Issue #1008 Business

Page 1

facebook.com/ georgiatoday

Issue no: 1008/109

• DECEMBER 19 - 21, 2017

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue... Startup Market EXPO: Grand Exhibition of Georgian Startups Held for 2nd Time NEWS PAGE 3

October GDP Growth: Georgia at 5.7%, Armenia Surges to 17.6% Y/Y ISET PAGE 4

FOCUS

ON SKIING

Tetnuldi and Svaneti ski resorts are now OPEN!

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Minister of Economy Attends New Hydro Power Plant Construction Launch BY NINO GUGUNISHVILI

BUSINESS PAGE 6

Radisson Blu Iveria Hotel, Tbilisi: Best Deluxe Hotel in Georgia BUSINESS PAGE 8

The Georgian Times Rates Businesses BUSINESS PAGE 10

Lincoln Mitchell on the Israel Issue

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he Minister of Economy and Sustainable Development of Georgia, First Vice Premier Dimitry Kumshishvili, attended the launch of construction of a new hydro power plant on December 15, placing a symbolic capsule near the site of the future Bodorna Hydro Power Plant which is to be built in Dusheti, Samtskhe-Javakheti. The Bodorna HPP is to be constructed through a GEL 10 mln investment from Georgian Water and Power Company (GWP). Continued on page 2

Helping to Build Georgia’s Future: Gulf Air

Photo: Minister of Economy attends the New Hydro Power Plant construction launch

POLITICS PAGE 11 Prepared for Georgia Today Business by

Markets As of 15ͲDecͲ2017

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

Price

w/w

m/m

GBP 34.89

+4,0%

+4,5%

GEOROG 04/21

107.61 (YTM 4.29%)

Ͳ0,1%

+0,3%

GBP 3.50

Ͳ

+4,7%

m/m

GEORG 04/21

BONDS

112.37 (YTM 2.93%)

Ͳ0,0%

Ͳ0,0%

GBP 16.42

+0,8%

Ͳ2,8%

GRAIL 07/22

112.37 (YTM 4.70%)

Ͳ0,1%

+0,5%

BGEOLN 07/23

104.60 (YTM 5.05%)

+0,2%

+1,4%

Price

w/w

m/m

63,23

Ͳ0,3%

+2,2%

CURRENCIES

Price

w/w

m/m

1 256,44

+0,6%

Ͳ1,7%

GEL / USD

2,5395

Ͳ4,7%

Ͳ6,1%

GEL / EUR

2,9839

Ͳ5,0%

Ͳ6,5%

Price

w/w

m/m

GEL / GBP

3,3841

Ͳ5,1%

Ͳ5,1%

FTSE 100

7 490,57

+1,3%

+1,6%

GEL / CHF

2,5706

Ͳ4,3%

Ͳ6,3%

FTSE 250

20 048,61

+0,3%

+1,8%

GEL / RUB

0,0432

Ͳ4,2%

Ͳ3,8%

DAX

13 103,56

Ͳ0,4%

+1,0%

GEL / TRY

0,6576

Ͳ5,4%

Ͳ5,7%

DOW JONES

24 651,74

+1,3%

+5,9%

GEL / AZN

1,5036

Ͳ4,1%

Ͳ5,6%

6 936,58

+1,4%

+3,4%

GEL / AMD

0,0053

Ͳ3,6%

Ͳ3,6%

NASDAQ

162,49

+2,0%

+2,5%

GEL / UAH

0,0917

Ͳ6,7%

Ͳ10,3%

1 118,50

+0,7%

+0,7%

EUR / USD

0,8511

+0,2%

+0,4%

SP 500

2 675,81

+0,9%

+4,3%

GBP / USD

0,7505

+0,4%

Ͳ1,1%

MICEX

2 143,99

+1,9%

+0,6%

CHF / USD

0,9905

Ͳ0,2%

+0,2%

MSCI FM

2 892,78

Ͳ0,2%

+2,4%

RUB / USD

58,7618

Ͳ0,6%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

3,8622

+0,7%

Ͳ0,5%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,6994

Ͳ0,0%

+0,2%

MSCI EM EE MSCI EM

Ͳ2,4%


2

NEWS

Minister of Economy Attends New Hydro Power Plant Construction Launch

GEORGIA TODAY

DECEMBER 19 - 21, 2017

Winter Tourist Season Opens at Tetnuldi and Hatsvali, Svaneti Photo Source: Samu Haber facebook

Georgia’s Natia Todua Wins ‘The Voice’ of Germany

Continued from page 1 The HPP is expected to have 2.5 Megawatt strength, and is to produce on average 15 mln Kilowatt/hour annually. The electro-mechanic turbines and generators of the HPP will be made by the Austrian company Gugler, and construction is to be carried out by Georgian companies under the supervision of the Swiss independent design and engineering company, Stucky SA. Bodorna HPP is financed through a long-term loan from the Dutch Development Bank (FMO) and the German DEG. While attending the Bodorna HPP construction launch ceremony, Kumsishvili noted that the new HPP will be an ecologically clean, “green” hydro power plant that will minimally affect the environment. “The construction of Bodorna hydro power plant is important in numerous directions; for the new investment possibilities and new employment it will provide both during the constuction process and after completion.” Bodorna HPP, the construction of which is planned to end in September 2018, is expected to provide electricity to the buildings supplying Tbilisi with drinking water.

