Issue #1106 Business

Issue no: 1106/158

• DECEMBER 4 - 6, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

Pursuing Real Growth: The Importance of This Year’s Nobel Memorial Prize in Economic Sciences ISET PAGE 4

GWS Showcases Famous Premium Wines of TAMADA Line, TAMADA Grand Reserve & TAMADA Qvevri

FOCUS

ON NEW MARIJUANA LAWS Gov't introduces new restrictions

PAGE 2

BUSINESS PAGE 6

Image source: medicalsecrets.com

7 Georgian Winners at Eastern European Real Estate Awards

BUSINESS PAGE 7

BY AMY JONES

Under Zurabishvili Relations with Russia Will Remain Unchanged

T

he IV Eastern Europe Real Estate Forum and Project Awards took place in Kiev, Ukraine, on 26 – 27 November. Seven Georgian real estate companies were victorious in their categories for exemplary architecture, development, and real estate services.

Each year the event is attended by more than 200 key persons in the real estate market, including investors, bankers, financiers, asset managers, and professional service providers. This year, the main theme of the event was “residential real estate as a growth driver for the economy of the Eastern European region.”

Talks focused on investments in real estate: their types and the specificity of the Eastern European region, urbanization and residential development of cities, and efficiently mixing

HUAWEI Offers Unique Warranty Conditions to Owners of Flagship Models

residential and commercial property.

Winning awards in seven categories, Georgian companies were the most numerous prize winners at the event. Hotel, residential and brokerage projects were all successful. Brokerage Company of the Year was awarded to Colliers International Georgia, a leading real estate services provider in Georgia.

Soon to be opened in the Kakheti region of Georgia, the Radisson Collection Hotel, Tsinandali Estate collected the award of Hotel Project of the Year. Offering 141 guest rooms and suites, visitors will be able to explore Georgia’s famous wine regions using the contemporary hotel as their base.

Continued on page 3

POLITICS PAGE 15 Prepared for Georgia Today Business by

Markets As of 30ͲNovͲ2018

Price

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 13.70

Ͳ8,5%

Ͳ11,7%

Georgia Capital (CGEO LN)

STOCKS

GBP 10.85

Ͳ7,0%

Ͳ5,9%

GHG (GHG LN) TBC Bank Group (TBCG LN)

COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)

w/w

m/m

GEOROG 04/21

100.49 (YTM 6.52%)

Ͳ0,3%

Ͳ1,8%

GEORG 04/21

BONDS

104.99 (YTM 4.61%)

Price

Ͳ0,2%

Ͳ0,3%

GBP 2.31

Ͳ

Ͳ7,1%

GRAIL 07/22

104.44 (YTM 6.35%)

Ͳ1,3%

Ͳ1,6%

GBP 14.96

Ͳ1,8%

Ͳ5,9%

GEBGG 07/23

98.17 (YTM 6.46%)

Ͳ0,1%

Ͳ0,2%

CURRENCIES

w/w

m/m

58,71

Ͳ0,2%

Ͳ22,7%

GEL / USD

2,6909

+1,1%

Ͳ0,7%

1 220,52

Price

Ͳ0,2%

Ͳ0,2%

GEL / EUR

3,0445

Price

+0,8%

w/w

Ͳ1,0%

m/m

GEL / GBP

3,4313

+0,5%

Ͳ0,3%

INDICES

Price

w/w

m/m

GEL / CHF

2,6972

+0,9%

+0,3%

FTSE 100

6 980,24

+0,4%

Ͳ0,8%

GEL / RUB

0,0401

Ͳ0,5%

Ͳ3,1%

FTSE 250

18 480,83

Ͳ0,3%

Ͳ1,0%

GEL / TRY

0,5156

+2,3%

+4,2%

DAX

11 257,24

+0,6%

Ͳ0,3%

GEL / AZN

1,5856

+0,9%

Ͳ1,1%

DOW JONES

25 538,46

+5,2%

+2,7%

GEL / AMD

0,0055

Ͳ

Ͳ1,8%

7 330,54

+5,6%

+2,4%

GEL / UAH

0,0954

Ͳ0,6%

Ͳ0,8%

MSCI EM EE

156,16

+1,2%

+3,5%

EUR / USD

0,8835

+0,2%

+0,2%

MSCI EM

994,72

+2,6%

+6,2%

GBP / USD

0,7843

+0,5%

NASDAQ

Ͳ0,3%

SP 500

2 760,17

+4,8%

+2,9%

CHF / USD

0,9979

+0,1%

Ͳ0,7%

MSCI FM

2 527,58

+0,5%

+2,6%

RUB / USD

67,0901

+1,3%

+2,5%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

5,2153

Ͳ1,3%

Ͳ4,8%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,6960

+0,0%

+0,1%

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NEWS

GEORGIA TODAY

DECEMBER 4 - 6, 2018

@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: Apollo 11 comprises a team of 20 ambitious young Georgian “astronauts” with a mission to export Georgian intellectual resources globally. Founder Zura Sekhniashvili has capitalized on his personal expertise and one year ago established a computer programming service provider which now produces Cloud-based apps for US, UK, German, France, Spain and Estonian markets in the fields of finance, pharmaceuticals and charity.

Parliament Adopts Amendments to Marijuana Consumption Law

BY THEA MORRISON

G Ruska Kbilashvili, PR and CSR Manager at Wissol Group, has started her own cosmetic brand Sapovnela, producing soaps, face, eye and body care oils and gels completely free from chemical ingredients and made using goat’s milk, bio oils, butters, cosmetic clay and other healthy natural products.

Sapovnela is a new brand and yet it has already received export offers.

Meet Jonathan and Laura Nelms, founders/co-owners of a Georgian restaurant in Washington DC. The successful ‘Supra’ was America’s most-anticipated new restaurant according to Eater.com. The couple spent their 5th wedding anniversary in Georgia and visited Tbilisi and Kazbegi. After making a firm decision to open a Georgian restaurant state-side, they decided to open Supra with executive Georgian Chef Malkhaz Maisashvili, who they met during their visit to Georgia.

Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge

eorgian Parliament has approved amendments to the Law on Marijuana Consumption, which regulates the field and sets some boundaries to the consumption of cannabis.

The amendments were prepared by the Ministry of Internal Affairs (MIA) and adopted by Parliament at the third reading last week.

The law implies a number of regulations on the use of marijuana and introduces some restrictions, in particular with regards to specific areas, the age limit and popularization.

Following the changes, the use of marijuana in public places, public transport, schools and educational institutions is prohibited.

The use of marijuana is prohibited for people under 21 in order to protect youth from the harmful effects of the drugs.

Pushing people under 21 to use marijuana has also become an offence.

“The use of marijuana is prohibited when performing official duties, be the users civil servants or individuals working in the private sector,” the law reads.

This means that for some people, (for example, teachers, doctors, public servants, etc.) who perform responsible duties, the consumption of cannabis will result in their losing their jobs.

In addition, the sanctions have increased for the popularization or promotion of marijuana and other drug consumption.

Image source: CNN

Driving a car under the influence of marijuana is also prohibited.

The MIA announced earlier this autumn that its patrol police officers will begin checking drivers specifically for the use of marijuana using a special test kit.

The ministry adding their main aim is to “protect juveniles from the harmful effects of marijuana” and uphold public safety.

The amendments took effect immediately after the approval from the lawmakers.

Before October 2015, Georgia’s laws on marijuana read that a person is to be jailed for seven to 14 years if found with a large amount of marijuana. The same law determined 50-500g of marijuana as "a large amount.”

In October 2015, the Constitutional Court delivered a verdict and stated that if an individual was caught with up to

70g of dried marijuana, they should not be sent to prison, as the previous punishment outlined.

In 2016, the court stated repeated marijuana users would not be sent to prison.

Georgia’s Constitutional Court ruled last year that no-one would be sent to prison for using marijuana, which meant marijuana consumption was decriminalized.

Afterwards, on July 30, 2018, the Constitutional Court declared that administrative punishment for the use of marijuana was unconstitutional when consumption does not create any threat to third parties - effectively legalizing the consumption of marijuana.

However, later the court explained that this does not mean legalization of marijuana in the country as the storage, distribution and cultivation of cannabis still remain punishable in Georgia.

NEWS

GEORGIA TODAY DECEMBER 4 - 6, 2018

3

My Way Airlines Fails to Capture Georgian Market

BY SAMANTHA GUTHRIE

I

n March of this year, My Way Airlines began laying the groundwork for its wide array of flight routes, using Tbilisi, Georgia as its hub. Flights officially launched in June. Routes included Tbilisi/Batumi-Kharkiv, Tbilisi/ Batumi-Tehran, Tbilisi-Samara, Tbilisi-Athens, Tbilisi-Kiev, Tbilisi-Budapest, Tbilisi-Rome, and Tbilisi-Tel Aviv. There were plans to expand routes to Minsk, Dubai, Urumqi, Moscow, and St. Petersburg. Those plans were put on hold this week, however, when the company suspended its flights to Rome, Budapest, and Kiev until March, and has stopped flights to Kharkiv.

