Issue #1122 Business

Issue no: 1122/166

• FEBRUARY 5 - 7, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

We Don't Need No Regulation: On Georgia’s Dairy and Livestock Sector ISET PAGE 4

Terabank Publishes Successful Financial Indicators for 2018

FOCUS

ON EDUCATION This week's Tbilinomics blog looks at the eradication of the school leaving exams and what it means for Georgia

PAGE 6

Large-Scale Infrastructural Projects to Be Launched in Svaneti

BUSINESS PAGE 5

Mayor Encourages Young Entrepreneurs with New Business Accelerator BUSINESS PAGE 7

How to Take Pictures Easily with Better Quality BUSINESS PAGE 9

Social Innovation Lab

BY THEA MORRISON

L

arge-scale infrastructural projects will be implemented in Svaneti, a historic province in the northwestern part of the country, in 20192020withmorethanGEL100million($376,591m) to be spent on road construction alone.

The statement was made by Georgian Prime Minister Mamuka Bakhtadze on Sunday, when he visited the Tetnuldi and Hatsvali alpine ski resorts in Svaneti.

The PM noted that the main goal is to improve roads and infrastructure in general in order to enable citizens and tourists to get to Svaneti faster.

Continued on page 2 Image source: PM’s Press Office

POLITICS PAGE 11 Prepared for Georgia Today Business by

Markets As of 25ͲJanͲ2019

Price

w/w

Price

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 15.91

+2,7%

+21,3%

GEOROG 04/21

102.16 (YTM 5.71%)

+0,9%

+1,5%

Georgia Capital (CGEO LN)

STOCKS

GBP 11.11

+7,8%

+11,1%

GEORG 04/21

105.88 (YTM 4.05%)

+0,2%

+0,5%

GBP 2.34 +14,1%

+11,4%

GRAIL 07/22

105.38 (YTM 6.00%)

+1,1%

+1,7%

+9,2%

GEBGG 07/23

98.74 (YTM 6.33%)

+1,0%

+1,2%

CURRENCIES

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

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

GBP 14.74

Price

+0,8%

m/m

BONDS

w/w

m/m

61,64

Ͳ1,7%

+22,1%

GEL / USD

2,6600

+0,0%

Ͳ0,2%

1 305,25

+1,8%

+2,9%

GEL / EUR

3,0345

Price

+0,4%

w/w

Ͳ0,0%

m/m

GEL / GBP

3,5117

+2,6%

INDICES

Price

w/w

m/m

GEL / CHF

2,6750

+0,2%

Ͳ0,8%

FTSE 100

6 809,22

Ͳ2,3%

+1,8%

GEL / RUB

0,0402

Ͳ

+3,9%

FTSE 250

18 643,58

Ͳ0,6%

+7,7%

GEL / TRY

0,5050

+1,2%

+0,5%

DAX

11 281,79

+0,7%

+6,1%

GEL / AZN

1,5680

Ͳ

+0,2%

DOW JONES

24 737,20

+0,1%

+13,5%

GEL / AMD

0,0055

Ͳ

Ͳ

NASDAQ MSCI EM EE

+4,0%

7 164,86

+0,1%

+15,7%

GEL / UAH

0,0957

+0,5%

Ͳ1,5%

166,01

+1,2%

+10,5%

EUR / USD

0,8766

Ͳ0,4%

Ͳ0,1%

1 032,34

+1,4%

+8,6%

GBP / USD

0,7576

Ͳ2,5%

Ͳ4,0%

SP 500

2 664,76

Ͳ0,2%

+13,3%

CHF / USD

0,9939

Ͳ0,2%

+0,7%

MSCI FM

2 643,74

+0,6%

+7,7%

RUB / USD

66,0074

Ͳ0,3%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

5,2722

Ͳ1,0%

Ͳ0,6%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,6993

+0,2%

+0,1%

MSCI EM

Ͳ3,9%

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NEWS

GEORGIA TODAY

FEBRUARY 5 - 7, 2019

Large-Scale Infrastructural Projects to Be Launched in Svaneti @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: Last year, Adjara Group’s Stamba Hotel was awarded the status of New Concept of the Year and People’s Choice at the Ahead Global Awards 2019, an international contest and one of the best platforms for the world’s leading brands to represent themselves on.

The Group also owns another well-loved Georgian brand- Rooms Hotel, and recently announced plans to launch the hotel in New York and establish the brand on the international market. Managing Director of Adjara Group, Levan Berulava, added that the USA is not the company’s only target.

At the International Green Week held in Berlin, Germany, Georgian honey brand ‘Tapli’ was presented. Set up by entrepreneur Tamaz Glonti and the founder of Geo Natural, Giorgi Iashvili, Tapli has been named a premium quality product, a label granted only to those products made using modern approaches with leading technologies and which meet the high standards. Test batches have been sent to small markets in Berlin. Current source supplies are enough for the production of 20 tons of honey, but the company is ready to meet even greater demands.

Think you’ve tried everything wine-related?

What about ‘apple wine’? Vaja Kvaliashvili of the Georgian Academy of Agricultural Sciences and Head Engineer of the Food Factory Revaz Torozashvili created three drinks several years ago: an apple alcoholic drink, an apple semisweet sparkling alcoholic drink and an appleflavored semi-sweet alcoholic sparkling drink.

At a tasting evaluation, these were awarded 8.5 points out of 10. The creators now seek financing to take the next entrepreneurial steps.

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

Continued from page 1 “I am happy to see the growing number of tourists in Svaneti, a most beautiful region. The projects implemented have truly benefited Svaneti's tourism potential. Even so, it is clear that the existing infrastructure does not suffice to accommodate the current tourist flow,” he said.

Bakhtadze noted that it is especially exciting to see Mestia transforming into a year-round destination.

“The cableways we built on Mount Tetnuldi, albeit important, are just the beginning. We are using less than 5% of this gorgeous attraction's potential.

Almost 200 family-run hotels operate in Mestia, but it not enough and in future we must do more to develop this place,” he added.

The PM stated that spatial planning will guarantee that Svaneti keeps its

unique architecture and landscapes while developing its tourism infrastructure.

Svaneti is best known for its superb house-towers, most of them dating back to the 12-13th centuries, which line the valleys and once served as look-out posts against the threat of invasion. Those towers are on the UNESCO World Heritage List.

Tetnuldi ski resort is the largest resort in Svaneti region and the second largest after the most popular ski resort in Georgia - Gudauri.

The skiing area in Tetnuldi is concentrated on the northern, western and south-western slopes of Mount Tetnuldi (4858 m), at altitudes from 1600 m to 3165 m. It can be reached from Mestia town by taxi or by shuttle bus from various hotels. Trails in this region are diverse and have a total length of 25 km.

The longest trail is 9.5 km.

Tetnuldi features four cableways and eight ski runs stretching 30 kilometers and accommodating skiers of every category.

Specialists conclude that the Tetnuldi ski complex is able to serve almost 4,000 skiers at a time. This unique destination will host tourists year-round, while the ski season spans 6-7 months.

Hatsvali is 8 km from the central town of Svaneti, Mestia. The upper cable car station is located on Mount Zuruldi. One of the cableways, a Mestia-Hatsvali connector, is of special importance as it connects Mestia's center to the Hatsvali resort. The cableway was built within record-breaking deadlines.