BY THEA MORRISON

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BY NINO GUGUNISHVILI

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urther to Gudauri and Bakuriani mountain resorts, Tetnuldi and Hatsvali in Svaneti are now ready to receive tourists for the winter skiing season. Officially opened on December 17, the ski lifts are

to work from 10 AM to 4 PM daily. Tetnuldi has five ski lifts with nine ski trails of an overall length of 30 kilometers, like those in Bakuriani and Gudauri, designed for any category of skier. Tetnuldi resort has a capacity to accommodate 6,806 tourists, while the skiing complex itself can host up to 4,100 visitors. The skiing period at Tetnuldi may last for six or seven months, although

the resort is able to host tourists as a year-round destination. Hatsvali, located some eight kilometers from Mestia, offers five ski triails, with an overall length of 7 km. A brand new 1200 m ski lift connecting Mestia and Hatsvali is to open on December 23, with a six-seat ski lift produced by Doppelmayr to operate, linking the center of Mestia with Hatsvali mountain resort.

atia Todua, 21, from Georgia has been named the winner of the musical contest The Voice of Germany. In the final of the contest in Berlin, the Georgian participant received 50.1% of votes and won the competition. In the final, Natia performed four songs, one of them with the lead vocalist of the band Sunrise Avenue, Samu Haber, who was Natia’s coach in the project. Georgian President Giorgi Margvelashvili was among the first to congratulate Natia on her victory. Georgian Prime Minister, Giorgi Kvirikashvili, also commented on Natia’s success. “Congratulations Natia! Georgia is proud of you!” Kvirikashvili wrote in a Facebook post. Before taking part in the German Voice, Natia auditioned for Georgian X Factor, but proved to be unsuccessful, after which she tried her luck on Ukrainian Voice. Finally, she left for Germany where she impressed the judges within a few seconds on her first day in the contest.


NEWS

GEORGIA TODAY DECEMBER 19 - 21, 2017

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Startup Market EXPO: Grand Exhibition of Georgian Startups Held for 2nd Time BY LIKA CHIGLADZE

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tartup Market EXPO is a grand exhibition enabling a number of Georgian startupers to introduce their products to potential customers. The annual exhibition marking the success of both small and fledgling Georgian enterprises, businesses, shops and companies, was held for the second time, on December 16-17. Upon entering the space, one found oneself in a bright, colorful and friendly environment, where representatives of various companies exchanged smiles, positive emotions and offered their products. The Startup Market is aimed at supporting and promoting small and newly-born businesses in Georgia. “It is a conclusive event of the year, bringing together Georgian entrepreneurs in one space, and, over these years, the project has proved to be successful,” Startup Market project manager Mariam Shevardenidze told GEORGIA TODAY. “This year, 130 entrepreneurs are presented in 16 different categories. The event gives all participants an opportunity to introduce their products to customers as well as create partnerships and expand their production.” Guests were able to help themselves to a variety of Georgian staples and organic products as well as warm up with mulled wine. Famous female winemaker Baia Abuladze, who launched her own business

at the age of 22, presented two sorts of wine and held a degustation for wine enthusiasts at the expo. “We presented the white wine TsitskaTsolikouri and red Otskhanuri Sapere. We have expanded our production and serve the local Georgian market and export to Austria. Currently, negotiations are underway to enter the US market, too,” Baia’s sister, Gvantsa Abuladze, said. The venue also gave space to artists and various brands manufacturing trendy, chic and quality clothes, shoes and accessories. Musya Qeburia, famous Georgian street artist, put on display giant posters of her signature series of lips, as well as stickers and handmade earrings with colorful prints. “Recently, I had a personal exhibition as part of Tbilisi Fashion Week that received positive feedback from the Georgian public. My products are more in demand on the German and US market as well as on international online platforms, but now, through this festival, I’m able to introduce my artworks and products to a wider Georgian audience,” Musya told GEORGIA TODAY. At the fair, one could purchase colorful stockings with Christmas designs and renowned brand Altersocks presented its new models for the season. The brand was founded two years ago by a husband and wife who decided to use their experience and knowledge to set up their own business. The brand produces 83% cotton socks: organic and extremely pleasant to wear.

