Issue #998 Business by Georgia Today

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Issue no: 998/104

• NOVEMBER 14 - 16, 2017

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue... Natural Georgian Produce Fair to Go International NEWS PAGE 2

ReforMeter: Tracking Progress, One Reform at a Time ISET PAGE 4

FOCUS ON GOV'T RESHUFFLE Ministries cut, PM welcomes new Finance and Education ministers

PAGE 2&14

PM: Gov’t Supports Entrepreneurship, Business & Innovations

Gov’t to Tighten Construction Regulations BUSINESS PAGE 6

British Trade Envoy to Georgia & Armenia on Georgia's Potential in Britain BUSINESS PAGE 11

BY THEA MORRISON

he Georgian Prime Minister, Giorgi Kvirikashvili has once again stated that the promotion of entrepreneurship, business and innovations is one of the main priorities of the government. Kvirikashvili made the statement on November 12 at Tech Park Tbilisi at the opening ceremony of Global Entrepreneurship Week. The PM thanked the US Embassy and Ambassador Ian Kelly for the initiation and financing of a program of mentorship that connects experienced mentors with young people and business sector representatives for a year with various activities that will provide young people with innovative ideas for their businesses. Continued on page 3

A Momentous Week for the World POLITICS PAGE 15

Girl of Now: Elie Saab’s New Fragrance at Ici Paris Stores SOCIETY PAGE 15 Prepared for Georgia Today Business by

Markets As of 10ͲNovͲ2017

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

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

INDICES

Price

w/w

m/m

Price

w/w

m/m

GBP 35.57

Ͳ0,9%

+8,1%

GEOROG 04/21

107.29 (YTM 4.45%)

+0,1%

+0,9%

GBP 3.37

Ͳ4,0%

+9,5%

GEORG 04/21

BONDS

112.35 (YTM 3.03%)

Ͳ0,3%

Ͳ0,0%

GBP 17.00

Ͳ2,4%

+6,2%

GRAIL 07/22

111.77 (YTM 4.89%)

Ͳ0,1%

+0,2%

BGEOLN 07/23

103.19 (YTM 5.34%)

Ͳ0,0%

+0,1%

Price

w/w

m/m

63,52

+2,3%

+12,2%

1 275,07

+0,4%

Ͳ1,0%

CURRENCIES

Price

w/w

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GEL / USD

2,6506

+1,7%

+7,0%

GEL / EUR

3,0940

+2,3%

+5,7% +6,9%

Price

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GEL / GBP

3,4962

+2,6%

FTSE 100

7 432,99

Ͳ1,7%

Ͳ1,4%

GEL / CHF

2,6663

+2,3%

+4,7%

FTSE 250

20 020,85

Ͳ2,2%

Ͳ0,6%

GEL / RUB

0,0448

+1,6%

+4,9%

DAX

13 127,47

Ͳ2,6%

+1,4%

GEL / TRY

0,6855

+2,3%

+2,7%

DOW JONES

23 422,21

Ͳ0,5%

+2,6%

GEL / AZN

1,5603

+1,7%

+7,0%

6 750,94

Ͳ0,2%

+2,5%

GEL / AMD

0,0054

+3,8%

NASDAQ

162,54

+3,4%

+1,3%

GEL / UAH

0,1000

+3,5%

+7,3%

MSCI EM

1 128,49

+0,2%

+1,4%

EUR / USD

0,8573

Ͳ0,5%

+1,2%

SP 500

MSCI EM EE

2 582,30

Ͳ0,2%

+1,2%

GBP / USD

0,7581

Ͳ0,9%

+0,1% +2,1%

2 169,26

+4,2%

+3,9%

CHF / USD

0,9961

Ͳ0,5%

MSCI FM

2 854,13

Ͳ0,3%

Ͳ0,9%

RUB / USD

59,1593

+0,2%

+2,0%

GT Index (GEL)

1 133,66

TRY / USD

3,8644

Ͳ0,6%

+4,1%

GT Index (USD)

922,38

AZN / USD

1,6985

+0,0%

+0,1%

MICEX

NEWS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

Prime Minister Introduces Changes within Government BY NINO GUGUNISHVILI

he Prime Minister of Georgia, Giorgi Kvirikashvili, has announced structual changes in the Government of Georgia in a briefing on

Monday. According to Prime Minister Kvirikashvili, several Ministries will be merged and new candidates will be appointed to Ministerial posts. Following the information recently announced, the number of the Ministries will be cut from 18 to 14. The State Minister Apparatus for Euro-

pean and Euro-Atlantic Integration will be merged with the Ministry of Foreign Affairs, while the Minister of Foreign Affairs, Mikheil Janelidze, will continue in his current post. The Ministry of Environment and Natural Recourses Protection will now form part of Ministry of Agriculture, while Levan Davitashvili, Minister of Agriculture, is to retain his post. Ministry of Culture and Monuments Protection will merge with sports affairs, Mikheil Giorgadze will continue as Minister of Culture; the youth component from the Ministry of Sports and Youth will move to the Ministry of Education and Science of Georgia. Ministry of Economy and Sustainable Development is to be merged wth the Ministry

of Energy, to be led by Dimitry Kumsishvili, former Minister of Finance of Georgia. Kumsishvili will continue to be the first Vice Premier of the country. Foreign Intelligence Service and the State Security Service are to be combined in one structure. Giorgi Gakharia, Former Minister of Economy and Sustainable Development, will now lead the Ministry of Internal Affairs of Georgia, while Giorgi Mgebrishvili, former Minister of Internal Affairs, will now lead the newly formed Center for Emergency Management. Mamuka Bakhtadze, former General Director of Georgian Railways, is to be appointed to the post of Minister of Finance, while Mikheil Chkhenkeli, for-

mer Deputy Rector of Tbilisi Ivane Javakhishvili State University, will replace Aleksandre Jejelava in the Minister of Education and Science post.

The recent changes are planned to be implemented during the upcoming government meeting, and consequently presented to Parliament to approval.

Tbilisi City Hall to Start Legal Dispute against C.T. Park BY THEA MORRISON

ayor-Elect of Tbilisi, Kakha Kaladze says that City Hall is going to start a legal dispute against the parking regulatory company C.T. Park, which has the exclusive right to manage parking in the capital. Many Tbilisi residents say they are unhappy with their services of the company, accusing it of acting illegally while

imposing high fines on them. Kaladze says that he is considering applying to the court to find out if the company is acting within the law. “Lawyers will be involved in the process of verifying the legality of C.T. Park activities. Our approach will be legal,” Kaladze told Imedi TV. He added that 99% of court disputes over fines imposed by this company were ruled in favor of Tbilisi citizens, which raises questions about the company actions being legal. The contract between the C.T. Park

Company and the Mayor’s Office was signed under the previous government in 2007, and the company received exclusive rights to manage parking services in Tbilisi until 2022. The previous Mayor, Davit Narmania, also stressed on numerous occasions that he was unsatisfied with C.T. Park, and explained that the agreement cannot be cancelled as, according to the international auditing company Ernst & Young, the annulment of the agreement will cost the Mayor’s Office 25 million GEL in expenses, a “huge sum for Tbilisi's budget”.

NEWS

GEORGIA TODAY NOVEMBER 14 - 16, 2017

Natural Georgian Produce Fair to be Held Internationally BY NINO GUGUNISHVILI

atural Georgian products, united under one brand, are preparing to enter the global market. Irakli Chavleishvili, Head of the Project, plans to organize an exhibition and fair of natural Georgian produce at the Event Hall in Tbilisi from 10:00 to 18:00 on November 18. The event will introduce the Gemovani brand to customers, with around fifty Georgian producers participating in the exhibition, coming from across Georgia and bringing their natural products: bread, milk, meat, fruits and vegetables, grains, and more. “From 2018, weekly fairs will be held, bringing together the produce under the Gemovani brand,” Chavleishvili says. “We want to use the local market as much as possible, and most importantly help to restore traditional Georgian production methods and promote natural Georgian produce. The products united under the Gemovani brand are unique, and the outside world should come to know them too; so, after set-

tling into the local, Georgian market, the first thing planned is to enter the international one,” Chavleishvili notes. According to him, any farmer with Georgian produce is free to participate in the project.

The General Sponsor of the Gemovani exhibition and fair is the Georgian bread brand Mzetamze, while Whizzard Events, Kar.ge and Georgian Wheat Producers Union are the event supporters.

