Issue #1142 Business

Issue no: 1142/176

• APRIL 16 - 18, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

The “Achilles’ Heel” of Georgia’s Agriculture: Incomplete Land Registration

FOCUS ON TAKING GEORGIA TO THE SKIES

Georgia is growing incrementally better and stronger says EU Ambassador Hartzell

ISET PAGE 4

RSM Georgia Welcomes New Partner

PAGE 9 BUSINESS PAGE 5

Standard & Poor's Improves Georgia's Rating from Stable to Positive

Presentation about Tourism Potential of Georgia Held in Tokyo

BY THEA MORRISON

Ambassador of the UAE on Relations, Development & Progress

I

nternational rating company Standard&Poor’s (S&P) improved Georgia’s sovereign rating from stable to positive and confirmed the rating at “BB.” The organization’s outlook reads that they forecast Georgia's economy will maintain comparatively high growth rates, even in times of a more difficult external environment.

“We are revising our outlook on Georgia to positive from stable and affirming our 'BB-/B' long- and short-term sovereign credit ratings,” the outlook reads.

Continued on page 6

BUSINESS PAGE 7

BUSINESS PAGE 8

MoE Reports to Parliament on DCFTA Implementation Plan 2018-2020 Image source: ifsp.org.mt

BUSINESS PAGE 12 Prepared for Georgia Today Business by

Markets As of 12ͲAprͲ2019

Price

w/w

Price

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 16.80

Ͳ2,8%

Ͳ

GEOROG 04/21

103.53 (YTM 4.90%)

Ͳ0,0%

+0,5%

Georgia Capital (CGEO LN)

STOCKS

GBP 10.68

Ͳ2,0%

Ͳ2,8%

GEORG 04/21

105.76 (YTM 3.84%)

Ͳ0,1%

Ͳ0,0%

GBP 2.22 +13,6%

+5,7%

GRAIL 07/22

107.53 (YTM 5.19%)

+0,0%

+0,4%

Ͳ2,4%

+0,3%

GEBGG 07/23

101.82 (YTM 5.51%)

+0,2%

+2,2%

CURRENCIES

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

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

GBP 15.60

m/m

BONDS

Price

w/w

m/m

71,49

+1,6%

+7,2%

GEL / USD

2,6923

+0,1%

+0,2%

1 291,68

Ͳ0,0%

Ͳ0,8%

GEL / EUR

3,0468

Price

+1,2%

w/w

+0,4%

m/m

GEL / GBP

3,5254

+0,5%

+0,4%

INDICES

Price

w/w

m/m

GEL / CHF

2,6898

+0,1%

+0,9%

FTSE 100

7 437,06

Ͳ0,1%

+4,0%

GEL / RUB

0,0419

+1,9%

FTSE 250

19 711,71

+0,9%

+3,0%

GEL / TRY

0,4682

Ͳ1,9%

Ͳ5,0%

DAX

11 999,93

Ͳ0,1%

+4,1%

GEL / AZN

1,5886

+0,4%

+0,3%

DOW JONES

26 363,85

Ͳ0,2%

+3,2%

GEL / AMD

0,0055

Ͳ

Ͳ

NASDAQ MSCI EM EE

+2,2%

7 971,27

+0,4%

+5,0%

GEL / UAH

0,1007

Ͳ

Ͳ0,7%

171,06

+1,7%

+4,8%

EUR / USD

0,8845

Ͳ0,8%

Ͳ0,2%

1 087,49

+0,2%

+3,4%

GBP / USD

0,7641

Ͳ0,4%

Ͳ0,1%

SP 500

2 901,32

+0,3%

+3,9%

CHF / USD

1,0016

+0,1%

Ͳ0,6%

MSCI FM

2 739,96

+0,3%

+2,5%

RUB / USD

64,3069

Ͳ1,5%

Ͳ2,0%

GT Index (GEL)

1 582,68

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TRY / USD

5,7569

+2,3%

+5,5%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,7001

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+0,1%

MSCI EM

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NEWS

GEORGIA TODAY

APRIL 16 - 18, 2019

@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: Another success for Georgian wine! The London market has expressed interest in particular wines of ‘Marani Kapistoni’. Company founder Nika Chochiashvili took on wine production to continue his grandfather’s traditional business, but he went into it knowing that due to the rareness of the grape varieties, ideal for higher price ranges, the products would be best for foreign markets. The business was launched with government grants, aiming to promote nearly extinct grape varieties. Currently, negotiations are ongoing with English businessmen, and interest has also been expressed by other countries.

Matchavariani Meets with IMF Deputy Director

Kokoro is a Georgian lingerie brand launched by Nino Iosava ‘Kokoro’ and Koko Chikradze. Nino had always wanted this type of business and grew her experience to make it happen. Today, she is the Kokoro designer, while her spouse manages the finances. Due to the lack of resources on the local market, production takes place in Ukraine. There are already plans for the further growth of the brand. Swimwear is another line of Kokoro. The founders also aspire to open a lingerie shop.

Discover Baratashvili 12, the hotel with a brand new concept of self-service, launched by the founder of the Same Group, Giorgi Iaskadze. Guests are met by special machines which will provide a unique code and room key after checking in, enabling them to enjoy the freedom of self-service. Isakadze claims this is a business which needs no human capital.

Baratashvili 12 is a member of the Same Group, aiming to engage and develop the service quality provided at apart-hotels. Covering other regions aside from Tbilisi is among the plans of the Group.

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

W

ithintheannualSpring Meeting of the International Monetary Fund and World Bank Group, Finance Minister Ivane Machavariani met with the Deputy Director of the International Monetary Fund (IMF), Tao Zhang.

The sides discussed the current and future cooperation between Georgia and the International Monetary Fund. They discussed the implementation of the IMF

program in Georgia, which fully supports the government reforms plan. Discussions on fiscal and monetary policy issues were held in which the dynamics of structural reforms were covered.

"We held a very good discussion with the Georgian delegation, headed by the Finance Minister and President of the National Bank,” Zhang noted. “We are glad that the Georgian government and Georgian people have achieved great progress in promoting economic growth

and structural reforms. The International Monetary Fund as always will continue to support. We are pleased that our cooperation, including the IMF program, is going well.”

The meeting was attended by the President of the National Bank, Koba Gvenetadze, Vice President of the Bank Archil Mestvirishvili, Deputy Finance Minister Giorgi Kakauridze and Nikoloz Gagua, David Bakradze, Ambassador of Georgia to the United States.

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BUSINESS

GEORGIA TODAY

APRIL 16 - 18, 2019

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

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

The “Achilles’ Heel” of Georgia’s Agriculture: Incomplete Land Registration

BY RATI KOCHLAMAZASHVILI

T

he commercialization of farmers can happen only if land consolidation occurs and farmers benefit from economies of scale – Minister of Economy and Sustainable Development of Georgia, Giorgi Kobulia stated at the Rural Conference 2019 held in Tbilisi last week.

According to the latest agriculture census (2014), there are 574,000 holdings with land in Georgia. Of these, 77% have less than one hectare under usage, which is usually divided into several parcels. Many of those land parcels are uncultivated or cultivated using outdated methods. In addition, with such a small amount of land, rural households cannot earn enough income for their families and their “farming” is subsistence, not commercial. Additionally, many of these landholders are not interested in either upgrading their farming practices or selling their land to more efficient farmers. As a result, Georgian agriculture is characterized by very low productivity and its contribution to the country’s overall GDP is 7.7% even though it “employs” about 40% of the labor force.

To improve this situation, the agricultural sector has been a priority for the Georgian government since 2012. Many programs have been developed and implemented to transform the sector, but the results are not yet promising

– real growth in agriculture was modest in 2018 (+0.7%) after a sharp decline in 2017 (-3.8%). While such numbers might destroy optimism about this sector, other countries have also had similar experiences. For example, the Indian government subsidizes farmers by various means, but nevertheless experts are talking about the deepening crisis in agriculture in India. According to an article in The Economist, the main reason for this crisis is the fragmentation of land, wherein average land size per holding has been shrinking since the 1960’s and today amounts to 1.1 hectare.

Not surprisingly, one of the fundamental problems (“root causes”) holding back the development of agriculture in Georgia is the fragmentation of land parcels.

LAND REGISTRATION – A PROPER START AT FIXING THE ROOT CAUSE There are various factors hindering Georgia’s land consolidation, but first and foremost is the incompleteness of land registration. According to recent data from the Public Registry, only 45% of land in Georgia is registered, although many attempts have been made over the last three decades.

So, what holds back land registration in Georgia?