“There was no such brand on the Georgian market before us. Our popular Georgian themes are Georgian Khinkali, boat-shaped cheese-bread Adjaruli Khachapuri and paintings by Niko Pirosmani. We have seven branches throughout Georgia and around 80 types of socks. Along with Georgian staples like churchkhela, our socks serve as souvenirs that tourists often take home with them,” said Rezi Beselashvili, co-founder of Altersocks. At the stalls, various kinds of Georgian products including sweets, chocolates and well-known spices that give characteristic flavor to Georgian dishes were available. Brand Khurjini, selling only home-made products, was yet another discovery for lovers of organic produce. The company gathers organic produce from local farmers in different regions of Georgia and delivers them to consumers in the city. “Our company picks the best ‘culinary pearls’ from different corners of the country. We offer authentic home-made Georgian churchkhela, a wide assortment of tkemali (plum sauce), honey, jams, tea, as well as spices. We travelled from village to village to find the best produce,” Mikheil Dzidziguri, the cofounder of Khurjini, told us. Yet another novelty that captured ones’ attention was Skiji, an enterprise famous for producing delicious dried fruit, founded through the program Produce in Georgia. “Skiji means dried grapes in ancient Georgian. We wanted to stand out from

other brands, so we decided to produce rare dried fruits that grow in western Georgia, such as kiwi, melon, tangerine and feijoa. We have sent samples of our production to Japan, England, Germany and we’re planning to export our fruit to the foreign market in the near future. In addition, we make our own signature chacha, with the flavors of leftover citruses,” said Mako Tsirekidze, Marketing Manager of Skiji. Company Flipflop.ge grabbed custom-

ers’ attention, in particular, by introducing an extraordinary way of painting. Through its innovative technology anyone, even amateur artists and kids, can create amazing artworks and gift them to their loved ones. Other companies in technology, innovations, fashion, household tools, and jewelry were present at the exhibition, showcasing their extraordinary wares and proving that Georgia is on the ball for creativity and looking forward!


4

BUSINESS

GEORGIA TODAY

DECEMBER 19 - 21, 2017

October GDP Growth: Georgia at 5.7%, Armenia Surges to 17.6% Y/Y million USD). Unfortunately, trade variables are recovering from a very low base, and, despite the rapid growth, neither exports nor total trade have managed to reach their 2014 level just yet (level before regional crisis – see Figure 3). An increase in remittances and tourism further contributed to higher growth estimates. Remittances went up by 20% compared to the same month of the previous year, while the number of tourists increased by 19.9% yearly. Furthermore, there was a dramatic increase in the number of visitors in October (15% yearly growth). This suggests an expected increase in Georgia’s services exports. Overall, an improved trade balance, increased money inflows, and a dramatic rise in the number of visitors and tourists in October had a significant positive impact on our growth forecast.

BY DAVIT KESHELAVA AND YASYA BABYCH

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SET-PI updated its forecast of Georgia’s real GDP growth rate for the fourth quarter of 2017, and the first quarter of 2018. Here are the highlights of this month’s release: • Geostat updated its preliminary estimate of real GDP growth for the first and second quarters of 2017. The Q1 and Q2 GDP growth estimates were revised upward by 5.3% and 4.9%, respectively (0.2% higher than initial estimates). The third quarter estimates remained unchanged so far. • Real GDP growth rate reached 5.7 % y-o-y for October 2017. As a result, estimated real GDP growth for the first ten months of 2017 was 4.9%. • ISET-PI’s real GDP growth forecast for the fourth quarter of 2017 remained at 4.6%. • Based on September’s data, we expect the annual growth in 2017 to be 4.8%. • ISET-PI forecasts GDP growth for the first quarter of 2018 to be 3.3%. Between the months of September and October, very few variables changed in a meaningful way. The most significant changes were observed for variables related to national and foreign currency deposits, money supply (currency in circulation), excessive inflation (inflation that exceeds targeted level), and external statistics.

NATIONAL AND FOREIGN CURRENCY DEPOSITS: LONG MATURITY DEPOSITS DECLINE

EXTERNAL SECTOR: POSITIVE TRENDS IN EXPORTS AND TRADE BALANCE, BUT NOT YET AT THE LEVEL OF 2014 The first three quarters of 2017 were characterized by improved economic activity in Georgia’s neighboring countries. The Armenian economy advanced 7.0%, 5.5%, and 3.5% y-o-y in the first three quarters of 2017, respectively, and according to the National Statistical Service of the Republic of Armenia (Armstat), the real GDP growth figure was even more impressive in the month of October, reaching the 17.6% mark. Russia’s quarterly growth rates are also exhibiting an upward trajectory this year. The Turkish economy grew by 11.1% y-o-y in the third quarter of 2017, accelerating sharply from the 5.4% expansion in the previous three-month period. This was the strongest pace of expansion since the third quarter of 2011,

boosted by household consumption, fixed investment, exports, and government spending (Trading Economics). Azerbaijan is the only country in the region that was still was still in the grip of a recession. In the first two quarters of 2017, the economy of Azerbaijan contracted by 2.7% and 2.8%, respectively (see Figure 2).

