386

€ 0.239

€ 1.431

Slovenia

€ 0.512 € 0.235

€ 0.491

€ 0.248

€ 1.486

€ 0.512 € 0.281

€ 0.361

€ 0.231

€ 1.385

Spain

€ 0.512 € 0.197

€ 0.425

€ 0.238

€ 1.372

€ 0.512 € 0.267

€ 0.331

€ 0.233

Sweden

€ 0.512 € 0.185

€ 0.620

€ 0.329

€ 1.646

€ 0.512 € 0.248

€ 0.554

€ 0.328

€ 1.642

United Kingdom

€ 0.512 € 0.167

€ 0.674

€ 0.271

€ 1.624

€ 0.512 € 0.242

€ 0.674

€ 0.286

€ 1.714

€ 1.343

CMYK

HEADLINE NEWS & ANALYSIS

FINANCIAL

9 MARCH, 2015 | FINCHANNEL.COM

construction business

Hospitality and F&B Sectors to Boom on the Georgian Real Estate Market The FINANCIAL

By MADONA GASANOVA

evelopment of the commercial real estate market in Georgia remains firmly focused on the tourism and hospitality sector. The expansion of international food and beverage brands is still high on the agenda for 2015, which makes the hospitality and F&B sectors the most promising for investors. As for residential apartments - “demand exceeds supply,” said Steve Brown, Managing Partner at Cushman & Wakefield | Veritas Brown. So until this dynamic changes, Brown suggests that most new, well-located and constructed projects should yield returns. “If mortgages become unaffordable the residential sector will become saturated with empty or half-finished buildings. Good quality office space is in very short supply but this is due to low demand, and we think the hospitality and F&B sectors will continue to boom for the foreseeable future,” Steve Brown, Managing Partner at Cushman & Wakefield | Veritas Brown, told The FINANCIAL. “Development of the commercial real estate market in Georgia remains firmly focused on the tourism and hospitality sector, which led to us expanding our provision of hospitality consultancy services through the recruitment of Tom Day as Regional Hospitality Director. Also, the expansion of international food and beverage brands is still high on the agenda for 2015 and there are a number of new and exciting retail developments planned in Batumi,” said Brown. “We are helping Starbucks, through Alshaya, with their roll out in Kazakhstan, but we are making little progress convincing them to come to Georgia; this may change in the medium term. We believe many existing international brands are close to saturation point within the region and are seeking to consolidate rather than expand further,” he added.

STEVE BROWN, Managing Partner at Cushman & Wakefield | Veritas Brown Q. How would you summarize 2014 for the Georgian real estate sector? A. The market began to stabilise after the period of “cohabitation” and 2014 was another successful year for Cushman & Wakefield | Veritas Brown in the Caucasus Region - commission and service fee revenue saw a yearon-year increase of 35% and new improved office premises were found in Tbilisi as staff numbers expanded to 18. We also opened a second office in Batumi primarily to take advantage of the continued focus on the development of tourism in the region. Q. In your words, the period of “cohabitation” in 2013 had a negative effect on the state of the commercial real estate market in general. Has the situation changed for the better since the presidential elections? A. There seems to be increased confidence amongst developers, although there is still a degree of caution due to the continued regional instability and local currency is-

sues. But generally things are improving, albeit slowly. Q. The recent devaluation of the national currency towards the USD has had a negative impact on the solvency of the population. What will be its impact on the real estate sector? A. Residential development is on the increase, these projects are only successful if the population can gain access to affordable mortgages and of course be in a position to pay them. Currency devaluation can have a damaging impact for both developers and home owners alike, a fluctuating currency is not welcomed, and the Government should consider options to stabilize the situation. We were informed that a recent EBRD report supported the Government on their non-interference policy so perhaps doing nothing at present is the best policy; time will tell. Q. Cushman & Wakefield | Veritas Brown has been successfully operating in Kazakhstan since 2009. The country is also experiencing hard eco-