The company is owned by Chinese conglomerate Hualing Group, which has already made significant investments in Georgia. In May, My Way reported that it owned two Boeing 737-800s and planned to purchase two additional aircrafts by the end of 2018, but in a statement to Business Media Georgia, Chief Commercial Director Igor Aptsiauri noted that they only had one plane. Aptsiauri, who previously served as First Deputy Director of the Georgian Civil Aviation Agency, blamed the routes’ failures on low demand, a poor sales system, and the worsening political situation in Ukraine. Ticket sales were a particular challenge as tickets were only available by phone and in person for several

months, and when routes and prices could be viewed online, they were not listed on the major flight aggregator websites.

My Way does not rule out the possibility of resuming flights in the high season, the spring and summer, and will continue to conduct flights to Tel Aviv all winter. Regular flights on most routes only started at the end of the summer, losing this year’s high season for travel. Flights were initially planned to start in March. Aptsiauri blames the delay on “pressure from certain companies on state agencies,” who dragged their feet in issuing operation permits. Aptsiauri refused to name the companies he accuses of pressuring governmental bodies, but said they are companies “already on the market.”

He characterizes the airline industry in Georgia as “unhealthy competition” and says that it is an open secret within the industry that certain companies control the market.

There were rumors last week that Hungarian company Wizz Air, the biggest low-cost carrier operating in Georgia, which conducts flights out of Kutaisi International Airport, was being forced out of the country. Georgia’s Ministry of Economy and Sustainable Development rejected the claims, and added that the “disinformation” harms the national business environment. The rumor was started by HUB Georgia, who claimed they had a source who revealed that “the government had been putting pressure on the company, a process suspended due to the presidential elections in the

Image source: My Way Airlines

country,” and that the government wanted to make changes to the aviation market, restricting competition in the field of passenger transportation. Wizz Air itself denied the rumors, saying they have no plans to leave the market, and will instead expand their activities in Georgia.

Approximately 1000 passengers have already purchased tickets for the canceled flights, all of whom will receive refunds in line with European regulations and standards.

More than $50 million has been invested in My Way, according to Aptsiauri. In May, he pitched the airline as a much-needed addition to the Georgian market and announced an ambitious five-year business plan to turn Tbilisi into a regional transit hub between Europe and Asia. Currently, international transit accounts for only 5-6% of Tbilisi International Airport’s traffic, and My Way stated a goal to eventually raise that number up to 40% through increased volume and new destinations. “What we

see from Georgian Airways is they have their own niche market, they have their historical routes,” said Aptsiauri in a May interview with Forbes, “If you look at their development over the last ten years, it’s the same routes, it’s the same frequencies, the same fleet...in the future, we [at MyWay] will also concentrate on connecting and transiting passengers. I think in this way we will … be at some point bigger than Georgian Airways.”

In March, just days after My Way released its plans, Georgian Airways announced 11 new European and Russian routes, bringing the number of direct flights the company offers up to 21. Davitashvili tried to differentiate his airline from the competition, saying, “Georgian Airways is...generally oriented on day-time flights to make our customers feel safer during the flight. Additional comfort and flight safety are two major priorities that we want to fully accomplish to create satisfaction among our passengers.”

Tbilisi to Have 200 New Electric Buses from 2020

BY THEA MORRISON

I

n 2020, the Georgian capital Tbilisi can expect an additional 200 new electric buses, said Mayor Kakha Kaladze on Monday while summing up one year's worth of work.

Kaladze stated that at the end of 2019, the existing fellt of old buses will be completely replaced by new ones. City Hall has already purchased dieselbased 10-meter MAN 90 buses, which will start operating from February.

The Mayor noted that a tender for the purchase of 220 units of diesel-engine, 8-meter long buses has been completed and soon the winning company will be revealed.

"In 2019, we are preparing a tender for the purchase

7 Georgian Winners at Eastern European Real Estate Awards Continued from page 1 Residential projects in Tbilisi were also successful. Innovative Green Building of the Year was given to LISI Green Town, a residential development next to Lisi Lake that aims to combine modern living with high quality building materials chosen for their energy saving and ecological properties. In addition, Residential Project of the Year was awarded to the SEU Development, Jikia House, found in the Saburtalo district of the city.

The Alliance group won two categories. Alliance Palace, Courtyard Marriott brought home the title of Mixed-use Project of the Year, whilst Alliance Privilege Batumi collected the award for Sophisticated Architecture. Designed to be the first five-star Marriott hotel in Batumi, the curvaceous white skyscraper is expected to be completed in 2019. The project was visited by Prime Minister Mamuka Bakhtadze last week.

Many architectural projects have drawn criticism, for example at the recent architectural Biennale in Tbilisi, as the city is littered with empty new-builds. However, as focus is slowly shifting onto urban planning in the city, Georgia is proving that it has the innovation and creativity to put its real estate on the map for the right reasons.

of 240 units of CNG-engine eight and 10-meter long electric buses. As I promised, the process of purchasing buses will be completed by the end of 2019," said Kaladze In the frames of the bus replacement program, a total of 750 buses will be purchased which will replace the old buses completely and increase the total number of buses by 200 units.

Kaladze explained that in 2019, Tbilisi will have a detailed program for buses implemented by the French company "Sistra". He said there will be 11 main transit corridors for buses which will be used by largecapacity buses. The Mayor added the new system will make public transportation more comfortable and faster compared to travel by private vehicle.

Kaladze said more new projects are to come, including one which will effectively use the potential of the River Mtkvari.

4

BUSINESS

GEORGIA TODAY

DECEMBER 4 - 6, 2018

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

Pursuing Real Growth: The Importance of This Year’s Nobel Memorial Prize in Economic Sciences

BY MARIAM LOBJANIDZE AND SELAM PETERSSON

T

his year has plagued a number of countries with tremendous natural disasters and extreme weather events.

Greece was challenged with extensive fires and South Africa with a shortage of water. As late as November this year, the US was still struggling to tame forest fires. Something is certainly happening with the climate. These problems arise from society only being concerned with growth. The issue is that for far too long, we have been assuming that economic growth has no impact on the climate and, more generally, on nature.

It is especially concerning that we have had this point of view when nature provides services of a value of approximately US$ 125 trillion a year according to the 2018 Living Planet Report by WWF. However, this year’s Nobel laureate William Nordhaus proves the importance of considering climate change as a factor that effects economic growth. The foremost reason he was awarded this prestigious prize is his ability to incorporate climate change into long-run macroeconomic analysis. The focal point of this article centers on how Nordhaus considers climate change in his models and his suggestion as to which economic instruments countries could potentially use to combat CO2-emissions while pursuing real economic growth. Before diving into that, we need to go back to the very foundation of Nordhaus’s research, the origin of the neoclassical growth theory.

THE FOUNDATION OF NORDHAUS’ MODEL The Solow neoclassical growth model, in a nutshell, investigates how capital accumulation and economic growth are interrelated. It also examines the relationship between long-run living standards and fundamental factors such as, for example, saving rate and population growth. Additionally, it reflects on the evolution of economic growth rate over time, indicating whether growth will stabilize, accelerate or stop. Growth, according to Solow, derives from putting more capital and labor into the equation, with an economy reaching a steady-state level when product and capital per worker

stabilize and the economy grows only insofar as the population grows (or technological progress occurs). Perhaps the most important drawback of the Solow model is that it does not account for frictions or limitations along a path of continuous economic development, nor for productive factors other than labor and capital. Nordhaus points out the existence of a market failure associated with negative externalities (additional effects generated from the actions of economic agents who ignore them when deciding how to behave) arising from greenhouse gas emissions and negatively affecting the climate. Individual polluters consider the emission levels they impose on society as having negligible impacts and, consequently, do not feel compelled to keep them under control. As a result, the global emissions from economic agents accumulate and put pressure on the global climate, which, in turn, can negatively affect economic growth. Nordhaus has worked to expand the Solow model so that it incorporates the relationship between global climate change and growth, allowing researchers to study how governmental policies could be employed to enhance long-term welfare. To expose the relations and interactions between the economy and climate change, he developed 3 sets of models.

NORDHAUS’ INTEGRATED ASSESSMENT MODELS Thanks to his endeavors of combining economic theory with the latest findings in natural science, Nordhaus has developed models that have an interdisciplinary outlook. The inclusion of natural sciences has been crucial, as his models are based on the carbon cycle in relation to fossil fuel burning.

One of his models looks closely at how the influx of global emittance of CO2 occurs and how its concentration affects the carbon reservoirs – the biosphere and ocean surface, the atmosphere, and the deep ocean. The other model is designated to study how CO2 as well as other GHG concentrations affect the energy balance between the atmosphere and Earth. To measure how the energy balance changes globally over time, the output is set to predict global temperature.

Specifically, this model is quintessential for the scenarios developed by the UN Intergovernmental Panel on Climate Change. The Panel develops assessment

Source: Reuters

reports containing scientific and socioeconomic, as well as technical aspects.

They also present which options the international community has to adapt and mitigate to a changing environment.