PM: Gov’t Supports Entrepreneurship, Business & Innovations Continued from page 1 “We aim at creating economic development and a knowledge-based economy,” he said, highlighting as an example the Georgian Innovations and Technologies Agency, and projects Produce in Georgia and Startup Georgia, that promote innovations and entrepreneurship in the country. “Through various educational and financing programs and schemes, these projects are actively involved in small and medium businesses and startup supportive programs,” Kvirikashvili said. The Prime Minister also talked about the reform of the education system within which special emphasis is placed on the STEM fields: Science, Technology, Engineering, Mathematics and also information technology. He explained that undergraduate and graduate programs in collaboration with the University of San Diego enable Georgian students to obtain higher education and American academic degrees in these fields. The PM thanked the Millennium Challenge Corporation and San Diego University for their contribution to the project. Kvirikashvili also spoke about the topic of Global Entrepreneurship Week, noting that promoting women's education in the STEM spheres and digital economy is vital for the development of any state. “I want to encourage female students and future entrepreneurs who are in this room today to maintain their faith and keep their ambitions. I am glad that this Mentor Program focuses mainly on future

women entrepreneurs,” he said. At the event, US Ambassador Kelly handed Kvirikashvili a replica of the Voyager Golden Record that contains 116 images, a calibration image and a variety of natural and other sounds, among them Georgian folk song Chakrulo. The items were selected for NASA by a committee chaired by Carl Sagan, after which one of the rooms at Tech Park has been named. The Voyager Golden Record replica will be exhibited in Tech Park. “I would like to thank the US embassy and NASA for such an amazing gift,” the PM stated. The US Embassy and partner organizations are promoting innovation and entrepreneurship from November 12-18 within the framework of Global Entrepreneurship Week 2017. This year’s theme, ‘Women First, Prosperity for All,’ highlights the importance of women-led businesses and femalefriendly working environments. The US Embassy will also launch a year-long business mentorship program for women and men from all regions of Georgia to develop business skills. American entrepreneur Betsy Fore, known for her work with Hasbro and Mattel, will also run a series of workshops and lectures in Tbilisi, Batumi, Khashuri, Marneuli and Akhmeta, focusing on product development, marketing, branding, and intellectual property. The event brings together more than 10 million participants from all over the world: entrepreneurs, investors, politicians, researchers and educators specializing in entrepreneurship and innovation.

BUSINESS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

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

ReforMeter: Tracking Progress, One Reform at a Time

eforMeter is implemented by the ISET Policy Institute and supported by USAID G4G. Our goal is to generate reform progress analysis for policy making and public dialogue, and thereby promote informed debate about reform priorities and policy decisions, improve accountability and help build trust between the government, the private sector and the general public. Five reforms are currently being evaluated by the ReforMeter: Agricultural Development, SME and Innovation Development, Capital Market Development, Pension Reform, and Vocational Education and Training Reform. Each reform is evaluated, twice per year, by a group of stakeholders made up of 15 individuals not affiliated with the Government of Georgia, but directly affected by the reform in question. The entire group of stakeholders convene at ISET to review the results of the Government Survey and objective outcome indicators that have been collected and analyzed by the Project Team. The Government Survey measures progress made on the implementation of selected reforms, based on the indicators and timetables agreed upon with the implementing agencies. The objective outcome indicators collected and analyzed by the Project Team measure the outcomes and impact of each reform. Each member of the group provides an anonymous quantitative assessment of the reform in question. The stakeholders answer three questions (each scored on a 0-10 scale): 1. What is your assessment of Georgia’s current performance in the area of [reform name]? 2. Is the economic reform agenda in the area of [reform] progressing as expected? 3. Is the economic reform likely to deliver adequate results? The total score for each reform is calculated as a simple average of individual assessments. The overall assessment of the reform process is automatically

PENSION REFORM – PHASE 1

to introduce mechanisms of social pension indexation, and state that it should be linked not only to inflation, but also to other parameters. Otherwise, the pension replacement rate (currently at 18%) will decrease in the future and main goal of poverty reduction will not be achieved. It was also mentioned that social pensions are linked to the subsistence minimum, but that the methodology for the calculation of this is outdated. It is necessary

The first reform assessment was conducted on 27 September 2017. Based on the Government Survey, 38.8% of the reform has already been implemented. At this stage, the reform concept has been elaborated and approved by the government. The functions and obligations of the pension fund have been formulated, the regulatory body defined, and operating rules of the pension system designed. It is important to highlight the most important issues mentioned by the stakeholders: The trade union representative underscored the importance of social pensions as a tool for poverty reduction, since access to the saving scheme will not be provided to a large portion of the population due to the high level of informal employment in the country. They welcome the plan

to review the methodology and to calculate inflation separately for retired people. The postponement of the implementation of the reform and the many changes in the reform concept, are other causes for concern. It is necessary to accelerate the reform process. The level of communication between the government and stakeholders is not at the desired level, according to asset management companies. They expect adequate and timely information on all changes from the reform implementation body. If the time given to prepare for the tender is not sufficient, they are afraid they will miss the opportunity to participate. It was also underlined that the existing law and the presented reform concept restrict investment of pension assets in securi-

provided through the ReformVerdict – a summary score, derived as an average of scores assigned to each reform. The score is adjusted on a monthly basis, following the monthly stakeholder meetings. Below we present the results of the most recent assessments of Pension Reform and Vocational Education and Training Reform.

ties issued by an affiliated entity. Such restrictions in underdeveloped and small capital market are problem for asset management companies. Instead of prohibiting investment, they propose regulating such investments by setting thresholds and high standards of transparency.

VOCATIONAL EDUCATION AND TRAINING REFORM - PHASE 1

The reform assessment was conducted on 4 October 2017. According to the Government survey, 80% of the 2013-2017 Action Plan, and 50% of the entire reform (which is scheduled to last until 2020) has been implemented. The survey showed how the reform, including the launch of a dual education system in 2013, has revamped the whole structure of the vocational education system. However, it will be difficult to achieve the desired results without the active involvement of the private sector. At the stakeholders’ meeting, representatives of the Ministry of Education and Science stated that before 2013 the duration of VET programs were too short. As a result, 16-year-olds were already entering the labor market with incomplete education and qualifications. The duration of the programs increased after 2013, which caused a decrease in the number of students in the VET system. Employment among VET graduates is gradually increasing from year to year, but it is worth mentioning that the ministry only has data for public colleges and programs. Based on Georgia's new regulations, private colleges and programs will also be obliged

10 Galaktion Street

to integrate all their data into an electronic system. Geographical access to vocational education has improved during the last four years. Colleges are present in all regions of Georgia, and three new institutions will be added this year. The ministry also mentioned that the government is in the process of forming a Private Public Partnership framework. Dual

to a “performance-based” financing system, where private and public institutions are treated equally; however, the programs will be filtered by priority professions. Based on new quality control regulations, employers will be engaged as external evaluators in the programs, and will evaluate the level of preparation of the students. According to international organizations, involvement of the private sector in the informal education sector is a challenge throughout the world. The private sector often believes that education, including vocational education, is the sole prerogative of the government. Therefore, the awareness of the private sector should be raised in this regard. Representatives of public colleges mentioned that there are successful examples of business involvement in Georgia. However,

programs in agricultural education already exist, and three new dual programs in tourism education are planned for the near future. It was noted that the voucher financing system creates a situation where private colleges are in uneven competition with public colleges. The ministry is currently considering switching

to increase their motivation, a more flexible tax legislation is required. It is also necessary for employers to evaluate the students in the colleges. This will help businesses to become more informed about the programs, so that they will not spend additional resources on the same kind of training.

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

BUSINESS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

Natakhtari Fund Launches 6th Fundraising Wave BY NINO GUGUNISHVILI

atakhtari Fund announced the start of its 6th fundrasing wave at a press conference held at Radisson Blu Iveria Hotel Tbilisi, last week. The results of the six-year work of the foundation were also presented to the public. The event was attended by the Natakhtari Fund management representatives and NGOs involved within the Natakhtari Fund activities, encompassing the assistance of youth outside the childcare system. Cuneyt Arat, General Director of the Nataktari Company; Nikoloz Khundzakishvili, Corporate Affairs Director at Natakhtari; and Manana Omarashvili, Head of Psychological Service of the Association ‘Our House-Georgia,’ talked about the advocacy campaign initiated by Natakhtari Fund which supports the socially deprived and vulnerable youth groups within the Fund’s ‘Take Care of the Future’ project, aiming to assist socially deprived youngsters in pursuing an education and finding employment opportunities. Natakhtari Company established the Natakhtari Fund in 2011 with the launch of the charity ‘Take Care of Youth’. Every year, from each bottle of Natakhtari Lemonade sold, one to five Tetri go to the Fund.

In the six years since establishment, GEL 757, 864 was raised and 307 young people were provided education and employment assistance. The project is run together with the Our House-Georgia Association and supported by Ilia II, Patriarch of Georgia. “Natakhtari Company will continue to finance this project as long as such support is needed,” Khundzakishvili, said at the event. “We’re helping young children and youth according to their needs, be it providing a shelter or financing their

education and various courses, or covering their transportation costs,” said Omarashvili of Our House-Georgia. “The major advantage of the Natakhtari Fund is that each and every young person we’re helping is a separate case and our approach to each is individual. In our realm, it’s the only project which does not stop its service or assistance when young people reach 18 years of age: the project follows them to the point untill they are ready to live independently”. Alongside the fundraising activities for

the Natakhtari Fund, the program for the support of children and youth outside the childcare system, initiated by the Coalition for Children and Youth, written for the local self-government institutions in Georgia, was also discussed during the press-conference. As Natakhtari Fund is working with socially deprived young children from family type shelters, the Fund offers cooperation possibilities to the local self-governance authorities in this direction. Within the expected cooperation, the Fund is able to assess the needs of

the youngsters, plan interventions and conduct monitoring, while local authorities can be involved through renting housing for them, paying communal fees or covering transportation costs. Nino Kviria, Head of the Healthcare and Social Services Department at Rustavi Municipality, attended the press confrerence and expressed great interest in cooperation. A meeting with the Rustavi Mayor is planned for November 15 to discuss the issues related to the assistance of the children and youth outside the childcare system.