nomic times. What is the situation there at the moment in terms of the real estate sector? A. The economy in Kazakhstan is intrinsically linked to both the Russian economy and oil prices; two factors that adversely affect current and future prospects in the country. Consequently, the real estate sector is also experiencing an adjustment accordingly - for example, many occupiers are consolidating operations in the short to medium-term with a view to expanding in the medium to long-term. Q. The Russian-Ukrainian crisis had a negative impact throughout the whole region. Which countries remain the most promising? A. The current downturn in the Russian economy has caused a ripple effect throughout the region. Those countries with the most positive outlook are those that are insulated from the effects of both Russia and the drop in energy prices, or are sufficiently diversified through cooperation with a number of different international partners, such as China, India, the EU etc. For Georgia, the best way to minimize external risks is through diversification, by working with a variety of partners, who themselves are not intrinsically linked. Q. Attracting FDI still remains a big challenge for Georgia. What are your expectations of whether we’ll see larger interest from foreign investors in the country in 2015? A. For the time being we do not expect to see increased FDI into Georgia due to regional instability issues. Investors have little, if any, risk appetite for the region but may look for trophy assets with good revenue streams. Q. What are the main negative and positive steps that discourage and encourage the interest of foreign investors in Georgia? A. Generally Georgia is a

good place to do business, highlighted by the country being ranked 15th highest out of 189 economies in the World Bank’s “Ease of Doing Business” index; this position slipped from 8th last year. However, the recent immigration debacle did not help. Investors coming to Georgia from the east need to have access to the country, and imposing unattainable visa requirements doesn’t help. Common sense needs to be applied and investors need access to the country. Q. The construction of residential apartments was quite active during 2013-2014. Do you think that as the supply exceeds demand we might face another wave of uncompleted buildings? A. There seems to be an unfinished residential development on every street corner, a legacy of the 2008 crises. Most are poorly located and constructed, and competing with projects - such as Bank of Georgia M2, which in our view are excellent developments - will be difficult. At present demand exceeds supply, so until this dynamic changes most new, well-located and constructed projects should yield returns. Q. In Georgia there is no practice of insuring buildings under construction. What are the main reasons for it and do you recommend the implementation of this practice? A. If is not a legal requirement then developers are not obliged to insure buildings. The Government needs to address this issue which we believe should be a legal obligation.

Industrial Producer Prices Down by 0.9% in Euro Area The FINANCIAL

n January 2015, compared with December 2014, industrial producer prices fell by 0.9% in the euro area (EA19) and by 1.2% in the EU282, according to estimates from Eurostat, the statistical office of the European Union. In December 20143 prices decreased by 1.0% in the euro area and by 1.1% in the EU28. In January 2015, compared with January 2014, industrial producer prices fell by 3.4% in the euro area and by 4.1% in the EU28. The 0.9% decrease in industrial producer prices in total industry in the euro area in January 2015, compared with December 2014, is due to falls of 3.2% in the energy sector, of 0.5% for intermediate goods and of 0.2% for non- durable consumer goods, while prices rose by 0.2% for capital goods

and by 0.3% for durable consumer goods. Prices in total industry excluding energy decreased by 0.2%. In the EU28, the 1.2% decrease is due to falls of 4.8% in the energy sector, of 0.4% for intermediate goods and of 0.2% for non-durable consumer goods, while prices rose by 0.2% for durable consumer goods and by 0.3% for capital goods. Prices in total industry excluding energy fell by 0.1%. Industrial producer prices fell in nearly all Member States, with the largest decreases observed in the Netherlands (-3.6%), Lithuania (-3.1%), the United Kingdom (-2.9%) and Ireland (-2.6%). Industrial producer prices increased only in Latvia (+0.4%), Luxembourg and Malta (both +0.1%), while they remained stable in Romania and Slovenia. The 3.4% decrease in industrial producer prices in total industry in the euro area in

January 2015, compared with January 2014, is due to falls of 10.2% in the energy sector, of 1.6% for intermediate goods and of 1.1% for non- durable consumer goods, while prices rose by 0.7% for capital goods and by 1.0% for durable consumer goods. Prices in total industry excluding energy fell by 0.7%. In the EU28, the 4.1% decrease is due to falls of 14.1% in the energy sector, of 1.4% for intermediate goods and of 1.3% for non-durable consumer goods, while prices rose by 0.7% for durable consumer goods and by 0.8% for capital goods. Prices in total industry excluding energy fell by 0.7%. Industrial producer prices fell in all Member States, except in Luxembourg (+1.4%). The largest decreases were observed in the Netherlands (-10.9%), Lithuania (-10.6%), the United Kingdom (-9.5%), Belgium (-8.4%), Greece (-7.7%) and Denmark (-7.1%).