PAST - LAND REFORMS IN GEORGIA After the dissolution of the Soviet Union and the restoration of independence, Georgia faced many social, political,

and economic problems. The political leaders of that time decided that the best way to fight against the deep crisis was to distribute land among the rural population of Georgia. As a result, hundreds of thousands of subsistence farmers were created with an average landholding of slightly over 1 hectare (this land was often divided into 3-4 parcels).

The remaining state-owned land was leased out. Therefore, the total number of land parcels amounted to about 2,500,000(!), even excluding Adjara and the mountainous regions, where land reform was not implemented at that time. It may be true that many families survived hunger at that time because of subsistence farming, but today land fragmentation is one of the most severe challenges to agriculture in Georgia.

At the end of the 90s, the land registration process started, which continued until 2004. This process was lacking an entire cadaster system and legal documents were based on the maps existing in the villages and municipalities. The formal registration of land with cadaster started in 2008; until 2016, about 35% of land was registered.

PRESENT – CURRENT LAND REGISTRATION The current land registration reform started in August 2016 and after 2.5 years, the results show that only 9% of land out of the entire land fund (excluding the occupied territories and forest) was registered. Interestingly enough, more than half of the land registered by the reform was under state owner-

ship. The current reform uses sporadic as well as systematic registration approaches, but the major focus is on sporadic registration. The major difference between these two approaches is that while sporadic registration depends on the goodwill of the landowners to register their land, in the case of systematic registration, the government approaches the landowners and registers their land. Systematic registration has only been piloted in a few settlements across Georgia.

According to the findings of ISET’s Research on Land Registration conducted in 2018, although some incentives are provided by the current land registration reform, many private landholders are not interested in registering their land. The main reasons for this include: fear of losing social allowance, fear of losing (registered) land to credit authorities, fear of land taxation, disputes about demarcation of land, traditional view that land belongs to the household and does not need to be registered, absence of landholders in the country or in the region (migration), lack of finances, and lack of information about the land registration reform.

THE WAY FORWARD As has already been mentioned above, a sound land consolidation policy cannot really be started unless a comprehensive land registration process is pushed through and the country has its entire land fund registered properly.

Complete land registration can be achieved only with the systematic approach to land registration, which has proven to be the most effective means of land registration around the world.

After celebrating 28 years of the restoration of Georgian independence, we, the stakeholders in Georgia’s agriculture and rural development, need to wake up and speak out that fighting against “symptoms” is not effective and first we have to fix the “root causes”… This, first of all, requires a strong commitment from the government!

This blog is produced based on ISET PI’s Policy Paper on Land Registration Reform (2018): http://iset-pi.ge/index.php/en/agricultural-projects/completed-projects/2204agricultural-land-registration-reform-in-georgia

Completing the registration of land and developing modern land systems can support not only the land consolidation process, but can be beneficial for various means: security of tenure, certainty of ownership, facilitated land reform, improved land resource management, reduction of land disputes, stimulation of the land market, increased land taxation, credit security, improved land market monitoring, improved management of state lands, improved spatial land-use planning, improved agro statistics, and usage of agricultural potential (International Land Systems, 2009).

BUSINESS

GEORGIA TODAY APRIL 16 - 18, 2019

RSM Georgia Welcomes New Partner

Giorgi Tabuashvili, Partner, Tax and Government Compliance, RSM Georgia (Left), Giorgi Kvinikadze,General Director and Managing Partner, RSM Georgia (Right)

BY KETEVAN KVARATSKHELIYA

R

SM, representing one of the world’s leading and most powerful audit, tax and consulting networks uniting firms in over 116 countries, up to 750 offices and 41,000 professionals around the world, has recently welcomed a new partner, Giorgi Tabuashvili, Tax and Government Compliance, to its Georgian branch.

GEORGIA TODAY met Tabuashvili to discover his path to success and plans for the future.

“I joined the RSM team in March,” Tabuashvili tells us. “I’ve been operating in government agencies, private companies and international financial institutions, and participating in various projects, for more than 20 years. I’d say 2002 was the turning point in my career, the time I returned to Georgia after doing a Master’s Degree in Economics at the University of Illinois at Urbana-Champaign in the USA. I came back to Georgia and started working in the International Monetary Fund (IMF) in the position of Fiscal Economist.”

We asked Tabuashvili more about his studies abroad and the affect it had on his personal life and career.

“I can firmly state that doing the studies abroad played an incredible role in my success for various reasons. First of all, at university I obtained valuable academic knowledge and became an expert in my field. However, it is not the only good reason to travel thousands of kilometers from your homeland. While getting an education overseas, you acquire new experiences, meet new people and discover new cultures. In addition, your ability to make decisions independent and your self-confidence rocket, contributing to the formation of you as an individual, which is certainly paramount.

After receiving a foreign education, you return with a new spirit and a developed global outlook.

It is vital to live in that environ and be fully involved in that rhythm and lifestyle,” says Tabuashvili. “In my case, I had a chance to explore the USA, the Western World and their civilization, which as a result facilitated communication with foreign partners.”

We asked him how he had managed to succeed in such a significant and difficult field.

RSM Georgia is a representative of one of the top global networks, with incredibly high corporate culture

A number of important reforms were implemented the time I was working in the public sector “Even though I had worked in the public sector, including Parliament, the Ministry of Economy, USAID Programs, and had been one of the founders of the Association of Young Economists of Georgia (NGO) before 2002, working at the IMF has proved to be very fruitful for my further progress. I have changed a number of workplaces since then. For several years I have been working at the Ministry of Finance of Georgia, as well as Georgian Oil and Gas Corporation LLC and Policy and Management Consulting Group LLC (PMCG).

From 2014 to 2018, I occupied the position of Director General at the Revenue Service of Georgia,” Tabuashvili tells us.

We were intrigued to find out whether operating in the private or public sector was more interesting for the new Partner of RSM. “It would be very difficult to answer this question and outline just one sphere I liked working in.

There were times when I was sure that working in the government agencies would be better for me and my role towards the development of the country. I am happy to say that a number of important reforms that greatly contributed to the establishment of the well-developed system in Georgia, were implemented the time I was working in the public sector. Various international institutions have noted the progress of our country regarding the innovative reforms carried out in recent years.

It makes me proud to know that I have been involved in this process. We have also put a lot of effort into developing the accounting, auditing, and financial reporting fields and establishing an appropriate regulatory system. However, I would still think that the private sector is more interesting for me,” he notes.

We asked Mr. Tabuashvili regarding his decision to join the RSM Company team.

“When I made a decision to return to the private sector, I was thinking where I could apply my decades of working experience in the very best way. I considered RSM to be the most appropriate choice for accomplishing this aim. RSM Georgia is a representative of one of the top global networks, with incredibly high corporate culture. I strongly believe RSM will give me an opportunity to make use of my knowledge and experience. At RSM Georgia, we plan to offer to our clients the best possible solutions for tax and government compliance, based on in-depth and up-to-date knowledge of local as well as international tax regulations, while always acting with the highest level of integrity and concern for reputation,” he tells us.

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BUSINESS

GEORGIA TODAY

APRIL 16 - 18, 2019

Conference on Rural Development in Georgia

BY SAMANTHA GUTHRIE

L

ast week, Tbilisi hosted the 2019 Georgia Rural Development Conference. The conference, officially titled ‘Rural Development Policy 2020+, Translating European Practice into Georgian Reality,’ was a space to discuss prospects and ways forward down the country’s rural development path. Leading experts and policy makers from Georgia and European Union (EU) member states gathered at Expo Georgia on Monday, April 8, for a day of speeches and panel discussions.

The Rural Development Conference was organized by the Ministry of Environmental Protection and Agriculture of Georgia with the assistance of the EU in cooperation with the United Nations Development Program (UNDP).

The conference was opened with remarks from Georgian President Salome Zurabishvili, who emphasized the importance of rural development and Georgia’s regions for the overall success of the country. Welcome remarks followed from Levan Davitashvili, Minister of Environmental Protection and Agriculture of Georgia, Carl Hartzell, Ambassador of the European Union to Georgia, and Louisa Vinton, UN Resident Coordinator / UNDP Resident Representative in Georgia.

The Rural Development Conference aimed to assist the Government of Georgia to set priorities for the national Rural Development Strategy 2020-2027. Participants also discussed ways of adapting successful European practices to Georgia’s realities.

“Georgia has made notable progress

Image source: UNDP

since 2016 when the country’s first Rural Development Strategy was adopted,” said Minister Davitashvili. “The Government of Georgia has introduced a new vision of rural development grounded on the best EU practices in this field. In the next seven years, we will focus on promoting local entrepreneurship and employment and increasing people’s engagement in the rural development process.”

Later, Ambassador Hartzell spoke on the role of the European Union as a supporter and model for Georgia’s progress towards shared European values. “We are proud to be part of Georgia's progress in rural development and look

forward to continuing working together with all key ministries to improve employment and living conditions of the rural population in Georgia,” said Hartzell.

