Issue #1114 Business

Issue no: 1114/162

• JANUARY 8 - 10, 2019

• PUBLISHED TWICE WEEKLY

In this week’s issue...

FOCUS

Tourism Breaks National Records in Georgia

ON AWARDING GEORGIA'S ENTREPRENEURS Entrepreneur Magazine Georgia awards 50 Daring Entrepreneurs of 2018

PRICE: GEL 2.50

NEWS PAGE 2

International Property Show Holds First Exhibitions in Cairo & Jeddah

PAGE 5

BUSINESS PAGE 4

George Sharashidze, Entrepreneur Magazine Georgia's Editor-in-Chief

Loan Annulment Process Prolonged until Mid-January

BY THEA MORRISON

Ambassador Beruchashvili on Georgia-UK Trade Relations 2018 BUSINESS PAGE 7

President's Administration to Reshuffle Pardoning Commission

T

he program of loan annulment of black-listed bank debtors is ongoing successfully but the process has been prolonged until January 15.

Starting on December 15, 2018, the Government of Georgia began annulling the debts of over 600,000 citizens,150,000 of whom are socially vulnerable, whose loans at banks do not exceed 2000 GEL ($748).

Cartu Foundation, established by the Founder and Chair of the ruling Georgian Dream Bidzina Ivanishvili, agreed to take the full responsibility of paying the debts of those 600,000 people on the financial black list.

BUSINESS PAGE 11

Image source: pewtrusts.org

The information about extending the program dates was released

by Georgian Minister of Finance Ivane Matchavariani and was confirmed by the Head of the Association of Banks, Alexander Dzneladze.

Dzneladze said the banking sector has completed the process of making lists, adding the names of people whose debts will be annulled and have been uploaded to the website of the program - vali.ge.

"Every bank is participating in the program. There is talk about microfinance organizations, which are many, this is why the process has been prolonged until January 15th,” he explained.

The Head of the Association of Banks also stated that problematic credit portfolios have already been transferred from the banking sector to Cartu Foundation and the annulment process is ongoing.

"Debtors can go on the website and see if the data on their loans has been uploaded. If it has, it means that they no longer have a debt,” he said.

Continued on page 2

Prepared for Georgia Today Business by

Markets As of 04ͲJanͲ2019

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 13.80

+1,1%

+1,3%

GEOROG 04/21

100.53 (YTM 6.49%)

+0,0%

Ͳ0,4%

Georgia Capital (CGEO LN)

STOCKS

GBP 10.25

+1,5%

Ͳ4,7%

GEORG 04/21

105.37 (YTM 4.35%)

+0,0%

+0,3%

GBP 1.87

Ͳ10,1%

Ͳ17,1%

GRAIL 07/22

103.71 (YTM 6.55%)

+0,0%

Ͳ1,0%

GBP 14.70

Ͳ1,2%

Ͳ2,0%

GEBGG 07/23

97.51 (YTM 6.64%)

Ͳ0,1%

Ͳ0,6%

m/m

CURRENCIES

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

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

Price

Price

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BONDS

Price

Price

w/w

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m/m

m/m

57,91 +10,9%

Ͳ6,7%

GEL / USD

2,6758

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+0,2%

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+3,4%

GEL / EUR

3,0357

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1 280,33

GEL / GBP

3,3777

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INDICES

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GEL / CHF

2,6990

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+0,8%

FTSE 100

6 821,57

+1,3%

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GEL / RUB

0,0393

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FTSE 250

17 697,78

+1,3%

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GEL / TRY

0,4949

Ͳ2,7%

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DAX

10 691,77

+1,3%

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GEL / AZN

1,5768

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+0,2%

DOW JONES

23 154,76

+0,4%

Ͳ7,5%

GEL / AMD

0,0055

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NASDAQ MSCI EM EE

6 616,55

+0,5%

Ͳ7,6%

GEL / UAH

0,0962

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+0,9%

152,89

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EUR / USD

0,8811

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949,57

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0,7921

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SP 500

2 494,98

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CHF / USD

0,9901

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MSCI FM

2 514,04

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RUB / USD

68,0625

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+1,8%

GT Index (GEL)

1 582,68

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TRY / USD

5,4069

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GT Index (USD)

1 208,13

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AZN / USD

1,6998

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MSCI EM

GBP / USD

+0,8%

2

NEWS

Loan Annulment Process Prolonged until MidJanuary

Continued from page 1 Dzneladze also commented on the new loan issuing regulations at Georgian banks which took effect from January 1.

He says that January will be a tough month for the banking sector as it adapts to the changes.

“Issuing of loans will be significantly reduced. The old format no longer exists when a customer can go to a bank and get a loan based on their ID card alone.

According to the new regulations, only people who have an income will get loans,” he explained.

The regulations introduced by the National Bank of Georgia (NBG) envisage that the maximum amount of loan coefficient will be determined by the monthly income of the client.

