Issue #1074 Business

Issue no: 1074/142

• AUGUST 14 - 16, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Marijuana Legalization Constitutional Court Explains NEWS PAGE 2

JULY: Average Hotel Prices in Georgia & Hotel Price Index BUSINESS PAGE 4

FOCUS

ON BAR CULTURE A look into opening and owning a bar in Georgia

PAGE 6

Photo source: Dive bar facebook

“No Need to Panic” as GEL Devaluates

BY THEA MORRISON

R

ecent developments in the region, in particular the devaluation of the Turkish Lira and Russian Ruble against the US dollar, have been named as one of the main factors resulting in the depreciation of the Georgian national currency Lari (GEL), which recently dramatically lost value against the US dollar and Euro.

On August 13, the National Bank of Georgia set the official rate, according to which one dollar costs 2.5339 GEL (up from 2.4687 GEL), while one Euro equals 2.9061 GEL (up from 2.8622 GEL).

The exchange rate in the exchange booths and commercial banks is much higher than the official rate.

Deputy Finance Minister Nikoloz Gagua explains that Georgia has a floating exchange rate which means the developments in the neighboring states directly affect the country.

“It should be noted that this dynamic cannot affect the price stability in the country, since the National Bank has all the necessary leverage to maintain it,” he said.

Gagua noted that Georgia has seen a positive trend of economy development since the beginning of the year, adding it is expected that the growth of the economy will be further maintained.

Photo source: jnews.ge

Ekaterine Mikabadze, Georgia’s Deputy Economy Minister, believes the exchange rate will stabilize soon.

“The Turkish Lira depreciation can have only a short-term impact on the GEL… Based on fundamental macroeconomics, we can say that a number of factors contribute to the stability of the national currency,” she stated.

Opposition believes the government is not doing its best to prevent the devaluation of the national currency.

Zurab Chiaberashvili, from the parliamentary minority European Georgia, says the only way to improve the situation is to lower the taxes.

“The government has a very good instrument for this: reduce taxes, especially the excise on fuel, in order not to increase the price after every such currency fluctuation, which then leads to

higher prices on other products,” Chiaberashvili said.

Ruling Georgian Dream (GD) member Gia Volsky expects the Lari to gain value again. He says the recent developments were a result of external factors only.

“I think the GEL will definitely stabilize. Because the export volume has significantly increased, the tendency will be maintained, which means the inflow of foreign currency will be much more stable," Volsky said.

Economic expert, Founder of Development and Democracy Center (CDD), Bekar Oikashvili also expects the Lari to stabilize soon.

As he noted, in the first six months of 2018, Georgia's economic growth was 5.7%, and export increased by 30%.

“Despite the positive dynamics, the national currency has temporarily declined over the last few days due to external factors, including the Turkish Lira devaluation and increased prices on Georgian imported products. Taking into account the positive trends, I think the Lari will be stabilized in the near future,” the expert stated.

Executive Director of the Association of Banks Gogita Tsutskiridze excludes fundamental economic factors regarding the currency fluctuation.

He believes the recent economic developments are of a temporary character and will not cause major negative effects in the future.

“Currency fluctuations and temporary changes in the currency market are natural. No need to panic about this,” he added.

New Research Links Vocational Education to SME Competitiveness BUSINESS PAGE 5

French Development Agency: Newcomer Among International Aid Agencies in Georgia BUSINESS PAGE 8

HRW: "Harsh Punishment: The Human Toll of Georgia's Abusive Drug Laws" SOCIETY PAGE 11 Prepared for Georgia Today Business by

Markets As of 03ͲAugͲ2018

Price

w/w

m/m

BONDS

Price

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 17.55

Ͳ3,3%

Ͳ6,1%

GEOROG 04/21

102.26 (YTM 5.84%)

+0,5%

+1,1%

Georgia Capital (CGEO LN)

STOCKS

GBP 9.95

Ͳ0,5%

Ͳ3,0%

GEORG 04/21

106.60 (YTM 4.24%)

Ͳ0,4%

Ͳ0,0%

GBP 2.66

+2,9%

+2,3%

GRAIL 07/22

106.58 (YTM 5.85%)

+0,1%

+1,0%

GBP 17.46

+2,7%

Ͳ0,1%

GEBGG 07/23

100.09 (YTM 5.98%)