“European experience implemented in Georgia has demonstrated the benefits of a bottom-up approach in rural areas, empowering local people to take the development of their communities into their own hands.”

The UNDP, co-organizer of the conference, has played an active role in Georgia’s rural development in recent years, including contributing significantly valuable research in the field. “Rural development can help unlock the big-

gest socio-economic challenge facing Georgia, namely that farmers make up 43% of the workforce yet produce just 8% of the GDP,” Louisa Vinton shared.

“The new strategy will aim to narrow this gap by helping to make Georgia’s farms more professional and competitive, creating new non-farm jobs in rural areas and improving living conditions for rural communities.”

Former Chief Negotiator for EU accession on behalf of the Ministry of Agriculture of Hungary, Dr. Lászlo Sandor Vajda, spoke to the assembled audience on considerations for moving towards new agriculture and rural development

programming in Georgia based on Hungary’s experience joining the EU. Markus Hopfner, Deputy Director General of the Federal Ministry of Sustainability and Tourism of the Republic of Austria shared his country’s experience in implementing EU rural development policy.

Minister of Regional Development and Infrastructure, Maya Tskitishvili, and Minister of Economy and Sustainable Development, Giorgi Kobulia, joined a panel with Dr. Sandor Vajda, Hopfner, and Nino Evgenidze, Executive Director of Economic Policy Research Center on a panel to discuss, in practice, how Georgia may be able to adapt EU standards and policies to its national context, and the challenges the process will introduce.

Khatia Tsilosani, Deputy Minister of Environmental Protection and Agriculture, shared her ministry’s outlook on the new, integrated Agriculture and Rural Development Strategy (ARDS) beyond 2020. Surprising most of the audience, the ministry currently has no plans to include Local Action Groups in their strategy. Local Action Groups and the LEADER principle of bottom-up, grassroots rural development has been the central tenant of the EU’s ENPARD Program, a nine year, 179.5 million EUR support scheme. Under ENPARD, Local Action Groups, which bring together local government, private sector, and civil society representatives to create local development strategies and provide strategic policy guidance from a local perspective, have been established in 12 municipalities in Georgia. They join a network of hundreds of Local Action Groups across Europe. The Ministry of Environmental Protection and Agriculture plans to release the official ARDS Beyond 2020 in the coming months.

Airbnb Reverses Decision to Remove Listings in Occupied Abkhazia and South Ossetia

BY AMY JONES

A

irbnb has retracted its decision to remove holiday rentals listed in the occupied zones of Abkhazia and South Ossetia.

The company, which allows customers to rent accommodation in 191 countries worldwide, had previously decided to remove listings in Georgia’s occupied zones, as well as the West Bank, as they considered the listings to be linked to the conflicts.

“In applying the global framework of these disputed territories, Airbnb determined that the existence of the listings in these disputed territories has a direct connection to the larger conflict in the region,” read a statement by Airbnb released January 20.

Yet, in a new statement released by the company on April 9, Airbnb has reversed its decision to remove the listings. The announcement is connected to the West Bank and came after Israeli lawyers filed a class action lawsuit on behalf of property hosts and others. However, it also applies to the properties in occupied South Ossetia and Abkhazia.

While properties will still be listed, Airbnb announced they would no longer accept profits from occupied areas, and they will instead donate such revenue to charities. “Any profits generated for Airbnb by any Airbnb host activity in the entire West Bank will be donated to non-profit organizations dedicated to humanitarian aid that serve people in different parts of the world,” reads their statement. “The same approach will be applied for listings in South Ossetia and Abkhazia, two other disputed areas where the company has previously announced

that we would take action.”

Although US law permits companies to conduct business in occupied territories, Airbnb admits that it is a controversial issue. Palestinian human rights activists have called the latest decision “shameful” and “a blatant attempt to whitewash reality,” whilst many online users have accused the hospitality site of lacking morals.

Airbnb has also been criticized for listing properties in Abkhazia. The war in 1992 - 93 and Russian occupation displaced more than half a million Georgians from their homes in Abkhazia.

Therefore, critics underline that individuals listing the properties cannot verify the authenticity of their ownership of properties.

In addition, tourism in occupied Abkhazia and South Ossetia is illegal according to Georgian law. No Georgians are able to enter Abkhazia due to the risk of

Image source: Rest Agent

kidnapping and arrest by occupant forces.

Nonetheless, around one million tourists visit the region each year, the majority of whom are Russian. Abkhazia is a cheaper alternative to other holiday destinations such as Turkey. Russians can also easily travel from Sochi to Suchumi, the de facto capital of Abkhazia, by train. The journey takes around

six hours and costs approximately $25.

Abkhazia was once one of the most popular tourist destinations in Georgia.

During the Soviet Union, many tourists visited Abkhazia for its Black Sea beaches.

With over 202,000 tourists to the region every year, it accounted for a 40% share of the Georgian Soviet Socialist Republic’s tourism market.

Standard & Poor's Improves Georgia's Rating from Stable to Positive Continued from page 1 Standard&Poor’s also noted that they anticipate the country will remain compliant with the conditions of the funded International Monetary Fund (IMF) program, which should support foreign exchange reserves and investor confidence.

“The positive outlook primarily reflects our view that Georgia's economic and external performance has the potential to outperform our current forecast over the next 12 months. It also reflects the country's continued compliance with the conditions of the existing funded IMF arrangement,” the company said.

S&P reports that Georgia's economy expanded by nearly 4% on average over 2015-2018, weathering periods of anemic

external demand as trading partners were hit by falling oil prices, regional currencies were devalued, and some fell into recession.

“While we expect the external environment to remain challenging, the country's efforts to widen its economic base, to diversify its export geography and foreign investment, and to develop its infrastructure could keep the pace of economic growth above that of peers,” it added.

The company said that Georgia's economy remains narrow and is characterized by comparatively low per capita income levels but they expect prudent policymaking should support sustained growth of 4% on average annually over the medium term.

In addition, it reports that the authorities' reform focus could yield additional

growth benefits, particularly in the long run, and they expect per capita income in Georgia will rise, but still remain modest in a global comparison.

“In our view, Georgia's institutional settings remain favorable in the context of the region, with several established precedents regarding power transfer, and a degree of checks and balances between various government bodies,” the company said.

However, S&P added that they see downside risks from the ruling Georgian Dream party's constitutional majority in parliament. “Specifically, we believe there could be attempts to centralize power, solidifying Georgian Dream's incumbent position,” they noted. “We also see some risks of heightened volatility given the approaching parliamen-

tary elections in 2020,” the company stressed.

Moreover, Standard&Poor’s report noted risks from regional geopolitical developments, highlighting the status of breakaway South Ossetia and Abkhazia will likely remain a source of dispute between Georgia and Russia.

“Russia has continued to build stronger ties with the two territories, as highlighted by the recent partial integration of the South Ossetian military into the Russian army, the establishment of a customs post in Abkhazia, and regular visits to the territories by senior Russian government officials. However, we don't expect a material escalation,” they added.

Minister of Economy of Georgia Giorgi Kobulia commented on the outlook of S&P, saying the rating growth means

that in November, when the S&P's next report will be published, Georgia's sovereign rating may increase even more.

Kobulia said that since 2011, the company has not changed Georgia’s rating until now.

"The positive assessment of S&P is related to the fact that they saw a fairly high economic growth in the country on the background of the recent developments in the region. They also positively assessed implemented reforms and said we have a successful and wellmanaged monetary and fiscal policy,” the Minister explained.

To note, Moody’s credit rating for Georgia was last set at Ba2 with stable outlook. Fitch’s credit rating for Georgia was last reported at BB with a stable outlook.

BUSINESS

GEORGIA TODAY APRIL 16 - 18, 2019

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Image source: 112 international

NGO TI Georgia Says Corruption Remains a Challenge in Georgia

BY THEA MORRISON

Presentation about Tourism Potential of Georgia Held in Tokyo

W

ithin the frames of the project ‘Georgia – Homeland of Wine,’ a presentation about Georgia’s tourism potential was held for the representatives of Japanese tourist companies at Terrada Republic / TMMT Hall, Tokyo.

Representative of the Embassy of Georgia to Japan David Goginashvili introduced information about Georgian wine, history, culture and gastronomy to invited guests.

The event was attended by the following companies: Intourist Japan, Toyota Tsusho Corporation, Turkish Air & Travel, Latera International, Europe Expres, and others.

After the presentation, business meetings were held between representatives of the Georgian and Japanese sides, where future cooperation plans were discussed.

The event was organized by LEPL National wine Agency, Georgian National Tourism Administration and the Embassy of Georgia in Japan.