This means that banks will be allowed to give clients loans only after studying their solvency.

The regulations apply to all entrepreneurial entities where more than 20 individuals have a loan or credit obligations.

New rules for lending by guaranteeing real estate have also been tightened. In particular, such a loan is issued if the borrower owns more than one residential property and, at the same time, those properties are not on lease.

The current version of the regulations reads that the maximum term of a mortgage is 15 years. Under the changes, consumer loans secured by real estate have become a maximum 10 years and any other type of loan can be issued for a maximum 4-year period.

GEORGIA TODAY

JANUARY 8 - 10, 2019

Tourism Breaks National Records in Georgia tors are learning about our country and seeing that our unique culture is part of a common European civilization," said Bakhtadze.

He also noted several other significant recognitions of Georgia in 2018 - the "host country" of the world famous Frankfurt Book Fair, high rankings in safety and attractiveness for tourists from various organizations and publications, and, "according to the United Nations World Tourism Organization report, Georgia is one of the fastest growing tourist destinations in the world and comes in fourth place - second place in Europe."

BY SAMANTHA GUTHRIE

E

arlier today, Georgian Prime Minister Mamuka Bakhtadze spoke to the press about the country's most recent tourism figures.

In 2018, a total of 8,679,544 international visitors came into the country - a national record.

"This is truly a unique success for a country of our size...it means that awareness of Georgia, as well as interest in our country, is growing every day. Visi-

Georgian Snowboarder Jaba Skhvediani Wins Gold in FIS Competition

BY AMY JONES

G

eorgian snowboarder Jaba Skhvediani has won gold at the International Ski Federation (FIS) competition in Kopaonik, Serbia.

The event, one of the first competitions of the season, was held 3 - 5 January. International male and female athletes competed in categories

such as big air, slope style, and ski jumping.

Skhvediani, 23, from Tbilisi took first place in the snowboard slope style event. Building on his success in 2017 when he finished top four in the same competition, he has got his 2019 season off to a great start.

Skhvediani has competed internationally in Snowboarding, other events include the World Cup Qualifying rounds and the World Snowboard Championships in Sierra Nevada in Spain.

Photo source – Jaba Skhvediani Facebook page

4

BUSINESS

GEORGIA TODAY

JANUARY 8 - 10, 2019

International Property Show Holds First Exhibitions in Cairo & Jeddah Dubai Land Department as a strategic partner of IPS countries with the UAE.” Jeddah welcomes IPS, which has been held successfully in Dubai for 14 years, as the Kingdom has recently made a qualitative shift to diversify its economy.

This move has created positive indicators of growth, particularly in the real estate sector and in the development and support of SMEs, which are in line with the Kingdom’s 2030 Strategy. Jeddah is the second largest city in Saudi Arabia and is expected to witness unprecedented real estate activity due to population migration, which according the experts’ forecast, will reach 2.5% per annum up to 2022.

Within the framework of the Kingdom's Vision 2030, the Saudi government recently implemented a range of projects. Most notable is the initiative of the Public Investment Fund and the

T

he International Property Show, the largest real estate sales platform in the Middle East for local and international markets, has announced its first edition in the Arab Republic of Egypt on 10-13 January 2019 at the Egypt International Exhibition Center and at the Jeddah Centre for Forums and Events in the Kingdom of Saudi Arabia over the course of four days on 17-20 January 2019.

IPS Egypt is ably supported by Makanak Real Estate Club (MREC) while IPS Jeddah enjoys strong support from Wafi, a Saudi Ministry of Housing initiative.

Both first editions in Cairo and in Jeddah will be staged in partnership with the Investment Management and Promotion Centre, an investment arm of the Dubai Land Department.

The exhibition provides an ideal platform for investors and buyers interested in investing in residential real estate to

Ministry of Housing with their joint establishment of the Saudi Real Estate Refinancing Company. SRC aims to increase home ownership by more than 50% by 2020. This initiative provided more than 280,000 products in 2017, including 85,000 soft loans and 77,000 residential plots for about 120,000 housing units.

In Egypt, the real estate market has been witnessing remarkable development in terms of pricing in the last decade. Home prices have increased by 35%, in line with the qualitative boom witnessed by the sector, resulting from the country’s implementation of major urban projects such as the New Administrative Capital and Upper Egypt Cities.

IPS Egypt anticipates more than 20,000 visitors and 30 major real estate inves-

tors and developers from different countries including Saudi Arabia, Hashemite Kingdom of Jordan, United Arab Emirates, Bahrain, United Kingdom, Russia, Oman, Italy, Kuwait, and Sudan.

IPS Jeddah is geared to welcome 15,000 investors and accommodate 75 exhibitors from 15 countries from the region and beyond.

get the best properties they are looking for and to maximize exclusive offers and special discounts offered exclusively by the exhibitors during the event. The exhibition also offers exhibitors an ideal opportunity to showcase and promote their commercial and residential projects while ensuring an investment environment that offers ideal opportunities to explore the best ways to invest locally and internationally in the real estate market.