Currently, there are three runs in Hatsvali: red (1900 m), blue (2600 m) and a trail for beginners (300 m), meaning skiers of every level can enjoy one of the world’s most picturesque resorts.

BUSINESS

GEORGIA TODAY FEBRUARY 5 - 7, 2019

3

Supreme Court Judge Selection Procedure Almost Decided

BY AMY JONES

T

he leader of the parliamentary majority Archil Talakvadze has declared that the ruling party Georgian Dream has “almost decided” on the procedure for selecting judges for the Georgian Supreme Court.

The dispute has been at the center of discussions since mid-December when parliament suspended the selection process. Eight High Court of Justice (HCoJ) members supported the appointment of 10 judges without informing non-judge members of the Council, a move which was heavily criticized by over 40 NGOs and officials. Public defender Nino Lomjaria described the selection process as “incompatible with the constitution”.

On January 21, civil society groups organized a rally outside the HCoJ calling for the resignation of the Chairman of the Tbilisi Court of Appeals Mikheil Chichaladze and judge Levan Murusidze.

They also called for better regulations and procedures, with the involvement of civil society, so that only the best candidates become judges in a democratic way.

Eka Beselia, former chair of the Georgian Parliament’s Legal Affairs Committee, resigned from her post on December 27 due to the dispute surrounding the selection process, saying it was “hasty

Image source: Parliament of Georgia Press Office

and unacceptable” and “should be suspended until the selection process is refined”. She accused Georgian Dream’s leadership, including speaker Irakli Kobakhidze, of lobbying the controversial nominees. She argued that some of the nominees “served Mikheil Saakashvili’s oppressive regime”.

Some have criticized the move to halt proceedings. On January 21, the 10 can-

didates released a joint statement asking Parliament to not deliberate on their appointment so as to avoid “unhealthy speculations”. In addition, Part Chair Bidzina Ivanishvili at the time released a statement criticizing the decision which “hindered the normal functioning of the court”.

However, Ivanishvili is still open to discussions. “It is noteworthy that this

Six New Flights to Be Launched from Kutaisi

BY THEA MORRISON

S

ix new flight routes will be launched from Kutaisi International Airport from August 1, 2019.

Wizz Air announced the allocation of a third Airbus A320 aircraft to its Kutaisi base as well as the start of six long-awaited new services from Kutaisi to Eindhoven (Netherlands), Tallinn (Estonia), Brussels (Belgium), Copenhagen (Denmark), Bari (Italy) and Basel (Switzerland).

The new low-fare routes are already on sale on wizzair.com starting as low as GEL 56.99 / EUR 19.99.

Image source: Ministry of Economy

At the Ministry of Economy and Sustainable Development of Georgia, an agreement on the new flight directions was signed between the Union of Georgian Airports and the Hungarian lowcost airline Wizz Air. Giorgi Kobulia, Minister of Economy and Sustainable Development of Georgia expressed hope that the flights will increase the geography of the countries from which tourists come from to Georgia.

"This will give us the opportunity to attract more tourists from the target markets, which is very important for us," said Kobulia.

The Ministry of Economy stated that after the new flights are launched, 30 new jobs will be created for the local population.

Wizz Air started operations from Kutaisi International Airport in 2012 and after seven years of successful operations, and only eight months after allocating its second aircraft to the Kutaisi base, the airline announced the further expansion at its Georgian base by allocating a third Airbus A320 aircraft in August 2019.

Wizz Air is a Hungarian low-cost airline with its head office in Budapest. The airline serves many cities across Europe, as well as some destinations in North Africa and the Middle East. It has the largest fleet of any Hungarian airline, although it is not a flag carrier, and currently serves 44 countries.

Together with six new routes commencing on 1 August 2019, WIZZ now offers 27 routes to 18 countries from Georgia.

decision was made in accordance with the position of a majority of the ruling team,” read the statement, “we respect differing opinions within the team and we believe that it is possible to make reasonable decisions only on the basis of free discussions”.

Officials, including Beselia and Talakvadze, attended a meeting at the Georgian Dream office in Tbilisi on February

2 to discuss the lifetime appointment of judges. “I once again touched on the issue of suspension of judges’ lifetime appointments, an idea which had been shared by the chairman of the ruling party. Nobody seemed against the idea.

So, we started working on initiating a procedure for appointing judges in the first and second instance courts. The Supreme Court issue needs to be discussed separately once again,” Beselia said.

Talakvadze stated that the new procedure will be aligned with constitutional principles and other legislative acts.

“Considering the existing legal framework, we will continue working on the document which will improve the selection process of Supreme Court judges, their introduction to Parliament and finally, their appointment,” he said.

During the meeting, Georgian Dream decided to back Anri Okhanashvili’s candidacy to be Eka Beselia’s replacement and become chairman of the Legal Affairs Committee in the Georgian parliament. Davit Matikahsvili has served as acting Chairman since she resigned.

Parliament will decide on his candidacy, as well as the Supreme Court judges during Spring sessions. This is the first time that the HCoJ has nominated candidates who are then voted upon by Parliament. This procedure was first introduced after President Salome Zurabishvili’s inauguration on December 16.

President’s Palace May Become the Georgian National Culture Museum

Image source: RFE/RL

BY THEA MORRISON

T

he “President’s Palace” in the Avlabari district of Tbilisi may be turned into the National Museum of Georgian Culture. The building was the presidential residence until the new President Salome Zurabishvili decided to reside in Orbeliani Palace near Alexandrouli Park.

The information was released by Georgian Dream MP Mamuka Mdinaradze after a meeting held on Sunday at the central office of the ruling Georgian Dream (GD) party.

Mdinaradze noted that a working group will decide the fate of the building of the former presidential residence and that “the arrangement of a museum was only one of the options under consideration”.

“A positive decision will be made with regard the Avlabari palace. We have several options, but a culture museum is one of the main ideas,” he added.

During the pre-election campaign, the GD-supported Zurabishvili mentioned several times that she would not live in the Avlabari residence if she became president, highlighting it as a stateowned building where the country's premier or foreign ministry would be better placed than the President’s Administration.

The GD had also raised the issue with

Zurabishvili’s predecessor Giorgi Margvelashvili, urging him to move into the Orbeliani residence on Atoneli Street, Old Tbilisi, which was prepared for him after his election and which is now the residence of the new president.

Opposition parties do not agree with the position of the majority and state that such important state institutions as the Presidential Administration, should not choose a lesser address than the Avlabari palace.

Khatia Dekanoidze, member of the opposition United National Movement, points out that if the dispute originates from the high costs of maintaining Avlabari as a Presidential Residence, the same expenses will be needed if a culture museum is to open there.

“I think the decision to change the function of Avlabari palace was made by the informal ruler of the country,” she said, referring to the GD founder and Chair, billionaire Bidzina Ivanishvili.

Parliamentary minority European Georgia also criticized GD for their steps.

Levan Tarkhnishvili, member of European Georgia believes that the ruling team has more important issues to discuss rather than defining a new function to the former presidential residence.

“The steps that GD takes, including moving parliament back from Kutaisi to Tbilisi and moving the Constitutional Court from Batumi to the capital, and now the issue of the Presidential residence, weakens the state institutions.

We see that instead of solving problems, GD is creating them,” he said.