Gov’t to Tighten Construction Regulations BY THEA MORRISON

he Government of Georgia is to make amendments to the 41st Government Resolution of January 28, 2006, on technical regulation and building safety rules, with the aim of tightening regulations in the field to make new buildings and construction works safer and in line with the capital’s architecture. The amendments were prepared by the Ministry of Economy in cooperation with Tbilisi City Hall. The Minister of Economy, Giorgi Gakharia, and newly-elected Tbilisi Mayor, Kakha Kaladze held a meeting with the representatives of various construction and development companies last week in order to share views and agree on the amendments. The Economy Ministry says the amendments cover the design, construction and operation of existing buildings as well as on-going constructions, reconstructions and demolition works. “The goal of the amendments is to ensure standard safety conditions for public health, safety and common welfare, protection of life and property from fire and other threats, as well as safety of firefighters and rescuers during the emergency situations,” the ministry stated.

At the meeting special attention was paid to the development of a regulation plan. According to Minister Giorgi Gakharia, during the elaboration of the amendments, members of the Developers Association and construction specialists offered their opinions. “There are problems and we have worked together to elaborate these amendments. Amendments require the builders and developers to observe and fully follow the safety standards during the construction process,” he stated. The Minister added that the amendments also envisage the creation of a construction policy, which will be a general document and will be followed by all development and construction

We all agree that the capital should not have the visual appearance it has today

companies in the country. “This is principally important because it allows Tbilisi and other municipalities to elaborate and develop the construction policy as well as to implement it. Otherwise, with the existing development regulatory plans, most of the residential building remained behind this policy. This is the main agreement between the Ministry of Economy and Sustainable Development, City Hall and the representatives of the field,” Gahkaria said. The new Tbilisi Mayor, Kakha Kaladze, stated that apart from safety norms,

construction companies should take into account the visual side of the buildings and residential complexes, in order not to distort the architectural look of the capital. “We will work and implement general standards which have to be met by developers during construction,” he added. The representatives of the construction and the development companies assessed the meeting as fruitful and said they support the governmental initiative. “We all agree that the capital should

not have the visual appearance it has today. It is unacceptable to have such unfinished buildings to save on exterior design or facades. We request severe regulations regarding this issue. The government offered this initiative and we completely support it,” Lasha Papashvili, the CEO of Redix Group said. The Economy Ministry says that public discussions were also held during the amendment elaboration process, adding there were trainings for the architects and specialists of the administrative services.

BUSINESS

GEORGIA TODAY NOVEMBER 14 - 16, 2017

NOVEMBER RETAIL FPI | Sweet Peach Preserves for Cold Winter was 44% higher compared to the previous year (23.1 ths tons). Although production figures for 2017 are not yet available, the current year was considered to be quite good in terms of harvest in Kakheti, which might suggest that 2017’s low price is the result of increased supply. In contrast to Kakheti, this year was extremely bad for western Georgia, where the harvest was destroyed by the stink bug invasion. Given that stink bugs like peaches as much as they like hazelnuts, if they continue to invade the country and expand to Kakheti region, which is a major producer of peaches (80% of the peaches produced in Georgia come from that region), this year might be the last year for Georgian consumers to enjoy cheap, sweet peach preserves during the cold winter.

drop was for eggplant (-8%), buckwheat (-8%), and onions (-4.4%).

IN THE SPOTLIGHT: PEACHES

n the first half of November, ISET’s Retail Food Price Index increased by 9.2% y/y (compared to November 2016). On a monthly basis (compared to October 2017), retail food prices slightly increased, by 1.2%. The largest bi-weekly price changes were recorded for fruits and vegetables. The price of peaches (14.8%), cucumbers (11.9), and bananas (9.5%) increased most. The biggest price

Peaches are among the products for which prices increased most in the middle of November: the average price of a peach moved from 2.48 GEL/kg in October to 2.85 GEL/kg in November. This is not surprising, as the prices for most fruits and vegetables tend to increase at this time of year due to seasonal shortages. Over the last three years, peach prices have been exhibiting a downward trend, primarily caused by increased production. In 2016, the production of peaches and nectarines was 33.3 ths tons, which

The Guidebook for Business Associations: Interview with Terrance Barkan CAE BY TOM DAY

errance Barkan is a CAE (Certified Association Executive) who focuses on helping associations build international growth strategies and business plans. For the past 27 years he has worked in over 60 countries spanning over 6 continents, developing his international management career predominantly in the not-for-profit sector. He wrote ‘Global Growth Strategies; the International Association’, used by more associations than any other publication to help shape their international strategies and business plans. He was also selected by the Center for International Private Enterprise (CIPE) to author their guidebook, ‘Business Associations for the 21st Century’. The book is used as a reference guide for CIPE employees that are working in post-conflict countries around the world to establish democratic business associations. Barkan has also been an author of articles, guidelines, original research and white papers on international association growth strategies. He served as the Chair of the International Section Council for the American Society for Association Executives (ASAE), is a former member of the Board of the European Society of Association Executives and has been an adviser to the Chinese Federation of Industrial Economics (CFIC). Barkan was invited in Georgia by the United States Agency for International Development (USAID)- funded project Governing for Growth (G4G) with the support of the Center for International Private Enterprise (CIPE) to evaluate the state of business associations in Georgia and to provide customized guidance on how they can build their capacity and effectiveness. GEORGIA TODAY met with him this weekend to talk to him about his upcoming publication for Georgian Business Associations.

TELL US ABOUT THE G4G PROJECT? G4G is designed to support the Government of Georgia to create a better enabling environment in which legal and regulatory reforms are fairly and transparently conceived, implemented and enforced providing a level playing field for small and medium size enterprise growth. It supports effective formulation of the government policies necessary to drive economic development through the promotion of constructive PublicPrivate Dialogue (PPD) in business-ena-

bling economic reforms, such as tax Policy and Administration; trade facilitation system/transport and logistics; capital markets; pension reform; building codes; state procurements; insolvency reform; innovation and technology; crop insurance; water resource management; electricity trading mechanism; and energy strategy reform. This requires strengthening of the government’s institutional capacity, strengthening the private sector and civil society actors’ capacity to effectively engage with the government, and ensuring a productive PPD process. G4G is strengthening the capacity of both the public and private sectors to effectively co-operate on elaboration of the legislative changes required for the identified reforms through an inclusive consultative process.

WHAT’S YOUR IMPRESSION OF THE GEORGIA BUSINESS SPHERE? What I’ve observed about Georgia is that it is in a really unique position. It’s amazing, for me it’s like where Switzerland was after World War Two. 70 years ago, Switzerland was a poor and mainly rural country. Then they decided to focus on quality, so they looked at the financial sector, sophisticated engineering, tourism. We can all see where Switzerland is today. It has a lot of similarities with Georgia; it’s a small country, mountainous, small population, so for me Georgia could look at Switzerland as a model to build towards. There’s tremendous opportunity, and the access these business associations have to the government today to be able to have a dialogue to make educated, sound policy and legislation is a fantastic opportunity for the private sector and for the government. It’s a great chance for the government to make good policies for the long-term benefit of the country. Its relatively easy to establish a business here, so I think there are some excellent opportunities. The geo-political location of Georgia is an interesting position to be in. The alliance and alignment with the EU and the US are things that must be preserved because, for the long-term, it’s important for access to very large markets. This could be very good if Georgia became more export-orientated, but that then goes back to the quality issue because to compete in these mature markets, you must have quality products and services. It’s a great opportunity, especially for a small-population country: if you look at Denmark, Belgium or Holland, these are all small-population countries and they’re all export-orientated. Switzerland is the same, all of these countries have to be export- and trade-orientated,

otherwise they don’t have a large enough domestic market. To be export-orientated, you have to be competitive. To be competitive today, you have to have quality products and services.