Walid Farghal, Director General of the International Property Show, said, “Based on the success achieved by the International Property Show in Dubai over the years, and thanks to strong economic relations between United Arab Emirates with Egypt and with Saudi Arabia, we have decided to organize the first editions of IPS in Cairo and in Jeddah.

This will support the promotion of investments in these countries and will strengthen joint cooperation of both

2018 Inflation Rate in Georgia up by 1.5%

BY THEA MORRISON

T

he National Statistics Office (GeoStat) said on January 3 that the December 2018 Consumer Price Index increased by 0.5% compared to the previous month, while the annual inflation rate amounted to 1.5%.

The monthly inflation rate was mainly influenced by price changes for food and non-alcoholic beverages, transport and household equipment and maintenance.

In particular, last month the prices in the group of food and non-alcoholic beverages increased by 2.3 %, contributing 0.69 percentage points to the overall CPI change.

Transport prices in December were down by 0.6%, contributing -0.07 percentage points to the overall monthly inflation rate.

Furnishings, household equipment and maintenance prices decreased by 1.0% contributing -0.06 percentage points to the overall monthly inflation rate.

The annual inflation rate was mainly influenced by price changes for food and non-alcoholic beverages, alcoholic beverages and tobacco, housing, water, electricity, gas and other fuels, Health and transport.

In the ‘housing, water, electricity, gas and other fuels’ category, the price increase of

Image source: canstar.com

3.1% was registered in 2018, which contributed 0.25 percentage points to the annual inflation.

Meanwhile, food and non-alcoholic beverages last year increased by 1.7%, con-

tributing 0.52 percentage points to the overall annual inflation rate.

Alcoholic beverages and tobacco prices increased last year by 4.9%, with a relevant contribution of 0.33 percentage points to

the overall annual CPI growth.

Health products, appliances and equipment, patient services and hospital service total prices last year increased by 2.9% which resulted in a 0.25 percentage point

contribution to the overall annual inflation rate. In addition, transport category prices increased by 1.7%, with a relevant contribution of 0.22 percentage points to the overall index growth.

BUSINESS

GEORGIA TODAY JANUARY 8 - 10, 2019

5

Entrepreneur Business Awards

BY KETEVAN KVARATSKHELIYA

L

ast year was incredibly significant and successful for Entrepreneur Magazine Georgia, as its first issue was released in the month of April 2018. Throughout the remainder of the year, the Entrepreneur team worked to produce a high-quality mag-

The event was both interesting and unique in nature, as the organizers chose not to follow the typical style of awards ceremonies, commencing with a fascinating performance of the actors of the Movement Theater. This was followed by a welcome speech from George Sharashidze, Entrepreneur Magazine Editor-in-Chief, who summarized the first year of the magazine’s work.

“2018 has been a historical year, as one of the most prominent American magazines, Entrepreneur,

spheres of business. Each winner expressed their gratitude to Entrepreneur Magazine for the recognition, addressed the audience and introduced some of their future plans.

Significantly, many of the entrepreneurs awarded at the event were women, underlining the rising trend of female inclusion in the business sphere in Georgia.

We spoke to two of them.

DARIA KHOLODILINA (TRAILS AND WINES) This Ukrainian lady, who moved to Georgia several years ago, has become a successful entrepreneur and today is able to offer one of the best and most unforgettable wine tours for both local and foreign tourists in Georgia. She is also author of a book about Georgian wine.

“It’s been a busy year. I moved from the public sector to private and founded the company Trails and Wines. I expect 2019 to be even more interesting and I have a number of exciting plans,” she told us.

NINA MENTESHASHVILI, REZI BESELASHVILI (ALTERSOCKS) The founders of the company AlterSocks, Nina

Menteshashvili and Rezi Beselashvili, were recognized at the Entrepreneur Awards. They are also contributors to the magazine, offering a very interesting and informative column in every issue of Entrepreneur Georgia.

Menteshashvili focused on the hard work and effort that is put into producing the company’s colorful and fun socks, already enjoyed not only in Georgia, but also beyond its borders. She emphasized the importance of Entrepreneur Georgia’s recognition for more motivation and courage.

“This is an important award for us,” co-founder Beselashvili agreed. “It represents an extra source of motivation, as when you have your own business, you sometimes need to hear you’re on the right track. The Entrepreneur Awards is exactly that and has justified that we’re doing the right thing in the right sphere.”

The awarded entrepreneurs, as well as the Editorin-Chief of Entrepreneur Magazine Georgia, also accentuated the importance of such awards for motivating other businesspersons and developing the sector in the country.

The ceremony was finalized with a pleasant reception, where the entrepreneurs and other guests were given the opportunity to share their impressions and discusses their current work or future plans.