The former “President’s Palace” in Avlabari was built by ex-President Mikheil Saakashvili, and the GD repeatedly stated it was an unfit place for the President to live due to the high cost of its original construction and subsequent upkeep, which takes up to GEL 3 million monthly from the state budget.

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BUSINESS

GEORGIA TODAY

FEBRUARY 5 - 7, 2019

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.

We Don't Need No Regulation: On Georgia’s Dairy and Livestock Sector

BY SALOME GELASHVILI

D

airy production in Georgia is a hot topic right now.

Over the last couple of years, new state regulations have been adopted in this sector. The most widely discussed recent change in regulations prohibits the use of milk powder in cheese production.

This regulation was adopted in 2015, but was amended in June of 2017 in order to better serve consumer interests.

While defining terms such as “cheese”, “butter”, and “matsoni” is definitely a step forward, the execution of this technical regulation is associated with many challenges, and Georgian consumers are still offered products which do not qualify as dairy products because they contain vegetable fat.

CHALLENGES The biggest challenge is the large number of unregistered family farms producing and selling cheese on a regular basis.

According to sector experts, up to 90% of cheese is produced by those unregistered households, which is not surpris-

not expired, but still spoiled. Most consumers notify a consultant in the retail store about this case or do nothing at all, while only a small portion of consumers notify the National Food Agency (NFA), which is obliged to send its employees to the retail shop and fine it.

A BIT OF STATISTICS… According to Geostat data, imports of milk powder have increased over time, while the amount of raw milk produced in the country has declined (Figure 1).

Thus, milk production in Georgia has declined by 10% in 2017 compared to 2014, while imports of milk powder, on the other hand, increased by a tremendous 88% for the same time period. This signals massive use of milk powder in the dairy sector.

At the same time, exports of live cattle have increased in recent years (Table 1).

The biggest jump in live cattle exports happened in 2016 when the number of head exported almost doubled compared to 2015. In terms of export quantities, even more live cattle were exported in 2017 and 2018, although the total export value steadily declined, as did the unit value per head of cattle.

In light of existing trends and practices

Figure 1. Amount of raw milk and milk powder in Georgia, 2014-2017

Source: Agrokavkaz.ge

few registered intensive dairies cannot compete with unregistered producers or producers who use milk powder in their production and produce lower quality products at lower prices. As far as current regulations favor family farms (individuals) by allowing them to avoid registration as a business operator, unfair competition among registered and nonregistered producers will be apparent in the future as well.

Increased exports of live cattle also contribute to the reduction of milk production in the long-run as well as an increase in meat prices.

THE WAY FORWARD

Source: Geostat and the Ministry of Finance of Georgia

ing because according to Geostat more than 97% of milk in Georgia in 2017 was produced by family farms. These unregistered producers usually sell their unlabeled produce (mostly cheese) at open markets through intermediaries.

Another challenge is related to registered producers, who find different ways to overcome regulations through confusing and vague labelling of their products. The most frequent tool used by cheesemakers who use milk powder for cheese production, is by labelling products with names associated with cheese like “Imeruli” or “Sakhachapure”. By doing so, the producer does not explicitly violate the law because the name of the product does not contain the word “cheese”, but consumers definitely consider these products cheese.

One more challenge is associated with consumers’ low awareness of their role in supporting the state’s enforcement of technical regulations on dairy products.

Most consumers do not react properly when they identify that the dairy product they have purchased is expired, or

in the dairy and livestock sector, there is currently a shortage of safe raw milk in the country because of the low productivity of cattle and small size of dairy farms. Inadequate feeding practices, lack of pastures, and poor veterinary practices lead to the lack of intensive cattle farms with high productivity cattle. The

In an attempt to respond to the challenges in dairy and meat production, just recently the Government of Georgia has banned the export of live cattle under the weight of 140 kg. The arguments listed by some proponents of the ban rely on the assumption that growing cattle in Georgia and after some period selling it for meat within the country is more profitable and generates higher value added locally, rather than exporting low weight calves and heifers abroad. While that might be true, the new regulation has raised many questions about its legitimacy and appropriateness in a market economy.

Interestingly, there are other countries that have implemented a similar policy but with different motivations. For example, in New Zealand, where live sheep exports for slaughter were banned in 2003, the argument for the ban was a concern for animal welfare due to the high number of deaths during transit, as well as inappropriate slaughtering practices in some recipient (importing) countries. While live sheep exports for slaughter are banned, live sheep exports for breeding are allowed, but the actual number of exports for this purpose is extremely low. While animal welfare concerns are growing all over the world (e.g. Brazil, Australia, UK), New Zealand’s ban allowed Australia to capitalize on this market opportunity and increase its live sheep exports. According to Australian authorities, although the country is concerned with animal welfare, the increase in live sheep exports for slaughter was motivated by the fact that the existing slaughterhouse infrastructure in Australia, which is way ahead of Georgia, is not developed well enough to respond to the growing number of sheep in the country.

In light of foreign countries’ experience and Georgian reality, it is hard to believe that the ban on the export of live cattle

Table 1. Live cattle exports, 2015-2018

Indicator

2015

2016

2017

2018

Number of head

53,005

102,363

134,134

127,139

Total live weight (kg)

10,664,000

20,503,000

19,697,000

14,857,000

Total export value (USD) 20,103,000

36,842,000

36,011,000

28,227,000

Unit weight (kg/head)

201

200

147

117

Unit value (USD/head)

379

360

268

222

Unit price (USD/kg)

1.89

1.80

1.83

1.90

Source: Geostat, MEPA, MoF, trademap.org

in Georgia can solve structural problems in the dairy and livestock value chains.

Rather, the export ban is likely to have the following consequences: • Higher exposure of livestock farmers to risks. Given that growing cattle in Georgia in light of the abovementioned poor feeding practices, and pasture- and veterinary-related issues is quite risky, the export ban obviously negatively affects farmers who previously engaged in live cattle exports by exposing them to those risks; • Lower number of potential buyers of live cattle. Since contract farming is not well-developed in Georgia, sales of agricultural products locally are not only sporadic but difficult. Many farmers simply cannot sell their product for adequate price. By restricting sales of live cattle to local markets only, the number of potential buyers clearly declines.

Additionally, introduction of HACCP requirements at slaughterhouses might lead to the closure of some regional slaughterhouses which will negatively affect demand for live cattle. If a local slaughterhouse is not available, the farmer gets a lower profit from sales of cattle for slaughter.

• Low bargaining power for livestock farmers. Restriction to local markets drives the price of live cattle down, which might be good for consumers because meat prices will decline, but producers are negatively affected. The overall impact on society – total surplus has yet to be studied.

These are just a few arguments that should be considered in addition to the potential commercial gains generally obtained when a farmer sells a product with more value added. While theoretically raising cattle and selling it for meat should be more profitable for the farmer, one has to consider very carefully, why such an “obvious” opportunity is missed by the livestock farmer, what challenges the famer faces along the value chain, and whether such a policy is the right solution to those challenges.

BUSINESS

GEORGIA TODAY FEBRUARY 5 - 7, 2019

Terabank Publishes Successful Financial Indicators for 2018

ADVERTORIAL

T

he year 2018 ended with successful financial indicators for terabank, with the bank demonstrating a positive growth dynamic.