+0,0%

+0,3%

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

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

Price

w/w

m/m

CURRENCIES

Price

w/w

m/m

73,21

Ͳ1,5%

Ͳ5,9%

GEL / USD

2,4488

+0,0%

+0,1%

1 214,90

Ͳ0,8%

Ͳ3,0%

GEL / EUR

2,8283

Ͳ0,7%

Ͳ0,8%

GEL / GBP

3,1845

Ͳ0,7%

Ͳ1,3%

INDICES

Price

w/w

m/m

GEL / CHF

2,4625

+0,3%

Ͳ0,1%

FTSE 100

7 659,10

Ͳ0,5%

+0,9%

GEL / RUB

0,0383

Ͳ1,8%

Ͳ1,3%

Ͳ1,1%

Ͳ0,1%

GEL / TRY

0,4819

Ͳ4,6%

Ͳ7,9%

DAX

12 615,76

Ͳ1,9%

+2,2%

GEL / AZN

1,4400

Ͳ

+0,2%

DOW JONES

25 462,58

+0,0%

+5,3%

GEL / AMD

0,0051

Ͳ

7 812,02

+1,0%

+4,1%

GEL / UAH

0,0905

Ͳ1,5%

Ͳ2,7%

159,87

Ͳ0,1%

+2,3%

EUR / USD

0,8645

+0,8%

+0,8%

0,7692

FTSE 250

NASDAQ MSCI EM EE

20 635,33

Ͳ

1 073,33

Ͳ1,7%

+1,5%

GBP / USD

+0,8%

+1,5%

SP 500

2 840,35

+0,8%

+4,7%

CHF / USD

0,9941

Ͳ0,0%

+0,2%

MSCI FM

2 754,30

+0,3%

+3,7%

RUB / USD

64,3063

+2,5%

+1,9%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

5,0818

+4,7%

+8,8%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,7007

+0,2%

+0,2%

MSCI EM

2

NEWS

GEORGIA TODAY

AUGUST 14 - 16, 2018

Marijuana Legalization Constitutional Court Explains

BY THEA MORRISON

G

eorgia’s Constitutional Court says the recent statements of certain political and religious groups regarding their decision on marijuana consumption aims at discrediting the institution and harms the image of the court.

The Constitutional Court released a statement in response to the politicians, clergymen and organizations that had slammed it for abolishing the administrative punishment for marijuana consumption on July 30.

The statement reads that the court did not legalize marijuana, as reported by various media and religious organizations, but abolished the administrative punishment for its consumption.

It says according to the media reports, the Constitutional Court and its members were subjected to pressure and because of this legalized marijuana. The

court explains that this assessment is far from the content of the court decision and is a misinterpretation.

“As a result of the decision made by the Constitutional Court on July 30, 2018, the administrative responsibility for marijuana use, if it does not create any threat to third parties, was declared unconstitutional. The Constitutional Court also stated in its decision that imposing responsibility for the use of marijuana is in accordance with the Constitution in cases where the particular case of consumption creates threats to third parties,” the statement reads.

The Constitutional Court calls on the public to show more responsibility when evaluating the performance of the court and to criticize it based on factual circumstances.

“The Constitutional Court of Georgia will continue to carry out constitutional control and constant protection of human constitutional rights,” the statement reads, in response to those clerics who demanded the abolition of the court.

Last week, Georgian Catholicos-Patri-

arch Ilia II stated those who pushed for drug legalization exercised hostility towards the nation. He also claimed that the decision was made under political pressure.

“If we allow drugs, we should allow the drug trade and drug production too.

This will lead young people from neighboring countries to come to Georgia, which will turn our country into a drug hub,” he stressed.

The ruling Georgian Dream (GD) decided to work on regulations which will impose certain restrictions on marijuana consumption.

The Prime Minister, Mamuka Bakhtadze, stated fast steps are needed to establish a healthy lifestyle in the country and create new rehabilitation centers for drug-addicts.

Meanwhile, Davit Sergeenko, Minister of IDPs, Labor, Health and Social Affairs of Georgia, noted that the court decision had created a negative reality in the country and the legislative and executive authorities “need to move fast to avoid the negative repercussions of this

Photo source: Medical News Today

decision.”

According to the Chairman of the Education, Science and Culture Committee of Parliament, Mariam Jashi, the Constitutional Court has put society at “high risk.” She says it is necessary to immediately introduce certain regulations.

“We have the reality that today there is absolutely no control over the use of marijuana, including its realization and possibly its production too. Consequently, we should immediately take measures that will bring the current situation into a regulatory framework,” she stated.

The NGOs say regulations are necessary but they should not shadow the court’s decision regarding the abolition of punishment for marijuana consumption.

They say if Parliament adopts the changes, they should refer to the age limit and conditions of consumption and not to the prohibition of its usage.

It is expected that the Interagency Council for Combating Drugs will work on certain regulations and present them to the parliament in September, during the autumn session.

Far-Right Georgian March Holds Rally in Batumi

BY THEA MORRISON

F

Photo source: Batumelebi

ar-right, ultra-nationalist movement Georgian March held a protest rally in Georgia’s Black Sea coastal city of Batumi on August 12, marching in the streets with icons, Orthodox symbols and Georgian flags and voicing the slogans – “Georgia without Turks,” and

“Georgia without Seljuks.”

Before starting the march, the leader of the movement, Sandro Bregadze, addressed his supporters in Rose Square, calling on the government to erect a statue of King David the Builder there, to replace the statues of Memed Abashidze, an eminent leader of the Muslim Georgian community of Adjarians, who was a major proponent of proGeorgian orientation in Adjara, and Selim Khimshiashvili, who was a Muslim Geor-

gian nobleman and derebey of Upper Adjara under the Ottoman suzerainty.

The protesters marched in the streets where Turkish cafes and restaurants are located, shouting xenophobic slogans and calling on the Turks to leave Georgia. The members of the Georgian March are against of Turkish investments in Batumi and say that the new planned mosque should not be built in Adjara.

The group stated it will hold more rallies in the future.

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BUSINESS

GEORGIA TODAY

AUGUST 14 - 16, 2018

JULY: Average Hotel Prices in Georgia & Hotel Price Index

I

n Georgia, the average cost of a room1 in a 3-star hotel was 148 GEL per night in July 2018. The most expensive 3-star hotels in July in Georgia were in SamegreloZemo Svaneti - 180 GEL and Adjara - 156 GEL. In these regions, the average cost of a room in a 3-star hotel reached its highest point in the last ten months (October – July). The cheapest 3-star hotels in July in Georgia were found in Kvemo Kartli- 89 GEL and Imereti – 110 GEL. The average cost of a room in a 4-star hotel in Georgia in July 2018 was 254 GEL per night. The most expensive 4-star hotels for this month were found in Samtskhe-Javakheti – 297 GEL and Kakheti – 289 GEL. In these regions, the average cost of a room in a 4-star hotel reached its highest point in the last ten months (October – July). The cheapest 4-star hotels in July in Georgia were found in Samegrelo-Zemo Svaneti – 155 GEL and Imereti – 219 GEL. The average cost of a room in a 5-star hotel in Georgia in July 2018 was 455 GEL per night. In Tbilisi, the average price was 518 GEL, followed by Samtskhe-Javakheti - 443 GEL, Adjara – 432 GEL and Kakheti - 408 GEL. In July, the average cost of a room in a 5-star hotel