The icing on the climatic modelling cake is, of course, the economic-growth segment. What this model conceptualizes is the very essence of describing how the global market is effecting emission levels.

It – the global market - does so by, for example, using fossil burning for energy use, seen in the model as one of the inputs (burning fossil fuels represent an activity that societies use to produce energy services). But fossil burning, seen as an externality-generating activity, generates CO2-emissions, thus having a negative impact on the long-run GDP growth. Other inputs, which were included in the Solow model as well, are labor and capital.

Perhaps a mitigating prevention (it depends on the success of the implementation of such a policy) Nordhaus adds yet another layer by exposing how CO2emissions and the economy are affected by different climate policies such as carbon pricing. To be able to frame how CO2-emissions not only impact society but also how economic activities have a negative impact on CO2 pathways, Nordhaus uses outputs that expose time paths of global CO2-emissions and welfare, damages followed by climate change as well as GDP. The damage-parameter unfolds how much society actually loses due to global warming. It does so by exposing losses in farming, biodiversity,

coastal regions and human health. This function is paramount in understanding how economic activities actually impact society, especially as the end result is a smaller share of the investment and consumption resource at hand. In short, Nordhaus’s economic models put a monetary value on damages caused by a changing climate. The models also show how much it would cost to prevent and repair such damages.

FINDING A GLOBAL SOLUTION? It is, of course, hard to predict in the long run the real consequences of global warming, but Nordhaus’s models invite us to at least try to encapsulate what might happen for the well-being of future generations if we choose a certain economic pathway today. Based on his models, governments could analyze what the monetary effect could be depending on what policy they implement. As a possible solution, Nordhaus suggests the establishment of an international target carbon price. The consensus of such carbon pricing could be established in a Climate Club where participating countries agree to undertake measures in reducing CO2emissions. Participating countries could choose from three different mechanisms: carbon tax, cap-and-trade, or a combination of the two. To be able to participate in the Club, a minimum level of carbon price could be agreed upon – suggested at $25/ton CO2 - and a similar target goal should be set for other GHG substances.

In case of non-compliance, countries

should face significant penalties in terms of increased import tariffs on their goods, coming from Climate Club members.

Tariffs should be set in a way that attract countries to become members of the Club.

According to the WorldBank (2018), 51 carbon pricing initiatives currently exist (or will be introduced) around the world.

Out of these 51 initiatives, there are 25 emission trading systems (ETSs) and 26 national carbon tax schemes implemented or planned to be introduced. In 2018 alone, these instruments generated a value of US$ 82 billion. Unfortunately, the carbonpricing schemes currently in place or scheduled to be in place cover just about 20% of global emissions. As this number shows, we currently cannot compensate for the global emissions we encounter today, despite international legally binding treaties such as the UNFCCC’s Kyoto protocol. Perhaps this is a consequence of the absence of major emitters that did not sign the Kyoto agreement. Since, at least currently, we cannot seem to curtail global emissions effectively, we need to further elaborate Nordhaus’s models and understand how different policies effect the economic growth taking natural resources into consideration. Moreover, we need to make sure that the world population and world politicians finally understand that ignoring the negative long-term effects of environmentally irresponsible economic policies is a myopic and self-defeating strategy that is already negatively affecting economic growth and human well-being.

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BUSINESS

GEORGIA TODAY DECEMBER 4 - 6, 2018

More Financial Organizations Get Involved in Debt Annulment Initiative

Image source: postregistrat.com

BY THEA MORRISON

G

eorgia’s Deputy Finance Minister, Lasha Khutsishvili, says that more financial institutions have expressed a wish to participate in the loan annulment initiative of the government, which envisages the pre-New Year abolition of the loans of around 600,000 Georgian citizens who have been blacklisted by the banks.

Khutsishvili explained that around 10 more lending institutions, which refused to participate in the initiative at the initial stage, have now got involved in the process and will provide a list of people to Cartu Foundation, which has expressed its readiness to buy the debts of people and pay them off.

He stated the process will be launched from December 15, as initially stated, and will conclude on December 31.

The Deputy Minister explained there will be a special website where people can check if their debts will be written-off.

In addition, people can address the financial institutions to include them on the list of people who are incapable of paying their loans.

The main criteria for a person(s) to be included on the list are that the debt not be more than GEL 2000 and the person is on a black list, which includes those who have not met their financial responsibilities for at least one year.

As stated by Georgian Prime Minister Mamuka

Bakhtadze in mid-November, the total amount for debts, amounting to 1.6 billion GEL, would be covered by the Cartu Foundation, which is a fund owned by ruling Georgian Dream (GD) founder and chair, billionaire Bidzina Ivanishvili.

Cartu Foundation and commercial institutions had negotiations and reached an agreement whereby Cartu will take responsibility for the loans of blacklisted people in banks whose loans do not exceed GEL 2000. Of the total 600,000 people, 150,000 are socially vulnerable.

The non-governmental sector stated the initiative of the ruling party contains signs of vote-buying ahead of the November 28 elections, adding it was directed in favor of Salome Zurabishvili, the candidate supported by the ruling party, who won. They also called on the Prosecutor’s Office to launch investigation into the case, which is already underway.

The opposition also shares the position of the NGOs regarding alleged vote-buying. They say the authorities “pressure private banks and microfinance companies to sell the debts of people to Cartu Foundation for 1% of the total amount.”

Koba Gvenetadze, the President of the National Bank of Georgia (NBG), stated in late November that the borrowers should not think their debts will be annulled again in future.

“We declared from the very beginning that this is a one-time measure and it will not happen in the future,” he said.

He added the Cartu Foundation and commercial institutions had had negotiations and reached an agreement about the process of the initiative.

Georgia Increases Exports of Natural Products to China

BY KETEVAN KVARATSKHELIYA

U

nder the supervision of the CEO of the Partnership Fund Davit Saganelidze, the delegation of Georgia participated in the China Import and Export Fair.

The Fair was attended by the official delegations of more than 30 countries, approximately 500 transnational companies and nearly 3 000 delegates.

With the support of the Partnership Fund, about 15 Georgian companies had the opportunity to take part in the Fair.

A variety of Georgian natural products were exposed in the Georgian showroom, including Georgian tea, hazelnut, olive oil, mineral waters, whisky, wine, and other spirits and non-alcoholic beverages.

This was named a significant event for the promotion of Georgian products beyond the borders of the country, growth of export and further development of Georgian-Chinese business relations.

Source, Image source: imedinews.ge

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BUSINESS

GEORGIA TODAY

DECEMBER 4 - 6, 2018

GWS Showcases Famous Premium Wines of TAMADA Line, TAMADA Grand Reserve & TAMADA Qvevri TRANSLATED BY KETEVAN KVARATSKHELIYA

O

n November 28, Georgian Wines and Spirits Company (GWS) showcased premium wines of TAMADA line, TAMADA Grand Reserve and TAMADA Qvevri in the Georgian National Museum. The event was attended by the representatives of GWS Company, more than 30 chefs, sommeliers and partner organizations of the company.

The Brand Manager of GWS Salome Dolidze presented premium wines to the guests.

The premium brand TAMADA of GWS is closely related to art. GWS has been the partner of the Georgian National Museum since 2014. TAMADA is a historical brand and comprises a diversified portfolio of dry and semi-sweet wines.

“It stands out with a clearly expressed character which is one of the most important characteristics of the Georgian ‘Supra’,” Dolidze said.

The Executive Director of GWS, Phillipe Lespi, also addressed the audience and focused on the excellent reputation of TAMADA on the international market, noting that a famous work of Niko Pirsomani is displayed on the TAMADA bottle label. “Our brand values Piro-

smani and his works, as clearly seen on the TAMADA bottle label, where his outstanding painting “Feast of Five Princes” is displayed. The fact that TAMADA was exclusively presented on the opening ceremony of the exhibition of the prominent Georgian painter Niko Pirosmani at the Vienna Albertina Museum, dedicated to the 100th year of the artist’s demise, was a great responsibility and honor for us. The gala dinner was attended by almost 250 guests,” stated Lespi. The French viticulturist noted with a special pride that it was exactly that day he became familiar with Georgia, as the producer of the premium quality wine.

At the end of the event, the guests of GWS tasted the premium line wines with special courses and discussed the importance of Georgian wines and dishes.

TAMADA was founded 2001, and since then has gained multiple golden medals within the frames of international wine festivals.TAMADABrandportfolioincludes 7 types of wines from Appellation of ControlledOrigin(Tsinandali;Tvishi;Mukuzani; Napareuli; Kindzmarauli; Khvanchkara; Akhasheni). It unites the unique characteristics of Georgian ‘Supra’.

GWS is one of the oldest and bestknown wine factories in Georgia, established in 1993 in Telavi and created on the “Telavi 2” base, the oldest wine factory founded in 1976. Today, GWS owns 350 hectares of vineyards, the majority

of them 15-25 years old. 280 of them are red grapes and the remaining 120 belong to white varieties. 70% of production is devoted to Georgian traditional grape

varieties, and 30% to international varieties. The company produces wine, sparkling wine and high alcoholic products, such as Tamada, Old Tbilisi,

Admanti, Vismino and Elibo. Soon, customers will be able to enjoy wine produced using biotechnology methods from the company’s vineyards.