The bank’s gross loan amount grew by 17.9% in 2018, amounting to a total of GEL 105.6 million. SME and microloans increased by GEL 98.1 million (42.3%) in the small and medium-sized business segment which is one of the most strategic components for the bank. Moreover, retail loans and individual deposits grew by GEL 36.5 million (24.2%) and GEL 73.1 million (35.6%), respectively.

Based on 2018’s financial results, terabank’s net profit saw a 12% growth and amounted to GEL 18.1 million while ROE was 14.9%. Improvement in quality and a growth in effectivity were also achieved last year.

“Two years have passed since terabank’s rebranding and we have demonstrated growing successful financial results,” said Tea Lortkipanidze, Terabank’s CEO. “We are very proud of this achievement. The doubled SME and microloans portfolio is proof that terabank is a reliable and stable business partner for consumers. Moreover, the doubled amount of retail deposits demonstrates that not only business customers but also retail consumers are showing increasing trust towards the bank.”

The year 2018 has also proven to be both interesting and successful for terabank in terms of a diversification of products. The bank is offering consumers a completely unique set of banking products customized to individual needs and market demands – tourist mortgages and convertible deposits, among others. Towards the end of the year, terabank presented an innovative and distinctively new personalized banking services brand –

Select. In addition to exclusive and convenient services and terms, Select sets a unique standard for customer relations and extends its services based on individual interests.

In the previous year, significant steps were also taken towards the improvement of remote convenience services. In particular, the design of the terabank mobile banking application was renewed with its interface made even simpler and more convenient to use. The year 2018 was also successful in terms of international partnerships: terabank initiated partnerships with two financial organizations: Responsibility and the German Investment and Development Society (DEG).

Corporate social responsibility projects constituted a significant part of terabank’s successful work and outreach in 2018. The bank initiated several interesting projects, including a campaign popularizing healthy lifestyles, the engagement of women in the tech industry and supporting youth education and outstanding individuals. Terabank implemented a variety of projects in each of these directions: the Terabike campaign enabled individuals to take advantage of free bikes and bike lessons last year, the bank supported Mariam Lomtadze as a part of its engagement with the education of Women Techmakers project, and it took part in the Startup Alphabet initiative, the Ika Cultural Award, and it participated in the search for interesting artists to highlight and introduce to the wider public, among others.

With new banking regulations now in place, the year 2019 is off to a challenging start for terabank.

However, responsible banking continues to guide its work and small and medium-sized businesses remain as a strategic component. The bank is simultaneously planning to implement numerous technological novelties for business customers which are going to make the use of terabank’s services even more convenient.

Two New Penitentiary Establishments to Be Built in Rustavi

Image Source: www.aclu.org

BY MARIAM MERABISHVILI

U

nder the initiative of the Minister of Justice of Georgia, in the framework of ongoing reforms in the penitentiary system, the construction of two new penitentiary establishments is planned in Chkondideli settlement, Rustavi. The information was released by the Special Penitentiary Service of Georgia.

According to the Special Penitentiary Service of Georgia, one establishment will accommodate 700

sentenced individuals, and the second 120.

The winning company of the tender, announced on October 25, 2018, has already begun working on setting up the perimeter of the construction by fencing and leveling the surrounding territories to the required standards, with completion planned for June.

The project design for the establishments is yet to be finalized. The contract with the project team was signed on September 18, 2018. Geological, construction and architectural aspects are under examination and complete design documentation will be ready by February 10. On March 15, the construction tender for the buildings is to be announced.

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BUSINESS

GEORGIA TODAY

FEBRUARY 5 - 7, 2019

What Do We Need So Many (Standard) Exams For?

BY ERIC LIVNY

A

professional violinist by training, Keti Kipshidze is probably one of the best guitar teachers in Tbilisi.

Having graduated from Erik Arakelov’s class at the Tbilisi Conservatorium in 1994, she auditioned for the Tbilisi Opera and Jansug Kakhidze’s Symphony Orchestra, but failed to get a job. In 1994, one could still hear Kalashnikovs on the streets of Tbilisi. The muses went silent.

Many of Keti’s classmates left the country. Keti stayed, and in 1998, following the advice of Tengiz Gamitadze, a great musician and her guitar teacher since age 13, she took a few teaching classes and embarked on a new career, that of a private guitar teacher. Keti’s jovial, glass-half-full personality and musical talent (she sings, too!) were her key to success. Over the course of more than 20 years, she has taught and inspired hundreds of young people and become a great friend in the process.

When we met in early February 2019, Keti was full of excitement. She has never been short on demand but lately demand has been truly exceptional. As many as eight interested students called, repeating the same story over and over again.

“The government has just announced that there will be no more school leaving exams. We will now have more time for things we really care about, such as music”.

I ask Keti what she thinks about the government’s decision to abolish the school graduation exams. “Our talentedbut-lazy kids probably do need deadlines and exams”, she responds, “but there should also be much more flexibility for them to choose what to study. Why should we force everybody into the same mold?” And there comes a classical Keti Kipshidze joke: “You know, I am still looking for an opportunity to use any of the school math that was hammered into me, all this tangent-cotangent stuff”.

MUCH ADO ABOUT WHAT? The sudden surge in demand for Keti Kipshidze’s guitar lessons followed a government announcement that nationally-administered university admission tests (“Uniform National Exam”) – a key

symbol of Saakashvili era reforms – will from now on include only three compulsory subjects: Georgian language and literature, foreign language, and either math (for those planning to acquire a technical qualification) or history (for those interested in social science and humanities). The general ability test, which used to have the largest weight in the Uniform Exam, will no longer be mandatory, however universities will have the right to require it. And, from 2020 onwards, students will no longer be required to take school leaving exams in order to get their General Education certificates. 11th graders will not be examined from 2019; 12th graders will be exempt starting 2020.

This announcement was explained and enthusiastically endorsed by supporters of the Georgian Dream side of the political spectrum as a potential panacea for all the ills of the Georgian education system. Kakha Kaladze noted that “education is a constitutional right, not an obligation”. In other words, if somebody needs exam results in order to study, it is his or her responsibility. Minister Batiashvili explained that this change is only one element of a broader education sector reform seeking to empower Georgian schools, give them more autonomy and strengthen their incentives to educate as opposed to prepping students for standardized tests. By changing the way students’ performance is assessed, the new system will also drastically reduce parental expenses on useless tutoring, while giving kids more time to invest in music and other types of actual learning. Hallelujah!

Many Georgians speaking out in social networks do not share in this optimism.

Some are scared of Shevardnadze-era corruption making a victorious comeback. Students and educators I spoke to raised more serious contra arguments.

Nino Sarishvili, one of my best students at ISET, thought that the specter of rigorous school graduation exams motivated many of her academically weaker classmates to go into professional training as opposed to continuing to grades 10-12.

“With no exams, they would have stayed in the general education system – a huge waste of time as far as such students are concerned.”

A very strong argument was provided

by Iwa Mindeli and Natia Andghuladze, senior education experts previously

associated with NAEC, the government agency in charge of running standardized tests. According to their data, the rural-urban gap in performance on standardized tests is smallest (8.1 points on an 80-point scale) in the general ability test, and largest (22 points on a 90-point scale) in the foreign language. By abolishing the general ability test while maintaining the current system of allocating university grants, the government will further skew the distribution of such grants (and university education) in favor of Tbilisi and large urban centers.

They would not be opposed to the abolition of standardized tests, provided the government abandons the current – “money follows students” (and nothing else) – approach to financing university education.