AND RESTAURANTS On Tripadvisor4, when comparing the capital cities of Georgia and the capitals of neighboring countries, the highest number of accommodation units are registered in Moscow – 2843 accommodation units. In Tbilisi, on Tripadvisor 1618 accommodation units are registered, which is the second highest of the five compared cities. The number of accommodation units registered on Tripadvisor in the capitals of Azerbaijan, Armenia and Turkey are as follows:

Baku – 456; Yerevan – 436 and Ankara – 364.

Similar to accommodation units, the highest number of restaurants on Tripadvisor among the capitals of Georgia and its neighboring countries are registered in Moscow – 12469, followed by Ankara – 3330, Tbilisi – 906, Yerevan – 678 and Baku – 669. Among the compared cities, Tbilisi is the only city where the number of accommodation units registered on Tripadvisor exceeds the number of registered restaurants.

the highest average cost of an apartment in July was recorded in Batumi-$50, followed by Tbilisi-$43, Poti-$35, Kutaisi-$30 and Rustavi-$20.

HOTEL PRICE INDEX In July 2018, the hotel price index3 increased by 2.7% compared to June 2018. The daily rates for standard double hotel rooms increased the most in Adjara – 10.1% and Samtskhe-Javakheti – 5.9%. Such price increase in Adjara was largely due to hotel price increases in Kobuleti (13%) and Batumi (10%).

The price increase in Samtskhe-Javakheti basically was mainly attributable to hotel price increases in Borjomi (18.3%).

Meanwhile, in Bakuriani hotel prices

1 The results are based on the surveying of standard double hotel room prices of 3, 4, 5-star hotels and guesthouses in 10 regions of Georgia. Hotels were chosen arbitrarily according to random sampling principle. The study contains 71% (312) of all 3, 4 and 5-star hotels and 25% (456 guesthouses) of all guesthouses registered on www.booking.com The 3, 4 and 5-star hotel price data was collected by contacting hotels individually, while the prices of guesthouses were taken from booking.com. The average prices are arithmetic mean of standard double hotel room prices.

2 Guesthouse: a type of accommodation that is characterized by having a small number of rooms and services are usually offered by the resident family.

3 The calculation of the hotel price index is based on the recommendations given by the International Monetary Fund (IMF). The elementary aggregate price index is calculated by Jevons index (Consumer Price Index Manual-Theory and Practice (2004), Practical Guide to Producing Consumer Price Indices (2009)).

4 https://www.tripadvisor.com/ * Preliminary results

in Adjara and Samtskhe-Javakheti reached its highest point in the last ten months. In Tbilisi, during the last ten months, the highest price of a 5-star hotel room was recorded in October, while in Kakheti this was recorded in June.

In July 2018, the average cost of a room in a guesthouse2 in Georgia was 72 GEL per night. The highest daily rates for guesthouses were found in Kvemo Kartli -148 GEL and Adjara – 92 GEL. During the last ten months, the average cost of a room in a guesthouse in Adjara peaked in July 2018, whereas in Kvemo Kartli the highest price in this period was recorded in November 2017. The cheapest guesthouses in July in Georgia were found in Imereti – 58 GEL and Kakheti – 62 GEL. In terms of apartments, on Airbnb in Georgia the average cost of an apartment in July was $45. On Airbnb in Georgia, among self-governing cities

decreased by 2.5%. In July 2018, among the ten regions of Georgia and Tbilisi, the hotel prices decreased only in Tbilisi, by 1.2%.

The 3-star, 4-star and 5-star hotel price index increased by 2.9% in July 2018 compared to June 2018. In these types of hotels, the highest price increases were recorded in Adjara – 13.8% and Samtskhe-Javakheti -8.9%. The 3-star, 4-star and 5-star hotel price decreased the most in Tbilisi and Kakheti, by 2.1% and 0.6% respectively.

For guesthouses, the price index increased by 3.2% in July 2018 compared to June 2018. In this type of accommodation, the biggest percentage price increases for standard double rooms were recorded in Adjara (4.7%) and Racha (4.6%). In this type of accommodation, the prices decreased only in Guria, by 0.7%.

TRIPADVISOR –HOTELS

10 Galaktion Street

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge

BUSINESS

GEORGIA TODAY AUGUST 14 - 16, 2018

New Research Links Vocational Education to SME Competitiveness

Akaki Tsereteli State University. Source: vet.ge

BY SAMANTHA GUTHRIE

P

MC Research has published a new policy brief titled “Vocational Education in the Context of the DCFTA.” The research analyzes challenges in Georgia’s vocational education system which hamper growth in the competitiveness of SMEs and provides policy recommendations.

The research for the policy brief was conducted for the project “Civil Society Organizations Supporting Free Trade with Europe,” funded by the European Union and implemented by People in Need in partnership with PMC Research, the Rural Communities Development Agency, Atinati, Bridge, and the Georgian Alliance on Agriculture and Rural Development. The policy brief is based on individual interviews with representatives from vocation education and training (VET) institutions and other stakeholders, along with an evaluation of legislative acts, resolutions, and research reports prepared by other organizations.

In 2014, Georgia signed an Association Agreement with the European Union, which included the Deep and Comprehensive Free Trade Area Agreement (DCFTA). The DCFTA encompasses a liberalization of trade in both goods and services.