…AND WHAT WOULD HAPPEN IF GEORGIA FAILS IN THIS REGARD? It’s in everyone’s best interest to protect this way of operating; to maintain transparency, the rule of law, fact-based decision-making, democratic processes and engagement with all stake-holders. It is important for the country to keep its progress transparent to keep its World Bank ranking as one of the top country’s for doing business. I think the risk is that policies would get made that are not consensus-based, which means that whoever has the biggest voice can shape it to their benefit. One piece of advice I have for the country and for the government is to have a focus on quality, as I mentioned before. That means professionalism on all levels, it means education, it means doing business in a transparent way and following the law. The Swiss model is based on quality and Georgia has a great opportunity to create that brand for itself, but that means using best practices. What associations are really good at is developing best practices through a peer-review process. This is for every single sector that you can imagine. There is an association everywhere for anything that human beings do; whatever industry it is, they focus on best practices through this peer-review process. I think it’s a tremendous advantage for a society to accelerate development and not have to go through a slow growing process.

TELL US ABOUT YOUR NEW GUIDEBOOK It’s to help Georgian business associations improve their capability to be more effective and successful in what they’re doing. Some of the challenges they face are quite new, many of them are to do with industry sectors that are not yet mature, which is a problem because most associations serve well-established industry sectors. In Georgia, the problem is that some of the business sectors themselves are not yet mature and the associations are also new. So, the guidebook is to help them and to be a catalyst for the learning process; to mature faster than if they tried to learn these things on their own. One of the concepts we’re trying to convey to them is value-based pricing. They need to ask what the value is of what they deliver to the end user. So, if you’re a business association and you have companies that are members, we don’t talk about the

membership fee; it’s irrelevant. What’s important is what the company can do with the information they get and how valuable it is to their business. So, if they’re a 10 million GEL company and they get just a small percentage of improvement because they have better workplace safety, or they have better quality processes, then how valuable is that to the company? That is what they should think about when they think of the membership fee, not saying ‘here’s a membership fee’, when they aren’t sure what they’re getting. Because the whole purpose of these business associations is to help businesses be more effective and profitable. Most people don’t understand how important the not-for-profit business and professional association sector is; for example, food safety standards, car safety standards, come out of industry associations where peer groups work together to establish these standards and then put them forward to government, so that they can make a more informed and intelligent decision on legislation. If associations didn’t play this role, it would be up to individual companies which is not very democratic, or there would be no information and the government would have to do it in an absence of information, which is also not good. So, the average person doesn’t understand or appreciate how important the work is that happens in these associations. And it’s important for government to listen to groups that represent whole industries as opposed to just one or two voices.

YOU’VE WRITTEN TWO OTHER BOOKS BEFORE THIS Well, one book I wrote is specifically for business associations and I wrote it for the Center for International Enterprise. Anybody can request this book for free by download. I’ve also written one called International Strategy for Associations, which I update every year. It’s for anybody interested in just a general understanding of a trade or professional association and the role that it plays in society. I wrote this one because I kept getting the same questions; ‘what’s the difference between an international association and a global one?’ ‘What are the different business models?’ ‘What are some of the govern-

ance issues?’ One thing that is unique about an association is you have a volunteer board of directors, so you have this governance structure that sits on top of the organization that has to run like a business. The other thing people misunderstand is the term ‘not-for-profit’. This doesn’t mean that the association cannot make a profit, it means that it’s not paying income tax. It also means that any surplus that the association makes gets reinvested in services to the members. So, the difference is that no individual person profits from the operations. Associations still have to be sustainable financially, which means they have to make a surplus every year, so they can grow and add services for their members. It’s just like a business, except there are no individual shareholders or profits. What I like about this model is you get businesses coming together who would otherwise be competitors, to work on a common problem.

CAN YOU GIVE US A REALWORLD EXAMPLE OF THIS? One very interesting group we worked with was the International Carwash Association. When I said before that there is an association for everything, I really meant everything! So, the ICA is an association for owners with two or more outlets and this group is primarily in the US. They were looking at global expansion and serving the market. First, they looked to Europe and found, from our market study, that there were more carwashes than in the US. We recommended that they establish a trade show in Amsterdam. For the first show we estimated that they would get a minimum of 1000 people which would at least break-even financially, but they had 2000. Within one month of announcing the next show, they had already sold 60% of the exhibition space. The point here is that they were successful because there was a good market study and real data was used. So, for associations here in Georgia, if they want to address a market, they need to first measure it. They also need to know who their competitors are; not just other similar associations, but pro-profit companies, magazines, and tradeshow organizers that are serving the same market.

BUSINESS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

Ajara Tourism Representatives Attend London Tourism Exhibition

BY TAMZIN WHITEWOOD

he tourist potential of Ajara was presented at WTC London 2017, one of the world's largest tourist exhibitions. The Ajara Tourism Department, along with the National Tourism Administration and tourism companies in the UK, attended the event. More than 5,000 tourism companies and organizations from around the world took part in the London Tourism Exhibition, contributing to establishing business contacts and finding potential partners. Within the scope of the exhibition, representatives from Adjara held meetings with Euronews, BBC, CNN and New York Times, as well as representatives of British tourism, and

advertising companies worldwide. "Tourism is a very lively, fast developing area. Therefore, it is necessary to gain information about the current trends. The London exhibition was attended by 50,000 people. These are the people who have the leading positions in tourism, are looking for new markets, represent new technologies and creating a vision for tourism development issues. At the meeting, they talked about the challenges faced by tourism today. “In 2018, Great Britain is to be an official target destination where we plan to carry out active advertising and marketing campaigns,” said Sulkhan Glonti, Chairman of the Department of Tourism and Resorts of Ajara. “The United Kingdom is very interesting for us both in economic and cultural terms. The London exhibition was a great opportunity to establish the necessary contacts for future cooperation”.

Teaching Kids about Real Jobs BY KATIE RUTH DAVIES

n Monday, the children of the 5-6-yearold group of Tbilisi Kindergarten 162, which is based in Okrokhana village on the outskirts of Tbilisi, took a trip to Carrefour supermarket in Kolmeuneba Square as the exciting conclusion to an in-school project about markets, supermarkets, hypermarkets, produce and jobs. GEORGIA TODAY went along with them and spoke to Kindergarten Director Nino Tsiklauri as two groups of children were led around by entertaining staff members. During the ‘tour’, the children were asked to identify the products, talk about their favorites, and highlight the health benefits of eating certain foods, such as fish and fruit. The children also got to watch tone bread being made and meet the serving staff. “At our kindergarten, we have a system of concluding our projects with an outing related to the theme,” Tsiklauri told us. “When we focused on books, we took a trip to the Sulakauri publishing house; when we talked about technology, we went to meet the AI robot Pepper. We also go to various museums, the Childrens’ Theater to watch specific performances, and to other venues for the children to get some practical experience related to what we’re teaching them in the classroom. In future, I’m planning on taking the children to Pirimdze to

show them the various professions.” Pirimze is a center offering shoe/bag repairs, ateliers, key cutting and other practical jobs that we need in everyday life. “We want to show the children that there is more to the concept of work than ‘an office job’, that there are many other respectable jobs out there,” Nino tells us. On completion of their supermarket tour, the children repaid the kind welcome by holding a 15-minute concert for staff, parents and shoppers, including songs and a small ballet dance. “We were very glad to welcome these children to our store,” Nino Ramishvili, PR Manager, Majid Al Futtaim Hypermarkets Georgia LLC (Carrefour) told GEORGIA TODAY. “It’s a great initiative for children to be given the chance to see different professions in action, people actually working in different fields. Letting children see such things from an early age is important. We welcome such initiatives. In fact, we often work with disabled children and have playgrounds in some of our stores. We work with the Ministry of Education, kindergartens and schools to do something fun for children. One of our company missions is ‘To create great moments for everyone, every day in our stores,’ and I feel today is a great example of that”. Tsiklauri echoed the sentiment, as the children sat in the Carrfour Cafe tucking into a feast of pastries, cupcakes, marshmallows and juice. “The children have really enjoyed themselves today, and come away with new experiences. I think the staff enjoyed it, too, going by the smiles on their faces!”