Deputy Economy Minister Holds Meetings in Washington on Georgia-US Economic Relations

BY SAMANTHA GUTHRIE

O

n November 28-29, Deputy Minister of Economy and Sustainable Development of Georgia Genadi Arveladze met with advisors from various committees of the US House of Representatives and the US Senate, US Agency for International Development (USAID) Assistant Administrator for Europe and Eurasia, the US Trade Representative (USTR), and economic policy aides to discuss international trade and labor issues.

During the meetings, Arveladze underlined the necessity of expanding trade between the US and Georgia and highlighted the possibility of launching a free trade agreement between the countries, an opportunity Georgian representatives have been pushing hard for in Washington since the Trump administration came to power. US President Donald Trump has repeatedly stated his preference for

Image source: Ministry of Economy and Sustainable Development

bi-lateral trade agreements over multilateral or international deals such as the Trans-Pacific Partnership and the North American Free Trade Agreement.

At the meetings held at the US Congress, Arveladze spoke about the importance of supporting legislative action in the process of deepening economic relations, which is also necessary to expand

bilateral trade relations between the countries. This issue was also discussed during the meeting held at the USTR’s Office. The USTR website notes that trade between the United States and the Caucasus region totaled $1.2 billion in 2017, equivalent to the United States' 87th largest trading partner. To Georgia specifically, the US exported $383 mil-

lion worth of goods in 2017 and imported $131 million worth of goods from Georgia in the same year. “Investment flows to and from the region remain strong due to Bilateral Investment Treaties between the United States and all three countries,” explains the site, recognizing the Trade and Investment Framework Agreement (TIFA) signed between the US and Georgia in June 2007 that provides “a forum to address trade issues and will help bolster Georgia's ambitious program of economic reform and liberalization.”

During his meeting at USAID, Arveladze spoke about the importance of the organization’s projects and programs in Georgia to the country’s economic development, including two major ongoing programs which are aimed at the development of agriculture in Georgia and promoting economic security to strengthen the country. One of the main topics of the meeting was the Country Development Cooperation Strategy for Georgia, which will be implemented in Georgia to promote economic develop-

ment in various fields over the next several years.

While in the US, Arveladze also attended the America-Georgia Business Council's 21st Annual Conference on November 29, where he watched several presentations and delivered a speech that focused on the importance of US-Georgia economic and commercial cooperation and deepening ties in this direction. The opening remarks at the conference were given by Georgian Ambassador to the United States, David Bakradze. Bakradze posted on Twitter that it was “a pleasure participating in [the] 21st annual conference...discussing priorities of US-Georgia cooperation in the fields of Security and Trade.” He thanked president of the Council Mamuka Tsereteli for his “decades-long commitment to the bilateral relationship.”

During his visit, Arveladze also met with the Deputy Assistant Secretary of State at the US State Department and with the Chair of the US House of Representatives Committee on International Affairs.

Investor Considers Georgia Underserved by Nordic Startups

BY AMY JONES

G

eorgia is becoming ever more present on the radar of foreign investors and startups. The tourism industry’s rapid growth in the country has become a major factor for why investors see Georgia as “currently underserved” by Nordic startups.

In recent years, Georgia has quickly distanced itself from its image as a former Soviet Republic. Once relatively unknown to tourists, the country’s tourism took off in 2012 when tourism jumped from 2.8 million visitors to 4.4 million.

In 2017, that figure stood at 7.5 million, 18% higher than 2016.

Some Nordic startups are beginning

to focus their eyes on the Georgian tourism market. Guide.me hopes to tap into the tours and activities sector, estimated to be worth $150 billion globally with an app that sends tourists location-based push notifications about local experiences as they walk around a town.

Although the project is still in its concept phase, it shows how technology could potentially be used to transform the experience for tourists in Georgia.

Georgia’s booming tourism industry led Estonian investment partner at Change Ventures, Yrjö Ojasaar, to label Georgia “underserved” by Nordic startups. “Many of them [Nordic startups] consider it outside their target region,” he said. Having visited Georgia four times in the past two years, he considers the local adoption of new technologies and solutions to be “very rapid and scalable.”

The Estonian unicorn Taxify is an example of potential success for startups in Georgia. Launched in 2017, Taxify has become one of the leading ride-hailing apps in Tbilisi. They have demonstrated the potential to work together with Georgia partners to achieve great results.

After a strong launch in Tbilisi, the company also began operating in Baku in spring of the same year.

Tbilisi, as the economic hub of Georgia, is an especially attractive market to Nordic startups. Indeed, around one third of all 3.7 million Georgians live in the city, making the capital larger than Stockholm and Copenhagen, and almost twice the size of Helsinki or Oslo, although the economy is still significantly smaller.

As a compact market with relatively cheap living costs, Georgia offers international startups a large amount of con-

venience and potential. As seen in the startup capital Berlin, startups can bring a huge amount of money to the local economy. Although often accused of

being a main fuel of gentrification, they could help modernize the Georgian economy, ensuring that it continues to grow.

BUSINESS

GEORGIA TODAY DECEMBER 4 - 6, 2018

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HUAWEI Offers Unique Warranty Conditions to Owners of Flagship Models

BY MARIAM DIASAMIDZE

G

eorgian customers witnessed the most important event of the year this week as HUAWEI started selling the Mate20 flagship smartphone in Georgia. Soon, the HUAWEI Mate20 Pro will also appear on the Georgian market.

HUAWEI consistently shows it cares more about customer satisfaction than other brands, now offering special guarantee conditions with the HUAWEI Mate20 to make it even more attractive and tailored to consumer interests.

If you buy a HUAWEI Mate20 series smartphone, the company will give you the chance to get an 18-month warranty service and an additional 6-month service for the cell phone screen (meaning if the phone screen is accidentally damaged, you can replace it free of charge under the additional warranty: the company will reimburse all the costs of the screen and the screen replacement service).

A hotline has been set up - 0322 422216 to answer any questions you might have about the new models of smartphone, service centers or warranty conditions of HUAWEI. Additionally,

the company offers customers a postal service throughout the country that provides free delivery of products from center-to-customer.

HUAWEI products and services are

available in more than 170 countries and are used by a third of the world's population. There are 16 research and development centers operating worldwide in the USA, Germany, Sweden,

Russia, India and China. HUAWEI Consumer BG is one of HUAWEI's three business units, mainly focusing on smartphones, personal computers, tablets and cloud services. HUAWEI

Global Network is based on 20 years’ experience in the telecommunications business and serves to provide innovative technologies to customers around the world.

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BUSINESS

GEORGIA TODAY

DECEMBER 4 - 6, 2018

Maia Khetsuriani: 94 mln Patients Worldwide Treated with Servier Medicines Daily lots of scientific projects conducted. One of the last was held in Batumi: 13 international experts participated in the Black Sea Phlebology Meeting. It was a combination of experience-sharing for Georgian doctors and recognition of the country and the specialists of this sphere for the further organization of similar meetings.

ADVERTORIAL

C

ompany ‘Servier’ has been functioning on the Georgian pharmaceutical market for 15 years,havingbeenestablished in France in 1954 and opening offices in numerous other countries thereafter. The General Manager of Servier Representative office in Georgia, Maia Khetsuriani, spoke to us about the achievements and successes of the company.

“These past 15 years of having Servier on the Georgian pharmaceutical market have been interesting, colourful and full of challenges,” she told us. “Since 2003, the company has gone through multiple levels of development. Our company is focused on the patients’ needs and on distributing the best therapeutic treatments for them. A number of scientific projects have been carried out with medical society which brought important benefits to the development of different fields of medicine in Georgia and to the patients in an increase in access to high quality medicines.”

Maia Khetsuriani goes on to note that Servier-Georgia is associated with high quality, innovation and progress, and highlights that 94 patients worldwide use Servier drugs every day.

“Servier has kept its strong position on the Georgian pharmaceutical market for 15 years, giving Georgian patients access to effective medical treatment. I believe this is the main feature of the success of the company.”

She also highlights the dedicated Georgian team, “outstanding” both in its professional characteristics and united spirit as

WHAT HAVE BEEN THE MAIN OBSTACLES DURING YOUR 15 YEARS OF DEVELOPMENT? I don’t believe it’s possible to develop and achieve success without obstacles. When they have already been overcome, there is no difficulty, and then it is more of a challenge. And there were a lot of challenges during these 15 years.

WHERE AND HOW YOU SEE SERVIER IN THE NEXT 15 YEARS?

it seeks innovation.

“Servier has 4 corporate values: Dare to innovate, taking care of each other and the patients, share for professional growth and commit to succeed. I think the Georgian office of Servier integrates all four,” Khetsuriani notes.