Improved economic activities in the region increased the demand for Georgian goods and services. Thus, Georgian exports continued to expand, increasing by 39% relative to the same month of the previous year. Moreover, import of goods and services increased moderately by 10% yearly, and as a result, the trade balance (net-exports) improved by 0.9% (trade deficit reduced by 468

10 Galaktion Street

As far as ISET-PI’s forecast model, the first group of variables that changed significantly in October were the national and foreign currency deposits in commercial banks. Almost all types of deposits increased significantly both in yearly and monthly terms. The only category of deposits that experienced a yearly decline was, again, the Time Deposits with maturity of more than 12 month in national and foreign currency. These variables went down by 17% and 18%, respectively, year on year. Since deposits with long term maturities are one of the most important sources for country investment, their decline had a negative effect on the model’s growth estimate. Furthermore, the Dollarization Ratio of the total non-bank deposits increased by 1.0%, up to 66.4%. The Dollarization Ratio of the total credit portfolio, however, was reduced by 0.8%, and amounted to a much lower 57.3%. These trends signal an increase in currency mismatch on the commercial banks’ balance sheets, and may exacerbate currency risks. In brief, despite the promising trends in the accumulation of national and foreign currency deposits, the overall effect of all deposit-related variables on the growth forecast was quite limited.

MONEY SUPPLY IS EXPANDING The other set of variables that had a significant positive effect on our forecast were related to the currency in

circulation. In October 2017, the annual growth rate of loans issued by commercial banks amounted to 24.6%. Even without the exchange rate effect, the annual growth of bank loans was 15.7%. All the monetary aggregates, including the largest Broad Money (M3), increased significantly (by 3% monthly and 18% yearly) in the corresponding month. The largest yearly increase was observed again for Monetary Aggregate M2, which increased by 22% relative to the same month of the previous year. Moreover, Currency in Circulation (CCIR) itself increased by 13% in yearly terms.

HIGHER INFLATION IS PUTTING A BRAKE ON GROWTH According to our model, the main negative contributor to the growth estimate was increased consumer prices compared to the same month of the previous year. Several factors contributed to rising price levels: First, at the end of October, the lari depreciated with respect to the US dollar and euro (by 4% and 3% respectively, compared to the end of the previous month), which fueled expectations of further depreciation (these processes tend to have a selffulfilling nature), and exacerbated the upward pressure on prices (since depreciation leads to an increase in imported product prices, which the raises overall price level in the country). Second, world prices for oil, as measured by Europe Brent Spot Price FOB, increased by 2% monthly and 16% yearly, which also put an upward pressure on the general price levels in Georgia Third, the effect of the one-time increase of the excise tax has not been exhausted yet. Thus, an increase in the inflation rate reduced the purchasing power of consumers, and further hindered economic growth. Our forecasting model is based on the Leading Economic Indicator (LEI) methodology developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian economy, which assumes that all economic variables, including the GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published. For each quarter, ISET-PI produces five consecutive monthly forecasts (or “vintages”), which increase in precision as time goes on. Our first forecast (1st vintage) is available about five months before the end of the quarter in question. The last forecast (5th vintage) is published in the first month of the next quarter.

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



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BUSINESS

JICA Georgia Office Seeking National Staff (Clerk)

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eadline: December 29, 2017

JICA Georgia office is pleased to announce an opening for the position of National Staff (Clerk) Job description: ** Assisting to make accounting documents and payment; ** Conducting secretarial work for Resident Representative; ** Making document registration, circulation and filing; ** Arranging business trips - reserving tickets, accommodation, etc.; ** Dealing with official letters and distributing received letters; ** Procuring office supplies and disposal of unnecessary items; ** Supporting PR activities, including arrangements for journalists and publishing newsletter; ** Other tasks given by Resident Representative; Skills and requirements: ** University degree; ** Highly proficient in spoken and written Georgian and English (regarding English proficiency, certificate is necessary); ** Knowledge of Russian is preferable; ** Computer literacy (Word, Excel, Power Point, etc) and troubleshooting; ** At least three years’ work experience in a similar field; ** Analytical, open-minded, honest character;

** Excellent communication and interpersonal skills; ** Well-organized; strong sense of responsibility; hard working; ** Willingness to go on field trips. Preferable but not mandatory skills: ** Familiarity with terms related to engineering and finance is preferred; ** Japanese language skill is preferred. Term: From February 1, 2018 until January 31, 2019, with possible extension (Probation period is 1 month. The employer will be able to terminate the contract depending on the performance during the probation period). Salary: US$700-800/month without taxes (actual amount will be adjusted based on the past work experience and will be paid in GEL). Working hours: Monday – Friday, 9:30 – 18:00 (with lunch break from 13:00 – 14:00). Next step: Only shortlisted persons will be notified by email and invited to an interview. Interested candidates are required to send a CV (in English) with the contact information from teo previous workplaces/schools and copies of certificates to: gg_oso_rep@jica.go.jp and w284637@hotmail.com; no later than December 28, 2017.