The project ‘Georgia – Homeland of Wine,’ organized by the National Wine Agency and Association ‘Georgian Wine’ is implemented in partnership with Sony Music Communication and TOPPAN. The exhibition combines unique archaeological exhibits and modern technologies, the concept of which is based on the uniqueness of Georgian wine culture.

A

recent survey conducted by the nongovernmental organization Transparency International (TI) Georgia reads that corruption still remains a problem in Georgia.

The survey reads that only 1% of respondents stated they were asked to pay a bribe in return for receiving public service in the past 12 months, which is an identical result to similar surveys conducted in previous years.

However, the NGO says respondents believe other forms of corruption are widespread, as 59% of respondents say abuse of power by public officials is common in Georgia, while 21% said that it is not common.

Meanwhile, 36% of respondents think abuse of power for personal gain by public officials is common, while 15% consider it uncommon.

In addition to this, 91% out of those respondents who think that such actions are common, believe they aim to employ own family members, friends and relatives.

Also, 86% of respondents think that abuse of power by public officials aims to protect own business or the businesses of their family members, friends and relatives. 79% think that its purpose is inappropriate spending, and 58%, a bribe-taking in exchange for various cases.

The survey revealed that 52% of respondents said companies affiliated with government officials enjoy privileges in the process of public procure-

ments. 13% think such a practice does not exist.

51% of interviewees think that there is no proper investigation of corruption cases when they are dealing with high-ranking officials or influential people who have ties with the ruling party Georgian Dream (GD), while 42% consider the government, as a rule, covers up for people involved in corruption, and 31% think that the government discloses such cases.

Regarding employment in the public sector, 31% of respondents said one needs to have acquaintances to get hired in public service. 28% and 19% respondents respectively listed education and professionalism/work experience as main factors for recruitment.

The survey was commissioned by Transparency International Georgia and conducted by the Caucasus Research Resource Center (CRRC) from February 20 to March 5, 2019. With a total of 2,087 respondents being interviewed throughout the country, the representative survey has a margin of error of 2.3%.

To note, in Corruption Perceptions Index (CPI) 2018, released by Transparency International in late January, Georgia leads Eastern Europe and Central Asia countries with its score of 58.

Georgia has advanced its score by two points since last year, taking 41st place among 180 countries.

In the ranking, 100 points indicate the lowest level of perceived corruption while 0 – the highest.

Georgia’s CPI scores during the recent years are: 2012 – 52 points, 2013 – 49, 2014 and 2015-52, in 2016 Georgia was placed 44th with a score of 57 and in 2017 – 56 points and 46th place.

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BUSINESS

GEORGIA TODAY

APRIL 16 - 18, 2019

Ambassador of the UAE on Relations, Development & Progress

EXCLUSIVE INTERVIEW BY KETEVAN KVARATSKHELIYA

I

n recent years, Georgia has made major steps forward developing and enhancing relations with other countries around the globe. The launch of the Embassy of the United Arab Emirates (UAE) in Tbilisi in 2018 is further proof of it.

GEORGIA TODAY grabbed a chance to meet with the first Ambassador of the UAE in Georgia, H.E. Essa Albasha Alnoaimi, and find out about the current collaboration between Georgia and the UAE, as well as future plans.

“Georgia is a country always looking to develop,” the Ambassador told us. “It has managed to succeed on a global scale and to strongly establish itself on the international arena in various spheres.”

The Ambassador positively evaluated the current collaboration between Georgia and the UAE and explained the reasons why.

“Even though the Embassy of the UAE was launched in Georgia just a year ago, the two states have led the cooperation in many sectors successfully and have achieved a number of fruitful outcomes.

A major role in this process is definitely played by the governments of the countries, which are always involved in the processes, preparing various agreements, implementing flexible taxation systems and reciprocally encouraging each other to allocate investments in the right directions. There is a practice of high level visit exchange between the two countries; The visit of former President of Georgia H.H Giorgi Margvelashvili to the UAE in April 2018 gave a powerful impulse to the bilateral relationships followed by signing of the memorandum of the establishment of a joint political

commission of UAE and Georgia during the meeting between the Prime Minister of Georgia H.H Mamuka Bakhtadze and the Minister of Foreign Affairs and International Cooperation of the UAE H.H Sheikh Abdullah bin Zayed Al Nahyan at UN General Assembly meeting in New York in September 2018. H.H Sheikh Al Nahyan also paid an official visit in Tbilisi back in 2017. As of recent an official delegation headed by the Minister of Climate Change and Environment H.H Dr. Thani bin Ahmed Al-Zeyoudi attended the inauguration ceremony of newly elected president of Georgia H.H Salome Zourabichvili. Additional to that many agreements and MOUs has been signed between both country in order to enhance friendly relationship based on the mutual interest.

Ambassador Essa Albasha Alnoaimi then shared his views regarding the further enhancement of friendly relations between Georgia and the UAE and the significance of 2019 for both countries.

“2019 is especially important for the development of bilateral cooperation between the UAE and Georgia, which is preparing for one of the most crucial and grandiose events in the region: ‘Expo 2020’,” stated the Ambassador.

Expo 2020 is one of the world’s biggest fairs, which is set to open on October 20, 2020 in Dubai and last for 173 days.

Totally unique, the fair will offer an amazing ‘journey’ through 190 countries, including Georgia, with no borders, allowing guests to be able to discover and enjoy narratives from every corner of the globe.

“Expo 2020 with the motto “Connecting Minds, Creating the Future“ is the best platform to bring multiple countries together in one huge area, giving each of them a wonderful opportunity to display themselves and their products to the rest of the world in the very best way

for six months, to attract more investors and to establish themselves on the international markets. I would also like to emphasize the fact that the upcoming event is not going to be focused on the commercial sector but will be fully dedicated to the cultural sphere. In this case, Georgia has incredibly high chances and potential to achieve success, as this is a country with an ancient history and outstanding culture. At the fair, it will be able to mesmerize visitors with traditional dances, arts and dishes of the stunning, colorful cuisine and, of course, mineral waters of local production in addition to industrial and agricultural products.

Georgia is successful in the tourism industry, and the Diplomat also focused on this fact.

“Georgia has put a lot into the development of its tourism industry in recent years and has seen positive results come from it. It hosted more than 8 million tourists last year, which is an unimaginably high figure for such a small country. Expo 2020 will contribute to augmenting this number and increasing the desire of travelers to visit Georgia, as the fair is expected to see approximately 30 million visitors.”

We asked the Ambassador to tell us more about the economic cooperation between the UAE and Georgia.

“Enhancing the economic collaboration is paramount for the UAE, as well as for Georgia. The UAE represents a country which has already allocated investments amounting to more than $1 Billion in Georgia, which was certainly catalyzed by the brotherly relations of the two governments and their mutual aspirations for progress. The implemented investments include the launch of multiple hotel and shopping center chains, as well as the support of the retail business and real estate. There is a room of tremendous investment possibilities in other segments, such as export of the mineral water, as there is the incredible multiplicity of water resources in Georgia.”

The Diplomat also shared his views regarding the strategic location of Georgia and the UAE. “Both the UAE and Georgia benefit from a strategic location which is one of the best factors for development. The UAE, which has developed infrastructure of Airports and Sea ports with high security measures, is located in the crossline of Asia and Africa and is few hours distance from the South of Europe. As for Georgia, due its location, it is the channel through Europe and Asia and its sea ports serve the whole Caucasus region.

These factors make the country attractive for investors and tourists.

The UAE is the second strongest economy in the region and one of the leading economies in the world, which is the result of knowledge and innovation.

Therefore, it is considered one of the main touristic and shopping centers of the world.

There is big tourist movement between Georgia and the UAE. 15,000 Emirati visitors are hosted by Georgia annually, while there is a tourist inflow of 6,000 from Georgia to the UAE in the same period of time. Therefore, the expansion of the transport network is one of the important aspects on our agenda, with negotiations well underway between the two governments. As the fact, Georgia has the most frequent air connection with the UAE, comparing to countries in the region. More precisely, there are 25 flights from Tbilisi and Batumi to the UAE International Airports per week.

This number is increasing seasonally up to 40 flights weekly.”

The Ambassador of the UAE spoke with great enthusiasm about Georgia’s humanitarian resources and projects in the education sector.

“It would be unfair to undermine the human resources in Georgia, a dominant catalyst for the country’s prosperity and triumph. I strongly believe that the citizens of Georgia are very skillful and have a vast number of capabilities. It is vital not to lose such a unique chance and to invest more in boosting human capital countrywide. It is important to improve the qualifications of Georgians in different spheres, which as a result will contribute to the sustainable development of the country in general, and its economy in particular.