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| places we strongly reccommend to visit | Georgian Real Estate Management The Green Building, 6 Marjanishvili Street, 0102 Tbilisi

15 Lubliana Str.

Tel: 251 00 01 Fax: 253 00 44 info@zarapxana.ge www.zarapxana.ge

37 Chavchavadze Ave. Tel.: 291 30 26; 291 30 76

Tel: 243 30 77, Fax: 243 30 79 www.firstbrokerage.ge E-mail: info@firstbrokerage.ge

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Tel.: 260 15 36 info@piazza.ge, www.piazza.ge

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fragola.cafemail@gmail.com 4 Freedom Square, Tel: +995 32 254 70 30 Fax: +995 32 254 70 40 tbilisi@citadines.com

13, Rustaveli Avenue.; Tel.: 2 779 200 www.TbilisiMarriott.com tbilisi.marriott@marriotthotels.com

4, Freedom Square, Tel: 2 779 100 www.CourtyardTbilisi.com courtyard.tbilisi@marriotthotels.com

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45a M.Kostava St., 0179 Tbilisi, Georgia; 16 Meskheti str.Borjomi Tel:(+995 32) 2 292292 E-mail: borjomi@rixos.com www.Borjomi.rixos.com

Radisson Blu Iveria Hotel Rose Revolution Square 1 Tel.: 240 22 00; Fax: 240 22 01 info.tbilisi@radissonblu.com radissonblu.com/hotel-tbilisi

Betsy’s Hotel 32-34 Makashvili Street, 0108, Tbilisi, Georgia

Tel.: 293 14 04, Fax: 299 93 11 info@betsyshotel.com www.betsyshotel.com

GEORGIA PALACE HOTEL

275 Agmashenebeli Ave., Kobuleti, Georgia Tel: 2242400 Fax: 2242403

Tel.: (+995 32) 219 11 11 www.hotelcoste.ge

Tel: +995 422 229000 E-maill: info.batumi@ sheraton.com www.sheraton.com/batumi

Radisson Blu Hotel Batumi 1, Ninoshvili str., Batumi Tel/Fax: 422255555 info.batumi@radissonblu.com radissonblu.com/hotel-batumi

26 May Square Tel: 2300099 E-mail: info@hi-tbilisi.com www.hi-tbilisi.com

Divan Suites Batumi Address: Jordania/Z. Gamsakhurdia Str. 8/15 (422)255 522 bulents@divan.com.tr

6 Kavsadze Str. Tel: 2 25 15 45 2 55 44 55 www.lottravel.ge

E-mail: info@gph.ge, www.gph.ge

13 Shavteli Str. Tel: 2439494 info@ambasadori.ge www.ambasadori.ge

Hotel “O. Galogre” 8, Vakhtang Gorgasali Str. Batumi, Georgia Tel: +995 422 27 48 45 info@hotelgalogre.com www.hotelgalogre.com

Tel: 31 99 99 hotel@tifilis.ge addr: #9 Grishashvili Str.

Best Western Tbilisi № 1 Kheivani street 12/13; Tbilisi, Georgia Phone: (+995 32) 2 24 23 21; Phone: (+995 32) 2 24 23 22 E-mail: reservation@cronpalace.ge

Addr: 11, Apakidze str. Tel.: 2 300 777

4 Freedom Square Tel: 2988 988, Fax: 2988 910 E-mail:gmt@gmt.ge, www.gmt.ge

LE MARAIS 5 Chavchavadze Ave. The tickets are available at tbilisi international airport freedom square 4 courtyard marriott hotel, 1st floor