BUSINESS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

Tbilisi Book Days 2017 BY MAKA LOMADZE

etween November 9-12, the ‘Expo Georgia’ exhibition center hosted Tbilisi Book Days 2017. The event was supported by the Georgian Ministry of Culture and Monument Protection. Over the course of four days, EXPO hosted leading local and regional publishing houses, as well as research laboratories, bookshops and distributors. Book Days are held annually. This year, saw more than 54 publishing houses taking part,” said,” Tina Laghidze, PR and Media Communications Manager of Expo Georgia. “The amount of translated literature from Georgian into foreign languages and vice versa has grown. This year’s Book Days was distinguished by a lot of events for kids and adults. The Georgian National Museum gave presentations in the kids’ corner, and the Academy of Thinking ‘Leterato’ discussed ‘Catcher in the Rye’ by Jerome Salinger”. There was also a discussion on Richard Bach’s ‘Jonathan Livingston Seagull’, and what benefits logical thinking brings in general. The main news, as always, was the new books themselves, as well as the new authors, who made presentations Among the events that took place within

the framework of Book Days 2017, the Book Art Festival had a pivotal role. “These two events are interlinked, as they were founded together,” Otar Karalashvili, Curator of Book Art festival, told GEORGIA TODAY. “We try to show various aspects and forms of what a book can be. We had an exhibition of photobooks, which represents a separate genre, in which there were a lot of Georgian photographers. Photo-books are a new thing for Georgia, first appearing some two years ago. As far as I know, this is the first big exhibition of this kind.” Data Patatishvili, 21, is one of the youngest among the photographers to make a photo-book. “This is my first photo-book,” he said. “At first, I didn’t think that I’d present it in the form of a book. However, because I wanted to have tighter communication with viewers via a united concept, I decided to turn the photos into a book. It is called ‘A Rare Hike on the Circle’. I tried to transmit what the human perceptions are about people, their surrounding environment and objects”. Among the exhibitions was a worldrenowned Polish graphic design exposition, as well as ‘Street Photography’ by self-taught photographer Gigo Karalashvili. Amazingly, the most famous Swiss Publishing house has translated 21 Georgian fairy tales into the German language, entitled ‘The King Never Smiles’, the presentation of which will take place at

Frankfurt Book Fair 2018 at which Georgia has the status of honorary guest. By the end of 2018, it is planned to publish the English translation of the

same Georgian fairy tales in New York, too. The upcoming Frankfurt Book Fair has boosted the translation process. According to the Georgian National Book

Center, the number of Georgian books that were translated in 2017 was the same amount as had been translated in the last ten years combined.

Ambitious Plans for Adjara Development: Large Scale Projects to Make it a 4-Season Region

INTERVIEW BY NANA ABULADZE

eorgia became an attractive country both in terms of tourism and investments, a tendency reflected in the adjara region as well, with a considerable boost seen both in the number of tourists visiting and in the increase of the investments in the region. Where, years ago, foreign visitors came to Batumi primarily to enjoy it as a sea resort, the trend has changed, as Adjara is becoming an attractive destination year-round. GEORGIA TODAY met with Mr. Ramaz Bolkvadze, Minister of Economy and Finance of Adjara, to talk about the ongoing projects for promoting the region and to find out what’s are in the pipeline to grow Adjara’s tourism potential and attract new investors.

WHAT IS THE REASON BEHIND THE GROWING POPULARITY OF ADJARA IN RECENT YEARS? First of all, the fact we’re promoting its tourism and investment potential. We’re trying to realize many infrastructural projects to make our region attractive and accessible year after year, and I’m delighted that’s exactly how it is.

TELL US ABOUT YOUR PRIORITY PROJECTS FOR ASSISTING ADJARA’S FURTHER DEVELOPMENT There is great number of such projects. We have road infrastructure improvement, being carried out by the Ministry of Infrastructure and Regional Development of Georgia, which will see the Khulo-Zarzma road construction this year. We’re working on the Goderdzi resort internal road construction, part of it being done with a 1761c meter road

connecting the investment land plots at the resort. Next year, we’re planning to improve a 1300m road at the resort. At this stage, there are six investment projects running at the Goderdzi resort, with GEL 80 million financing. Another direction which we’re promoting is Green Lake, with a construction development regulation plan aiming to create infrastructure for ease of access to the lake and area. We’re also working on the Goma Mountain master plan, all of which helps to bring private investments, a process in which government is also involved. In addition, we’re realizing a landmark project: the gasification of mountainous Adjara, which started this year. All the way from Batumi municipality to Shuakhevi municipality, the Mountanous Adjara gasification project will ensure 11,000 subscribers start to receive gas. The first stage of the project is to be finalized in the spring of 2019. Next year, we’re planning to acquire a new project for the Shuakhevi to Goderdzi direction gasification. One of the projects realized by the Ministry of Economy and Finance of Adjara is the concept of Heroes Avenue (Heroes Lane) in Batumi, which greatly helped the investment flow to the region as well as to the overal development of the location. From the very start, the decision on what type of building should be constructed in the area was made, which assisted the consequent systematic and effective development of the territory. There are 12 investment projects in the area, with an overall GEL 609 million investment, which will add a 1000 hotel room capacity to the city. Apart from offering this territory to investors, we’re planning to start building an international Batumi football stadium opposite the Heroes Avenue, bringing a final touch to the district, which will be developed through state and private investments. This increases interest in our region; tourists are eager to come and see the modern architecture, the modern possibilities of the region and at the same time see

the untouched nature some 100 kilometres from Batumi.

WHAT INFRASTRUCTURAL AND OTHER PROJECTS ARE BEING REALIZED IN BATUMI AND OTHER MUNICIPALITIES FOR TOURISM? The attractiveness of our region is exactly in it being a four-season, year-round tourist destination, and we’re putting lots of effort into developing it further. From the successful projects realized lately, the Kobuleti territory needs highlighting, with an ambitious, high budget construction project of a 200-room hotel, with an approximate investment of GEL 200 million and 400 people to be employed. There were lots of health and spa sanatoriums during the communist period in Kobuleti, and there’s a great interest in that direction now, too. I expect we’ll have a number of novelties coming. If we take the Autonomous Republic of Adjara at a whole, we have impressive figures: according to the 2016 data, approximately $428 million investment was made, 71% of which was foreign. As for the tourism direction, on the territory of the new boulevard, more than half a billion GEL investment has been made, which means approximately 2600 new employment possibilities and 1700 hotel rooms. The aforementioned Heroes Avenue is expected to have more than additional 1000 hotel rooms with 1500-2000 workplaces. On one hand, it’s bringing in investments, and on the other it’s improving social consitions, reflected in greater employment opportunities.

IS THE INFRASTRUCTURE AND SERVICE WELL ADJUSTED FOR ATTRACTING TOURISTS? The Ministry of Economy and Finance of Adjara is planning to carry out an interesting project, building campsites along the central road to Goderdzi resort and also on the road to Cholokhi. The project is already being worked on, encompassing approximately six campsites; however, next year we’re planning

to add more. Creating an ethno-village in Machakhela is also a very interesting project, bringing and reviving folk traditions in one place. Machakhela is close to the city, so tourists could reach it by bike and enjoy the rich nature of the area, alongside the added historical and cultural value that our region has to offer. We’ll do our best for Adjara to become even more interesting and attractive for tourists, offering them the best service and a comfortable environment.

WHAT ARE THE MAJOR CHALLENGES YOU FACE? Our plans are quite ambitious and we’re realizing mega-scale historical projects in the region. The team of professionals involved is the defining factor that means few difficulties or challenges create barriers: we want Adjara to be a four-season region, a place where tourism flourishes, a place for business.

HOW WILL 2017 BE IMPORTANT FOR ADJARA? This is the question I often asking myself and I think 2017 is the year of starting projects of historic significance. We started the gasification project; we’re planning to start estacade construction; we’re starting the Batumi Central Stadium project; we have also managed to launch six projects in mountainous Adjara, with an overall investment of GEL 80 million minimum and the chance to create up to 500 workplaces. In other words, we can say that the kick-off is extremely positive and we think that it will bring a lot of benefits to the region. 2017 was a good year for the region.

WHICH PROJECT ARE YOU MOST PROUD OF IN YOUR TIME AS MINISTER? I’d say that every project realized is important for me, and it’s difficult to underline only one; however, I would note the Batumi international football stadium project for 20,000 spectators that our beautiful city of Batumi is soon to have.

BUSINESS

GEORGIA TODAY NOVEMBER 14 - 16, 2017

British Trade Envoy to Georgia & Armenia on Georgia's Potential in Britain BY MÁTÉ FÖLDI

efore launching a career in Parliament, Mr. Mark Pritchard, MP, ran a marketing consultancy firm advising large blue-chip companies and multinationals all over Europe, including those that wanted to enter markets in the former Eastern Bloc. For the last 12 years, Mr. Pritchard has been a Conservative Member of Parliament, and is also on the Speaker’s Panel, allowing him to chair legislation and debates in the British Parliament, similar to a deputy speaker. Furthermore, he has also been appointed as the UK representative on the Council of Europe, and the Trade and Investment Envoy to both Georgia and Armenia. GEORGIA TODAY sat down with Mr. Pritchard to discuss the future of Georgian-British trade relations.

GIVE US A SUMMARY OF THE HISTORY OF BRITAIN’S ECONOMIC RELATIONSHIP WITH GEORGIA, THE SECTORS BRITAIN HAS FOCUSED ITS INVESTMENT AND EFFORTS IN, AS WELL AS EXAMPLES OF KEY PROJECTS Bilateral relations between the United Kingdom and Georgia are excellent. We’ve just had a very successful strategic dialogue in London with Foreign Minister Mr. Mikheil Janelidze. This followed the excellent meeting I had with Prime Minister Kvirikashvili a few weeks ago. I am due to meet some more high-ranking Ministers in the near future.