A REFORM LONG OVERDUE! Modern public schools, as we all know them, are a relatively recent invention.

19th century Europe needed literate industrial workers and patriotic soldiers.

Therefore, Europe’s public schools (as opposed to public-in-name-but-privatein-essence Eton and Westminster) were designed and financed for this very purpose: delivering standard (“French”, British” or “Russian”) mass education for assembly line workers and soldiers.

Public school curricula of the time did not venture beyond basic literacy in a “national” language, basic numerical skills, and national-religious mythology and prayers. The standard school pedagogy included top-down lecturing, learning by rote, and harsh physical punishment for the lazy and undisciplined – excellent preparation for the future ‘cannon fodder’ and industrial proletariat.

Fast forward to the 21st century. Gone are blatant gender and racial discrimination, illiteracy and harsh physical punishments, but relatively little has fundamentally changed in many, if not most, national education systems around the world. Modern-day Etons and Westminsters still exist almost everywhere except a handful of Nordic countries. With “Quality”, “British”, “American” or a similar geographic denomination in their title, these cool and innovative institutions employ modern technology and offer plenty of individual choice. Moreover, they now serve a larger share of the population – not only upper-class

“Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid” (a saying, often attributed to Albert Einstein)

boys, but also girls. Unfortunately, however, these schools are also the very expression of social inequality and the main means of its conservation.

Public schools, on the other hand, still use the same time-tested top-down methods of instruction and serve the same purpose: delivering basic literacy, numeracy and patriotism for the rest of the society – urban and rural poor. Their education ‘standards’ are defined and enforced through a ‘national curriculum’ and nationally-administered exams.

These standards and exams allow very little autonomy for schools or teachers.

Consequently, there is almost no flexibility or choice for students in the public education system: everybody must take the same core subjects and pass the same national exams.

Of course, standard curricula and exams are not the worst thing that can happen to an education system. It is much worse for a society to have schools that teach almost nothing at all, schools with no heating, and teachers who are paid almost nothing. And given the sorrowful state of Georgia’s schools and universities until well into the 2000s, investment in basic infrastructure and standardization were hailed as major achievements in the country’s post-Rose Revolution realities. Moreover, introduced in 2005, standard national tests had the added advantage of helping eradicate corruption and creating a meritocratic mechanism to allocate public funds to students, and students to universities. These tests, wrote Transparency International in 2005, were “a watershed in Georgia’s history… They showed that it is possible to conduct a fair and impartial competition throughout the country.”

Nationally-administered university admission tests are a key symbol of Georgia’s Rose Revolution. Like many

other Saakashvili-era reforms, they provided a civilized façade to an otherwise outdated, underfinanced and dysfunctional system. While helping eliminate corruption, standardized tests did not address any of the fundamental problems in Georgia’s education system. Gone is corruption, but where is the quality?

Where are the educators that can prepare our sons and daughters for 21st century occupations? Certainly not in Georgia’s public schools.

And just as the standardized test and exams did not prove to be a “watershed event” in Georgia’s modern history, their abolition, in and of itself, is not going to be a major game changer either. It is definitely a step in the right direction, giving schools and teachers greater freedom to create the new and different. But it will not endow them with the professional abilities and resources to do so.

For now, Georgia’s one-size-fits-all education system is geared towards producing barely literate “managers” (modern day assembly line workers) and patriotic soldiers. When thousands of “managers” hit the labor market, the result is not a well-managed economy, but mass unemployment, frustration and emigration.

To truly redeem the vast majority of Georgia's youth of their underprivileged childhood, Georgia has to move beyond simple “standard” solutions and invest – quite heavily! – in the quality of its public schools and its teachers. Achieving this feat will require a long-term effort to be sustained over a generation.

About the author: Eric Livny is Founder and President at Tbilinomics Policy Advisors. In 2007-2018, he served as President with the International School of Economics at Tbilisi State University (ISET) and ISET Policy Institute. His current advisees include the Caucasus University and the Finnish International School project.

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BUSINESS

GEORGIA TODAY FEBRUARY 5 - 7, 2019

7

Mayor Encourages Young Entrepreneurs with New Business Accelerator

BY SAMANTHA GUTHRIE

O

n Thursday last week, Tbilisi Mayor Kakha Kaladze presented a new Business Accelerator project at the Veterans' Culture and Rest Park (better known as Kikvidze Park). The event was attended

by Ambassador of the European Union to Georgia Karl Harcell and the Head of City Hall’s Economic Development Department, Andria Basilaia.

The new project serves to promote the development of business ideas by young people. “This project will support young people in carrying out their ideas. We will help businesses create a business plan and communicate with them to make their ideas a reality...

Anyone can register, present a project and work with people who will give them maximum support,” Kaladze explained.

At the kickoff event Thursday, Ambassador Harcell commented on the importance of the project and expressed his readiness to share European experience in implementing the program. He noted that the purpose of the project was to combat brain drain, ensuring “Georgia does not lose talented young people”.

The Business Accelerator program is part of a large-scale initiative being implemented in Georgia and Eastern Europe, ‘Mayors for Economic Growth’.

Half a million Euros of the project is being financed by the EU, while Tbilisi City Hall is also contributing an undisclosed sum.

Mayors for Economic Growth is an

Image source: Tbilisi City Hall

EU initiative that began operating in January 2017 in Eastern Partnership countries – Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine. Its overall goal is to support mayors and municipalities to be more active facilitators for economic growth and job creation at the local level. The EU hopes that the initiative will one day become a regional professional network that requires certain commitments from its members while offering expert and peer-to-peer support.

The Business Accelerator's work space in Kikvidze Park was initiated by Tbilisi City Hall and the European Union in partnership with the Georgian Employers' Association within the framework of Mayors for Economic Growth. The purpose of the project is to promote employment, enhance the capacity of Georgian entrepreneurs, and implement innovative business ideas. From now on, the work space and the services offered there will be available to anyone with a business idea.

The event was held in conjunction with a Tbilisi Market day, where artists and craftspeople in various fields exhibited their work at stands set up in the park. Nearly 50 entrepreneurs exhibited and sold their products at the Market.

The Tbilisi Market project debuted last year in July with a focus on handmade crafts, and ran every Saturday of the month. The Department of Economic Development at City Hall said that project aimed to promote local creativity and business development in the arts.

City Hall hoped then that the Tbilisi Market would become an “interesting and verified trade space for local guests and tourists, where micro and small entrepreneurs registered in Tbilisi can take part.”

In July, Kaladze emphasized that “it is highly important to encourage people who work in this field to sell items regularly from this location. As you know, there are many tourists in the city and this opportunity is vital for them”.

8

BUSINESS

GEORGIA TODAY

FEBRUARY 5 - 7, 2019

December 2018: Average Hotel Prices in Georgia and Hotel Price Index prices of guesthouses increased by 9%.

It is of note that during the previous year, the number of 3*, 4* and 5* hotels registered on booking.com in Tbilisi grew by 46%, while the pool of registered guesthouses expanded by 19.1%.

AVERAGE HOTEL PRICES

Graph 1: In the graph, average prices for standard double rooms in 3 and 4-star hotels and guesthouses are given by region. 5-star hotel prices are provided above.