Tel: 2400 400; 2400 040

32 Abashidze Str. Tel: 222 40 83

Tel.: 222 44 17 577 22 99 22 plasticsurgerygeo.com

For advertising please contact: Address: 1/3 Melashvili Street 6000 Batumi,Georgia | +995 422 225790 www.batumiworldpalace.com info@batumiworldpalace.com

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BUSINESSTRAVELCOM HOTEL AND AIRTICKET BOOKING: 2 999 662 | SKY.GE

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Female millennials are the most Volume of Retail confident and ambitious of any Trade Up by 1.1% female generation In Euro Area The FINANCIAL

pportunities for career progression tops the list of most attractive employer traits. 49% of female millennials starting their careers believe they can reach the very top levels with their current employer. 86% of female millennials in a relationship are part of a dual-career couple, while 66% earn the same as or more than their partner or spouse. But almost half say employers are too male biased when it comes to internal promotions And 71% feel that opportunities are not equal for all. To mark International Women’s Day (IWD) on Sunday 8th March 2015, PwC surveyed 8,756 female millennials (women born between 1980-1995) from 75 countries to find out how they feel about the world of work and their career.

The report eveals that the female millennial is much more likely to believe she can reach the very top levels with her current employer, particularly those starting their careers (49%). The female millennial ranks opportunities for career progression as the most attractive employer trait (53%); making her more career confident and ambitious than previous generations. Female millennials in Brazil (76%), India (76%) and Portugal (68%) are the most confident, while their peers in Japan (11%), Kazakhstan (18%) and Germany (19%) are the least confident. Of the female millennials who are in a relationship, 86% are part of a dual career couple, with 42% earning equal salaries to their partner or spouse. And almost a quarter (24%) are the primary earner in their relationship. When it comes to diversity, 86% of female millennials seek out employers with a strong record on diversity,

equality and inclusion – and while they say employers talk about diversity, 71% do not feel opportunities are really equal for all. What’s more, 43% of female millennials believe employers are too male biased when it comes to promoting employees from within – up 14% since 2011. Millennial women in Spain (60%), France (58%) and Ireland (56%) view employers in their country as the most male biased, versus Malaysia (16%) and the Philippines (11%) where female millennials are more optimistic. As the experience of a 34-year-old millennial woman with 12 years’ work experience will be very different to that of a 22-year-old millennial woman just starting out in her career, the report looks at the insights and desires of the female millennial by career stage: career starters (female millennials with 0–3 years’ work experience), career developers (4–8 years’ work experience) and career

establishers (9 or more years’ work experience). The millennial generation can be expected to drive unprecedented shifts in organisational culture, with significant demand for work life balance and flexibility from 97% of female and 97% of male millennials. The female millennial expects real time, high quality, future-focused feedback and despite being extremely techsavvy, prefers critical feedback discussions to take place face-to-face. Female demand for international experience has never been higher with 71% of female millennials wanting to work outside their home country during their career. Despite this, only 20% of current international assignees are female. Female millennials are least likely to want to work in the Financial Services, Defence and Oil & Gas sectors, solely because of their image and reputation.

n January 2015 compared with December 2014, the seasonally adjusted volume of retail trade1 rose by 1.1% in the euro area (EA19) and by 0.8% in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In December3 retail trade rose by 0.4% in both zones. In January 2015 compared with January 20144 the retail sales index increased by 3.7% in the euro area and by 4.0% in the EU28. The 1.1% increase in the volume of retail trade in the euro area in January 2015, compared with December 2014, is due to rises of 3.2% for automotive fuel, of 1.2% for the non-food sector and of 1.0% for “Food, drinks and tobacco”. In the EU28, the 0.8% increase in retail trade is due to rises of 2.9% for automotive fuel, of 0.8% for the nonfood sector and of 0.6% for “Food, drinks and tobacco”. Among Member States for which data are available, the

highest increases in total retail trade were registered in Portugal (+6.8%), Poland (+3.1%), Germany (+2.9%) and Slovenia (+2.4%), while decreases were observed in the United Kingdom (-0.9%), Lithuania (-0.5%), Bulgaria and Ireland (both -0.1%). The 3.7% increase in the volume of retail trade in the euro area in January 2015, compared with January 2014, is due to rises of 6.1% for automotive fuel, of 5.0% for the non-food sector and of 2.2% for “Food, drinks and tobacco”. In the EU28, the 4.0% increase in retail trade is due to rises of 5.6% for automotive fuel, of 5.4% for the non-food sector and of 2.4% for “Food, drinks and tobacco”. Among Member States for which data are available, the highest increases in total retail trade were observed in Luxembourg (+10.7%), Hungary (+8.2%), Poland (+7.5%) and Romania (+7.3%), while the only decreases were observed in Finland (-1.2%) and Belgium (-0.3%).