To take full advantage of the agreement, the PMC recommends intensifying “cooperation between the Government of Georgia and the private sector.”

Georgian producers, particularly small and mediumsized enterprises (SMEs) are now competing against increasing imported products from the EU. Georgian SMEs have struggled, however, to be competitive in the European market. The main challenges are a lack of “comprehensive information on international markets and the standards set by the DCFTA,” particularly for agricultural products, which must “make significant improvements” in terms of production techniques, standards, and equipment, “to meet the necessary food safety requirements,” according to the policy brief.

To increase the competitiveness of Georgian SMEs, researchers turned to VET institutions. By “enhancing the entrepreneurial culture,” the brief argues, SMEs can increase innovation, adaptability, and productivity. The brief says that 94% of all active enterprises in Georgia are SMEs, but the majority are involved in low value-added activities.

Drawing off a single workshop organized by Germany’s Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) within the framework of the EU-funded "SME Development and DCFTA in Georgia " project, researchers maintain that “vocational education plays an important role in growing the competitiveness of the SME sector.”

The brief identifies many problems within the VET sector, including the failure of educational programs and curriculums to align with labor market demands, poor teacher training and the lack of

a professional development system for teachers, low levels of participation of social partners and civil society organizations (CSOs), limited private sector involvement, and, perhaps subsequently, low attractiveness of VET programs to potential students.

Much of the policy brief focuses on the Entrepreneurship Module, introduced in 2015 as a mandatory component of VET education for students in the third, fourth, and fifth ‘stages.’ The Entrepreneurship Module has six components: business planning; business registration; business management; sales of products and services; simplified financial accounting; and HR management. The introduction of the module was well-intended but flawed, particularly as researchers identify inadequate teaching materials, the lack of a clear, comprehensive strategy for private sector cooperation, and continued low awareness among students of the DCFTA and the opportunities the agreement presents.

Researchers developed several recommendations to “increase productivity and motivation regarding entrepreneurship among graduates of VET institutions.” The major recommendations are: integrating information about the DCFTA into the Entrepreneurship Module, integrating collaborations with successful entrepreneurs (in particular exporters) into the Entrepreneurship Module, establishing a DCFTA information week at VET institutions, and developing a standardized communication approach with private companies. The brief recommends that CSOs get more involved by organizing DCFTA information sessions for VET students and seminars on value chain production.

PMC Research is the research arm of Tbilisi-based Policy and Management Consulting Group (PMCG), an international development consulting company focused primarily on transitional and developing countries.

The full policy paper is available here in English: http://research.pmcg-i.com/images/Policy_Papers/ Vocational_Education_in_Context_of_DCFTA. pdf Last month, The Ministry of Education and Science released the results of a survey of 2016 graduates from Georgia’s technical and vocational education and training (TVET) institutes. The survey was commissioned more than a year ago to determine the effectiveness and quality of TVET programs. According to the survey, just 56.2% of 2016 graduates of professional educational programs are now employed. The employment rate is 0.2% higher than the rate reported by 2015 graduates when surveyed last year. The National Statistics Office of Georgia (GeoStat) says unemployment nationwide in 2017 was just 13.9% - making the 2016 TVET graduates less likely to be employed than the average Georgian.

Full survey results (only available in Georgian) can be found here: www.mes.gov.ge/uploads/ files/2016-(Tracer%20Study).pdf

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BUSINESS

GEORGIA TODAY

AUGUST 14 - 16, 2018

On Opening & Owning a Bar in Georgia

INTERVIEW BY SHAWN WAYNE

G

eorgia has an eye being kept on it by many worldwide, be it because of the recent commemoration of the 2008 Russo-Georgian War, the pending membership of NATO, or the massive growth in its economy and tourism potential. A lot of investors are taking this opportunity to pour their money into Georgia in all sorts of ways, from real-estate and tourism to energy and agriculture.

Georgia is well known for its wine growing. It is just as well known for the consumption of that wine, and other alcohol. Georgia consumes 7.7 liters of pure alcohol per year per person on average, going on the statistics of 2017. Anyone with a keen eye for business can see that there is opportunity in Georgia, but even more so when it comes to alcohol, which is practically part of the local culture.

Dive Bar is known in Tbilisi as a bar for Georgians and foreigners alike, where all types of alcohol are served, and is popular with both visitors and longterm residents of the country.

The man behind the idea of Dive, Cory Greenberg, saw the opportunity years back when coming to Georgia with the Peace Corps, and success followed a year after with DiveXFabrika.

Fabrika is a favorite spot in Tbilisi and recommended as a must-visit on most websites. Known as a space for rebellious minds, it was once a soviet sewing factory, now revived as an urban hotspot, offering everything from bars and cafes to shops and educational institutions.

GEORGIA TODAY sat down with Cory in order to find out where his idea for Dive came from, and the potential for such businesses in Georgia.

CORY, INTRODUCE YOURSELF TO OUR READERS I came here from New York and I’m the proprietor of Dive bar, DiveXFabrika and soon to be Dive Art.

DIVE AND DIVEXFABRIKA WE KNOW, BUT WHAT IS DIVE ART? Dive Art is new: I just started working on it last week. It’ll be right above Dive bar, sort of a poster shop/gallery which will sell reproductions of soviet era tourism posters of Georgia and the region, including prints from local contemporary artists.

I’m hoping to officially open it on August 20.

HOW DID DIVE COME TO BE AND DID YOU HAVE ANY PREVIOUS EXPERIENCE IN THE FIELD? I didn’t really have any experience on the bar scene until I opened Dive bar- before that I’d worked in restaurants, but that was way back in high school.