Money Transfers to Georgia Increase by 24.8% in November BY THEA MORRISON

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eorgiasawincreasedmoney transfers by 24.8% last month compared to the same period of 2016. In November, the volume of money transfers from abroad constituted $122.1 million (GEL 326.3 million), which is $24.3 million more compared with the same period last year. The official information was released by the National Bank of Georgia (NBG), which said that 92.3% of the total money transfers from abroad came from the 14 largest donor countries, with the volume of transfers from of these countries each exceeding $1 million in November 2017.

In November 2016, the share of the same 14 countries constituted 92.2% of the total volume of money transfers. The highest volume of money transfers in November 2017 from European countries to Georgia came from Italy ($12.9 million), followed by Greece ($12.5m), Germany ($3.3 m), Spain ($3.2 m), the UK ($1.6 m) and France ($1.4m). As for non-EU countries, Russia is leading with money transfers ($39.1m), followed by the USA ($11.6m), Israel ($11.5m), Turkey ($9.5m), Ukraine ($2.5m), Azerbaijan ($1.6m), Kazakhstan ($1.1 m) and Canada ($1.0m). In November 2017, $19.9 million (GEL 53.1 million) was transferred from Georgia, as compared to $17.1 million (GEL 42.3 million) in November 2016.

GEORGIA TODAY

DECEMBER 19 - 21, 2017

Helping to Build Georgia’s Future: Gulf Air INTERVIEW BY LIZA NADIBAIDZE

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ive-star Gulf Air Airlines continues flight operation from Bahrain to Georgia with weekly three flights. During Summer Season, when inbound tourism traffic reaches to significantly pick figures, Gulf Air has added additional flights to Georgian route to facilitate brining more and more tourists to Georgia from the Middle Eastern markets. Gulf Air is a five star airline, offering premium class as well as full service economy class product to its customers. The journey between Bahrain and Tbilisi takes just two hours, which makes the flight experience even more pleasant for those who are connecting to destinations like Thailand, Sri Lanka or Manila with Gulf Air from Tbilisi. We spoke to Mariam Kvrivishvili, General Director of Voyager, GSA of flydubai and Gulf Air in Georgia. “We are very proud to represent Gulf Air on Georgian market and have possibility to contribute into our country’s tourism and aviation industry’s development” she told us. “we are delighted to see that with Gulf Air flights, more and more travers come to explore Georgia, and not only from Bahrain: there is a flow of tourists, which travels from Saudi Arabia and Oman, Kuwait, UAE, etc spreading the flow of tourists from the Middle East to Georgia. At the end of 2017, the flight will remain at three times per week. Various promotional activities were held to raise the popularity/awareness of Georgia in Bahrain, before and after launching the flights. We hope to be able to bring even more tourists to Georgia, create experiences that would make them want to come back, recommend to family or friends - so that we could do our part for the national economy.”

WHAT ARE YOUR FUTURE PLANS? We’re carrying out many promotional activities with the Georgian government, Ministry of Economy and National Tourism Administration. We discuss mutual projects as well as our own structures, and we also discuss how we can unite our powers to make our country more popular and in-demand. We continue promotion and marketing campaigns, not only marking Georgia as an attractive four season travel destina-

tion, but today we aim to position our country as top destination for MICE and Medical tourism, too. Voyager, being leading inbound and outbound tour operator in Georgia (at the same time being GSA for Gulf Air and flydubai) - was proudly the first company to start working and investing to make Georgia known as an option travel destination for the Middle Eastern travelers.

WHAT CAN YOU SAY ABOUT COMPETITION IN THE COUNTRY/ABROAD? I believe, competition nowadays is healthy between the key players of the industry, however not that healthy when it comes to medium and small sized ones due to absence of any tourism regulations. It is nice to see several companies operating in the same area, be they touristic companies or airlines. The participation is far greater than competition and leads to more people discovering our country. We as Voyager, are not trying to compete with any Georgian companies, in fact, we’re trying to cooperate with them so that any company, i.e. one from Azerbaijan oriented on the same group as we are bidding for, is persuaded to visit Georgia

instead of Azerbaijan. We’re happy that Georgia is developing so well, and we consistently ask hotels and businesses to keep up with the changes to keep that development on track.

WHAT EXPECTATIONS DID YOU HAVE WHEN YOU FIRST CAME TO THE GEORGIAN MARKET? The Ministry of Economy is to thank for Gulf Air becoming interested in the Georgian market. I remember our first meeting with Gulf Air, it was a national tender, and there were five companies from Georgia including Voyager that took part in the bidding. I had to work with top management of the airline through this challenging bidding process which lasted more than 4 month. I was proud to come across with the pre-preparation program that Ministry of Economy and United Airports of Georgia had done for an airline and private sector like us. The whole head office had high expectations for Georgia as their new route before flight launch. Today we are proud to stand in the position to serve more Georgian and international tourists to and from our country to obtain more memorable experiences with Gulf Air Airlines.