Baku, Tbilisi, Yerevan at the Bottom of Quality of Living Rankings Continued from p. 16

pollution. However, advances in the telecommunications and consumer sectors have had some positive offsetting effects on their ranking. Behind Singapore, the second highest-ranking city in Southeast Asia is Kuala Lumpur (84); other major cities here include Bangkok (117), Manila (136), and Jakarta (140). In South Asia, Colombo (132), ranks highest and is followed by emerging Indian cities Hyderabad (138) and Pune (145). Both cities rank higher for quality of living than the country’s more traditional business centres, Mumbai (152) and New Delhi (154). Considerable population increases in Mumbai and New Delhi in recent decades have increased existing problems, including access to clean water, air pollution, and traffic congestion. In the Pacific, New Zealand and Australian cities are some of the highest-ranked cities globally, with Auckland in 3rd, Sydney in 10th, Wellington in 12th, and Melbourne in 16th.

MIDDLE EAST AND AFRICA In 74th place, Dubai ranks highest for quality of living across the Middle East and Africa region. It is followed by Abu Dhabi (77), also in the UAE, and Port Louis (82), Mauritius. In South Africa, Durban (85) is an emerging city and ranks higher than the country’s traditional business centres, Cape Town (91) and Johannesburg (94). Durban’s higher ranking is mainly due to its highquality housing, plentiful recreational offerings and good consumer goods availability. However, the city’s crime problems keep it from reaching the top 50. Ranking 230th, Baghdad is the lowest-ranking city in the region and on the overall list. A quality-of-living allowance is typically location-related, while a mobility premium is usually independent of the host location. Some multinational companies combine these premiums, but the vast majority provides them separately. "In a global environment, employers have many choices as to where to deploy their mobile em-

ployees and set up new business”, Mercer commented. "A city’s quality-of-living standards can be an important variable for employers to consider. Leaders in many cities want to understand the specific factors that affect their residents’ quality of living and address those issues that lower their city’s overall quality-of-living ranking. Mercer advises municipalities through a holistic approach that addresses their goals of progressing towards excellence, and attracting multinational companies and globally mobile talent by improving the elements that are measured in its Quality of Living survey" Mercer evaluates local living conditions in more than 440 cities it surveys worldwide. Living conditions are analysed according to 39 factors, grouped in 10 categories: Political and social environment (political stability, crime, law enforcement, etc.) Economic environment (currency exchange regulations, banking services) Socio-cultural environment (media availability and censorship, limitations on personal freedom) Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc) Schools and education (standards and availability of international schools) Public services and transportation (electricity, water, public transportation, traffic congestion, etc) Recreation (restaurants, theatres, cinemas, sports and leisure, etc) Consumer goods (availability of food/daily consumption items, cars, etc) Housing (rental housing, household appliances, furniture, maintenance services) Natural environment (climate, record of natural disasters) See below detailed list. 2015 City Rankings Rank 1 2 3 4 5 6 7 8

City Vienna Zurich Auckland Munich Vancouver Dusseldorf Frankfurt Geneva

Country Austria Switzerland New Zealand Germany Canada Germany Germany Switzerland

9 10 11 12 13 14 15 16 16 16 19 19 21 22 22 24 25 26 27 27 27 30 31 31 33 34 34 36 37 38 39 40 41 41 43 44 44 44 47 48 48 50 51 52 52 54 55 55 57 58 59 60 61 62 63 64 65 66 67 68 69 70 70 72 72