WHAT ARE THE MAJOR STRENGTHS OF THE COMPANY THAT KEEP IT IN PLACE ON THE MARKET AND CONSISTENTLY DEVELOPING? The first and most vital fact is that our company is oriented on the research sector and invests 25% of its income (one of the highest indicators in the pharmaceutical sphere) in research and the investi-

Internet Connectivity for Enterprises in Georgia

BY ANNA ZHVANIA

G

eostat has published the results of a study of the use of information-communication technologies in enterprises. According to the results, 98.6% of Georgian enterprises had access to the internet as of 1 January 2018.

In addition, the DSL connection (xDSL,

gation of new molecules. It has 16 research centres worldwide. In 2002, the company won the Galien Prize in recognition of its’ creativity in Research. As a result, Servier medicines are differentiated by high efficiency and safety profile of the treatment. Today, Servier works in five therapeutic spheres: cardiology, endocrinology, angiology, neurology and already in oncology.

Servier drugs represent an effective weapon in doctors’ hands for managing number of diseases with effective reduction of symptoms, improvement patients’ quality of life and depending on disease reducing risk of life threatening compilations. The need for such medical treatment is high for both doctors and patients.

It’s hard for me to name one major reason.

It’s the strategy of the company to develop internationally and establish representations in different countries. The first Servier office to be opened outside France was in London in 1964. After that, multiple offices were added annually. Today, Servier operates in 149 countries, with 21,700 employees.

The Georgian office, with 42 employees, is one member of this big family.

I’m proud that our office has managed to gain an important position in Georgia and within our company. The proof of it is that with the support of Georgian Medical society and French Head office, there has been

Engurhesi Rehabilitation to Kick Off in 2019 Source, Image source: bm.ge

ADSL, SDSL, VDSL, etc.) is the most commonly used to secure connection to the Internet - 32.1% of users and fixed broadband devices (optical fiber (FTTH)) and cable technologies - 29%.

As of January 1, 2018, 44.4% of those employed in enterprises used a portable computer or smartphone belonging to the enterprise that was connected to the Internet, and the percentage of those companies using the website or website amounted to 40.3%.

BY KETEVAN KVARATSKHELIYA

O

Source: Geostat

WHY DID SERVIER CHOOSE TO OPEN AN OFFICE IN GEORGIA IN 2003?

Servier strives for permanent development, while dare to innovate is main moto of the company. Servier made acquisition of Shire Oncology business and created new subsidiary in USA. Servier has signed partnerships with private and public actors, such as Harvard and University of San Francisco.

A new research centre with a bio innovation direction has also been established in Boston.

Today, Servier is well-known for its’ presence in Cardiology, Angiology and Endocrinology. Company objective is to launch one new molecular entity every 3 years and also to become a key player in oncology.

Looking to the past what was done and company current dedication, I believe that is real future. Speaking about Georgian office, I am sure we will face new challenges in the changing environment and hope that with the strong values and great will, we’ll reach new levels of development.

ne of the most significant projects that is planned to be carried out in Georgia in 2019 is the rehabilitation of Engurhesi, which represents a major electrical supplier of Georgia, supplying 30% of overall electricity in the country.

The Director of Engurhesi, Levan Mebonia, told Business Media Georgia that “the processes related to the tender for the rehabilitation of hydropower plant project Engurhesi will have to be completed by the end of April 2019”.

The costs of the rehabilitation of Engurhesi will be covered using a loan from the European Bank for Reconstruction and Development (EBRD) and funding from the EU Neighborhood Investment Facility (EU NIF). The total budget of the project amounts to 35 million Euro, of which 28 million Euro is the EBRD loan and 7 million the EU grant. Financing will primarily be used for the rehabilitation of the Enguri headrace tunnel and penstock, but it will also cover the expenses of the restoration of the Enguri switchyard, Vardnili II spillway gates, Enguri river diversion weir and access road, together with implementation of a sedimentation management plan. The main aim

of the project is to promote resilience against climate change.

Another significant purpose of the given project is the amelioration of the effectiveness of the power plant. As a result of the rehabilitation process, the power plant will be able to produce 2% more power. The reconstructions will begin in 2019 and in the interval from March to April of 2020 the Enguri power plant will stop functioning for three months due to the works in the tunnel.

“There will be a partial renovation of the tunnel since three months is not enough time to fully reconstruct 15-kilometer long tunnel. We are planning to reconstruct the most needy parts of the tunnel, a 1.5km stretch," states Mebonia.

BUSINESS

GEORGIA TODAY DECEMBER 4 - 6, 2018

Building an Inclusive & Equal Society

O

n 3 December, International Day of Persons with Disabilities, Head of the United Nations in Georgia, Louisa Vinton; Ambassador of Sweden to Georgia and Armenia, H.E. Ulrik Tideström; and First Deputy Minister of Justice of Georgia, Mikheil Sarjveladze, visited the Public Service Hall in Tbilisi to see the results of their joint work aiming to adapt Georgia’s public space and services to the needs of people with disabilities.

The guests met with the Public Service Hall management and staff and joined a sign language training for the operators.

“The United Nations firmly believes that equal rights and equal opportunities are the foundation of sustainable development that leaves no one behind,” said Vinton. “The Public Service Hall is an example of Georgia’s evident progress in building an inclusive environment and public services. However, we still look forward to seeing more developments in adopting the legislation and policies that will help Georgia move forward in the implementation of the UN Convention on the Rights of Persons with Disabilities.”

The Public Service Hall is one of the few public offices in Georgia where the physical space has been fully adapted to the needs of people with disabilities, including wheelchair users and people with visual and hearing impairments.

As a next step to an inclusive and equal environment, the Public Service Hall is now adapting its services. Over 750 operators are undergoing

a specialised training in delivering services to people with disabilities. Twenty operators have been trained in sign language. 50 new signs were created and introduced to the Georgian sign language to cover all key areas of public services.

The first ever public service in Georgian sign language was delivered in November 2018.

In addition, the Public Service Hall has prepared and published guidelines about delivering public services to people with disabilities that can be applied to all public agencies in Georgia.

Many of these initiatives have been implemented with assistance from international partners, including the United Nations Development Programme (UNDP), Government of Sweden and the European Union.

“Sweden has a long experience of introducing inclusive polices that give people with disabilities a greater chance of participating in society on the same terms as others. We are privileged to share this experience with Georgia and assist in creating an inclusive and equal society,” said H.E. Ulrik Tideström, Ambassador of Sweden to Georgia and Armenia.

The International Day of Persons with Disabilities is celebrated every year on 3 December. It aims to promote the rights and well-being of persons with disabilities in every aspect of political, social, economic and cultural life. The 2018 theme of the day, “Empowering persons with disabilities and ensuring inclusiveness and equality,” focuses on the inclusive, equitable and sustainable development envisaged in the 2030 Agenda for Sustainable Development.

EUMM Hosts Medical Security Course in Georgia

Photo: EUMM

BY SAMANTHA GUTHRIE

T

he European Union Monitoring Mission in Georgia (EUMM) hosted a medical security course in its headquarters in Tbilisi this week, November 22-27.

The training course was part of the EU’s Civilian Common Security and Defence Policy missions,

developed for the EUMM’s safety and security personnel by the Swedish Contingencies Agency.

The main goal of the course was to provide participants with the knowledge, skills and abilities required to prevent and respond to medical emergencies in a safe, secure, timely and effective manner.

14 students from EUAM Ukraine, EUAM Iraq, EUCAP Somalia, EUPOL COPPS, EUCAP Niger, Civilian Planning and Conduct Capability (CPCC) and the host Mission, participated in the course.

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BUSINESS

GEORGIA TODAY

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November Agri Review: The Sector at a Glance

T

he state budget for 2019 is currently being discussed in Parliament and must be approved by the end of the year. According to the revised version (second version), the total budget will be around 13 billion GEL, out of which the Ministry of Environmental Protection and Agriculture (MEPA) will get 332 million GEL (2.4% of the total budget). Approximately 285 million GEL will go to agriculture development and the remaining 47 million GEL will be spent on environmental protection.

Compared to 2018, the budget for agriculture development will increase by around 22% in 2019. More state funds will be allocated to most of the agricultural areas except for development of the wine and viticulture sector and development of agricultural cooperatives. In 2019, these two areas will have a lower budget than they had in 2018.

As in previous years, the biggest share of state funds goes to further support the Agricultural Projects Management Agency (APMA) and the modernization of amelioration systems. It should be noted that in 2019, APMA will finance 10 types of projects including 4 new ones.

These new projects are: farmer/farm registration, “Imereti Agrizone”, “Reap the Harvest” and a project on technical support and marketing. Specifically,

Source: Ministry of Finance, Note: Draft budget (second version), which is currently being discussed in Parliament; the share of budget for agriculture has been calculated by the authors.

“Imereti Agrizone” aims to create a greenhouse cluster in Imereti, while “Reap the Harvest” will support farmers in purchasing harvesting equipment.

DOMESTIC PRICES Month-on-month prices did not change in the category of food and non-alcoholic beverages. From an annual perspective (October 2018 vs. October 2017), prices of food and non-alcoholic beverages increased slightly by 0.2%. On an annual basis, the sharpest price decreases were observed in the fruit and grapes subcategory for tangerines (-41%), lemons

(-33%), apples (-28%), pears (-25%), plums (-24%) and grapes (-15%). In October 2018, prices for grapes dropped by 15% compared to October 2017 due to a good harvest in 2018. According to LEPL National Wine Agency, this year more than 230,000 tons of grapes have been processed; that is 72% higher than the previous year (134,000 tons).