BUSINESS

GEORGIA TODAY DECEMBER 19 - 21, 2017

Challenges for Sustainable Mountain Tourism in Georgia: Reflection on 2017 Issues OP-ED BY MARTA MILLS

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ecember is a good time to reflect on the past year, and to look at the opportunities ahead. Since I have been working on sustainable tourism development in Georgia, I will reflect on the key challenges for mountain tourism in Georgia at the end of 2017. By sustainable tourism, I mean tourism that benefits the local people and helps protect their nature and culture. I first came to Georgia on my own to travel around for two weeks in 2001, and have been a dozen times since. I have been working on rural development and tourism for international organizations since 2007 (on and off, but solidly for the last 2.5 years), and am finalizing a postgraduate degree in Responsible Tourism Management, focusing my research on Georgia. Responsible tourism looks at minimizing the negative and maximizing the positive impacts to create better places to live in and better places to visit.

RAPID GROWTH IN PROTECTED AREAS Tourism in Georgia has been growing rapidly over the last five years (from 2.8m international arrivals in 2011 to nearly 7m in 2017), and mountain tourism in particular. The statistics of the Agency of Protected Areas confirm that “nature” is the leading motive for international tourists to visit Georgia. In 2016, there were 734.874 visitors to 18 Protected Areas in Georgia (41% more than in 2015), rising to 924.426 in the first 10 months of 2017. This type of tourism is particularly important for the local communities as it can bring much-needed income in remote areas. In June 2016, I conducted the first ever community consultation for a tourism project in Svaneti, holding several meetings with the residents and local organizations of 10 villages. They all told me they wanted tourists, and more tourists. However, most of them were unprepared to host and the necessary infrastructure and facilities was lacking. But the crucial thing is that “more tourists” can potentially have a negative impact if the growth is not managed responsibly; if there is no vision what a particular destination wants to achieve and how tourists can benefit the destination and its people, rather than destroying its main assets. This is a subject for a separate article and I will write about it shortly, but I mentioned it here because that lack of long-term management of tourism is one of the key issues likely to hinder sustainable tourism development in the mountains and Protected Areas of Georgia.

KEY CHALLENGES FOR MOUNTAIN TOURISM IN GEORGIA 1. Ad-hoc, unplanned tourism development with

no vision or long-term strategy. No efficient Destination Management Organizations (regional tourism bodies) to oversee the strategic development. 2. Lack of cooperation and communication between the private and public sector on planning and implementation of tourism in the regions. 3. Lack of professional hospitality, management and language skills amongst the local population. 4. Seasonality and short stay of tourists. 5. Poor quality of products and services. 6. Poor and non-diversified product offer. 7. Lack of strategic and coordinated marketing. 8. Poor trail management (marking, maintenance; inability to utilize the existing network of trails for tourism development). 9. Poor waste management – no waste collections in villages; rubbish is thrown into rivers. 10. Poor infrastructure (particularly, access roads to mountainous villages).

OPPORTUNITIES But it’s not all doom and gloom. The main strength and opportunity lies in Georgia’s rich and diverse natural resources and culture, as well as its potential for adventure tourism, remains in its unspoiled, “authentic” environment. This is what draws most international tourists here. Protecting and preserving that heritage, and diversifying the experiences offered, are the key opportunities for successful and sustainable growth. It is up to the local residents, as well as authorities, to ensure this is done. Money (i.e. income from tourists) will drain if Georgia loses its main assets; tourists will simply go elsewhere.

DMOS FOR EFFICIENT MANAGEMENT There is a huge need to establish Destination Management Organizations (DMOs) in each region for an efficient sustainable tourism management, and for addressing and making any progress on the key environmental, economic, social, and cultural issues. DMOs are organizations, groups or committees from both public and private sector responsible for a coordinated approach to and management of sustainable tourism (planning, oversight and implementation). I am currently working on setting up two DMOs and I believe that regional DMOs - provided the roles and responsibilities of individual members are clearly defined, and that it is appropriately funded – would provide the much-needed leadership and vision for long-term sustainable tourism development. Marta Mills (oneplanetblog.com) is a Sustainable Tourism Specialist for the Caucasus region, advising international organizations and tourism businesses on how to manage tourism responsibly to protects its natural and cultural assets, and benefit the local population in Georgia and Armenia. She studies for MSc in Responsible Tourism Management, focusing all her research on Georgia.