The idea for Dive came to me and some friends based on the type of place we wanted to visit ourselves, which in reality isn’t that special, but which did not exist in Georgia at the time. This was in terms of service and just the general interaction between staff and clients.

WHEN DID YOU FIRST COME TO GEORGIA? I came to Georgia in 2011 and worked with the Peace Corps until 2013. When I finished that, I stayed and started Dive bar. In 2015, I started Graduate School and recently finished that so now I’m back here full time.

WHY DID YOU DECIDE TO STAY IN GEORGIA AFTER YOUR TIME

WITH THE PEACE CORPS? Well, it’s quite beautiful here and at the time I wasn’t ready to go back to the States, so I used the opportunity as a starting point for doing lots of traveling.

It was convenient due to living costs being cheap and the fact that I had residency. After opening Dive, things were going well business-wise, and it was just generally fun being in Tbilisi. After I left for Graduate School, I started thinking seriously about Georgia and that’s when the DiveXFabrika opportunity presented itself. I decided to finish Graduate School while I was developing it. Now I’m looking for my next thing to commit to and Georgia seems like the logical place to do it again.

OVER THE YEARS OF DOING BUSINESS IN GEORGIA, IS THERE ANYTHING SPECIFIC, POSITIVE OR NEGATIVE, THAT STANDS OUT? Business is business no matter where you go. But my biggest frustration here has mostly been with the suppliers and the distribution of products, though it has gotten better over the years and is still developing. There used to be only a couple of options; it wasn’t a lot of fun dealing with them at that time and product orders would end up wrong due to the fact that it just wasn’t run properly or regulated, but it has definitely gotten better. I remember being shocked at how something as simple as bringing products from point A to point B could be so difficult. Things here happen at a different pace, be it for better or worse, and sometimes you have to deal with people who promise things that they can’t deliver. Comparing Georgia to the US, though, I don’t think I’d like to open a bar State-side at all, it’s much more comprehensive, whereas here it’s much easier.

WHY IS IT EASIER HERE? I believe selling alcohol here is generally quite straightforward, and so I don’t think it surprises anyone that owning a bar in Georgia is a good business to have.

Georgia and alcohol go hand-in-hand and I don’t mean that as a bad thing, it’s just part of the culture here: making friends, socializing and drinking together is part of day-to-day life for most. Essentially, when it comes to selling alcohol in Georgia, it’s more of a “how could one go wrong?” situation.

SEASONALLY SPEAKING, AND WITH THE RISE OF TOURISM IN GEORGIA, DO YOU NOTICE A DIFFERENCE IN BUSINESS? There’s a distinct difference between Dive Bar and DiveXFabrika. The whole of Fabrika as a concept will keep accommodating the in-flow of foreigners, while Georgians will sort of move on to the next new thing. Fabrika is more a seasonal business due to this, whereas Dive bar has more a sense of community, having the occasional tourists and Georgians coming for the “beerpong” but more catering to regulars coming in day-to-day, week in and week out.

AS A CLOSING STATEMENT, DO YOU HAVE ANY ADVICE FOR PEOPLE WANTING TO OPEN A BAR IN GEORGIA? I think the “anything alcohol-based” in Georgia is a great idea. Georgia is a service-based country, with tourists basically being a precious resource.

So, if you can start a business anywhere else catering to those needs, start it here because it will most likely be easier and more profitable. The key, though, is to do it as soon as possible. I remember back then all the options that were available and almost all of them turned out to be a good idea because someone grabbed the chance.

BUSINESS

GEORGIA TODAY AUGUST 14 - 16, 2018

Mangistau Region Becomes a Major Transport & Logistics Center

BY DIMITRI DOLABERIDZE

P

resident of Kazakhstan Nursultan Nazarbayev held a meeting on the socioeconomic development of the Mangistau region. Opening the meeting, the Head of State stressed the important historical, cultural, spiritual, ideological and geopolitical significance of the Caspian region, reports the press service of Akorda.

In the context of the development of the oil and gas industry, the infrastructure and transport and logistics potential of the country, President Nazarbayev noted the special contribution of the Mangistau region to the national economy. The state program "Nurly Zhol" is a continuation of the "development of regions by 2020" program.

"Thanks to the Nurly Zhol program, the region is becoming a major transport and logistics center that unites air, road, rail, ferry and sea transport networks, including the international airport, the railway routes Zhezkazgan – Beyneu and Uzen the State border of Turkmenistan, the highway Atyrau - Aktau, the modern seaport of Aktau, and the ferry complex Kuryk. These projects will have a big impact on the economy of the region,” the President of Kazakhstan said.

He also spoke ahead of the Fifth Caspian Summit.

"Tomorrow, the heads of five Caspian states will gather here and sign a historical document - the Convention on the Legal Status of the Caspian Sea, which we have been working towards for 20 years," Nazarbayev emphasized.

Eraly Tugzhanov, Govenor of Mangistau region,

Image source: stantford

pointed out that 42 projects have been introduced in the region since the implementation of the Industrialization Map. Presently in the process of implementation are 89 projects with an investment volume of 418 billion Tenge ($1,163,126,800.00).

"It is necessary to achieve stable economic growth,” Nazarbayev said. “To do this, we must diversify the economy and ensure the development of the service and manufacturing sectors. For example, on an area of 2,000 hectares here, the special economic zone Aktau Sea Port operates. The State allocated funds for the development of its infrastructure. Now, we need to intensify its activities and create alternative jobs.”