Awarding Zura Shevardnadze, Gardenia

azine with interesting content and important news in the sphere of entrepreneurship. Entrepreneur Georgia has already published nine issues, which makes almost 1000 pages of entrepreneurial spirit.

Entrepreneur Georgia rounded off 2018 with a beautiful business awards ceremony, where on December 27, 50 of the most outstanding and courageous Georgian entrepreneurs and intrapreneurs were recognized at a ceremony held in Tbilisi’s Movement Theater.

published in numerous countries, was also launched on the Georgian market. In 2018, Georgia took its small place on the map of world entrepreneurship,” Sharashidze said, going on to emphasize the significance of entrepreneurship for boosting the business sector in Georgia.

The second part of the celebration was dedicated to awarding 50 Georgian entrepreneurs operating in different sectors. Sharashidze introduced all the nominees and gave brief information about their

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6

BUSINESS

GEORGIA TODAY

JANUARY 8 - 10, 2019

New Accumulative Pension Program Begins

BY SAMANTHA GUTHRIE

O

n January 1, several new laws came into force in Georgia – mandatory inspections for private vehicles, a 20 GEL increase in monthly pensions, and the first part of the law on accumulative pensions.

Georgian politicians and academics debated the law on accumulative pensions for several months in 2017 and 2018 and it was adopted by Parliament on July 21, 2018. It has several phases – the first phase will automatically enroll all people working in Georgia under the age of 40, apart from self-employed people, into the new pension scheme. Workers 40 years and older and self-employed people can choose to voluntarily participate.

The new pension system is designed to give Georgians a retirement savings account that is more proportional to their earnings while they were working by taking a percentage of their pre-tax salary. The pension fund will be invested domestically.

Employees contribute 2% of their pretax salary, the employer contributes an amount equal to 2% of the employee’s pre-tax salary, and the government contributes an amount equal to 2% of the employee’s pre-tax salary. If an employee’s salary is greater than 24,000 GEL ($8,888) per year, the government contributes only 1%, and if an employee’s salary is greater than 60,000 GEL ($22,222) per year, the government does not contribute at all. The self-employed can

participate with a 4% personal contribution.

The possibility to opt out of the program will open in June of this year, returning the pension contributions made on behalf of an employee to the respective contributors. This ‘opt-out’ design is popular for pro-social policies in many countries, and sees a much higher rate of participation in programs than the standard opt-in design. The field that spearheaded this design, behavioral economics, was recognized with a Nobel Prize awarded to Richard Thaler, often called the “father of behavioral economics,” in 2017.

When Georgians reach the official state retirement age – 60 for men and 55 for women – they will have access to their pension funds, distributed in monthly installments. The new pension scheme will not affect the current system, by which every retired Georgian is eligible to receive 200 GEL ($75) a month – a rate which increased by 20 GEL from January 1.

For those already near retirement age – a person who joined in the pension scheme five years or less before retiring will be able to withdraw their full contribution upon reaching retirement age.

Otherwise, an amount will be distributed each month, as calculated by the National Statistics Office based on the average life expectancy for Georgian men and women. In the case of a person’s death before reaching the average life expectancy, the remaining funds will go to that person’s heir.

Accumulated pensions are private property and cannot be accessed by

Image source: Simba Law

banks or courts to cover debts or administrative fines.

Participants in the scheme will have three options, low risk, medium risk, and high risk, correlating to the level of risk, and subsequent potential reward, of the investments for which a participant’s contributions will be used. During the first five years of the new program, participants will only be able to select a low-risk portfolio.

Since Georgian independence in 1991,

the country’s pension system has been reformed multiple times. A flat rate pension was instituted in 1995. In 2004, social programs, including the pension fund, began to be funded by general budget revenues rather than the State United Social Insurance Fund (SUSIF), which was based on social contributions from employers and employees. From 2008 to 2012, pensions included a bonus of 10 GEL a month for people who had worked for more than 25 years, but in August

2012, pensioners stopped receiving longservice bonuses and instead received the combined amount as a flat rate pension benefit.

There is still quite a lot of uncertainty surrounding the new system, coupled with anxious memories of the Soviet collapse that led to the loss of the nation’s savings, but many are also optimistic that the experiment will be successful, ushering Georgian households into a more financially stable future.

BUSINESS

GEORGIA TODAY JANUARY 8 - 10, 2019

7

Ambassador Beruchashvili on Georgia-UK Trade Relations 2018

EXCLUSIVE INTERVIEW BY KATIE RUTH DAVIES

T

he UK maintains its high position among the top 10 largest investor countries in Georgia, which indicates that Georgia is an attractive destination for UK businesses. In 2017, the United Kingdom was third on the list with direct investments of $250 million.