“The UAE cares a lot about the education sector. There are the brunches of

the world’s oldest universities such as Sorbonne University, American and Australian Universities. As the fact, these universities are among top rated universities in the world.

Moreover, government is supporting the development of medical service.

There are many medical recreations resorts in the UAE, for instance, Cleveland Clinic in Abu Dhabi and Dubai Healthcare City. Our government is in close partnership with UNICEF and allocates major investments to enable all minors and adolescents to have access to education.

The foreign aid of the UAE government has reached $32 Billion during 2013-2017.

The main purpose of the foreign aim was to support millions of refugees from different continents who were the victims of the war or natural catastrophe.

Moreover, the UAE government on the regular basis corporates with UNDP and FAO” H.E. Essa Albasha Alnoaimi concluded the interview with us by focusing on the high principles of the UAE. “It is important to underline that the UAE follows the concept of tolerance and respect for each individual, regardless of their ethnicity or religious beliefs.

2019 is ‘The Year of Tolerance’ in the UAE. In addition, I am proud to say that on February 4, 2019, His Holiness Pope Francis and Grand Imam Al-Azhar Ahmed Mohammed Al-Tayeb launched the Human Fraternity Document, dedicated to the establishment of unity, peace and harmony among different nations. Georgia shares our values. That is why I am strongly convinced that our countries will manage to continue friendly and balanced collaboration and achieve success in the future.”

BUSINESS

GEORGIA TODAY APRIL 16 - 18, 2019

9

Georgia On the Runway: the Country's Aspiration, Potential & Perspectives OP-ED BY EU AMBASSADOR CARL HARTZELL

G

eorgia has taxied out onto the metaphorical runway and is ready for lift-off.

That is the feeling I get after six months at the helm of the EU Delegation to Georgia. Georgia is currently the undisputed reform champion of the Eastern Partnership region, a fact that is reciprocated by an unprecedented level of EU political engagement and economic assistance to this country. EU-Georgia relations have never been more intense than they are right now.

The EU is Georgia's biggest trade partner and almost half of Foreign Direct Investments to Georgia come from the European Union. Georgia's exports to the EU have grown steadily since the Deep and Comprehensive Free Trade Area (DCFTA) entered into force in 2014.

The DCFTA also helps in pushing a much broader agenda of economic modernization, equipping this small and open economy to compete successfully on the global market. With its geographic location, Georgia is in an excellent position to link up trade between Europe and Asia as well as in the region.

Through EU-Georgia visa liberalization, launched in 2017, more than 300,000 Georgian citizens have already taken the opportunity to travel visa-free to Europe, and programmes like Erasmus+, Horizon 2020 and Creative Europe are contributing to boosting people-to-people contacts.

With a wealth of culture, history, tradi-

tions, wine and culinary specialities, and wonderful nature and landscapes ideal for trekking in the summertime and for skiing in the wintertime, Georgia has

huge potential as a unique and attractive tourism destination as well as exporter of niche products to Europe and beyond.

The President and government have

rightly put cultural diplomacy high on the agenda, which will undoubtedly assist in building up Georgia's brand name further.

But for Georgia to successfully get airborne and reap the benefits of its potential, it still needs to clear the tarmac of a number of obstacles and risks. With around 20% of the population still living in poverty, an uneven distribution of wealth between Georgia's regions, and many Georgians left out of the job market, more efforts need to go into the government's stated objectives of 'inclusive economic growth', de-centralization, jobs creation and education reform.

Without such investments in Georgia's human capital, not only will there be bottlenecks to economic growth, but eventually also a risk to sustained popular support for further reforms.

Moreover, without continued, ambitious efforts in key areas such as judicial reforms, including in the judiciary itself, and the fight against high-level corruption, a strong societal contract in Georgia will not emerge, nor will Georgia become a truly attractive place for investments. These challenges are well-known here, but it will still require a strong political will to set the course right. The same goes for addressing the shortcomings of past election processes, including last year's presidential elections, where I hope that, through concerted legislative and other efforts this year, Georgia will be better positioned to face the parliamentary elections in 2020.

With every year that passes, Georgia is growing incrementally better and stronger. With every year, more Georgian citizens are broadening their horizons and taking ownership of their own

With every year, Georgia is better prepared to handle its regional challenges, and to embrace its opportunities fate, their own potential and that of their country. With every year, Georgia is better prepared to handle its regional challenges, and to embrace its opportunities.

And given that there is an almost national consensus on where Georgia should be heading, towards Europe, through further democratic and economic reforms, objectively, little stands in the way of Georgian politicians from all camps to unite around this objective, thus making sure that the trajectory set already some 25 years ago, becomes irreversible. We are now at a point in time when it is time to clear the last rubble from the tarmac and take Georgia to the skies!

The Georgian version of this article was printed in the Georgian version of The Economist’s The World in 2019 edition.

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BUSINESS

GEORGIA TODAY

APRIL 16 - 18, 2019

The Unbearable Lightness of Doing Business in Georgia

BY ERIC LIVNY

G

eorgian policymakers are proud of their country being #6 in the world in the Ease of Doing Business Index. It is, indeed, quite easy to do business in Georgia.

Starting a new business takes literally only a couple of hours (on paper, that is), ranking Georgia #2 in this category globally.

And all it takes to register a new property is one action and one day (Georgia is #4).

Georgia is only #16 in paying taxes, but businesses should not be complaining.

Georgian tax rates are rather low by international standards: 20% on personal income, 15% on distributed profits, and 18% VAT. Furthermore, inspired by Estonia, Georgia makes paying taxes easier by levying income tax on distributed profits (dividends) rather than on taxable profit.

Though not captured by the Ease Doing Business methodology, Georgian companies have yet another advantage over their international peers: they don’t have to give a s*** about their clients and customers, whether it’s other businesses or unfortunate Georgian citizens. And judging by the experience of Ana and Davit, Georgia might be #1 in this aspect of the business environment.

ANA, DAVIT AND THEIR NEW BATUMI APARTMENT In the fall of 2018, Ana and Davit bought a beautiful apartment on the 18th floor of Batumi’s Pushkin Twin Towers, as the project was advertised by the developer, DARBUILDING.ge. Large panoramic windows promised a great view of the city and the mountains. Transforming the concrete shell (“black carcass”) into a cozy home, required a lot of work, but this was a challenge well worth taking up.

All was good (for a couple of months) until it wasn’t. Davit quickly realized that the building’s external walls were not properly insulated. The developer, DARBUILDING, promised to “look into the issue”. But while they kept looking – without doing anything – walls were getting wet, preventing Davit from starting the renovation works.

“In the end, I decided to take a month off, and fix the wall by myself. I could not afford waiting any longer,” Davit tells me.

But tragedy struck on the first day of Davit’s vacation on January 16, 2019: a strong wind gust at 90 km/h blew their large (9m2) panoramic windows out of their frame. In their apartment and that of their neighbors on the 17th floor. The windows fell down, crushing a BMW and a small cabin beneath. A similar incident had happened three days earlier, when a window fell out of the 14th floor of the building. Thank God, nobody died or was hurt in both incidents.

Davit, his neighbors and the owners of the damaged property spent the rest of the day in the local police station, reporting the incident. The police never bothered to inspect the scene of the crime and merely transferred the case to an investigator in the central police office of Batumi.

IS THERE ANYBODY OUT THERE (TO TAKE RESPONSIBILITY)?

The next morning, Davit and Ana called DARBUILDING. They were certain the company would quickly fix the problem.

After all, it operates its own plastic window factory. But, they were bitterly disappointed.

“The building was commissioned by the Batumi City Hall,” they were told by the company’s representative, “they are now responsible.”

A representative of Batumi’s Construction Supervision Department, where Davit found himself a few hours later, briefed him on the legal situation: “The house has been commissioned, but,

Batumi’s Pushkin Twin Towers.

Prime location. Subprime construction quality and no accountability.

Georgia is #8 in the world in “enforcing contracts” (13/18) Indicator

Range NOR

Overall quality of judicial processes (0-18)

14.0

GEO

SWE

FRA

ARM

GER

RUS

FIN

ICE

AZE

13.0

12.0

12.0

12.0

10.5

9.5

8.5

7.5

6.5

Court structure and proceedings

(-1-5)

3.5

3.5

3.5

4.5

3.5

4.5

3.0

1.5

1.5

3.0

Case management

(0-6)

4.0

4.5

4.0

3.0

3.5

1.5

4.0

2.0

2.0

2.0

Court automation

(0-4)

4.0

2.5

2.0

2.0

2.0

1.5

0.0

2.5

2.0

1.5

Alternative dispute resolution

(0-3)

2.5

2.5

2.5

2.5

3.0

3.0

2.5

2.5

2.0

0.0

according to the Georgian law, the developer remains responsible for any damages, visible or invisible, for a term of 10 years.” He even agreed to call and admonish DARBUILDING’s lawyer: “come on, you know it is your responsibility, not ours!” (the two were friends – as, in fact, everybody seems to be friends in Batumi’s bustling construction sector).