I

n December 2018, compared to November 2018, in Tbilisi, the hotel price index increased by 11.9%. The growth rate of guesthouse prices (21%) significantly exceeded the growth rate of 3*, 4* and 5* hotel prices (9.3%). Notably, the given dynamics differs from the dynamics of the previous year, when the overall price level of hotels in Tbilisi increased by 12.5%, the 3*, 4* and 5* hotel prices rose by 15.1%, while guesthouse prices grew

only by 3.6%.

In December 2018, compared to December 2017, the hotel price index increased by 1% in Georgia. The daily rates for standard double hotel rooms increased the most in Adjara (21.1%) and SamtskheJavakheti (14.8%). Whereas in Tbilisi, the overall price level of hotels decreased by 9.8%. This is mainly due to the price decreases in 3*, 4* and 5* hotels in Tbilisi. While the prices of 3*, 4* and 5* hotels decreased by 14.7% in Tbilisi, the

In Georgia, the average cost of a room1 in a 3-star hotel was 133 GEL per night in December 2018. The most expensive 3-star hotels in December in Georgia were in Samtskhe-Javakheti – 208 GEL. The average cost of a room in a 4-star hotel in Georgia in December 2018 was 240 GEL per night. The most expensive 4-star hotels in December was found in Samtskhe-Javakheti – 278 GEL. The average cost of a room in a 5-star hotel in Georgia in December 2018 was 502 GEL per night. In Tbilisi, the average price was 630 GEL, followed by Adjara – 483 GEL, Samtskhe-Javakheti - 417 GEL, and Kakheti - 300 GEL. In December 2018, the average cost of a room in a guesthouse2 in Georgia was 73 GEL per night. The highest daily rates for guesthouses, like 3* and 4* hotels, were found in Samtskhe-Javakheti – 89 GEL.

increases were recorded in MtskhetaMtianeti and Samtskhe-Javakheti. In December 2018, compared to November 2018, the 3*, 4* and 5* hotel prices decreased only in Adjara.

For guesthouses, the price index increased by 18.7% in December 2018, compared to November 2018. In this type of accommodation, the biggest percentage price increases for standard double rooms were recorded in SamtskheJavakheti and Tbilisi. The price decrease of guesthouses was recorded only in Kvemo Kartli.

In December 2018, compared to November 2018, in Georgia the growth rate of guesthouse prices exceeded the growth rate of 3*, 4* and 5* hotel prices. It has to be noted that in the previous year, in December 2017, compared to November 2017, the hotel price index increased by 9.3%, while the 3*, 4* and 5* hotel price index increased by 12.2% and the price index for guesthouses increased by 3.3%.

In December 2018, compared to December 2017, in Georgia the hotel price index

increased by 1%. The daily rates for standard double hotel rooms increased the most in Adjara (21.1%) and SamtskheJavakheti (14.8%).

Among the regions of Georgia, in December 2018, compared to December 2017, hotel prices decreased in five regions.

In Tbilisi, in December 2018, compared to December 2017, the overall price level of hotels decreased by 9.8%.

In Georgia, the 3-star, 4-star and 5-star hotel price index increased by 0.1% in december 2018, compared to December 2017. In these types of hotels, the highest price increases were recorded in Adjara and Samegrelo-Zemo Svaneti. During this period, in Tbilisi, the prices of these types of hotels decreased by 14.7%.

In December 2018, compared to December 2017, for guesthouses, the price index increased by 8.1%. In this type of accommodation, the biggest percentage price increases for standard double rooms were recorded in Samtskhe-Javakheti and Mtskheta-Mtianeti. During this period, in Tbilisi the prices of guesthouses increased by 9%.

HOTEL PRICE INDEX

Table 1: Percentage change of prices in December 2018 over November 2018 and over December 2017.

JTI Recognized as Top Employer 2019

In December 2018, in Georgia the hotel price index3 increased by 11.9% compared to November 2018. The daily rates for standard double hotel rooms increased the most in Mtskheta-Mtianeti (24%) and Samtskhe-Javakheti (27.3%).

Among ten regions of Georgia and Tbilisi, in December 2018, compared to November 2018, the hotel prices decrease was not recorded in any of the regions.

The 3-star, 4-star and 5-star hotel price index increased by 8.6% in December 2018, compared to November 2018. In these types of hotels, the highest price

New Tourist Destination to Be Launched in Mountainous Ajara

BY KETEVAN KVARATSKHELIYA

T

he company JTI (Japan Tobacco International) has been once again certified as Top Employer in Georgia, Europe, Asia Pacific regions and Globally in 2019 for ‘Excellence in Employee Conditions’.

Organizations certified as Top Employers dedicate themselves to providing the very best working environment for employees through their progressive ‘people-first’ HR practices.

This global Certification Program has certified and recognized more than 1300 Top Employers in more than 115 countries/regions across five continents.

As an independent HR certification company, the Top Employers Institute assesses participants through their global HR Best Practices Survey. In order to be certified, organizations must successfully achieve the required minimum standard as set out by the Top Employers Institute.

The HR Best Practice Survey encom-

passes over 100 questions which cover 600 ‘People Development’ practices across 10 topics: Talent Strategy, Workforce Planning, Talent Acquisition, On-boarding, Learning & Development, Performance Management, Leadership Development, Career & Succession Management, Compensation & Benefits and Culture. The Top Employers Institute evaluates the implementation of these HR practices and reviews how they are supported through Strategy, Ownership, Practices, Measurement and Technology.

ABOUT JTI JTI, a member of the Japan Tobacco Group of Companies, is a leading international tobacco manufacturer. It markets brands such as Winston, Camel, Sobranie, LD and Winchester. Headquartered in Geneva, Switzerland, and with operations in more than 130 countries, JTI employs around 40,000 employees worldwide. In Georgia, JTI employs about 110 local employees.

A

new tourist destination is to be launched in Mountainous Ajara. The Department of Tourism and Resorts of Ajara has commenced working on the tourism development plan in Chvani Gorge. The initiative aims to establish interesting tourism options in the Shuakhevi Municipality, including ecotourism and rural tourism. Another major target is the promotion of the regions’ cultural and ethnographic values.

Along with the Mayor of Shuakhevi and the working team, the Chairman of the Tourism Department, Sulkhan Glonti, traveled to the Chvani Gorge and discussed a number of issues regarding the forthcoming project.

“The tourism development plan of the Chvani Gorge territory comprises carrying out a detailed concept and making a general plan for the territory’s spatial development. The importance of major cultural heritage of the region will also be reflected," Glonti said. "Chvani Gorge is outstanding for its cultural monuments and traditions, which may contribute to the development of the gorge and crea-

Image source: The Department of Tourism and Resorts of Ajara

tion of colorful tourist products. It is important to launch various tourist attractions in each municipality for the development of this industry, and make the region of Ajara even more attractive

for guests. We have already commenced work on a number of major projects which are set to meet all the requirements of modern tourism. The first phase will be completed in 2019-2021," he added.

BUSINESS

GEORGIA TODAY FEBRUARY 5 - 7, 2019

How to Take Pictures Easily with Better Quality TRANSLATED BY KETEVAN KVARATSKHELIYA

A

lmost everyone has a smartphone these days, but not everyone really understand their phone’s capabilities.

Companies, on their side, trying to produce models with advanced features, adding new models to the smartphone market each year, that boast new processors, increased operating memory, sophisticated cameras and more.