UK-Georgia diplomatic relations date back to the time when Foreign Secretary Lord Curzon appointed brilliant diplomat and connoisseur of Georgia Sir Oliver Wardrop as the UK’s first Chief Commissioner to the Transcaucasus in 1919. Sir Oliver Wardrop played a very important role in convincing the UK to recognize Georgia's independence in 1920. He became actively engaged in mobilizing much needed support to deal with political and economic challenges. 2018 also marked very significant outcomes of Georgia-UK relations in all dimensions as well as a new beginning of Georgia’s future cooperation after Brexit.

GEORGIA TODAY sat down with H.E. Tamar Beruchashvili, the Ambassador of Georgia to the UK, for our annual catch-up on the latest on British-Georgia relations.

“Against a background of successful political relations, further strengthening and expanding of trade and economic relations is one of the main priorities of the strategic partnership between the two countries,” the Ambassador told us. “In 2017, for the first time, the UK Prime Minister appointed a Trade Envoy to Georgia, experienced politician Mark Pritchard MP. In 2018, on 4-5 June, Pritchard visited Georgia, accompanied by the first official business delegation of the UK Department of International Trade (DIT). The aim of this trade mission was to share its experience and knowledge with local businesses and to familiarize themselves with the business environment in Georgia. “This is yet another indication that both Georgian and the UK sides strongly intend to continue to intensify bilateral economic relations, dynamically increasing trade turnover and facilitating expanding of business ties between our countries,” she said.

In this regard, building new partnerships and promoting active cooperation between the Georgian Chamber of Commerce and respective counterparts in London, Edinburgh, Gibraltar and Wales is another priority, leading to the signing of mem-

oranda of understanding between the parties.

For more than 20 years, Georgia has enjoyed an exemplary partnership with British Petroleum (BP), as it creates jobs and brings new technologies and know-how to Georgia. This partnership also has a wider regional impact, bringing Caspian oil and gas to Europe and contributing to the European energy security particularly through the Southern Corridor project. The Ambassador also spoke of Georgia’s financial presence in the UK. “Georgia’s banking sector has been trading at the

London Stock Exchange (LSE) since 2006. Currently, shares of four Georgian companies are included in the Premium Listing segment of the LSE, amongst them two leading Georgian banks TBC Bank and Bank of Georgia, both having deep sectoral knowledge, local expertise and a comprehensive range of products and services in Georgia,” she said. As a result, today, more than a half of the Georgian banking sector is presented at the LSE and, as the Ambassador noted, “[we] are expecting an increase in investments and a further strength-

ening of our financial institutions.”

Innovations and the development of new technologies is another priority sector, which has real potential for extending mutually-beneficial collaboration.

“Georgia as a start-up nation is eager to exploit the opportunities and share the experience that London is offering to innovations and start-up businesses,” she said. “The latest example is the successful participation of a large Georgian delegation, headed by the National Innovation and Technology Agency, in the well-acknowledged Start-up GRIND conference held on 12-14 June in London. Almost 20 Georgian start-ups had an opportunity to present themselves and directly engage with potential investors and British companies. The enhancing of sectoral cooperation with a particular focus on innovation was stressed during the last meeting of the Georgia-UK Wardrop Strategic Dialogue.”

“Our fruitful sectoral cooperation has a direct impact on people-to-people contacts and cultural exchange between our countries,” the Ambassador noted. And the figures speak for themselves: during the first 10 months of 2018, Georgia welcomed 26,347 visitors from the UK, a 33.3% increase compared to the same period of 2017. “The direct flights of Georgian Airways and Wizz Air opened in 2017 have greatly contributed to this end,” she said.

“In 2018 we also witnessed a record increase in the export of Georgian wine to the UK market, which has been marked by a 34% of increase (103,724 bottles) during the first 10 months of 2018. This would not have happened without the right strategy and our close cooperation with the National Wine Agency of Georgia, wine companies and highly regarded wine experts in the UK,” the Ambassador noted. “Particularly, this is a direct result of the active participation of the Georgian wine companies at international wine exhibitions in the UK and a record number of roadshows and wine tastings organized by well-known wine experts and writers Sarah Abbott MW and Robert Joseph, special partners of the National Wine Agency of Georgia.”

While Britain is going to build the new trade and commerce partnerships globally, Georgia is committed to being actively engaged in this process in due time.

“In view of the Brexit and common European and global challenges, we are concentrating our efforts to further deepening and widening our cooperation in all priority directions, bringing our countries and peoples closer,” Ambassador Beruchashvili noted.

8

BUSINESS

GEORGIA TODAY

JANUARY 8 - 10, 2019

Kakheti Restaurant Featured in Business Insider

BY SAMANTHA GUTHRIE

A

new article on the Business Insider website lists 28 of the best, most remote, under-the-radar restaurants around the world, as named by the World Restaurant Awards.

Business Insider quotes a representative from the World Restaurant Awards saying "The Off-Map award is for restaurants in a remote location that are off-thebeaten-track and worth the journey."