The investment projects of the Mangistau region were presented. Among them, a factory for the production of yarn and fabrics, a gas turbine power station in the city of Zhanaozen, a desalination plant in the village of Kuryk, a steam-gas installation at the site of Maek Kazatomprom LLP, a wind power plant in the Tupkaragan region, and the Aktau eco-city.

Presidents of 5 Countries Sign Aktau Convention

BY DIMITRI DOLABERIDZE

T

he summit of the Caspian states was held in Aktau this weekend, seeing the heads of the "Caspian Five" sign a convention on the legal status of the Caspian Sea. The ministers of defense and national security signed an agreement on combating terrorism in the Caspian Sea, as well as a protocol on combating organized crime in the Caspian region.

The ministers of economy signed an agreement between the governments of the states on trade and economic cooperation.

The ministers of transport signed an agreement between the governments on cooperation in the field of transport.

Overall, during the Fifth Caspian Summit, the following documents were signed: 1. Convention on the Legal Status of the Caspian Sea. 2. Protocol on cooperation in the field of combating terrorism in the Caspian Sea.

3. Protocol on cooperation in the field of combating organized crime in the Caspian Sea. 4. Agreement between the governments of the Caspian states on trade and economic cooperation.

5. Agreement between the governments of the Caspian states on cooperation in the field of transport.

6. Agreement on the prevention of incidents in the Caspian Sea. 7. Protocol on cooperation and interaction of border agencies.

The meeting coincided with the International Day of the Caspian Sea. “This is a day of important historical decisions,” said Nursultan Nazarbayev, President of Kazakhstan. “Today we consider three main topics: the legal status of the Caspian Sea. Under this item, we will sum up the results of the multi-year process; resources of the Caspian Sea; and regional international themes. The adoption of the convention is evidence of friendly relations between the Caspian states. Kazakhstan is ready to further promote friendly relations based on trust,” he stated in his opening speech.

The Economic Logic of Nord Stream-2

BY DIMITRI DOLABERIDZE

T

he protection of the Nord Stream-2 project, though often a real headache for German Chancellor Angela Merkel, from the point of view of economic logic is hugely beneficial for Germany, claims British media.

The construction of the gas pipeline, which must pass through the Baltic Sea, is seen by those European countries opposing the project as a direct threat to their economic well-being, unsurprising as they will stop receiving money for transporting Russian gas. They voice their protests with political slogans mentioning the "energy security of Europe," which allegedly will suffer greatly if the project is implemented.

British media has analyzing the situation, coming to the conclusion that the economic logic of the

project is "ruthless", since Berlin has well calculated the benefits it will receive if the Nord Stream-2 gas pipeline is built. Germany plans to completely abandon coal generation, for which purpose it will need even more gas, another factor pushing Berlin into the “embrace” of Moscow.

US President Donald Trump attacked the Nord Stream-2 with sharp criticism. He believes the consequences of the construction of the pipeline for Europe will be "terrible," forcing Europeans into the "energy trap" exhibited by Russia. According to Trump's logic, to prevent this from happening, Europe should buy the more expensive American LNG (LNG).

Berlin and Brussels again find themselves acting as intermediaries between Moscow and Kyiv on the extension of the transit gas contract, which will expire in 2019. The volume of this transit is a matter of great bargaining, and even if some Russian gas continues to pass through Ukraine, European consumers will likely have to pay out of their own pockets to keep Ukraine afloat.

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BUSINESS

GEORGIA TODAY

AUGUST 14 - 16, 2018

French Development Agency: Newcomer Among Int'l Aid Agencies in Georgia working in the region. The French government gave us the mandate to collaborate with South Caucasus countries (Armenia, Azerbaijan, Georgia) in 2012, then, in 2016, we opened an office here in Tbilisi, hiring three people. Georgia was, for us, the most neutral country to set up a permanent office in. Indeed, communication from Armenia to Azerbaijan and vice versa can be really complicated due to their dispute. Financial support today amounts to around €440 million for the South Caucasus, including €90mln for Georgia. The portfolio is diversified, as I said: we can support projects through sovereign and nonsovereign loans, and through grants, including those delegated from the European Union. Grants provided so far to Georgia amount to €5.5mln, focusing mainly on technical assistance and capacity building.

EXCLUSIVE INTERVIEW BY ANTOINE DEWAEST

F

or a decade, Georgia has been a fast-developing country.

Accessing water and electricity and boosting growth are just some examples of the Georgian achievements. Such successes are usually supported by international aid agencies, starting with the World and European Investment banks. GEORGIA TODAY met with one of the latest agencies to set up in the region, the French Development Agency (AFD). Gaelle Assayag, head of office for South Caucasus, agreed to answer our questions.

Assayag first worked in the French Embassy to Kazakhstan, then focused on Central Asia and South Caucasus for the Ministry of Economy. In 2016, she opened the South Caucasus representative office of the Agency in Tbilisi.

WHAT’S IN STORE IN TERMS OF FUTURE PROJECTS? Gaelle Assayag, AFD head of office for South Caucasus

COULD YOU DEFINE THE AFD IN A FEW WORDS? The French Development Agency is the French Development Bank operating under the authority of the French Ministry of Foreign Affairs, and the Ministry of Economy. We rely on 85 field offices working with more than 100 countries. The AFD

is aimed at giving financial support, i.e. loans and grants, in order to enhance green, inclusive and sustainable growth. We support, around the world, projects bearing on education, health, governance, rural and urban development and energy. In 2017, the AFD committed to 10.5 billion

Euros worth of new development projects.

TELL US ABOUT THE AFD IN THE SOUTH CAUCASUS Even being among the oldest development agencies, we are a newcomer among the several international aid agencies

One of the projects consists of modernizing the water network and sanitation system in Khashuri. Additionally, the French Development Agency will support the reform pension implementation.