The lawyer promised to talk to Amiran Darchidze, DARBUILDING’S owner and director: “Amiran may agree to give you a new window but you would have to install it yourself.”

But when the lawyer called them back the next day, it was to inform Davit that Amiran Darchidze was not in the mood to do any “favors” for his customers.

Davit was not in the mood to give up.

He typed up his claims and went to see Mr. Darchidze in person. “Get out of my office,” he was told, “see you in court!”

Within the next few days, Davit sent his claims – by registered mail or handdelivered – to: • DARBUILDING LLC; • The Georgian prosecution office in Batumi (with a request to investigate the building’s safety); • Batumi City Hall (with a request to meet Batumi mayor, Lasha Komakhidze); • The Georgian Ministry of Economic and Sustainable Development in Tbilisi.

He never heard anything back from DARBUILDING. The prosecution office agreed to open the case, but then closed it, without ever visiting Davit’s apartment and inspecting (either of) Pushkin Twin Towers.

The letter to the Georgian Ministry of Economic and Sustainable Development was forwarded to the Ministry of Economic Development of Adjara Autonomous Region, and from there to Batumi City Hall. Batumi City Hall’s Construction Supervision Department has not officially responded to this very day.

On January 30, 2019, an investigative journalism piece by Tsago Kakhaberidze, describing the Pushkin Twin Towers drama, appeared in Batumelebi. Two days later, on February 2, Davit was invited to meet Batumi Mayor Lasha Komakhidze. Komakhidze listened and asked his staff to talk to DARBUILDING and demanded that they take responsibility.

On Feb 15, Davit called Irakli Mokia from Batumi’s Construction Supervision Department, who was supposed to be informed of his case. Like others before him, Mokia promised to help, but never returned the call or took any action...

Georgia’s bureaucracy turned out to be a tough nut to crack for Davit and Ana. After three months of trying, they had no choice but give up. In the meantime, DARBUILDING continues to have

its buildings commissioned by a businessfriendly city hall. What is good for the likes of Amiran Darchidze is presumed to be good for Batumi. Nobody seems to care about – and take responsibility for – the wellbeing and safety of Georgian consumers and citizens.

AN EFFICIENT COURT IS THE BEST REGULATOR “If you could not get the government regulators to help you, why didn’t you take your case to court?” I ask Davit.

“Don’t you believe in your chances of winning?”

“I thought of it,” says Davit, “but decided this was not worth our time and money.

First, we would have to pay at least 525 GEL for an expert engineer’s opinion.

Then, we would need to hire an experienced lawyer. Ideally not from Batumi, but from a good office in Tbilisi. The litigation process would take about 2 years, with minimal chances of winning in the first instance, in the local Batumi court. We would most likely win in an appeals court in Kutaisi, but this would take another year. In the best-case scenario, we would be able to cover our costs for the window, legal services and engineering expertise. But 3 years is also sufficient time for the company to declare bankruptcy… “ I had no further questions for Dato.

But I do have many questions (and a few suggestions) for Georgian policymakers.

Kakha Bendukidze, the ideologue of Georgia’s libertarian reforms of 20042006, hated government regulators and inspectors. “The court is the best regulator,” he told me once.

But, if courts take three or four years to settle a simple civil case, such as that of Davit and Ana, they can hardly perform the regulator’s role. Slow and dysfunctional courts cannot deter unlawful or irresponsible behavior on the part of fellow citizens and companies. They are equally bad for the “ease of doing business” (especially for small companies), and the wellbeing of Georgian consumers.

courts can handle claims up to $10,000.

Individuals may sue other individuals or corporations. If needed, they can use legal assistance, but are not allowed to be represented by professional lawyers.

To get a hearing, one has to wait about 3 months, but cases are typically decided on the spot (or within a maximum of seven days), using a simplified, informal procedure. Importantly, decisions by small-case courts are executed just like any other court’s decision. * * * Rather astonishingly, the World Bank’s ‘Doing Business’ report ranks Georgia at the top of the world (#8, to be precise) on contract enforcement. Ahead of its neighbors. Ahead of OECD high income country average. Ahead of Sweden, France and Germany. Way ahead of Finland and Iceland.

But based on what we know about Georgia’s justice system, something is fundamentally wrong with not only the Georgian business environment but also the (flattering) way in which the World Bank assesses it. Time has come to fix (or nix) the Doing Business Index and the reality it purports to describe.

ABOUT AUTHOR:

Eric Livny is Founder and President at Tbilinomics Policy Advisors and Chair of Economic Policy Committee at the International Chamber of Commerce (ICC Georgia).

THE WAY FORWARD How can Georgia unlock the bottlenecks in its justice administration system? One easy solution would be to establish “small-claims courts” to handle civil cases involving small amounts of money.

Such courts exist in Britain, the US, many former British colonies, such as Singapore and Hong Kong, and Israel. While the institutional detail may differ, the general purpose served by such courts is to offer a quick, easily accessible, and inexpensive legal recourse for rank-andfile citizens.

In Israel, to take one example, such

On 16 January, 2019, strong wind blew away two windows on the 17th and 18th floors of the building.

BUSINESS

GEORGIA TODAY APRIL 16 - 18, 2019

Georgia’s External Trade Reaches $2.8 Bln in Jan - March 2019

Photo source - Zimbabwe Situation

BY AMY JONES

G

eostat, the National Statistics Office of Georgia, has announced that external trade amounted to $2.8 billion in January to March 2019.

The statistics show a 0.1% decrease

in year-on-year trade. The value of Georgian exports was $826 million, a 12.8% increase compared to the same period in 2018, whilst the value of imports was $1.98 billion, a 4.7% decrease compared to 2018.

In 2018, external trade accounted for 41.1% of Georgia’s total trade turnover. Georgia’s trade deficit amounted to $1.16 billion last year, meaning imports exceeded exports significantly.

Business Ombudsman Calls for Softening of Banking Regulations

BY THEA MORRISON

G

eorgian Business Ombudsman Irakli Lekvinadze says that the new tight banking regulations have affected sales of various business sectors, including companies employed in construction and retail trade.

Lekvinadze stated that it is important to mitigate the new banking regulations because the negative effect of the regulations is already obvious in the hardware stores and other business sectors.

“Sales of these companies have reduced by about 40-60%, and this was especially acute in the regions.

The regulations also affected the construction sector," he stressed.

The Business Ombudsman added that softening the regulations is necessary to prevent a dramatic influence on the business sector.

The new banking regulations took effect in Georgia on January 1, 2019 meaning that people will not get loans from banks if there are no solid guarantees that they will be able to pay it back on time.

Ivane Matchavariani Meets with MIGA Vice President TRANSLATED BY KETEVAN KVARATSKHELIYA

W

ithin the scope of the annual spring meetings of the International Monetary Fund (IMF) and the World Bank Group taking place in the USA, Ivane Matchavariani, Minister of Finance of Georgia, met with Vijay Iyer, Vice President of the Multilateral Investment Guarantee Agency (MIGA), where the parties covered topics regarding the projects carried out with the assistance of MIGA, and the perspectives for further cooperation.

“We had a very fruitful dialogue with Minister Ivane Matchavariani and his team. We are looking forward to starting to use the products of MIGA to enable Georgia to attract investments for infrastructural, as well as other projects,” noted MIGA Vice President.

MIGA is a member of the World Bank, operating

in a number of countries, including Georgia. The risk insurance mechanism applied by the institution makes access to capital more affordable for investors and increases their interests regarding participation in the large-scale projects carried out in Georgia.

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BUSINESS

GEORGIA TODAY

APRIL 16 - 18, 2019

HUAWEI's New Camera Receives Top Rating by BBC & Forbes

BY MARIAM MERABISHVILI

U

p to 5,000 items of media coverage in six hours, the HUAWEI P30 series smartphones are in the spotlight of the world.

"A smartphone that gives the user exactly what she needs." "This is what the mobile industry has lacked” – media said of the HUAWEI P30 series smartphones. According to ‘Stuff,’ the configuration of the new series cameras is another step forward in the innovative world, definitely changing the rules of photography.

Fix the furthest away objects, even the Eiffel Tower in full scale and at the same time incredibly close: this is now possible with a 10x hybrid, 50x digital and 5x optical zoom, The internet journal Beebom YouTuber explains that "HUAWEI Company has been working hard on the P30 Pro's super-zoom camera; none of the flagships can be equal to its opportunities. It's a smartphone with the best camera."