This year's awards will be officially announced in February, but Business Insider reveals a sneak peak at the list, which includes the restaurant The Crazy Pomegranate/Gizhi Brotseuli.

"This restaurant is situated in the vine-

yard of a cult Georgian wine producer" the caption simply reads, sharing an Instagram post of two bottles of homemade house wine.

The restaurant is connected to John Wurdeman's Pheasants' Tears winery in Sighnaghi. The website explains the concept, "The Crazy Pomegranate is a restaurant opened in Spring of 2018 located amongst the vines in the Pheasant’s Tears Winery. We are open by reservation only (minimum 10 people) for tastings and meals and offer a creative spin on Georgian cuisine using the finest seasonal ingredients from our farms, fields, and neighboring villages. Chef Ketevan Mindorashvili’s creative kitchen paired with rare natural wines while gazing across the vineyards on the backdrop of the Caucasus mountains creates an unforgettable dining experience."

Harnessing Creativity for Success: Meet an AwardWinning Female Entrepreneur EXCLUSIVE INTERVIEW BY KETEVAN KVARATSKHELIYA

T

ika Dugashvili, the founder of the company Wine Yard #1, located in the Kakheti region, was recognized at the 2018 Welcome to Georgia National Tourism Awards as The Best Woman Entrepreneur in the Tourism Industry. GEORGIA TODAY met her to find out more about just what it took to develop her business and to what she owes her success.

WHEN AND WHY DID YOU DECIDE TO BECOME AN ENTREPRENEUR AND START A BUSINESS? Everything kicked off just a year ago. We have a family-type business in Kvareli region for tourists and welcomed our first guests on September 8, 2017. In quite a short time, our business gained popularity. I’d never thought about becoming an entrepreneur, it just happened naturally in the course of my work.

The innovation came in promoting rural life. We have a typical Kakhetian house with a winemaking tradition, an agro direction, eco-tourism and other types of tourism, and we employ a creative attitude towards our business.

I was recognized [at the Awards] because our business contributed to the develop-

ment of the sector and the Kakheti region.

Along with the Welcome to Georgia Award, I also won the National Award for Development of the Regional Tourism Industry and a prize for Family Business of the Year at the Georgian Times Awards. And all this happened within the first year of operation, which was totally unexpected but a nice surprise!

WHAT ENCOURAGED YOU TO ENTER THE TOURISM SECTOR? I am encouraged and motivated by satisfied and happy customers, foreigners in particular. Each family member involved in the business is just as happy and puts effort into its development. The awards that I mentioned played an important role in motivating me even more to continue my entrepreneurial activities and grow my business. The fact that I was chosen by the Bank of Georgia and awarded a financial prize is absolutely wonderful.

WHAT CHALLENGES DID YOU FACE WHILE DEVELOPING YOUR ENTERPRISE? Inception with no capital or other resources is probably the hardest obstacle in developing a business. Where there is no fixed capital investment, it becomes difficult to solve particular problems or allocate finances as needed.

And yet we managed to start our business with no loans. Our strategy is to expand our sphere of work step by step

and to avoid borrowing.

WHAT CHALLENGES ARE FACED BY FEMALE ENTREPRENEURS IN GEORGIA? I don’t think there are any specific challenges faced by female entrepreneurs in Georgia. Through my example, I can definitely state that I’ve never had to deal with this issue. Maybe the fact that my father and brother are involved in our business helps me to avoid such issues, but I still think the Georgian market is quite fair towards both male and female entrepreneurs.

WHAT ELSE HAD A ROLE IN YOUR SUCCESS? I’ve always sought to explore something new and have changed a number of professions. I’m a musician, but have experience working as a journalist. I was educated abroad and love working in different spheres and discovering novelties. I also enjoy meeting foreigners.

Sharing cultures and experiences has been a fascinating and fun process for me since childhood. I think my love of an eclectic life was the main catalyst for me to start my own business and achieve success.

WHAT ARE YOUR FUTURE PLANS? We plan to go beyond the local ‘borders’ of our region and start selling our cellar wine in the capital, Tbilisi, and export

it to other countries. We are actively working on this process and along with wine are going to offer other Georgian products. Aside from my own interest and desire to develop the business, I aim to promote rural life and in this way help my region. I further plan to launch a new hotel, which will not be the typical hotel everyone is expecting to see: it will be quite unique and authentic in nature.

DO YOU HAVE ANY

ADVICE FOR OTHER FEMALE ENTREPRENEURS? My advice is to use the freedom of imagination and creativity, not to hesitate, and to put as much effort into your work as possible. One should definitely seek to find a sphere of interest and use all the strength necessary to come out on top. Exploring oneself and giving full freedom to your imagination is possibly the best way to start a business and become an entrepreneur.