Positive trends in grape production obviously affected the wine sector. During January-October, 2018, Georgia exported 68.3 mln bottles (0.75 liter) of wine, which was 12% higher than the same indicator in the previous year. As

shown in the diagram, on an annual basis, Georgian wine export to Russia increased by 10%, while exports to Ukraine, Kazakhstan and Poland increased by 34%, 16% and 30% respectively. Meanwhile, Georgian wine exports to China declined by 11%.

In order to support the development of the Georgian wine sector and the international reputation of Georgian wine, on November 6, 2018, the Government of Georgia adopted technical regulations for wine production that determine general rules, permitted processes, inputs and substances for wine producers. Among other things, the regulation forbids the addition of water into wine and defines the physical-chemical characteristics, sugar content, acrylic acidity, and mass concentration of nonsugar extract in wine.

INTERNATIONAL PRICES As international prices, international prices decreased in October 2018. The Food Price Index, measured by the Food and Agriculture Organization (FAO), decreased by 7.4% in September 2018, compared to the previous year.

constitutes 16% of total Georgian imports.

Year over year (compared to October 2017), agricultural imports declined slightly by more than 1%.

POLICY WATCH New fruit processing factory opened in Shida Kartli A modern fruit processor was opened in the village of Sogholasheni in Kareli municipality with state support. The total investment amounts to more than 1 mln. GEL, out of which 60% is funded by donors and 40% comes from a cheap agricultural loans project supported by the state.

New 5-year USAID Agriculture Program The United States Agency for International Development (USAID) is launching a new program to support agricultural business development in Georgia’s western city of Kutaisi. The program aims to create 3000 new jobs in Georgia.

INTERNEATIONAL TRADE During October 2018, Georgia’s agricultural exports (including food) amounted to 64 mln. USD, which is almost 30% of total Georgian export value. While comparing this indicator to October 2017, it is down by 1 percentage point. As for imports, in October 2018, Georgia’s agro imports reached 103 mln USD, which

Source: LEPL National Wine Agency, 2018

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BUSINESS

GEORGIA TODAY

DECEMBER 4 - 6, 2018

How the Robot Revolution Affects the Manufacturing Business MANUFACTURING ROBOTS RUNNING OFF HUMANS?

BY ANNA KUCIRKOVA

S

ince the inception of the assembly line, manufacturers have continually searched for ways to improve their efficiency.

In the past few decades, robots have taken over some of the functions of human workers, mostly in repetitive, routine tasks. This has caused alarm for some who are worried about robots taking their jobs.

So how exactly is the robot revolution changing the manufacturing business?

Here’s what you need to know.

THE STATE OF THE ROBOT REVOLUTION Last year, an 11-inch armless robot named Jibo, a so-called “social robot,” became the latest example of a clear phenomenon: Whether we care to admit it or not, exponentially smarter and more capable robots are coming soon. In truth, they’re already everywhere we look: in our planes, in our cars, in operating rooms, next to us on assembly lines, in the military, and on the last mile.

As more robots appear, new product architecture and more computing power become essential. In 2015, Gill Pratt, who oversaw robotics technology at the Defense Advanced Research Projects Agency (DARPA), said “robot capabilities had crossed a key threshold. Improvements in electric energy storage and the exponential growth of computation power and data storage had enabled robots to learn and make decisions informed by the experiences of other robots.” Does that sound frightening?

Robots learning from other robots? In a sense, it leads to a larger consumer interest because the smarter robots are, the more helpful they are to humans. The consumer market will approach $100 billion in the coming years.

Today, most of the world’s robots are used in factories. What’s different is that those robots are smaller, more observant and more cooperative than their predecessors. Venture capitalists are flooding the robot market, which means we will be seeing more of them in our distribution centers and warehouses soon. And it’s not just manufacturers who are utilizing robots. Companies from retailers to hotels are implementing the use of smarter machines.

So, not only will more robots become available, the manufacture of the units, all of their parts, and their internal chips and other technology will greatly affect the robotics industry.

THE CHANGES WROUGHT BY BOTS The upcoming “robot revolution” will change the global economy over the next two decades, cutting the costs of doing business, as machines take over jobs like caring for the elderly or flipping burgers.

Robots can already perform manual

jobs, such as vacuuming the living room or assembling machines. The development of artificial intelligence (AI) means computers and robots are improving their ability to “think”. They are on the verge of being able to perform analytical tasks once seen as requiring human cognition.

This begs the question: what jobs could eventually be taken over by machines?

Bank of America Merrill Lynch’s analysts predict the following jobs to be at risk:

BURGER FLIPPERS A San Francisco-based start-up called Momentum Machines has designed a robot that would replicate the hot, repetitive tasks of the fast-food worker: shaping burgers from ground meat, grilling them to order, toasting buns, and adding tomatoes, onions, and pickles.

MANUFACTURING WORKERS Relatively low-skilled industrial workers in rich countries have become used to competing against cut-price employees in cheaper economies. Replacing workers with machines can cut jobs by up to 90%.

FINANCIAL ADVISERS Bespoke financial advice seems like the epitome of a “personal” service, but it could soon be replaced by increasingly sophisticated algorithms that can tailor their responses to an individual’s circumstances.

DOCTORS Some 570,000 “robo-surgery” operations were performed last year. Oncologists at the Memorial Sloan-Kettering Cancer Center in New York have used IBM’s Watson supercomputer, which can read 1 million textbooks in three seconds, to help them with diagnoses.

CARE WORKERS Merrill Lynch predicts that the global personal robot market, including socalled “care-bots”, could increase to $17 billion over the next five years, “driven by rapidly ageing populations, a looming shortfall of care workers, and the need to enhance performance and assist rehabilitation of the elderly and disabled.”

Should workers be concerned about the infiltration of robotic workers? While the US and Canada have lost more than 6 million jobs to overseas outsourcing, the majority of job losses in both countries was due to machines replacing humans.

The facts, however, tell us that over the past two decades, inflation-adjusted US manufacturing production has grown nearly 40%. While there may be fewer jobs, more is getting done. Manufacturing employees have better education, are better paid and produce more valuable products, including technology that allows them to be more productive.

In the past few years, there have been millions of jobs remaining unfilled in the manufacturing sector. The aging workforce is not being replaced by younger workers. Youth are more interested in other work.

There are other issues to consider as well: Robots are safer. They are reliable.

They are more ethical than using exploited labor overseas. They’re incredibly costeffective, with manufacturers seeing return on investment in 12 months or less. Robots allow manufacturers to focus on innovation. This creates new jobs that require and build a more educated, highly skilled workforce.

So, will a robot take your job? Possibly.

But, in return, workers of the future will likely find more meaningful work, for better pay. But there is also a distinct possibility that more white-collar jobs will be taken by robots with AI.

JOBS IN JEOPARDY FROM AI Artificial intelligence (AI) will also change the face of employment. Digitaltrends researchers found jobs that AI could handle that we humans would never dream of handing over to a machine.

LAWYERS While genuinely bespoke legal work still requires humans, AI can help perform tasks ranging from legal discovery (the pre-trial process in which lawyers decide which documents are relevant to a case) to creating contracts. They can even argue parking fines and handle divorce proceedings.

If you want to go into law, study a combination of law and computer science.

You could advise on how best to turn laws into algorithms or investigate the legal framework around new technologies like self-driving cars.

DATA ENTRY CLERKS Given the enormous amount of data generated every day by companies and individuals, data entry clerks won’t be going anywhere. But, by its very nature, this repetitive and boring job seems designed for a robotic worker or AI. You can snag job security by learning about data science or how to oversee machines doing the data entry.

JOURNALISTS News organizations could use bots to

generate sports reports, or they could try to use AI for more in-depth investigative journalism. Bots could be the hired researcher human journalists always dreamed of, able to pull up statistics and find interesting patterns in data.

DRIVERS Fleets of autonomous vehicles are going to have a huge impact on human service drivers, and autonomous trucks will mean the same thing for long-haul drivers. While the technology for autonomous vehicles is nowhere near perfect, taxi drivers and chauffeurs might want to consider furthering their education in a new field.

CHEFS You wouldn’t think a robot or AI would do well in a sweltering kitchen, right?

IBM’s Chef Watson can generate new recipes from scratch using an astonishing knowledge of taste chemistry and flavor pairings. And robots like Miso Robotics’ burger-preparing Flippy can prepare meals and serve them at speeds human chefs struggle to achieve.

FINANCIAL ANALYSTS AI gives financial analysts a run for their money. Computers can see patterns and initiate trades faster than even the quickest human analyst. The future for this industry will be in becoming a “quant”: someone able to combine knowledge of the financial sector with computer science and math are highly sought after to help develop the algorithms which increasingly drive this field.