The sectors we are focusing on are environment and infrastructure, education, finance and banking, and retail. Those are huge potential growth areas. Next year I hope to lead a Trade Mission from the UK, and we will be inviting companies that have a particular interest in those sectors. With regards to finance and banking, pensions is an area where the City of London have expertise. If asked by the Georgian government and the private sector, we hope to try and help advise and share our experience on the best practice for managing pensions, and pension reform. As for education, I think that there is huge potential for British companies, both in secondary and tertiary education, from helping shape the academic curriculum to publishing, through to the physical infrastructure of building new technical colleges and accommodation for students. Furthermore, I think that infrastructure is also a sector that we can help with. Georgia has huge infrastructure development plans, in energy, network and communications. If Georgia wants to be a hub for trading and investment as it used to be hundreds of years ago, then the UK can help to build the communication and logistics, rail network and other infrastructure that will allow Georgia to prosper as a regional hub. I believe that Georgia is capable of fulfilling this goal, and it’s already on the right path to doing so.

HOW HAVE THE ONGOING BREXIT TALKS AFFECTED THE UK’S TRADE STRATEGY

be top of the list, front of the queue, to have an early bilateral trade deal with the United Kingdom. That doesn’t mean having something brand new, but building on the current association agreement and the deep and comprehensive free trade that Georgia already has with the European Union, so the bilateral trade deal with the United Kingdom will be transitioned from the existing agreements that Georgia has with the European Union, of which the United Kingdom is still a part of.

CAN YOU PROVIDE ANY CONCRETE FIGURES OF FUTURE BRITISH INVESTMENT IN THE AFOREMENTIONED SECTORS?

INTERNATIONALLY? CAN WE EXPECT A DEEPENING OF ECONOMIC TIES BETWEEN LONDON AND TBILISI IN THE POST-BREXIT AGE? This isn’t a one-way relationship. It is in the mutual national and strategic interest of both countries for both the United Kingdom and Georgia to prosper. It’s a win-win if we get it right. I know that both governments are committed to getting it right. We want to see more trade and investment in Georgia by British companies, but we are also very happy to see exports of Georgian goods and services to the UK. Two of the major banks in Georgia are listed in the London Stock Exchange, and are very successful, in many ways they are as much British companies as they are

Georgian companies, so we’d like to see more of that. As far as how trade and investment are linked to diplomacy and politics, I would say that they are separate. I’m not talking about transactional diplomacy or transactional politics; diplomacy and security are completely different to trade and investment. I’m not a Politician, even though I’m a member of Parliament. I’m not a Diplomat, even though I studied diplomacy, and it’s not security, even though I used to be on our National Security Strategy Committee. It is about trade and investment, that is my focus, the rest I will leave to the Ambassador and his excellent Embassy team. Brexit provides new opportunities. We are leaving the European Union not Europe. My hope is that Georgia will

They are potentially very significant. What British investors are looking for is political stability, low taxation, transparency, ease of doing business, lack of corruption, and also recourses in commercial courts of arbitration, should there be any disputes over contracts or payments. All of those are pretty much in place in Georgia, though there could be some improvements in some areas. As along as Georgia’s political landscape remains stable, as well as its security relationship with its neighbors, there is no reason why we cannot see a significant increase in British trade and investment here. Certainly, there is a lot of genuine interest. When trade delegations visit and when British companies approach Georgian ministries and departments, they are well-received, and the information they request is available openly and freely. I think that the future for British trade and investment is a bright and positive one.

BUSINESS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

STS: Satisfaction that Sells EXCLUSIVE INTERVIEW BY TOM DAY

ichael Kerschbaumer is a hospitality professional who began his impressive 30-year career leading teams in the food and drink business. He took his skills and talent around the world, gaining experience by seeing the different markets and approaches used in a wide range of cultures, religions and economies. He did this for many years, up until recently managing two international Marriott hotels simultaneously, both with up to 340 employees, making him extremely knowledgeable about the Georgian market and needs. Taking all that he has learned, and after seeing the growth and opportunities that Georgia has to offer, Kerschbaumer set up STS Hospitality Georgia, a consultancy company for the hospitality business. He has integrated himself into the local culture, which allows him to understand both the investor and the workforce. This puts him far above other similar consultancy professionals who come from abroad. GEORGIA TODAY sat down with Mr. Kerschbaumer to talk about his company, why he has chosen to establish it here in Georgia, how his company will aid Georgia’s growing tourism industry, how he and his team will ensure clients remain on top of the competition and why people should choose to pay for his services.

TELL US ABOUT STS HOSPITALITY GEORGIA STS stands for ‘satisfaction that sells’. We’re a team of highly experienced and locally-based international experts, having explored many different cultures, markets and products, going with the current trends in the hotel/restaurant industry, partnering with high value marketing and research experts.

WHY DID YOU CHOOSE TO ESTABLISH YOUR COMPANY IN GEORGIA? In recent years, we’ve seen a huge increase in the number tourists coming to Georgia. The country has established its name as a prime travel destination and is getting more and more interesting because it has so much to offer year-round. From the seaside in summer to the mountains in winter, as well as fashion, music, culture, traditional food and wineries, which are all driving more and more international interest. The current number of hotels, apartments and hostels has long passed the grand figure of 11,000 and that number is growing day by day. That said, it’s also fact that international travelers and customers are getting more and more demanding these days and are expecting even more from their hotels, apartments, and restaurants, so the total infrastructure around these is more important than ever before, if they are to follow current trends and stay updated in any aspect of the latest technologies. Additionally, younger travelers are getting into the travel market more and more. Yes, they might be mainly lower budget travelers, but this generation is more demanding in the way of wanting to network and learn the local culture and traditions of the world they are living in. And don’t forget, these are our future high-value guests. We need to make sure they want to return to Georgia!

HOW WILL YOUR COMPANY HELP TO ACHIEVE ALL THIS? Long term planning, establishing strategies, and having a solid marketing plan in place by knowing the competition best will be critical for the future and the base for any investor’s success. We want to partner with investors and develop their needs and ideas tailormade for more success and more growth opportunities, to support them in build-

ing up this long-term plan and not to think from day to day and from room reservation to room reservation. We’ve established a team of talented and experienced international experts to meet all demands, for partnering with any investor to supporting them in establishing standards, hiring and training their workforce, creating a long-term strategy and following up with the investor to check the success of our partnership. Finding the right workforce for the right job is a huge challenge for the hospitality industry in the future, especially if we’re not able to establish the right approach and culture for these jobs and we don’t have enough sources and opportunities for technical and personal development of talent in Georgia. This is another reason STS Hospitality has already started to partner with colleges and academies to drive talent development, and to hold master-classes focused on personal development, guest satisfaction, improving awareness and techniques to become a successful part of the hospitality industry in the near future. Other questions we have are ‘How do I train my staff’? ‘How do I keep them engaged with me for a long time?’ There are always openings on the job market, so they will jump from one opening to the next and you will lose the staff you trained if you aren’t building the right company culture and taking care of your staff. When you take care of your people, they take care of you.

HOW WILL YOU OPERATE IN GEORGIA’S RAPIDLY GROWING TOURISM INDUSTRY? We need to build up the base in the hotel industry, working with the government to make sure that their efforts are materializing. The business alone can’t succeed: hospitality works with the government in the same way that a chain links together. Georgia is quickly getting more and more popular as a skiing destination, but there are places where there still isn’t 24-hour electricity or an effective drainage system! We’re seeing these areas bought for development and we’re currently working on a project in a place like this where the client wants to establish luxury apartments. Before this is possible, we need to break down the standard to a minimum because there is no infrastructure availability. Yes, the government has developed these cable cars to transport tourists into the mountains, but everyone trying to make business there is struggling. They are finding great difficulty even in getting a laundry service and fresh loaf of bread. The client is willing to work, but they need the support of the government. It’s not just about coming here to go the mountains, you need to have a pharmacy, a supermarket, a hospital, etc.

HOW WILL YOU HELP INVESTORS DRIVE A HIGH AND CONSISTENT FLOW OF CUSTOMERS? Online booking channels are getting more and more important these days. Most of the time they have a flat strategy that they use for the whole year and are not responding to market demands. So, we want to help them to better understand the strategies out there and build a long-term plan with them to optimize the opportunities to grow their business. When speaking with any investor, they all have the same questions; ‘How can I grow my ratings on these booking channels?’ ‘How can I deal with this demand?’ ‘How can I establish a strategy?’ Georgia is one of the few countries in the world where tourists want to come back again and again which makes this service very important. It’s not that you served them one and that’s it, you can have a lifetime client. So, it’s very important to build up repeat customers and this only works when they listen and react to guest needs. Other questions we get are, ‘how can I increase guest satisfaction?’ ‘How do I

respond best to guest complaints?’ ‘How can I stay profitable?’ The important thing here is to know your target group of clients, to train and develop your team and also to know your competition insideout. Many companies don’t know who their competitors are and at the end of the day their marketing plan isn’t built to work against them. When we work with partners, we ask if they have a competition set established. Do they know more about them than they know themselves? Sometimes our clients consider any hotel in the area with the same rating as a competitor, without taking into account the differences in the facility range, service range and target audience. The keystone of any successful business is, first of all, a deep understanding of its competitive advantages and answers to the question ‘what is the client paying for'? At the same time, sometimes hoteliers forget about indirect competition. They don’t realize that Airbnb and personal apartments are also their competition. On a wider scale, visiting another country is also a choice for the traveler. If we are talking about mountain tourism or sea tourism, there’s huge competition

from Turkey, Montenegro and many other countries. So, whenever we work with clients, we ask what other services or products customers can use instead of them. So, with these questions it’s easy to see why you need experience and knowledge. Many investors in Georgia have established a great product, but now it’s time to make it even greater. There are so many new products coming to the market every day and it is a great chance to grow and get your piece of pie.