"The HUAWEI P30 Pro's number of cameras, layout and deployment make it possible to take photos even with low lighting and greater distance, better then competitors’. Even minimum light is enough for the P30 Pro to capture stunning photos. It really changes the rules of the game in photography” Stuff wrote.

The HUAWEI P30 series even caught the eye of the BBC. CCS Insight's mobile analyst, Ben Wood, states "There is no doubt that the 5X optical zoom is a distinguished, magical feature that the company has acquired with SuperZoom lenses, the new L type periscopic architecture.

The results of the first tests we conducted were very hopeful and if everything goes well, the innovative camera will make the P30 series really outstanding against the background of competitors."

The Daily Mail also reported about the

HUAWEI P30 series, noting the assessment of Thomas Hasson, Forrester analyst: "By presenting the HUAWEI P30 and P30 Pro, the company clearly demonstrates its position as a technological leader, the best in photographic capabilities through artificial intelligence."

When it comes to poor lighting and zooming, Forbes finds the HUAWEI P30 series capabilities as “without an alternative.” Forbes analyst Ben Sin believes that "there is no competition: the HUAWEI P30 Pro is the leader." When compared to the IPhone XS, Samsung Galaxy S10 and LG V40, the P30 Pro model won in almost all categories.

"We can judge that the photos taken

by all four devices look the same, but when we find ourselves in the worst lighting conditions, the leadership of HUAWEI P30 Pro becomes even more noticeable, to the level that the competition no longer counts."

HUAWEI introduced the new P30 series smartphones in Paris on March 26. With a completely updated, powerful and ultra sensitive camera system, HUAWEI P30 and HUAWEI P30 Pro drastically change the rules of photography.

In the HUAWEI P30 series, we meet a camera system created with Leica, which offers the ability to shoot professionally through the latest sensors and automatic image processing techniques.

The world's first, the HUAWEI P30 Pro created with its Leica and 4-core cameras, is equipped with a 40 MP ultra-wide view and 20 MP wide lens. In addition, the P30 Pro's camera system includes 8 MP tele-photo lenses and TOF camera, which measures the depth of the object at a higher accuracy. As a result, we get a sharper focus on the object, and the background becomes more obscure with the help of a variety of effects.

The P30 series also features the ability to unlock through an embedded fingerprint in the screen, wireless charging and reversible charging functions. With 40W's fastest rechargeable technology and powerful processor Kirin 980 with

the 4200 millimeter battery, Smartphone is the best friend for travel lovers.

HUAWEI products and services are available in more than 170 countries and are used by a third of the world's population. There are 16 research and development centers operating worldwide in the USA, Germany, Sweden, Russia, India and China. HUAWEI Consumer BG is one of HUAWEI's three business units, mainly focusing on Smartphones, personal computers, tablets and cloud services. HUAWEI Global Network is based on 20 years’ experience in the telecommunications business and serves to provide innovative technologies to customers around the world.

MoE Reports to Parliament on DCFTA Implementation Plan 2018-2020

BY SAMANTHA GUTHRIE

Image source: Ministry of Economy and Sustainable Development

O

n Wednesday of last week, Deputy Minister of Economy and Sustainable Development Genadi Arveladze reported on the progress made in the 2018 National Action Plan and presented the 2019 Action Plan for the Deep and Comprehensive Free Trade Area Agreement (DCFTA) between Georgia and EU Member States to the Parliamentary Committee on European Integration. Currently, the DCFTA Implementation National Action for 2018-2020 is currently being carried out by the Ministry of Economy and Sustainable Development and other responsible entities, including the Ministry of Environmental Protection and Agriculture and the Ministry of Regional Development and Infrastructure.

The DCFTA, or Deep and Comprehensive Free Trade Area, entered into force in July 2016 as part of the Association Agreement Georgia signed with the European Union in June 2014. The preferential trade regime increases market access between the EU and Georgia based on a system of better-matched regulations. Georgian businesses have so far struggled to benefit from the regime, however, as the main potential

export, agricultural products, have failed to overcome the hurdles of European technical, quality, and food safety regulations. This is clearly reflected in the 2018 trade balance figures: exports from Georgia to the EU increased by 11.5% to $730.3 million, while imports from the EU into Georgia increased 19.5% and amounted to $2.6 billion. Overall, trade

turnover increased by 17.7% ($3.4 billion).

Arveladze attributes the growth to the DCFTA. The fact that not only has the overall volume of exports increased, but the number of companies who export goods abroad increased by 37% to 789 companies, is a strong indicator that the growth has not been concentrated at

the top, in large, already successful businesses. Arveladze explained that during the period of 2014-2018, recognition of Georgian products in the EU significantly increased, particularly for agriculture products: kiwi, dried lemons, persimmon, black currant, apples, quince, and fruit jams. Arveladze also mentioned pet furniture and glass bot-

tles as products from Georgia recognized in the EU for their quality and value. Georgia is actively cooperating with relevant EU institutions to help open the EU market for the import of Georgian animal-origin products, he noted.

Arveladze thanked the German International Cooperation Society (GIZ) for the support in developing Georgia’s export strategy, which is now focusing on the value chains of textiles, furniture and communication technologies for potential export to EU markets.

Arveladze also briefed the parliamentarians and attending civil society representatives on issues of phytosanitary measures, customs, state procurement, environmental protection and other ongoing and planned reforms designed to bring Georgia’s internal standards more in line with Europe’s as part of the DCFTA. Establishing a regulatory system for industrial products is a key priority for the ministry, including changes in product safety and the adoption of technical regulations in industrial conditions.

Another major area of work has been geographical indications (GIs). At their annual meeting in March last year, the EU-Georgia Sub-Committee on Geographical Indications approved GI protections for several products, including: Tkibuli tea, Machakhela honey, Kutaisi greens, and Akhalkalaki potatoes.

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BUSINESS

GEORGIA TODAY

APRIL 16 - 18, 2019

Battle for the Arctic: Resources & Commercial Routes

BY EMIL AVDALIANI

H

istorically,theArcticregion has been relatively exempt from geopolitical struggle among major world players. Yet, this is set to change as the Arctic has been melting at an alarming rate since the 1980s due to global warming. Environmentally, this development is quite alarming. However, for five Arctic nations (US, Russia, Norway, Canada, and Denmark), the ice melting presents wide economic and military opportunities to extend their prospective influence in this otherwise closed region.

The numbers speak for themselves.

According to estimates made by world research institutions, the Arctic region could contain up to 90 billion barrels of oil and 47 trillion cubic meters of natural gas.

This estimate, if true, means the Arctic region contains 30% of the world’s undiscovered natural gas, and 13% of its oil.

Further, around $1 trillion in minerals like gold, zinc, nickel and platinum lie in the region.

As said, these reserves of natural resources are expected to become more accessible as climate change accelerates the rate of ice melt. Russia might gain most as the country’s northern frontier

entirely borders on the rich ocean. In fact, Moscow has in the last several years stepped up its initiatives at revitalizing old Soviet military camps. Recently, Putin described the Arctic as "the most important region that will provide for the future of Russia." A separate Ministry for Far East and Arctic Development was created.

Russia military moves have brought a military response from other Arctic countries. For example, in 2018, NATO staged ‘Trident Juncture’ drills with some 40,000 troops, which so far is the biggest military exercise in Norway in more than a decade. Moreover, in January 2019, US Navy Secretary Richard Spencer said the Navy is working out a plan to reopen the Adak base in Alaska and send surface ships into the Arctic waters for the first time in the summer.

The militarization of the Arctic is now in full process. As a response, the Russians announced they will be holding large-scale drills this year, dubbed “the Tsentr-2019”. The exercises will be held in the Arctic archipelagos of Novaya Zemlya and New Siberian Islands.

Beyond the necessity to enhance a military posture in the Arctic, the Russians also strive for control of the region because of the so-called ‘Northern Sea Route’ (NSR), which falls into the Russian Exclusive Economic Zone in the ocean.

The commercial route through the

Arctic will cut the shipping time from Europe to Asia (primarily China) by some 40% compared to the route – Suez Canal – the Chinese use nowadays. A major economic route near the Russian seashore would give a major boost to Russia’s economy. Quite possibly, by the second half of the 21st century, we might have a situation when the Russians for the first time in their history border water where major world commercial activity unfolds. Even now, well before the ice has substantially retracted, Russia has the superiority of an atomic icebreaking fleet, which can lay out routes for trade ships. Essentially the control of the Arctic is a struggle for the control of future raw resources and commercial routes. Thus, it is no surprise that Moscow has just announced that foreign ships transiting through would be required to submit a 45-day notice, take a Russian pilot aboard and pay increased transit fees.