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BUSINESS

GEORGIA TODAY

JANUARY 8 - 10, 2019

Georgia Becomes a World Leader in Bitcoin Production

BY AMY JONES

I

n basements dotted across Tbilisi, an unusual product is being harvested. It’s not tomatoes or vegetables, but crypto currency.

As blockchain has taken the world by storm, Georgia has emerged as an unlikely world leader in Bitcoin production. Spotcoin, a Tbilisibased crypto currency company believes that Georgia currently harvests 15% of the world’s crypto currency, just behind China.

What makes Georgia such a hotspot for mining the currency? Firstly, Crypto currency can be accessed much more easily in Georgia than in many other countries. You only need to go to an ATM in some malls, or casinos and drape shops to find it.

Two leading crypto currency operators, Bitfury and Birtvi are also present in Georgia, whilst May this year saw a crypto currency conference take place in Tbilisi.

Secondly, electricity is relatively cheap in Georgia. The machines used to mine crypto currency consume huge amounts of power. Farms must be set up with cooling fans to prevent the crypto machines from overheating, which can often eat up a large percentage of the profits. However, the low electricity costs in Georgia thanks to hydropower, allow farmers to retain larger profit margins.

Despite the relative ease of mining in Georgia, it

is far from a get-rich-quick industry. Bitcoin investors are slow to come to the country in part due to the vague stance of the government surrounding mining. Currently, many miners go by the ethos “if it’s not forbidden, it’s allowed,” but many investors require greater security.

The costs to set up a farm can be huge. Some experts have seen Georgians optimistically sell much of their property in order to set up their crypto farms, only to loose everything as the market fluctuates. Machines, often bought from China, can cost thousands of dollars, although some miners have made profitable businesses by helping others to set up their own farms and taking a cut of the profit.

Even if farms make a profit, it is somewhat unpredictable. The increasing value of Bitcoin seemed unstoppable until December 2017, after which its value plummeted to under $4000 less than a year later. Its change in value can happen fast – in a matter of hours not just days. The income earned from each bitcoin mining has dropped from around $4500 per bitcoin unit to $75-85 per unit.

Despite the insecurity of crypto currency, many experts believe that it is here to stay. Although no guarantee, Bitcoin and other crypto currencies could potentially offer Georgians a chance to rake in huge income in the future. If the government takes a more secure and encouraging stance, the industry could continue to grow in Tbilisi basements.

Children's Vaccination to Become Mandatory from June 2019

BY THEA MORRISON

C

hair of the Healthcare Committee of the Georgian Parliament, Akaki Zoidze, says the vaccination of children will become obligatory from June 1, 2019.

He noted the period before the summer is required to make certain regulations to the law.

The Georgian Parliament has already adopted the vaccination bill, which means that from summer 2019 parents may face penalties if they refuse to vaccinate their children.

“Vaccination is a unique opportunity to avoid illnesses which pose serious threats to our children’s life and health. These illnesses are measles, pneu-

mococcal infections, and others, which are easily avoidable by the quality and free vaccines in Georgia,” Zoidze said.

He explained that 10 types of vaccination were previously of a recommendation kind, now it is said in the law that it is mandatory to take children to vaccination.

The National Calendar of Vaccination includes 10 vaccines in Georgia. Children are vaccinated against the following infections: diphtheria, tetanus, whooping cough, measles, rubella, mumps, poliomyelitis, rotavirus infections, etc. These diseases can cause very severe complications if children are not vaccinated on time.

Around 14 million people die from infectious diseases every year in the world. More than half of them are children under 5.

BUSINESS

GEORGIA TODAY JANUARY 8 - 10, 2019

11

Tbilisi City Hall Has 1 Billion GEL Budget for 2019

BY SAMANTHA GUTHRIE

I

n the last week of 2018, the Tbilisi Sakrebulo (City Assembly) approved the city’s budget for 2019. Tbilisi, and its effervescent mayor Kakha Kaladze, will have 927.6 million GEL ($346.8 mln) to spend over the next 12 months, plus another 75 million GEL ($28 mln) carried over from 2018 as a special budget transfer.

The budget is slightly higher than 2018’s – 861.6 million GEL ($322 mln).

Kaladze explained at a press briefing on December 27, that with the new budget City Hall “will have the opportunity to implement more interesting projects for Tbilisi. 38% of this budget will be spent on infrastructural projects, as many districts, streets and neighborhoods still need to be improved. About 35% or more will be spent on health and social needs. Unfortunately, there are still many families in Tbilisi who are in dire financial straits and need government support... Consequently, the budget has been increased by 20 million GEL in this direction.” Healthcare and social funding will in particular be allocated for breast cancer prevention and management, socially vulnerable families with many children, housing compensation for socially vulnerable residents, and food programs for the homeless and hungry.

First Deputy Mayor Irakli Khmaladze broke down the budget figure, noting that 900 million of the 2019 budget comes from city revenue – approximately 73%

Image source: Tbilisi City Hall

from VAT and property taxes, 5,6% from grants, and 21% from other sources.