CONSULTING IS EXPENSIVE. WHY SHOULD PEOPLE CHOOSE IT? The most successful businesses in the world turn to consultancy. They are visionaries. They carry on looking to the future. It’s like in professional sport even if you’re the best in the world, you still have a coach who helps you to be so. This coach can’t jump better than you, but he knows how to train you to jump better, and this is exactly what we are doing. Our clients are working in an oceanlike environment and are surrounded by an awful lot of sharks who are selling

the same product as them. What they need is somebody to work with them and inform them on how to be better than the rest. It doesn’t matter which country they are in; guest demands are always going to increase. Technology is also growing very fast and new trends are coming every day to the market that are separating from their product and if they don’t recognize this then they will fall behind very quickly. When we partner with a company, we want to use our years of experience across many different markets and countries to give professional, tailor-made strategies and tactics to support our clients to stay on top. The biggest advantage with our company is that our international experts are based locally: that is why they are much more affordable in terms of time and money. We really passionately seek development of the whole hospitality market in Georgia, that is why we make sure that the cost of our consultancy is paid back. Georgia is an amazing place providing thousands of opportunities for business, for partnership, for success and it is great that together we create MORE.

BUSINESS

GEORGIA TODAY NOVEMBER 14 - 16, 2017

Anaklia Port: the Window to Georgia

naklia exemplifies what Georgia strives to be. There is no doubt that it is a game-changing project that can alter our perception of political geography, unlocking markets and disrupting trade flows from Europe to Asia as we know them. On the eastern shores of the Black Sea, infrastructural “hardware” combines with regulatory “software” which Georgia has been building for over a generation to deliver the “next big thing” in international trade.

CHANGING LANDSCAPES There are at least two ways to see Anaklia. On the one hand, it is a gateway to a 160-million person market in the landlocked states of Central Asia; on the other hand, Anaklia is a trade hub in the emerging trade route from China to Europe – and viceversa – through Central Asia. The role Anaklia can play is not “destiny,” but the materialisation of vision. There is an old Norwegian proverb that goes “the sea unites us, land divides us.” This saying refers to the difficulty of overland travel throughout history. For over five centuries, the link between the Far East and Europe has been almost exclusively shipping. Ever since the Portuguese reached China with their caravels in 1513, global trade has shifted to the Atlantic, with sea travel becoming faster, safer, and more cost-effective. In this case, caravels made the difference. Today, bullet trains are the equivalent of Portuguese caravels, breathing new life into ancient caravanserais and overland trade routes. East of Georgia, the Silk Road is regaining significance as trains run from China through Kazakhstan, Iran, Azerbaijan, and Georgia. Then, cargo can be redirected to Turkey, Southeastern Europe and the Middle East. Alternatively, it can be shipped to Central Europe. For landlocked Central Asian nations with a total population of 160 million people, Anaklia is the natural import-export logistics centre. For mainland China, Anaklia is the diving board before one takes a dip into the lucrative Single Market of 500 million people, which embraces Turkey. Despite a population of only 3.8 million people, Georgia’s geographical position makes its ports indispensable to regional logistics. Georgia’s seaborne container demand has increased rapidly in recent years, with the rapidly growing countries in its hinterland market, outpacing infrastructural capacity, increases. Anaklia opens new horizons. Across the western side of the Black Sea, logistics experts can look to Odessa, Constanta, Varna and Burgas. But, on the eastern shore of the Black Sea, only Anaklia can host Panamax type vessels. Through Anaklia, Eastern Europe can reclaim its own centrality in ancient trade routes, unlocking markets and unleashing the potential for production and exports into the heartland of emerging economies. From Madrid to Xinjiang, cargo today can reach its destination in less than 12 days; from Warsaw, it takes a week. Anaklia trims the cost and narrows the distance between Europe and Asia. It is not a stop. It is not “in the middle” of a trade route. Anaklia is an infrastructure that adds value and interlinks different regions of the world, markets, people, and ideas in ways previously impossible. This is what Georgia wishes to do; this is what Georgia wants to be, and this is the landscape it is creating.

attractive business environments in the world. With signing and implementing its Deep and Comprehensive Free Trade Agreement with the EU, which comes hand-in-hand with the highest international regulatory trade standards, Georgia is moving to conclude a Free Trade Agreement with China. And Georgia has already concluded preferential trade agreements with EFTA, Japan, the US, and Canada. From Georgia, producers and exporters have special access to the biggest markets in the world, as well as and favorable terms. Besides the special corporate tax status of an FIZ, investors in Georgia have access to a cluster of goods and services in one of the easiest places to do business in the world. This includes a low-regulation and low-taxation environment, with European levels of transparency and internationally competitive labour and energy supply costs. Georgia not only makes up part of an oil and gas energy highway from the Caspian region, but also has a state of the art electricity grid and covers 95% of its electricity needs from clean, reliable, and costeffective hydroelectric power. With Georgia’s rich metallurgical tradition and access to both a Turkish and a Central Asian heartland of commodities, Anaklia also makes a strong case for investment in manufacturing. Complex supply chains can make their way from Asia and Europe to Georgia. Taking advantage of energy and labour inputs at internationally competitive prices, products can be assembled by the standards required by the market of the destination country, taking competitive prices of energy and labour. Then, assembled products can be shipped to Europe or loaded onto trains to any part of Europe, Asia, the Far and the Middle East.

EMBRACING THE WORLD

AN ATTRACTIVE MANUFACTURING PROPOSITION

The way the Anaklia Port was tendered and is being developed provides a hint to its attraction. The project was tendered in a transparent process according to international standards. From the inception of the tender, the highest levels of government lent support to the process and indicated their desire to back the project. The only dispute between the government and the opposition was of the “who thought it first” variety. From a foreign policy standpoint, the Georgian government’s selection of an American/Georgian partnership is a strong expression of the administration’s foreign policy intention to continue to look west towards an institutional and regulatory environment that inspires security, confidence in contract enforcement, and respect for human rights standards. Transparency and accountability are equally important to external security when estimating “country risk.” Besides being a good place to invest and do business, Georgia aspires to be a good place to work and live. The post-Soviet world is littered with colonies, places with tremendous potential that have never become what they could have become because they are regimented rather than being open to the world. In such places, there is no investment, no growth, no opportunity, and sovereignty is devoid of substance. We can work with this world, but Georgia chooses to be all it can become. Georgia’s role is not the fruit of geographical destiny. Reforms, often painful, vision, and commitment have cumulatively created an opportunity. Anaklia is the window to that opportunity.

Adjacent to the port, the Free Industrial Zone (FIZ) of Anaklia opens up new possibilities. For years, Georgia has honed one of the most

The article by Tedo Japaridze was originally published in Anaklia Magazine.

POLITICS

GEORGIA TODAY

NOVEMBER 14 - 16, 2017

De Facto Abkhazia Denounces Removal of Monument in Scotland Tbilisi Mayor Kakha Kaladze Names New Deputy Mayor BY NINO GUGUNISHVILI

ewly elected Tbilisi Mayor, KakhaKaladze,announced the names of the new Vice and Deputy Mayors on Monday. Kaladze will have five deputies overall: Irakli Khmaladze, Kaladze's former deputy at the Energy Ministry, was named as the Deputy Mayor of Tbilisi. Maya Bitadze, Former Deputy Minister of the Environment and Protection of Natural Resources, will also now be one of Kakha Kaladze’s

deputies, as is Irakli Bendeliani, who previously worked in the energy sector. Giga Nikoleishvili, who held the position of Deputy Mayor in the period of David Narmania, is set to retain his post. Kaladze is expected to name the candidate for the fifth post of Deputy Mayor in the near future, and as Georgian media sources report, it is likely that it will be Ilia Eloshvili, who held the post of the Minister of Energy. The new Mayor of Tbilisi will also be announcing heads of municipal services in the coming days. From November 13, Kakha Kaladze officially took the mayoral post from Davit Narmania.