Copenhagen Sydney Amsterdam Wellington Bern Berlin Toronto Hamburg Melbourne Ottawa Luxembourg Stockholm Stuttgart Brussels Perth Montreal Nurnberg Singapore Adelaide Paris San Francisco Canberra Helsinki Oslo Calgary Boston Dublin Honolulu Brisbane Barcelona Lyon London Lisbon Milan Chicago New York City Seattle Tokyo Kobe Los Angeles Yokohama Washington Madrid Birmingham Rome Pittsburgh Glasgow Philadelphia Aberdeen Osaka Leipzig Minneapolis Nagoya Dallas Belfast Houston Miami Atlanta St. Louis Prague Pointe-a-Pitre Detroit Hong Kong San Juan Seoul

Dubai

75 75

Budapest Ljubljana

Abu Dhabi

78 79 79 81 82 83 84

Montevideo Vilnius Warsaw Bratislava Port Louis Taipei Kuala Lumpur

Denmark Australia Netherlands New Zealand Switzerland Germany Canada Germany Australia Canada Luxembourg Sweden Germany Belgium Australia Canada Germany Singapore Australia France United States Australia Finland Norway Canada United States Ireland United States Australia Spain France United Kingdom Portugal Italy United States United States United States Japan Japan United States Japan United States Spain United Kingdom Italy United States United Kingdom United States United Kingdom Japan Germany United States Japan United States United Kingdom United States United States United States United States Czech Republic Guadeloupe United States Hong Kong Puerto Rico South Korea United Arab Emirates Hungary Slovenia United Arab Emirates Uruguay Lithuania Poland Slovakia Mauritius Taiwan Malaysia

85 85 87 88 89 90 91 91 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 122 124 125 126 127 128 129 130 131 132 133 133 135 136 137 138 139 140 141 142 142 144 145 146 147 147 149 150 151 152 153 154 154 156 156 156

Athens Durban Limassol Tallinn Riga Busan Buenos Aires Cape Town Santiago Johannesburg Panama City Victoria Zagreb Cheonan Taichung Wroclaw Shanghai Bandar Seri Begawan Johor Bahru Muscat Tel Aviv San Jose Brasilia Doha Monterrey Bucharest Noumea Nassau Tunis Asuncion Sofia Rabat Bangkok Beijing Rio de Janeiro Sao Paulo Guangzhou Amman Istanbul Lima Kuwait City Mexico City Manaus Casablanca Quito Manama Bogota Colombo Chengdu Windhoek

Greece South Africa Cyprus Estonia Latvia South Korea Argentina South Africa Chile South Africa Panama Seychelles Croatia South Korea Taiwan Poland China Brunei

Malaysia Oman Israel Costa Rica Brazil Qatar Mexico Romania New Caledonia Bahamas Tunisia Paraguay Bulgaria Morocco Thailand China Brazil Brazil China Jordan Turkey Peru Kuwait Mexico Brazil Morocco Ecuador Bahrain Colombia Sri Lanka China Namibia Dominican Santo Domingo Republic Manila Philippines Nanjing China Hyderabad India Shenzhen China Jakarta Indonesia Belgrade Serbia Xi’an China Chongqing China Gaborone Botswana Pune India Bangalore India Trinidad and Port of Spain Tobago Qingdao China Lusaka Zambia Guatemala City Guatemala Chennai India Mumbai India Ho Chi Minh Vietnam City Hanoi Vietnam New Delhi India Kingston Jamaica La Paz Bolivia Shenyang China

159 160

Skopje Kolkata

161

Sarajevo

162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 184 186 187 188 189 189 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 206 208 209 210 211 211 213 214 215 216 217 217 219 220 221 222 223 224 225 226 227 228 229 230