The NSR is especially attractive to Beijing. Today, China is Moscow's biggest client for Northern Sea Route shipments: Russia sent liquified natural gas tankers to China via Arctic waters for the first time in July 2018, and lent Russian icebreakers to escort a convoy of Chinese cargo vessels to Europe that fall.

Beijing’s interest in the arctic is also exemplified by the announcement last month that China will build its own

nuclear-powered icebreaker.

Overall, the battle over the Arctic is set to increase in the coming years. Climate still is a powerful obstacle but only

decades are needed to see the geographic situation changed, constituting the largest geopolitical development in recent centuries.

SOCIETY

Georgia Joins Global Recognition of Stenocardia Month

BY MARIAM MERABISHVILI

T

he campaign to raise awareness of stenocardia began in Georgia with a presentation of a social project organized by the European Cardiology Society (ESC) Working Group and French Pharmaceutical Company Servie. The information campaign is being conducted locally by the Association of Cardiovascular Diseases Prevention and Rehabilitation Association in Georgia.

Within the framework of the campaign, Tbilisi hosted a scientific conference on the topic: ‘Personalized approach to stable heart ischemic disease.’ At the conference, which was led by Zurab Klimiashvili, President of the Association for Cardiovascular Diseases Prevention and Rehabilitation, were invited doctors from Tbilisi’s leading cardiology clinics.

The awareness-raising campaigns of various illnesses gain importance by the year. This year, the world announced April as the month of stenocardia. Georgia joined the initiative and started a stenocardia informational campaign

called "Listen to Your Heart", which aims to inform the public about ischemic heart diseases. The aim of the campaign is to raise public awareness about the ischemic heart disease so that patients do not ignore the symptoms, visit a doctor in time and clearly understand what's going on.

Klimiashvili and Director of Georgian representative of the Pharmaceutical

Company Servie Maia Khetsuriani talked about the symptoms, early diagnostics and management of the disease, as well as planned activities during the campaign. Leading specialists of the field were also invited to the conference in order to jointly define priorities on how to promote early diagnosis of stenocardia and disease prevention.

"Listen to your heart and control steno-

cardia together” is a campaign to explain the signs and symptoms that characterize stenocardia, advising people to listen to their bodies to catch the early-warning signs and go to the doctor if necessary. Stenocardia is a top global issue in complications and disability in various forms. Sometimes it is deadly," said Klimiashvili.

"This year, the world has recognized

April as the Month of Stenocardia.

Accordingly, our company Servie Georgia joins this initiative together with the Association for the Prevention and Rehabilitation of Cardiovascular Diseases,” said Servie Director Khetsuriani. “Our company will try to provide comprehensive information on the symptoms of the disease and its detection, and give advice what to ask the doctor in order to avoid a heart attack.”

In terms of health economics, stenocardia is a big burden for the public, negatively affecting the quality of life and increasing by 1.5 times the risk of losing your job, three times the chance of losing work-capabilities and four times, depression. Despite these alarming indications, stenocardia remains outside the control of doctors. It means that many patients do not take appropriate action and, as a result, their health conditions worsen. Recent research has shown that in 43% of patients with coronary artery disease, stenocardia is not diagnosed.

44% of patients with angina are not treated with enough medicinal therapy.

These facts confirm that important efforts are needed to improve the treatment of stenocardia both on the side of doctors and patients.

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SOCIETY

GEORGIA TODAY APRIL 16 - 18, 2019

15

Tbilisi Open Air to be Held in Lisi Wonderland

BY MARIAM MERABISHVILI

T

bilisi Open Air will be held on June 21, 22 and 23 in Lisi Wonderland. The headliners of the festival are Franz Ferdinand, Mogwai, UNKLE, Rhye, David August, The Subways, Michelle Gurevich, 1200 Micrograms, 'Green Room'. Overall - up to 70 performers!

Four stages will entertain guest at Open Air 2019.

On June 21, on the festival’s main stage, openair headliner Franz Ferdinand will be presenting, as will Georgian artists MokuMoku and LOUDspeakers. You will be able to listen to UNKLE, Rhye, Green Room on June 22 on the main stage and on June 23, Mogwai, The Subways, Michelle Gurevich, and Salio.

EYESTAGE is an electronic music and visual art scene hitting Tbilisi Open Air for the second year. On June 21, on the EYESTAGE, Moritz Von Oswald, Tobias and Edit Select will perform for you. On June 22, the headliner will be David August and on 23, Andrey Pushkarev and Matthew Dekay.

Garden Stage Psytrance is a stage being presented at Open Air for the fourth time. 1200

Micrograms will be a headliner on June 21, Pixel on 22 and Freedom Fighters on June 23.

The Singer Stage joins Tbilisi Open Air for a second year. During the day, Singer's is dedicated to acoustic projects, and at night to Jazz Foundation artists. At this stage, two newcomers will be presenting their outstanding projects on June 21. On the night of June 21, guests will be able to listen to Dinis Virsaladze's quintet. On June 23, the Singer Stage will be taken over by Rezo Kiknadze's sixtet.

Tbilisi Open Air was created in 2009 on the initiative of the Altervision Group. Achiko Guledani, Vakho Babunashvili and Beka Japaridze are the authors of the idea of the biggest music festival in the Caucasus region.

In 2009, the first day of the festival was held on Shardeni Street and continued on the territory of the Old Hippodrome. In 2016, Tbilisi Open Air built its “base” at Lisi Wonderland on Lisi lake.

The Festival has been twice winner of the National Tourism Awards, Welcome to Georgia, in the category of musical event / festival.

In its more than 10-year history, Tbilisi Open Air has hosted artists such as Deep Purple, Placebo, DDT, Archive, Tricky, UNKLE, Sevdaliza, Tom Odell, and Roman Flugel: a total of nearly 1000 artists!

April 17: International Day of Hemophilia TRANSLATED BY MARIAM MERABISHVILI

L

ithuanian ‘Life Without Bleeding’ patient Gitis Kirvela shared their experience with Georgian patients in a conference dedicated to the International Day of Hemophilia, held under the auspices of the Hemophilia and Donor Association and organized by the K. Eristavi National Center for Experimental and Clinical Surgery and Clinic ‘New Life.’ The conference aimed at informing the public about the necessity of access to hemophilic treatment.

Hematologists, experts and patients took part in the conference to once again summarize the current problems surrounding hemophilia and to highlight the gravity of disease management and access to treatments with modern methods.

Topics discussed at the conference included novelties in the treatment of hemophilia, modern methods of laboratory research of bleeding pathologies, physical therapy in countries with limited resources, dental treatment in patients with hemophilia, the role of donor plasma in hemophilia treatment.

Special guest Professor Robert Clamrot from Germany, Head of Hemophilia and Angiology Center in Vivantes (Berlin), introduced the audience to hemophilia A inhibitory treatment in Germany

and around the world. Another special guest was Gitis Kirvela, Member of the Lithuanian Hemophilia Association, who shared her experience with Georgian patients in a speech titled, "life without bleeding".

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GEORGIA TODAY

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

On the initiative of the World Federation of Hemophilia, the International Day of Hemophilia has been celebrated annually since April 17, 1989. The goal of this day is to increase public interest in and awareness of the disease. Hemophilia

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Vazha Tavberidze, Nugzar B. Ruhadze, Samantha Guthrie, Amy Jones, Thea Morrison, Ana Dumbadze, Ketevan Kvaratskheliya Photographer: Irakli Dolidze

is a congenital disease which manifests in men, while woman are carriers of the disease. People with disease have problems with blood clotting and tend to bleed excessively. Hemophilia can drastically degrade the quality of life of suf-

Website Manager/Editor: Katie Ruth Davies Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

ferers, as well as their families, friends and caregivers.

Today, the management of hemophilia is simpler than even a few years ago. The focus is on prophylactic treatment that provides a way to not only stop the existing bleeding, but to make bleeding occur less frequently. Prophylactic treatment allows patients full integration into society and to improve their quality of life.

The treatment of hemophilia in Georgia is financed by a state program to ensure patients do not die from bleeding caused by hemophilia. However, prophylactic treatment is not yet available and joint work is ongoing to solve this problem.

Information about the disease: There is a myth that hemophilia is a "royal disease" and people suffering are associated with royal branches. The myth comes from the fact that Queen Victoria was the carrier of the hemophilic gene, and accordingly her children suffered from it. Because of the lack of information on hemophilia, the myth was spread that the disease came from royal families.

397 people suffer from hemophilia and other bleeding pathologies in Georgia, with a worldwide statistic of one in every 10 thousand men. Nowadays, according to the World Health Organization, 400,000 people live with this disease in the world.

Today, the management of hemophilia is simpler, there are already modern possibilities to diagnose and detect this disease at the earliest stage, with prophylactic treatment able to give positive results for patients.

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