PM Kvirikashvili Meets New Ministers after Gov’t Reshuffle

BY THEA MORRISON

fter announcing a number of important changes in the cabinet, which resulted in a reduction of the number of ministries from 18 to 14, the Prime Minister of Georgia, Giorgi Kvirikashvili, met the new ministers of finance and education, Mamuka Bakhtadze and Mikheil Chkhenkeli, who will start working after Parliament approves the changes. Kvirikashvili congratulated the ministers on their new positions and wished them success. The PM stressed that it is important to spend state finances on current needs, especially during the process of optimization. He highlighted the important work carried out by Finance Minister Dimitry Kumsishvili, who is to now to lead the Ministry of Economy, which was merged with the Energy Ministry. Kvirikashvili wished Bakhtadze luck,

adding it will be important to carry out the optimization process as professionally as possible so that people can see that the main focus of this process is really the people. “Each program and every article in the state budget is to be aimed at improving our citizens' lives," said Kvirikashvili. The PM also underlined that education is one of the top priorities of the government, the promotion of vocational “a step forward in this field”. Kvirikashvili wished Mikheil Chkhenkeli success, and expressed hope that his role will see more results for Georgia’s education system. Former Education Minister Alexander Jejelava was advised by the Prime Minister to move the diplomatic sector. However, he noted that the decision should be made by Jejelava himself. "He would be welcome a move to diplomatic work, but as he told me, he wants to work in the field of education. Let’s see what decision he makes. He is a member of our team and a very worthy person," said the PM.

BY THEA MORRISON

he de facto Ministry of Foreign Affairs of Georgia’s breakaway region of Abkhazia released a statement regarding the decision of the authorities in the Scottish town of Kilmarnock to dismantle a memorial stone dedicated to victims in separatistheld Sokhumi of the 1992-1993 Abkhazian war. The de facto ministry stressed that the removal of the monument was the initiative of Official Tbilisi, assessing the fact as ‘barbaric moves by the Georgian leadership and another vivid confirmation of the aggressive and anti-humane character of the Georgian policy towards Abkhazia and its people’. “This behavior of the official authori-

ties of Georgia is regarded as an act of vandalism aimed at destroying the historical memory of the Abkhaz people, against whom Georgia committed ethnic cleansing and genocide,” the statement of the “ministry” reads. The “ministry” also claims that in October 1992, in occupied Sokhumi, Georgian authorities burned down and destroyed buildings of the Abkhaz Institute of Language, Literature and History, and the State Archives of Abkhazia, adding “as a result of these barbaric actions, unique documents on the history and culture of Abkhazia were destroyed”. The exact date of construction of the memorial is unknown, as the representatives on the local city council have long since changed, but is estimated that it was built somewhere around 1993-1996. Georgian ambassador to the United Kingdom, Tamar Beruchashvili, said that

last month, when she paid a visit to Scotland, she had meetings with local authorities, parliament and other groups. “We were promised that the Scottish authorities would talk to the local government of the city of Kilmarnock and explain the situation to them. They got full information, shared the position of the British state towards the territorial integrity and sovereignty of Georgia and the local council decided to dismantle the monument. This is definitely a good result. We really have the opportunity to find and neutralize similar cases based on trust and cooperation with our partners," Beruchashvili explains. “One of the main tasks of the Embassy of Georgia, and general Georgian diplomacy, is to use all means against the efforts of the Russian government to propagate the so-called independence of Abkhazia and South Ossetia,” she added.

Georgia’s Foreign Policy Demonstrates Strengthening of Territorial Integrity BY MÁTÉ FÖLDI

he primary goal of Georgia’s foreign policy is to strengthen the nation’s territorial integrity and sovereignty, Foreign Minister, Mikheil Janelidze, declared at an event dedicated to the Day of Diplomacy at Tbilisi State University. “All remaining activities serve this main goal. We have chosen the Euro-Atlantic integration path because we believe it is in the best interests of Georgia,” Janelidze said. The Foreign Minister also explained the various successes of Georgia’s foreign policy. “We have been intensely involved in bilateral diplomacy. We have opened 60 embassies, three missions and consulates. Indeed, this is very large-scale effort for a small country like Georgia; it is the

result of our priorities in terms of nonrecognition policy, economic ties and Georgia’s representation throughout the world”. “The direction of multilateral diplo-

macy is very strong, it means success on a diplomatic level. Strengthening of the country’s positive image shows the fulfilment of all goals,” Janelidze added.

POLITICS

GEORGIA TODAY NOVEMBER 14 - 16, 2017

Photo source: ugc-about.futurelearn.com

SOCIETY

Girl of Now: Elie Saab’s New Fragrance at Ici Paris Stores BY NINO GUGUNISHVILI

A Momentous Week for the World OP-ED BY EMIL AVDALIANI

he past week was full of important events around the globe as well as some momentous geopolitical developments in the Middle East and elsewhere. In Asia, Vietnam hosted the APEC summit where a range of important global topics was discussed. World attention was drawn to a potential Putin-Trump meeting, but full-format talks between the two presidents did not take place. The Russians blamed it on the American protocol service, saying that it lacks flexibility, according to the Russian President’s Press Secretary Dmitry Peskov. Nevertheless, the two managed to speak on a number of occasions during walks and on Sunday, US President Donald Trump said at a joint press conference with his Vietnamese counterpart Tran Dai Quang, that he considers it necessary to get back to cooperation with Moscow, which will be beneficial for the country and for the whole world. The two touched upon Ukraine, Syria and not so much North Korea. One might think that this could be a sign that the Russian strategy is working when Washington and European countries increasingly look at Moscow to play a bigger role in those conflicts, thereby creating possibilities for the Kremlin to bargain more effectively with western powers. However, beyond this seeming scenario, there are no concrete developments on the ground in Ukraine to suggest that changes in Russian behavior will follow. Nothing suggests that Europe is willing to compromise either. Several days ago, additional

scandals erupted in the US regarding Russia’s role in the pre-election period and Canada introduced new sanctions against Russian officials. All of this pretty much summarizes the current difficult situation which exists in the US-Russia relations and that, as I have written previously, there are core geopolitical differences in the former Soviet space, hindering any meaningful breakthrough in the current standoff.

IRAN’S GRAND STRATEGY

TOWARDS A MORE COOPERATIVE CENTRAL ASIA?

Let’s move to the Middle East, where last week Iran-backed forces moved closer to control the Syria-Iraq border. This is a momentous event, as Iran would be able to gain a contiguous land bridge from its proper territory, through north Iraq and Syria, right to the Mediterranean coast. To gauge this development, it suffices to say that the last time the Iranians managed to do this was in the 620s AD, just before the Arab conquest of the Middle East. From now on, the Iranians will be able to communicate with their closest allies in Lebanon: Hezbollah. Iran is being transformed into a powerful geopolitical player whose influence will be projected over hundreds and maybe thousands of kilometers beyond the state borders. Those are important developments for our policy-makers to follow, as Iran’s position has been on the rise in the South Caucasus too. I have already written how essential local pipeline and railway infrastructure is for Tehran and the region overall. Iran sees opportunities in the South Caucasus, but it should nevertheless be put into the overall picture unfolding in the Middle East. In Saudi Arabia, the important arrests are likely to influence the Middle East. Riyadh fears Tehran’s growing influence

Over the last week it has become yet more clear that in Uzbekistan, under new leader Shavkat Mirziyoyev, Uzbekistan is set on a course of being more cooperative with the neighboring countries. Tajikistan is likely to renew import of Uzbek gas after nearly five years of near enmity between the two countries under former Uzbek president Islam Karimov. Moreover, the two countries also agreed to reunite their electricity grids. These developments take place as Tashkent voices its concerns over Tajikistan building a large dam on its territory. Uzbekistan, a veritable center of landlocked Central Asia, could serve as a cooperation motor for the entire region. Indeed, the Kazakh leadership already hinted that there would be talks on holding an inter-Central Asian states summit, the first such event in years. A more cooperative Central Asia would actually have ramifications for Russia’s ambitions in the region. For China, on the other hand, an interconnected region would mean more ease in laying its large pipeline and railway infrastructure projects (often stalled because of the enmity of the Central Asian states towards one another). Either way, what happens now in Central Asia is as important as unprecedented in the past decade or so.

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(particularly in Lebanon). Enmity and accusations between the two increase day by day. Yesterday, Bahrain’s major pipeline was under attack and the government was prompt to accuse Iran (who denied it). This shows that, if continued, the Middle East might be further engulfed in a sectarian and overall geopolitical battle between major regional players.

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lie Saab’s new fragrance 'Girl of Now', launched in 2017, is now available in Ici Paris stores. “It’s a reverse fairytale that begins at midnight and ends with three friends walking in the early light of dawn. It’s about a night of play, paparazzi flashes and a perfume that meets their mood: see the girl of now in her element, on her own terms and with a spontaneous and audacious energy,

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inspiring ELIE SAAB’s latest scent,” reads the new Girl of Now advert on the designers official page. As Khatia Shamugia, Head of Ici Paris PR and Marketing Department, says in her interview with fortuna.ge, Girl of Now is a fragrance for young, daring and successful contemporary women. “The new fragrance’s top notes are mandarin orange, pear and pistachio, with a mixture of patchouli and almond milk, bringing an element of eternity to the mix,” she says. Elie Saab is a Lebanese fashion designer born in 1964.

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