Artificial Intelligence (AI) has set new standards in mobile photography. HUAWEI is the leader, treating customers to innovative smartphones and creating a new era in the field of mobile photography - a priority sector for consumers wanting to capture important memories in the easiest way.

According to world statistics, the HUAWEI smartphone is the best choice for taking premium-quality photos. The company has proved multiple times that

it is the leading brand for pampering customers with innovations in recent years.

Leica worked in collaboration with HUAWEI in the development of the new smartphones and cameras. HUAWEI is a brand which creates trends in the sphere of smartphones and it was the first to launch the most innovative triple-camera smartphone.

Photography is the art of light. However, as phone size can limit the capabilities of the camera, it has been impossible to date to snap shots of professional quality and capture all the details in one picture.

Not anymore! The HUAWEI smartphones are equipped with a telephoto lens and advanced camera. The lens ensures stabilization and bright pictures while the advanced camera is capable of capturing more details in one image. HUAWEI uses pixel integration technology which is able to integrate four pixels and guarantee you high-resolution pictures.

Zoom used to be the top-mentioned weakness of mobile photography, reducing the quality of the image, and for a long time it was impossible to take quality long-distance photos. But now, in line

with annually evolving and developed technology, HUAWEI has launched the hybrid optic zoom.

In AI, HUAWEI has brought drastic changes to the world of mobile photography, equipping its smartphone cameras with artificial intelligence and facilitating the capturing of professional pictures: professional because AI can regulate the focus of the image, its colors and lighting, as well as recognize all the required parameters for the prefect picture.

HUAWEI was the first brand to offer customers a triple camera smartphone.

In this way, it takes mobile photography to the next level. The AI, collaboration with Leica, super telephoto zoom and advanced camera guarantee amazing photography and top evaluation for the HUAWEI camera. The company has changed not only the capabilities of mobile photography but has also presented customers more ways to discover the world.

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 three business units of HUAWEI, mainly focusing on the production of smartphones, personal computers, tablets and cloud services. The HUAWEI Global Network is based on 20 years of experience in the telecommunications business and serves to the production of innovative technologies for customers around the world.

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10

BUSINESS

GEORGIA TODAY

FEBRUARY 5 - 7, 2019

The Death of the ‘Lisbon to Vladivostok’ Project?

Image source: carleton.ca

BY EMIL AVDALIANI

R

ussian relations with Europe are part of a complicated story rooted in military, economic and often ideological realms. Both entities have for centuries tried to find a modus vivendi, but have so far failed. One compromise suggested for Europe and Russia was an economic space stretching from Lisbon to Vladivostok – the space characterized by a unified economy, political understanding and even deep military cooperation.

Russia’s President Vladimir Putin for years advocated the idea, making speeches about the case. To be clear, Putin was not the first to propound it, but was merely reflecting on similar ideological arguments of the past. A transcontinental union spanning the Atlantic to the Pacific is a geopolitical concept that pops back up from time to time and is linked to neo-Eurasianism, before which the geopolitical space was made up by the triangle of Nazi Germany, Soviet Russia and Imperial Japan.

One space from Lisbon to Vladivostok, which one might also call “Greater Eurasia”, would make Russia pivot to the West. This was an attractive idea for the European and Russians. Indeed, even German Chancellor Angela Merkel once said that she hopes “Russia would increasingly develop ties with the European economic area, finally resulting in a common economic area from Lisbon to Vladivostok”.

How would such cooperation look? Perhaps it would imply at least a free trade agreement (FTA), whose core features might involve the cutting of tariffs and non-tariff barriers. Business interests in the EU as well as Russia are likely to be supportive of such a proposition. Putin stated that “in future, we could even consider a free trade zone or even more advanced forms of economic integration. The result would be a unified continental market with a capacity worth trillions of Euros”.

Surely when we talk about Russia in this context, we need to understand this space as including neighboring post-Soviet states. Russia launched its Eurasian Economic Union (EEU) project back in 2015.

One would think that for the EU, an FTA with the EAEU would be an advantageous proposition from an economic standpoint, since it would give preferential access to an important market. But one would expect the pre-conditions posed by the EU for the opening of negotiations to be many and quite stringent.

For Moscow, this positioning might be more economically advantageous, as the EEU could be a bridge for China’s Belt and Road Initiative (BRI) to connect with the European market. On the map, all appears logical and attractive, but in reality, China’s BRI, although not against being cooperative with other blocks, still aims at pulling major Eurasian resources towards itself. Russia’s EEU, weaker in dimension than the BRI, will inevitably be drawn to Beijing with growing grievances on the Russian side.

Back to the unified Russia-Europe economic space,

there remains the fundamental question as to whether or not Russia would consider an FTA with the EU to be in its interests. Is the ‘Lisbon to Vladivostok’ idea serious? In Russia, many would fear that an FTA with the EU would be too imbalanced, or asymmetric in favor of the EU. Indeed, most Russian exports to the EU, such as oil and gas, are already being traded without tariffs. Also, the challenge for any petro-economy to sustain a substantial and competitive industrial sector would be a tough task to pull off.

So far, we have given a pretty rosy picture of the two stood regarding the project just several years ago, in the period before the Ukraine crisis.

When discussing Russian geopolitical moves, one needs to remember how important Ukraine is and how the latter has been a driving factor in Russia’s calculus. Ukraine has always been the main point of any of Russia’s grand projects of the past and present. The modern EEU, an ambitious project that goes well beyond the simple removal of borders between the five ex-Soviet countries (Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia), is weak economically and geographically without Ukraine. Many believe that even before the Ukraine crisis, Russia-Europe relations were strained and a crisis was inevitable, but it should not be forgotten that it is still Ukraine which made the differences insurmountable. It could even be argued that the Ukraine crisis put an end to any grand strategic view between Russia and Europe. The “LisbonVladivostok” vision, it could be argued, is now dead.

Beyond the Ukrainian issue are also other important issues which are likely to stop any furtherance of the Greater Eurasia project. Europe and Russia are not just two competing economic blocs, but two blocs with opposing values and political systems. A compromise between the two has not been seen in the history of the past several centuries, except for short periods of time when Russian military power was needed in settling inter-European problems.

Moreover, put in the longer-term perspective, we see that the abandoning of the grand Lisbon-Vladivostok vision follows what is taking place across the entire Eurasian continent, where pragmatism and a reliance on real state interests and capabilities are back in fashion following the hopeful postCold War years.

Over the past several years, Russia has also leant towards the East. And while it is often put to question just how deep the Russian pivot to the East is, certain geopolitical tendencies lead us to support the idea as fact. Moscow portrays this policy as its own choosing, but the reality is that from three grand avenues (Eastern Europe, South Caucasus, and Central Asia) of projection of Russian geopolitical influence, it is only in Central Asia that Moscow does not meet important pushback from any Western power, while Chinese influence is only seen in economics. This simple vector of projection of Russian power is quite telling at a time when Moscow is more drawn to the East rather than the West, spelling a death note to once grand plans of an economic space from Lisbon to Vladivostok.

POLITICS

GEORGIA TODAY FEBRUARY 5 - 7, 2019

11

Social Innovation Lab WHAT MADE YOU DECIDE TO EXPAND TO GEORGIA? WHAT ARE YOUR THOUGHTS ON THE STARTUP/INNOVATION MARKETPLACE HERE?