“Property taxes in 2019, as planned, exceed the previous year by 25 million GEL...out of 51 million GEL [in grants], 50 million GEL is a special transfer from the State. In some directions, we have increased our revenue – notably the sale of goods and services, which is planned to exceed previous indicators by 15 million GEL,” said Khmaladze.

He also explained that at least 357 million GEL ($133.5 mln) of the 2019 budget will go to infrastructural projects.

Khmaladze explained, “In 2019 we are approving 357 million GEL, which will increase by 75 million GEL during the

year. In this regard, I would like to tell you that 2019 will be the first year when the budget of Tbilisi will exceed 1 billion GEL...Certainly, Tbilisi’s budget has never had such high indicators and it provides grounds to assure you that 2019 will be even more beneficial and fruitful for the city than 2018.”

Another major area of funding will be pre-schools, the budget for which will increase by 51 million GEL. This year, 11 new kindergartens will be built in the capital at a cost of 23 million GEL, and another 20 million will go to repairs and renovation work on existing kindergarten buildings.

The construction and rehabilitation of

bridges and tunnels is also planned, with a budget of 23 million GEL, including repairs on the bridges spanning the Gldanula river, which will cost about 4 million GEL, the construction of a road bridge connecting University Street and Tskneti Highway (8.3 mln GEL), repairs on Vakhushti Bagrationi bridge, renovating the tunnel near the Radisson Blu Hotel, construction and reconstruction of storm water drainage networks and the construction of a floodwater collection point (9 mln GEL), renovations of the Kakheti Highway, the completion of renovation work at Orbeliani Square, Dry Bridge, and Gudiashvili Square, and rehabilitation works for several under-

ground road crossings, notably the underground crossings at Heroes’ Square.

Chavchavadze Avenue will be renovated, Khizanishvili and Vekua Streets in Gldani will be fully renovated, a new road will be built connecting Machavariani and Gelovani Streets (18 million GEL), and Gorgasali Street will be renovated.

Sports and leisure will also be a priority for City Hall in 2019 – construction will begin on two new multi-functional sports complexes and tennis courts in Saburtalo and in Vake Park will be renovated. The Youth Palace on Rustaveli Avenue will be renovated at a cost of about 8 million GEL and the historic Pirosmani Street, near Tbilisi’s central train station, will be rehabilitated.

During the press conference, Kaladze thanked the Tbilisi Sakrebulo, his team members, and “even the opposition, for allowing me to share the outcome of a year’s work with the Tbilisi population, which we achieved and made together.

Of course, one year is not sufficient to resolve all the problems in the capital city, but we can say that we have built a solid foundation for the proper and sustainable development of the city in a number of directions.”

He continued, “You can see that the plans provided in the budget for 2019 are quite ambitious and it is really one of the best budgets out city has had in recent years. 2019 will be an even better year and we, together, will make Tbilisi more comfortable to live in, with improved infrastructure in all districts, neighborhoods and streets. I believe that we will manage it with united efforts and support from the population.”

President's Administration to Reshuffle Pardoning Commission

BY THEA MORRISON

T

he Administration of the new Georgian President, Salome Zurabishvili, stated they are reshuffling the composition of the Pardoning Commission.

The President’s Pardoning Commission is composed of ten people. Members are mostly lawyers from the civil sector and public figures, alongside the Public Defender and the Georgian Patriarchate.

The commission discusses all cases sent before it by inmates or their families, and makes the initial decision as to which prisoners seem to deserve a pardon. The list is then sent to the President for approval.

The President is the only person authorized to grant pardons in Georgia.

Before the statement of the President’s Administration regarding the changes to the commission composition was released, Zviad Koridze, Chair of the Pardoning Commission, Eka Gigauri and Basa Janikashvii, members of the Commission from the non-governmental sector, announced they were leaving the commission.

Gigauri, Executive Director of the NGO

Transparency International Georgia, took to Facebook to post about her decision.

“I am leaving the Commission after five years of work there. I wish success to the new members of the Commission…

I would like to thank Zviad Koridze. I think he was the most distinctive chairperson [of the Commission],” she wrote.

The President’s Administration has already started the selection process of the new members.

“The Administration of the President confirms that some members have left the Commission. The President expresses gratitude to all members of the Commission for their work. The Administration plans to staff the Pardon Commission with new members. This is an ordinary process,” the President’s Administration said.

The Head of the Human Rights Committee of the Parliament, Sophio Kiladze, thinks that the pardoning mechanism was sometimes used “improperly.”

She made the statement while commenting on the decision of some members to leave the commission.

“I think the former President's pardoning mechanism was often used incorrectly. As such, there are many questions in society regarding different cases. I hope Salome Zurabishvili will manage the Pardon Commission in future as it is in western countries," Kiladze said.

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