Hope Again: Georgian Lari Regaining Value BY TOM DAY

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he recent plummet in the value of the Lari against the US Dollar has caused a lot of anxiety among locals, travelers and business people alike, but after an uncertain few weeks the Georgian Lari is finally regaining its worth. The National Bank of Georgia has set a new exchange rate, according to which, the Dollar price is, at time of going to press, GEL 2.5405. Starting from today, 1 USD will cost 2.5405 GEL, as for the euro its exchange rate is 2.9980 GEL. This is an improvement on the rate one month ago on 18 December of 2.7268 GEL, and the value of the Lari is only set to increase. Georgia’s currency experienced a frightening dip in value last winter too, reaching an historic low of 2.78 to the dollar. The official reason for this last year was “external shock;” problems with the economy in the region and neighboring countries. This year, the National Bank of Georgia representatives and the government say the drop was caused by false expectations of society. The depreciation seemed to accelerate after the municipal elections on October 21. The day before, on October 20, the Lari was 2.48 to the Dollar and by November 21 it had reached 2.72. Opposition parties made accusations about retaining an artificial exchange rate during the runup to the elections. Economic expert Levan Kalandadze said that the Lari losing value around elections is a regular occurrence. “In Georgia, there is a theme of the Lari losing strength after elections and the dollar

gaining in demand.” On November 2, the NBG released a statement explaining that the devaluation was temporary and caused by false expectations of the public that the Lari would lose its value. “The expectations had an influence on the national currency in the shortterm perspective only,” the bank wrote on the anxiety around buying foreign currency because people are afraid of the devaluation of their own. Despite the expectations being high, there was no grounds for it. The bank stressed that the midterm and long factors only had positive influences and the tendency would only continue into next year. “Based on September data, incomes from solid export and tourism has risen about 30 percent and remittances have increased by 20 percent,” the bank stated. NBG representatives said that they were working hard and maintaining good communication with the government to avoid any threat of high inflation. The NGB president Koba Gvenetadze emphasized during the devaluation that the Georgian currency is characterized by frequent periods of strengthening and devaluation. Its exchange rate is “floating”, meaning it is not regulated by the bank or government. In 1995, the Lari was announced as the only official currency of Georgia. Back then, the official exchange rate was 1.3 to the Dollar. In the beginning of this year, the state tried to stop the devaluation of the currency by launching something called ‘larisation’, in which the role of the Lari in the national economy was increased. Notable in this action was loans and credit. Banks gave out loans denominated in Lari.

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BUSINESS

GEORGIA TODAY

DECEMBER 19 - 21, 2017

Qatar Embassy Georgia Celebrates Qatar National Day

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he Embassy of the State of Qatar to Georgia celebrated the National Day of the State of Qatar which marked the Accession of His Highness Sheikh Jassim Bin Mohammad Al Thani, the Founder of the State of Qatar, to the throne and

commemorated the inception of the modern state of Qatar in 1878. On this occasion, H.E. Mubarak Bin Nasser AlKhalifa, Ambassador of the State of Qatar to Georgia, hosted a reception on December 15 in Courtyard Marriott Tbilisi.

Radisson Blu Iveria Hotel, Tbilisi: Best Deluxe Hotel in Georgia ADVERTORIAL

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adisson Blu Iveria Hotel, Tbilisi won in the category of The Best Deluxe Accommodation at the Welcome to Georgia - National Tourism Awards. The ceremony was held in Tbilisi, Georgia on December 6, co-organized by the Georgian National Tourism Administration, Ministry of Economy and Tbilisi City Hall. The event brought together local and national authorities, hotels, restaurants, tour operators and travel agencies to celebrate the highest-achieving tourism businesses and brands that work towards creating a positive image of Georgia worldwide. The core aim of the ceremony was to promote and support the development of the tourism industry in Georgia. “Considering that tourism is one of the fastest growing industries in Georgia, the local market is

FIRST BRAND HOTEL IN KUTAISI UNDER BEST WESTERN INTERNATIONAL Within the framework of the Georgian Hotels’ Regional Network Development Project “12 hotels in 12 regionsâ€? by GHYHORSPHQW FRPSDQ\ Âł6LPHWULD´ WKH ÂżUVW EUDQG KRWHO KDV been opened in Kutaisi under the Best Western International brand. The hotel accommodates 45 guest rooms, including 40 standard rooms and 5 suites. The hotel was designed taking into consideration special conditions and safety for guests with disabilities.

Address: 11 Grishashvili Str., 4600, Kutaisi, Georgia TEL 219 71 00 info@bwkutaisi.com

Three mobile conference halls are available with a total capacity of about 100 persons. (XURSHDQ FXLVLQH FDQ EH HQMR\HG LQ WKH JURXQG Ă€RRU FDIp and a grill-bar menu in the roof top restaurant with panoramic views over the city. The International Hotels Management Company “T3 Hospitality Management,â€? providing the hotel management, has 20 years’ experience in hotel management in different countries globally.

becoming increasingly competitive. So, it is with great pride that we receive this award granted by Welcome to Georgia Awards, since it underscores our team’s professionalism and quality experience delivered to our guests,� said Jordi Kuijt, Radisson Blu Iveria General Manager. During the ceremony, the best companies, including travel agencies, hotels and guesthouses, were determined in 20 different nominations by the judges. The competition was totally transparent and fair: after the jury members selected the winning companies, BDO, an independent auditor, summarized and carefully checked the information their decisions were based on. This is not the only award for Radisson Blu Iveria Hotel, Tbilisi this year - World Luxury Spa Awards recognized Anne Semonin Spa as the best “Luxury Wellness Spa in Eastern Europe� and the Asian Fusion Restaurnant �UMAMI� is the #1 restaurant on Tripadvisor, which was granted a Certificate of Excellence.