TELEMARKETERS/ CUSTOMER SERVICE Chatbots can convincingly deliver a script, just like a human. But, one AI company, Mattersight, uses voice recognition to determine the personality type of customer service line callers and connect them to humans with a similar personality type.

MEDICS AI has algorithms to diagnose diseases, computers are being used to recommend the best cancer treatment, AI pharmacists fill prescriptions, wearable AI

devices help treat physical disorders, and there are even robots carrying out surgery. But, for the most part, humans will still be needed in medicine. Immediate future technology augments human physicians and healthcare workers rather than replacing them.

MANUAL LABOR There’s no doubt that manual labor jobs that once required humans are now to be done by robots. Robots can work nonstop without getting tired. But robots do lack manual dexterity, a skill that requires a human worker. We see this in factory work most often.

FACTORY ROBOTS Cambridge Industries Group runs a large factory in China. Their goal is to replace 2,000 of its 3,000 workers with machines in the coming year. Shortly after that, it wants the operation to be almost fully automated, creating what’s called a “dark factory.” They want to switch the lights off and leave the place to the robots.

But during a recent test, one of the packaging line robots stopped working, stopping the entire production line and costing the company thousands. So even CIG acknowledges that replacing humans with machines is not foolproof. There are dozens of companies throughout Asia that hope to replace humans with robots for ultimate cost efficiency.

Introducing throngs of robots cannot be done overnight. That much is clear from the struggles faced by a $130 billion Taiwanese manufacturer named Foxconn.

In 2011, the founder said he expected to have a million robots in his plants by 2014. The challenge proved much more difficult than originally thought, and just a few tens of thousands of robots had been deployed within three years.

Chinese robot companies and research institutes have managed to develop industrial robots fitted with a fork-like appendage that can perform routine factory work at terrifying speeds. But factory bots don’t begin and end with China.

Rethink Robotics in Boston created a pair of flexible and intelligent industrial machines. The products require very little programming and are equipped with sensors to help them recognize objects and avoid hitting people.

Robots have their place in many manufacturing companies all over the globe.

It’s time for us to accept them as part of our global economy.

CONCLUSION While many will continue to fear robots and AI for the damage they can do to the job market, when businesses are able to save money with cost effective machinery, they have more resources to hire more skilled workers.

The robot revolution is inevitable.

Humans in manual labor jobs need to prepare for adding new skills or starting a whole new career.

Originally published on iqsdirectory.com.

Printed in Georgia Today with the permission of the author.

BUSINESS

GEORGIA TODAY DECEMBER 4 - 6, 2018

Nexia TA: The Only Georgian Auditor to Win at IAB

BY MARIAM MERABISHVILI

T

he N1 accounting publication International Accounting Bulletin (IAB) annually displays the world’s best networks and companies. Nominations differ through the directions and the winners are selected by considering their strongest attributes. The event was traditionally held in London in October.

In 2018, Nexia International nominated Nexia TA for the prestigious IAB competition for ‘Accounting, Capacity Building Champion,’ highlighting its special contribution to accounting development.

Representatives of the world’s top countries were also participating in the award ceremony, but this was the first time the Georgian audit company had been presented. And it won!

“We are very happy to win the competition because this is the first time a Georgian company has won such a prestigious award,” said Gela Mghebrishvili, Managing Partner at Nexia TA. “However, we weren’t ever so surprised because accounting is a very important and strong feature in Nexia TA, for the development of which we work continuously

in-house and across the country.”

“Our victory in the international arena is very important for Georgia's representation, and this type of world level recognition is further confirmation that Nexia TA offers clients the best services,” said Davit Lomidze, Managing Partner at Nexia TA. “Such a reward is a stimulus for us to contribute more to the development of accounting and auditing in Georgia and to help our clients make their businesses even more successful, both locally and internationally.”

“We would like to thank the Nexia TA team for their unsparing work and our clients for their trust and loyalty,” said Boris Megrelishvilil, Managing Partner of Nexia TA. “We also want to highlight the head office of the Nexia network, the support of which is very important for us. We are delighted that Nexia International has become the only network in the world to have won with two offices (Georgia and Tanzania), winning two nominations at the IAB awards 2018. This highlights the strength of the Nexia network in the international arena.”

“This award is international recognition of Nexia TA’s success, achieved in a short period, and is confirmation that the company is growing and developing in the right direction,” noted Nexia TA Managing Partners.

Tbilisi Hosts Int’l Night Time Economy Forum

BY KETEVAN KVARATSKHELIYA

F

rom November 30 to December 1, Rooms Hotel Tbilisi hosted the Tbilisi International Night Time Economy Forum (TINTEF).

Mayor of Tbilisi Kakha Kaladze noted the event aimed to define the night economy, activate nightlife by developing hidden and less popular spaces of Tbilisi, promote local culture, engage

the local population and visitors in the cultural life of the city, create a secure atmosphere and represent Tbilisi from a very diverse perspective.

Kaladze also outlined a major objective of TINTEF to adopt a broad dialogue with the participation of all relevant authorities on the role of urban planning and wise management in the development of a sustainable Night-Time Economy.

International government officials, professionals and experts participated in forum, sharing their experience for shaping a sustainable Night-Time Economy.

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POLITICS

GEORGIA TODAY

DECEMBER 4 - 6, 2018

Bringing Georgia’s Realities in Line with its Euro-Atlantic Dreams was far from inclusive, resulting in poverty and very high levels of inequality.

Almost a half of the country’s population survives in primitive agriculture; a large share of urban population is unemployed or self-employed in low-productivity services; only 15% of Georgia’s total population are officially employed. With so many people out of the modern labor market, the Georgian economy cannot catch up even with the least developed countries in the EU. To get out of this predicament, Georgia must implement bold industrial policies, providing incentives for, and coordinating, private sector investment in specific sectors of the economy and geographic regions. This is how Georgia developed the city of Batumi and the mountain resorts in Svaneti and Gudauri. This is how it could start new manufacturing activities with the potential to absorb workers stuck in subsistence agriculture and primitive services. The result would be higher levels of income and economic prosperity for all.

BY EKATERINE GASPARIAN

T

o be able to join the West’s military and political structures, Georgia has to upgrade itself in line with its Euro-Atlantic aspirations: educate its population, develop the economy, and, last but not least, address deficiencies in democratic governance, as reflected in its position on the Political Monopolization Index.

Georgia’s foreign policy drift away from Russia and towards the West started almost immediately after independence, when it joined the North Atlantic Cooperation Council in 1992. The following year, Russia intervened on Eduard Shevardnadze’s behalf in the civil war engulfing Georgia by stopping the advancement of Gamsakhurdia’s forces in Western Georgia. Yet, Georgia’s relations with its northern neighbor quickly soured over Russia’s accusations that Georgia sheltered Chechen rebels, and its own support for Abkhaz and South Ossetian separatists.

DEVELOPING DEMOCRATIC INSTITUTIONS

GEORGIA ‘GOING WEST’ Shevardnadze’s ‘bidirectional’ foreign policy sought to distance Georgia from Russia’s suffocating embrace, and bring it into the orbit of the US and its Western allies. With Georgia acquiring a new significance as a potential energy transit corridor, Shevardnadze was warmly welcomed by the Clinton administration.

In July 1995, Georgia and the US signed a Bilateral Investment Treaty, paving the way for the construction of oil and gas pipelines across Georgia’s territories.

With Russian military bases still present on its territory, Georgia was brave enough to declare its NATO aspirations at the 2002 Prague Summit. Two years later, following the 2003 Rose Revolution, Georgia became the first country to acquire an Individual Partnership Action Plan (IPAP). Another breakthrough moment seemed to have come in April 2008, when the Bucharest Summit resolved that “Georgia and Ukraine

will become members of NATO”.

The immediate next step was supposed to be a Membership Action Plan (MAP).

What followed, instead, was the RussoGeorgian war of August 2008, giving at least some NATO members second thoughts as to the urgency of letting Georgia into the Alliance. More than ten years have passed since the Bucharest Summit, but Georgia is yet to receive the MAP. 2018 Brussels Summit resulted in nothing but the usual expression of satisfaction with Georgia’s military contribution to the Alliance and its progress in developing its economic and democratic institutions.

STUCK IN LOVE

A more confident Georgia may also be able to mend fences with all of its neighbors while at the same time joining the West’s political structures and security arrangements

Successive Georgian governments have been drawn towards NATO as a possible antidote to Russian occupation of the breakaway regions of Abkhazia and South Ossetia, its unilateral decision to recognize their independence in 2014-15, and the creeping borderization process that ensued. At the same time, popular support within Georgia for joining NATO, according to NDI opinion polls, is quite volatile. Moreover, when asked about the benefits of joining the Alliance, many Georgian citizens see it as a way out of social misery, rather than a means of addressing the country’s security challenges or strengthening its democratic governance.

Thus, we observe a peculiar dualism: Georgia is politically determined to join NATO, but this aspiration is not fully reflected in the individual perceptions of Georgian people. A similar ambivalence appears to be shared by Georgia’s Western allies. On the one hand, Georgia

may have “all the practical tools to become a NATO member”, as recently stated by Secretary General Stoltenberg. On the other hand, however, the Alliance does not speak in a single voice when it comes to further expansion. Some NATO members (e.g. Germany and France) hesitate to grant Georgia the MAP, as this would imply an open confrontation with Russia.