INTERVIEW BY SAMANTHA GUTHRIE

M

r Ja s u r H a s a n ov describes himself as “an impact entrepreneur, marketer, trained startup coach, and innovation consultant.” Behind these buzzwords, he has launched several businesses, including a handful of his own.

Concretely, Hasanov is the CEO and founder of Social Innovation Lab (SIL), one of Azerbaijan’s leading entrepreneurship centers. After success in their home country, SIL is now making moves into Georgia. GEORGIA TODAY spoke with Hasanov to learn more about what they’re up to.

I have been to Georgia many times before to deliver sessions on Social Innovation and entrepreneurship and I’m familiar with the ecosystem – players like GITA, Impact Hub and other initiatives.

We decided to expand into the Georgian market firstly because we’ve seen a similar demand for entrepreneurship education in the market. At the same time, we see a lot of potential in the market with an increasing number of talents and opportunities, like the development of tourism and other industries in the country. These developments require innovations built on local context and knowhow.

WHAT INSPIRED YOU TO START SIL?

WHAT ARE THE DIFFERENCES BETWEEN THE ENTREPRENEURSHIP COMMUNITY IN GEORGIA AND IN AZERBAIJAN?

I went through startup accelerators like the Silicon Valley-based Cleantech Open and Singapore-based YSE Incubator with my startup a few years ago, where I gained a significant amount of knowhow and experience and networked in the entrepreneurship field. Observing the lack of structured entrepreneurship education and access to global opportunities [in Azerbaijan], I decided to establish SIL in Baku to help local entrepreneurs grow.

TELL US ABOUT SOME OF THE DIFFERENT PROGRAMS YOU OPERATE. ARE YOU BRINGING THEM ALL TO GEORGIA? SIL currently runs the international ClimateLaunchpad and Creative Business Cup programs, as well as the region’s largest accelerator for early stage space startups – NewSpace Accelerator. We’re planning to bring the NewSpace and ClimateLaunchpad programs to Georgia initially, as well as our expertise in building and running innovation programs.

In terms of culture, development and the general mindset of people towards entrepreneurship, there are differences as much as similarities. Some of the advantages in Georgia include ease of doing business in the country and across borders, supportive infrastructure like the availability of payment systems (like PayPal and general banking systems), ease of general travel to Europe, etc.

Considering these factors, Georgia is a promising geography to produce a number of unicorns [a privately held startup company valued at over $1 billion] in the coming years.

WHAT ARE YOUR LONGTERM GOALS FOR SIL? Initially, SIL was founded purely with my personal investment and until today we’ve been bootstrapping – as we have reinvested our profit into the growth of SIL for the past two and half years.

From being an accelerator, we’re grow-

ing into a VC [venture capital firm] to support our startups with initial funding / investment as needed. Our long-term goal with SIL is to become a leading impact investment group in the region with acceleration programs to produce new startups.

WHAT ARE THE BIGGEST CHALLENGES YOU’VE FACED IN GROWING THIS BUSINESS? As Social Entrepreneurship and even entrepreneurship in general is a new topic in countries like Azerbaijan and Georgia, we’ve had difficulties in positioning our services in the market. In the past year and half, we have achieved remarkable traction in terms of sales and impact generation. Having the experience of growing SIL in Azerbaijan will for sure ease things for us when we enter the Georgian market.

SOCIAL ENTREPRENEURSHIP IS A HOT TOPIC IN GEORGIA

Sexual Harassment Becomes Punishable

BY THEA MORRISON

S

exual harassment is to be subject to a fine of GEL 300, and if the offense is repeated within one year, the violator will be fined a further GEL 500 or given correctional works of up to one month.

Sexual harassment of a juvenile, pregnant woman, disabled person, or in the presence of a minor will be subjected to a fine of GEL 500 to 800. If the offense is repeated within one year, the fine will be GEL 800-1000, correctional works up to one month or an administrative punishment (imprisonment) of up to 10 days.

The package of legislative changes has already been prepared, which reads that sexual harassment signifies making comments of a sexual nature, showing genitalia, or any verbal, non-verbal and other physical behavior of a sexual nature.

The changes also envisage regulating

WHAT HAVE BEEN SOME OF SIL’S BIGGEST SUCCESS STORIES?

As an impact entrepreneur, founding SIL was not a coincidence but rather for the purpose of accelerating the growth of Social Enterprises or tech startups with a social or environmental impact. Therefore, we have always focused on supporting startups that have positive influence on society with sustainable and scalable business models.

To be frank, most businesses already do have a social impact with or without the intention of the founders. On the other hand, Social Entrepreneurship is does not mean integrating a social component into a traditional business, but rather it requires having a social or environmental problem as a core of the business itself. Being a social enterprise means producing a solution that directly aims to tackle a social or environmental issue.

Since the first day of our foundation, we have trained over 1400 entrepreneurs who have built about 110 startups and raised $300k+ in funding. Our alumni include professors, young professionals, university and even school students. As we position ourselves to be a “Path to the Global Startup Community,” 16 SIL alumni startups have joined nine international startup programs and one was featured in Forbes’ ‘30 Under 30’ list.

We value collaboration more than competition and therefore are open to collaborate with any individual or organizations from Georgia on boosting entrepreneurship in Georgia with our joint efforts.

For those who are interested, please visit our website at www.sil.vc and feel free to contact us at hi@sil.vc for collaboration.

Interview edited for clarity.

Prices for Food and Beverages Increased in January

BY KETEVAN KVARATSKHELIYA

T

sexual harassment in the workplace. In addition, the definition of sexual harassment is to be written into the Labor Code, which reads that sexual abuse may be regarded as 'an undesirable behavior of a sexual nature aimed at infringing a person's dignity or creating a humiliating, hostile or insulting envi-

PUBLISHER & GM

George Sharashidze COMMERCIAL DEPARTMENT

Commercial Director: Iva Merabishvili Marketing Manager: Anuka Poladishvili

GEORGIA TODAY

RIGHT NOW – DO YOU THINK EVERY BUSINESS SHOULD HAVE A SOCIAL COMPONENT?

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

ronment'.

The legislative package was prepared within the Parliament's Gender Equality Council and its initiators are MPs Tamar Chugoshvili, Tamar Khulordava, Dimitri Tskitishvili, Rati Ionatamishvili, Guguli Maghradze, Enzidela Machavariani, and Giorgi Tughushi.

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Maka Lomadze, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison Photographer: Irakli Dolidze

he National Statistics Office of Georgia (Geostat) has presented the latest inflation data, which shows that there is a fluctuation and increase in prices on a number of products across the country. The list of goods with augmented prices, includes: vegetables, milk, cheese, egg, bread and cereals.

In January 2019, the prices of food and non-alcoholic beverages increased by 3.2%, contributing 0.98 percentage points to the overall monthly inflation rate. The growth in prices was faced by the following subgroups: vegetables (15.8%),

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fruit and grapes (5.8%), milk, cheese and eggs (4.7%), bread and cereals (1.4%), and fish (1.4%).

The price of alcoholic beverages and tobacco increased by 5.8% with a relevant contribution of 0.39 percentage points to the overall monthly consumer price index (CPI). The price of tobacco increased by 12.5%.

In January, the consumer price index increased by 1.3% compared to the previous month, while the annual inflation rate amounted to 2.2%, says Geostat.

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