Macedonia India BosniaHerzegovina Dakar Senegal Riyadh Saudi Arabia Libreville Gabon Accra Ghana Jeddah Saudi Arabia Moscow Russia Jilin China Kampala Uganda Cairo Egypt Vientiane Laos San Salvador El Salvador Managua Nicaragua Saint Petersburg Russia Almaty Kazakhstan Kiev Ukraine Blantyre Malawi Maputo Mozambique Caracas Venezuela Tirana Albania Beirut Lebanon Cotonou Benin Yerevan Armenia Banjul Gambia Tegucigalpa Honduras Nairobi Kenya Algiers Algeria Djibouti Djibouti Kigali Rwanda Minsk Belarus Islamabad Pakistan Yaounde Cameroon Havana Cuba Tbilisi Georgia Phnom Penh Cambodia Douala Cameroon Baku Azerbaijan Dar es Salaam Tanzania Lahore Pakistan Luanda Angola Yangon Myanmar Karachi Pakistan Tehran Iran Lome Togo Addis Ababa Ethiopia Harare Zimbabwe Tashkent Uzbekistan Bishkek Kyrgyzstan Abidjan Côte d’Ivoire Ashkhabad Turkmenistan Dhaka Bangladesh Lagos Nigeria Abuja Nigeria Dushanbe Tajikistan Ouagadougou Burkina Faso Tripoli Libya Antananarivo Madagascar Niamey Niger Bamako Mali Damascus Syria Nouakchott Mauritania Conakry Guinea Congo, Kinshasa Democratic Republic of Congo, Republic Brazzaville of Sana’a Yemen N’Djamena Chad Khartoum Sudan Port au Prince Haiti Central African Bangui Republic Iraq Baghdad

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FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 9 MARCH, 2015

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Women Earned on Average 16% Less Than Men in 2013 in the EU 2 OUT OF 3 MANAGERS ARE MEN, 2 OUT OF 3 CLERICAL WORKERS ARE WOMEN The FINANCIAL

n 2013, the gender pay gap stood at 16.4% in the European Union (EU), ranging from less than 5% in Slovenia to more than 20% in Estonia, Austria, the Czech Republic and Germany. The gender pay gap represents the difference between average gross hourly earnings of male paid employees and of female paid employees as a percentage of average gross hourly earnings of male paid employees. Differences between females and males in the labour market2 do not only concern wage discrepancies but also and along with it, the type of

occupations3 held. Though representing 46% of employed persons, women were under-represented amongst managers, with only a third being female in 2013 in the EU. On the contrary, women were over-represented among clerical support workers as well as among service and sales workers, accounting for around two-thirds of employed persons in these occupations. The gap between men and women in the labour market was also significant as regards the type of employment held. In 2013, 1 employed woman out of 3 (31.8%) worked part-time, compared with fewer than 1 man out of 10 (8.1%).

LOWEST GENDER PAY GAP IN SLOVENIA, LARGEST IN ESTONIA In 2013 in the EU Member

States, the gender pay gap was less than 10% in Slovenia (3.2%), Malta (5.1%), Poland (6.4%), Italy (7.3%), Croatia (7.4%), Luxembourg (8.6%), Romania (9.1%) and Belgium (9.8%). At the opposite end of the scale, the gender pay gap was over 20% in Estonia (29.9%), Austria (23.0%), the Czech Republic (22.1%) and Germany (21.6%). Compared with 2008, the gender pay gap has dropped in 2013 in a majority of EU Member States. The most noticeable decreases between 2008 and 2013 were recorded in Lithuania (from 21.6% in 2008 to 13.3% in 2013, or -8.3 percentage points), Poland (-5.0 pp), the Czech Republic and Malta (both -4.1 pp) and Cyprus (-3.7 pp). In contrast, the gender pay gap has risen between 2008 and 2013 in nine Member States, with the most significant increases being observed in Portugal (from 9.2% in 2008 to 13.0% in 2013, or + 3.8 percentage points), Spain (+3.2 pp), Latvia (+2.6 pp), Italy (+2.4 pp) and Estonia (+2.3 pp). At EU level, the gender pay gap has decreased slightly, from 17.3% in 2008 to 16.4% in 2013.