With all their love for each other, Georgia-NATO relations appear to be stuck.

THERE IS A WAY OUT! One way forward, suggested by Coffey (2018), is to invite Georgia to joint NATO by temporarily excluding the Russianoccupied territories from Article 5 protection. However, the suggestion that Georgia should decide whether it wants to become a member of NATO or give up on its territorial integrity – as implied

by Coffey – is a false dichotomy in Georgia’s political realities.

Instead, Georgian policymakers should understand that integration into EuroAtlantic institutions will not be possible without restoring the country’s territorial integrity. And, since only an enlightened, democratic and prosperous Georgia can hope to re-integrate the territories and people it lost in the chaos of the 1990s, domestic policy issues – rather than demands for immediate admission into NATO – should be at the center of Georgia’s policy agenda. In other words, to join the West’s military and political structures, Georgia has to upgrade itself in line with its Euro-Atlantic aspirations: educate its population, develop the economy, and, last but not

least, address evident deficiencies in democratic governance.

DEVELOPING THE PUBLIC EDUCATION SYSTEM Since 2003, Georgia has made tremendous progress in eradicating corruption in its education system. This success, however, did not translate into quality improvements, as reflected in Georgia’s lackluster performance in international science and math tests, such as PISA and TIMSS. The teaching profession is among the least respected, failing to attract the best and the brightest. Public schools and universities are rigidly regulated by the state, but are shielded from social pressure and competition; teacher unions and academic elites stand united against structural changes. With private schools catering for the rich, the Georgian people are increasingly divided into haves and have-nots, with little social mobility and no equal opportunity at the start.

Radical reforms are long overdue. Such reforms should include increased spending on education at all levels; differentiated teacher compensation; greater autonomy for individual teachers and institutions; a special program of incentives to recruit young teachers willing to work in remote rural locations; and last but not least, international and social partnerships to help Georgian schools and universities implement new teaching methods suited for the 21st century, such as problem-based learning and the ‘flipped classroom’ approach.

DEVELOPING THE ECONOMY Georgia’s economy was growing rather rapidly in recent years, yet, this growth

So far, Georgia’s democracy has been handicapped by a lack of genuine competition, ranking first on the Tbilinomics Index of Political Monopolization among all NATO member states! Georgia’s electoral system allows for an easy emergence of dominant ruling parties that tend to ignore the due political process, public and expert opinion.

Georgia has to urgently abolish singlemember districts and introduce voting on nation-wide party lists. By doing so, it would take a major step towards a healthier situation in which parliamentary elections produce coalitional governments based on compromise rather than outright domination, a situation in which major policy choices are properly discussed and contested. Operating in a more competitive environment, political parties will be forced to present their views on issues that genuinely concern Georgian people – jobs, social security, education, minority rights and the environment – as opposed to cheap blame games we have seen them playing on biased television channels in recent months. * * * By addressing these interrelated challenges, the Georgian government will acquire the confidence to stand its ground and engage its people in the breakaway territories. It will be able to think in a more flexible way and put on the table solutions that are both feasible and politically acceptable for all sides in the conflict. A more confident Georgia may also be able to mend fences with all of its neighbors while at the same time joining the West’s political structures and security arrangements, such as NATO.

ABOUT THE AUTHOR:

Ekaterine Gasparian is a recent IR graduate from the International Black Sea University.

She is currently a Communication Specialist at Tbilinomics Policy Advisors. This article was submitted for consideration in the Essay Competition “NATO, Georgia and current security challenges: the 2018 Brussels summit and beyond” organized by the Bulgarian Embassy to Georgia.

POLITICS

GEORGIA TODAY DECEMBER 4 - 6, 2018

15

Under Zurabishvili, Relations with Russia Will Remain Unchanged

BY EMIL AVDALIANI

W

ith the presidential elections now over, it was fascinating to see how many rhetorical twists and political intrigues were used to incriminate the political candidacy of Salome Zurabishvili.

Though it was clear from the very beginning that the new president, like the outgoing Giorgi Margvelashvili, would not have much political power, it was nevertheless stated numerously by various political players that she could do many "negative" things in relations with Russia.

Few, if any, said during the campaign that the new president of Georgia would play a very minor role in the foreign policy decision-making process, that the president's active involvement is precluded by the Constitution, which was changed following the 2012 parliamentary elections.

In fact, even if one suspected that the new president would make some moves towards Russia, it is still more fascinating that ordinary people, and more so the analysts, did not much voice how meagre the probability was that Georgia would do anything to comfort the Russians.

In fact, in this case we have a good example how the human factor matters less than the geopolitical realities that nowadays exist between Moscow and Tbilisi.

For the Russians, Georgia is the southernmost part of the arc which runs from the Baltic to the Black Sea and then to the Caspian. Those lands are 'borderlands" for the Russians, contested by the Europeans and Americans. The Russians have seen in the past 25 years or so how their influence has dwindled in Moldova, Ukraine, the Baltic States and Georgia.

The Russians, through their geopolitical mistakes, even reduced the chances of reversing the process.

Economically and through soft power measures, the Russians are, unfortunately for them, less attractive, while militarily (hardly an asset when it comes to winning hearts and minds) they are one of the strongest in world.

The Russians and Georgians might enjoy increased

bilateral trade, increased cooperation on trade routes through Georgia's Abkhazia and Samachablo (South Ossetia) regions, but the reality is that any substantial progress in relations with the Russians is contingent upon Georgia abandoning its pro-western course.

For the Russians, the battle in the borderlands is

not only about the military issue, who would station more troops, Russia or the NATO alliance, but rather it is about the overall civilizational choice of Ukraine, Georgia and Moldova, and Moscow intends to reverse this process.

For the Russians, Georgia's NATO and European Union (EU) aspirations undermine the very basis

on which Russia's power was exercised throughout the last three centuries. In those times, the Russians were simply too powerful economically and militarily in northern Eurasia and thus were able to dominate the South Caucasus, Ukraine and Moldova.

This could explain why it does not matter much who becomes President of Georgia. A new leader, and in our case Salome Zurabishvili, would have to concede Georgia's very fundamental policies pursued since the end of the Soviet Union, NATO and EU aspirations, which she will not do because of her European diplomatic background and because of the Georgian public which will not tolerate concessions to Russians.

The problem in Georgian- Russian relations is that they have reached a dead-end. For any actual improvement to follow, Moscow would either need to reverse its recognition of Abkhazia and Samachablo, which they won’t (at least for the foreseeable future), or Tbilisi would need to have direct negotiations with the separatist regions, which the Georgians will not do.

Thus, it can be argued that the Russians have narrowed the space for maneuvering with the Georgians following the recognition of Abkhazia and so-called South Ossetia as independent entities in 2008. Where before 2008, many of the Georgian elites thought it probable that there could be a return of territories to Tbilisi in exchange for reversing NATO/EU aspirations, now this thinking is dead. Simply put, the is no hope in negotiating with the Russians beyond some security and perhaps economic issues.

Put in this difficult geopolitical perspective, it is very unlikely that Salome Zurabishvili would vouch for any radical moves, even rhetorically. Indeed, following her victory she has already declared that relations with Russia remain stalled and there will be no changes to the existing status quo.

Official Russian reactions to her victory were quite positive, as many in Moscow argued that she would be more amenable. However, as explained above, exasperation at Russian daily behavior on Georgian soil, as well as the wider geopolitical context, preclude the new Georgian president and the executive government from expecting something positive from Moscow.

Opposition Holds Rally, Slams Presidential Election Results

BY THEA MORRISON

U

nited Opposition, which is made up of several parliamentary and nonparliamentary parties, held a protest rally on Sunday asking for the abolition of the presidential election

results.

The opposition parties claim they are going to apply to court to demand the results of the presidential elections be declared void.

Grigol Vashadze, the former presidential candidate of the opposition, who came second in the race after the ruling Georgian Dream (GD) supported Salome Zurabishvili, stated the government falsified the elections.

He presented a number of ID cards at the rally which belong to already deceased people, claiming they were used in the Guria region to falsify the elections.

"We do not recognize the results of the elections.

Georgia has no president - the criminal dream

and Bidzina Ivanishvili have a president," Vashadze said. "It was not an election. It was a criminal operation against the Georgian people," he added.

In addition, Vashadze proposed the government set up a working group until December 16, “in order to move the country out of the political crisis constitutionally and legally.”

He added that the next steps of the United Opposition will depend on the government’s response.

“We demand early parliamentary elections and fundamental changes to the electoral system, which will completely change the corrupt electoral administration – starting with the Central Election Commission. These commissions should be staffed by civil society, opposition parties, and international experts,” Vashadze said.

The ruling party commented on the proposal of the opposition, saying such statements are “comical.”

The Vice-Speaker of the Parliament, Gia Volsky, said it is the United National Movement which tries to mislead the people.

The next opposition rally has been scheduled for December 16.

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