We will encourage a three-year program promoting social welfare which will deal with improvement of the healthcare system, disability management, and street

children. Also, we and our German counterpart KFW will help Georgia to apply European regulations regarding energy efficiency and the energy market. For the future, we are looking at supporting agriculture, irrigation and regional development.

We support projects throughout Georgia except in the breakaway regions. In Armenia, we focus on agriculture, energy efficiency and strengthening the tax administration, and we’re helping Azerbaijan to implement a better and complete railway network.

WHO IS YOUR MAIN INTERLOCUTOR? The Georgian government. Georgia is centralized; municipalities are not allowed to take directly loans from us, so we negotiate with the Ministry of Finance, relevant line ministries, public agencies and state companies. The collaboration is excellent, and we feel that they are reform oriented, want to make the country better, and want to work with us. So that is perfect!

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BUSINESS

GEORGIA TODAY

AUGUST 14 - 16, 2018

Mid-Range Hotels on the Rise in Georgia

Best Western Hotels and Resorts

BY SAMANTHA GUTHRIE

O Georgian fusion restaurant "Meama" with an authentic taste tradition!

Adress: 8 Dzmebi Zdanevichebi str. Tbilisi Mob: 558 31 11 33

ptions for mid-range hotels are expanding in Georgia. The independent hotel market opened, after the collapse of the Soviet Union in 1991, with a proliferation of family guesthouses. A guesthouse generally entails a family house or apartment with rooms for rent, similar to a bed and breakfast. They typically offer breakfast and, especially in rural areas, dinners can often be included as well. Guesthouses are usually on the low end of the price spectrum. While quality varies, visitors can usually expect simple, no-frills service from non-professionals in the hospitality industry and basic accommodation. On the other end of the spectrum were high end international chains – Sheraton Metechi Palace, Tbilisi Marriot – and later Holiday Inn, Radisson Blu, and others.

Backpackers praise Georgia as a budget destination, in part due to guesthouses and hostels where a bed can cost as little at 5-10 GEL ($2-4) a night.

More well-heeled travelers can stay in a variety of four- and five-star hotels, including internationally recognized brands and local upscale boutiques, gaining in popularity since Rooms Hotel broke onto the scene in 2012. The mid-range market, however, has grown much more slowly and there are significant gaps in the market, particularly outside of Tbilisi and Batumi, according to the Georgian National Tourism Administration (GNTA).

So far this year, a total of 18 new hotels have opened in the country. GNTA reports that this number adds 1,624 beds and 812 suites to Georgia’s tourism sector. Seven of the new hotels are international brands.

The majority of growth was in Tbilisi where 505 of the new rooms are located; 155 new rooms are in the eastern Kakheti region and 54 in the southern Samtskhe-Javakheti region.

52 new hotels are currently under construction in the capital, and in the Black Sea coast regions of Adjara and Guria, there are 40 and 29 hotels under construction, respectively.

One of the most notable new mid-range options is The Best Western Tbilisi, now open in the trendy upper-class neighborhood of Vake, near Round Garden. Prices range from $80 – 150 based on season and demand. It is the sixth Best Western in Georgia, and the second in Tbilisi – the first being the Best Western Tbilisi Art Hotel located in the Saburtalo neighborhood.

Best Western Hotels & Resorts plans to open two new hotels in Georgia by the end of the year, bringing their total to eight, with locations in Tbilisi, Batumi, Sairme, Bakuriani and Gudauri.

New hotels are also planned for Kutaisi, Martvili, Mestia, Anaklia, Poti, Tskaltubo, Stepantsminda and Telavi according to the GNTA. In late 2016, ISET Policy Institute at Tbilisi State University warned that Georgia may be headed towards an oversupply of hotels. The “surge in the number of hotels and hotel rooms is a very good indicator of economic progress and the confidence of international and domestic investors in the future of the country,” reported Olga Azhgibetseva of ISET, however, “an excessive supply of hotel accommodation can have a significant negative effect on hoteliers if internal and external economic conditions turn out to lag behind expectations,” Azhgibetseva cautioned, “balancing between demand and supply in an environment with uncertain prices is therefore an important challenge faced by investors and policy makers.”

The 2018 World Digital Mining Summit

BY SHAWN WAYNE

C

ryptocurrency is in a constant state of flux, and a cryptocurrency mining summit will be taking place in Tbilisi in September in order to tackle these issues. If you're a crypto miner, then you cannot miss the event.

Miners have been awaiting the cryptocurrency mining summit, which will take place from the 21 - 23 September.

This cryptocurrency mining summit seeks to attract miners from all over the globe, uniting nations such as Vietnam, Japan, Russia, United States, United Kingdom, China and many more.

China’s bitcoin miners have taken a massive lead in the mining industry within the past years; however, it is facing competition from many other parts of the world. As the competition for market share of crypto mining is growing. The organizers say that"joining the summit is top priority for anyone who’s looking to stay ahead in the constantly changing crypto industry."

The 2018 World Digital Mining Summit will be a jointly hosted in Tbilisi by Bitkan and Bitmain, and will showcase talks from numerous top crypto

experts. The event is expected to attract up to 100 experts from the crypto mining industry, more than 30 nations, and it is expected that more than 1000 people will visit the event. The summit will include senior crypto miners, hardware manufacturers, hashpower owners and even mining pools.