PART-TIME EMPLOYMENT TENDS TO BOOST FEMALE EMPLOYMENT RATE Among Member States in 2013, the largest disparities in employment rate between men and women were recorded in Malta (79.4% for men and 49.8% for women, or a difference of 29.6 percentage points), Italy (19.9 pp) and Greece (19.4 pp), and the smallest in Lithuania (2.6 pp), Finland (2.8 pp), Latvia (4.2 pp) and Sweden (5.0 pp). It should be noted that those Member States with the highest female employment rates are generally also those with a high share of employed women working part-time in 2013. Sweden, Germany, Denmark, the Netherlands and Austria have all a female employment rate above 70% and a share of part-time employment among

females well over 30%. The noticeable exceptions are Finland and Estonia, which combine a high female employment rate and a low share of part-time employment for women. It is worth mentioning that one of the key objectives of the Europe 2020 strategy6 is to increase employment in the EU. The target to be reached by 2020 is an employment rate of 75% among those aged 20 to 64. At EU level, the female employment rate stood at 62.6% in 2013 and almost a third (31.8%) of them were working parttime, while for men, the employment rate was 74.2% but less than 10% of them (8.1%) were in part-time employment.

LESS THAN 20% OF MANAGERS ARE WOMEN IN LUXEMBOURG AND CYPRUS At EU level, a third (33%)

of managers was female in 2013. Conversely, women accounted in 2013 for around two- thirds of all clerical support workers (67%) and of all services and sales workers (64%). In 2013 across the EU Member States, women were particularly underrepresented among managers in Luxembourg (while accounting for 44% of employed persons, 16% of managers are women), Cyprus (48% vs. 19%), the Netherlands (47% vs. 25%) and Croatia (46% vs. 25%). In contrast, the share of female managers was more representative of the proportion of women in total employment in Hungary (the share of women was 46% among employed persons and 41% among managers), Latvia (51% and 44%) and Poland (45% and 38%). In every Member State, women were over-represented among clerical support workers in 2013, with Ireland (while accounting for 46% of employed persons, 80% of clerical workers are women) and the Czech Republic (43% vs. 79%) having the highest proportions of women in these occupations.

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| places we strongly reccommend to visit | TSISKVILI

LITERATURULI CAFÉ

dining

Red Café Bistro & Cafe

4, Besiki Str. 22, Abashidze Str. Tel: 222 02 76

Tel: 2 519 966

# 71 Vazhaphavela Ave. Tel: 2201 211 info@redcafe.ge

Beliashvili Str. Tel: 253 07 97

Belle Ville

PREGO

PICASSO

84, Barnovi Str. Tel: 225 22 58

French - European barrestaurant Pleasant and cozy atmosphere High quality service, live music every day

15, Erekle II. Tel: 293 14 11 25, Tarkhnishvili Str. Tel: 225 25 16

4, Vashlovani Str. Tel: 298 90 86

26, l.Kiacheli Str. Tel: 293 65 53

4 4/2

DISCOVERY

Espresso Bar “RESPUBLIKA”

37, Kostava Str. Tel: 298 37 67

2, MarjaniSvili Str. Tel: 2 999 723

Book Corner

13b, Tarkhnishvili Str. Tel: 223 24 30 contact@bookcorner.ge

Entree 13 Taktakishvili Str. 20 Rustaveli Ave. 19 Petriashvili Str. 7 Pekini Str. 78 Chavchavadze Ave. (Bagebi) 86 Aghmashenebeli ave.

16, Marjanishvili Str. Tel: 555 003151 www.facebook.com/RespublikaEspressoBar

VERA STEAKHOUSE

40, Chavchavadze Ave. Tel: 229 42 30

SIANG-GAN

Tel.: 599 21 53 83

CAFE CINEMA

Addr: 3 Vekua Street. (Trade Center GTC) Tel.: 2 93 61 38

41, Gamsakhurdia Str. Tel: 237 96 88

ENGLISH TEE HOUSE

5, Marjanishvili Str. Tel: 294 16 20 32, Paliashvili Str. Tel: 222 11 09

Literary cafe “MONSIEUR JORDAN” V. Gorgasali st.,17 Tel.: 275-02-07

Prospero’s Books

34, Rustaveli Ave. Tel: (+995 32) 2923 592

For advertising please contact: 577 741 700 marketing@finchannel.com

BUSINESSTRAVELCOM HOTEL AND AIRTICKET BOOKING: 2 999 662 | SKY.GE

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Advertiser: Metra Development. Contact FINANCIAL Ad Dep at marketing@finchannel.com