The list of handpicked speakers set to appear at the summit is as follows: • Jihan Wu, BITMAIN CEO • Roger Ver, Bitcoin.com CEO • Yu Fang, BITKAN CEO • Jason Zhuang, Head of BTC.com • Lingchao Xu, Head of AntPool • Yuan Zhang, DEx.top co-founder • Olsen Su, Vice President of Bitmain & Head of Global Mining Farm, Bitmain • Marco Streng, Genesis Mining CEO and co-founder • Sean Walsh, HyperBlock CEO • Batyr Hydyrov, Uminers CEO and Founder • Dmitry Ozersky, Electro.Farm Managing Partner As the face of crypto mining is constantly evolving, if you are an industry insider, visiting this cryptocurrency mining summit in Georgia could well help you to tackle the on-going issues of the industry and to keep one step ahead of the game, or if you are interested in starting, this will be the best opportunity to learn everything you can about the world of cryptocurrency mining.

SOCIETY

GEORGIA TODAY AUGUST 14 - 16, 2018

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10 Amazing Health Benefits of Beer play a major role in the chemoprevention of cancer, including prostate cancer. Beer is also a good source of polyphenols that have been proven to be effective in fighting cancer.

ADVERTORIAL

T

he summer season has already set in and many are chilling with a bottle of beer. Beer is the ultimate rescuer, as it helps to cool down the body during the summer time. Beer is the most popularly consumed alcoholic beverages among youth and the third most popular drink, preceded by tea and water.

Beer is brewed from cereal grains which are responsible for its nutritional value. People usually drink beer while munching on snacks. Beer has higher amounts of protein and vitamin B content than wine and the antioxidant content is equal to wine. Beer is also rich in minerals which contain significant amounts of magnesium, selenium, potassium, phosphorous, and biotin. This plays a role in various metabolic processes and boosts your health in a number of ways.

NOTE: Drinking beer in moderate quantities will definitely boost your health. So, read on to learn more about the health benefits of beer.

PREVENTS ANAEMIA Beer is an excellent source of vitamin B12 and folic acid. A deficiency of these vitamins causes anaemia. The presence of vitamin B12 can ward away other diseases and is essential for maintaining normal growth, concentration and a good memory.

PREVENTS AGEING Did you know that beer can delay ageing? Beer increases the potency and impact of vitamin E, which acts as an antioxidant in the body. Vitamin E is required for the maintenance of healthy skin and slows down the ageing process.

PROMOTES KIDNEY HEALTH Sometimes, gallstones or kidney stones form in the kidneys, which are often due to dehydration. So, consuming beer can reduce the risk of kidney problems. But ensure that you drink beer in limited quantities.

PREVENTS CANCER

BOOSTS BRAIN HEALTH

Brewing beer contains flavonoid compounds that

As people age, brain functioning starts to diminish.

The brain is an important organ which controls memory, concentration and other functions. Consumption of beer reduces the risk of cognitive decline and Alzheimer's disease.

HEALTHY HEART Drinking beer regularly reduces the risk of heart disease by 30%. Beer also has good anti-clotting effects that help to keep the blood vessels clean. If you drink beer in limited amounts, it may help reduce blood clotting

REDUCES RISK OF DIABETES If you drink beer in limited quantities, the risk lowers of one suffering from diabetes. Studies have shown that moderate beer consumption can prevent Type 2 diabetes, wherein it is known to lower the blood sugar levels.

LOWERS BLOOD PRESSURE Many noted studies have shown that individuals who drank beer had a normal blood pressure value. It means beer prevents high blood pressure. So, if you are suffering from high blood pressure, you can drink 1-2 glasses of beer and know your BP will be unaffected.

PREVENTS STROKE Researchers have found out that a limited quantity of beer helps in preventing blood clots, which are responsible for blocking blood flow to the heart and other organs of the body.

STRONG BONES Beer if drunk in limited amounts may promote good bone health due to its silicon content. Silicon aids in stimulating the bone-building cells and the estrogenic effect of beer helps to maintain healthy bones.

HRW: "Harsh Punishment: The Human Toll of Georgia's Abusive Drug Laws"

BY ANNA ZHVANIA

H

uman Rights Watch, an NGO, published a report named “Harsh Punishment: The Human Toll of Georgia’s Abusive Drug Laws”.

The 67-page report of a study carried out over two years, outlines the impact of “overly punitive” drug laws and practices, forced plea agreements, automatically applied penalties, such as confiscation of driving licences or prohibiting users from working in an array of professions.

Even though Georgia has taken measures towards liberalization in recent years, the Human Rights Watch states that existing legislation is still too harsh.

“Every year, Georgian authorities needlessly detain thousands of people, subject them to forced drug tests and funnel them through the criminal justice system, for nothing more than drug consumption or possession for personal use. Locking people up for no more than using drugs causes tremendous harm and does nothing to help those who need and want treatment,” said Giorgi Gogia, Associate Europe and Central Asia Director at Human Rights Watch, and author of the report.

The report is based on more than 85 in-depth interviews with relevant people who have been prosecuted for drug related crimes, lawyers, family members, social workers, government officials and various advocacy groups and NGOs. Human Rights Watch highlights the events

of 2016 when the police arrested Kote Japaridze, 23, for the possession of the drug MDMA (“ecstasy”) and was given 20 years in prison. After a plea agreement, his sentence was reduced to six years, five of which were suspended. Kote was fined GEL 25,000 (about $9,800), lost his driving license and was banned from working.

The report highlights that Georgian law does not distinguish between small quantities of drugs and larger. Possession of even particles of these substances automatically means a mandatory minimum five-year prison sentence. Holding as small as one gram of drugs is considered as a “large quantity” and can mean life imprisonment.

“The Georgian authorities should decriminalize personal use and possession of drugs. This means removing all criminal sanctions for use and possession of drugs for personal use,” said Human Rights Watch.

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