BUSINESS

GEORGIA TODAY DECEMBER 19 - 21, 2017

The Renaissance of Natural Wine

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Retail FPI | Looking for Answers to Rising Beef Prices

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or a country like Georgia, that celebrates wine on different levels, it is important to say a few words about natural wine. What is natural wine and why is it growing so fast in popularity? Natural wine is wine made without chemicals, and with minimum technological intervention when growing grapes and transforming them into wine. The term is used to distinguish such wine from organic and biodynamic wines because of the differences in cellar practices. Most Georgians do not use additives in wine, but their grapes are not always farmed organically. Natural wine basically means making wine from organically produced grapes and the grapes have to be healthy from the beginning. This notion of natural wine in nothing new, as it was the way all wine was made before heavy chemicals and interventions were introduced. Nowadays, wineries are trying to catch up with international tendencies, such as “fish from the river” - literally meaning that all grapes must be fresh and natural. Georgian vineyards do not use as many chemicals as are used in Europe or other parts of the world. Luckily, industrialization of farming came quite late here, so the earth was damaged less. Presumably, this is the reason why Georgian natural wine can be found in top European restaurants such as Noma, El Celler de Can Roca and so on. Georgia has a lot to offer: diversity of terrain, use of Qvevri- a ves-

sel that ferments but does not transform wine into a direct flavor. Georgian wines are becoming an international influence and there are supporting movements in Italy, Spain and France. For this article, we spoke with famous winemaker John Wurdeman, who has numerous wine events planned, all with an educational aspect:

natural sparkling wines paired with dishes created by the Poliphonia kitchen exclusively for that event! They will discuss the differences between Petiullant Natural, Prosecco, Champagne, and offer an eclectic selection of Georgian examples to taste. 7PM 130 GEL per person

Natural Wines from the New World December 23 Natural wines from the New World, a creative tasting menu paired with wines from Chile, New Zealand, Australia, USA, and South Africa. 7PM 125 GEL per person

Magical Megrelian Wines February 24 Taste rare natural wines of Megrelia, hosted by Zaza Gagua and Keti Ninidze. Tasting will involve mature wines together with the premier tasting of the new juice, paired with rare Megrelian dishes and Megrelian folk songs. 7PM 95 GEL per person For reservations, contact: Magda Liparteliani +995 557637143 magdapoliphonia@gmail.com Facebook: Poliphonia

Natural Sparkling Wines January 2 Kick off the New Year in style by comparing bubbles from around the world on “Bedoba”, the Georgian day of luck. Enjoy a tasting menu of local and foreign

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id-December, food prices maintained an upward trend, as ISET’s Retail Food Price Index increased by 2.2%, compared to mid-November 2017. It turns out that the holidays will cost more in 2017 compared to December 2016, as we recorded a significant 10.9% y/y increase in food prices. According to data from the first two weeks of December, prices increased the most for eggplant (105%), cucumbers (43%), and onions (20%). However, not all food items became more expensive. The largest price drops were observed for carrots (14%), eggs (5%), and potatoes (3%).

MORE ON BEEF PRICE HIKE From an annual perspective, beef prices were particularly notable. Beginning in September 2017, beef has been trading above last year’s prices. In December, the average price of 1 kg of beef is 13.10 GEL; that is 17% higher compared to the previous year (11.17 GEL/KG).

High beef prices might be caused by the increased export of live bovine animals. During January-October 2017, Georgia’s exports in this category increased by 8%, compared to the same period in the previous year. Therefore, the value of Georgia’s exports in this category has also increased. During January-October 2017, the export value of live bovine animals accounted for 32,404.5 thousand USD; that is 57% higher than the same indicator for the previous year (unfortunately, export figures for November – December 2017 are not yet available). The increased export of live animals reduced the supply of meat to the local market, causing prices for beef to rise. While increased exports is good news for beef producers, Georgian consumers might not be very happy, since once beef is scarcer, it might become even more expensive. However, in the long run, if the new producers emerge in the market, supply will increase and meat prices are likely to return to their previous levels.


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BUSINESS

GEORGIA TODAY

DECEMBER 19 - 21, 2017

The Georgian Times Rates Businesses

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n December 14, media holding The Georgian Times presented its 15th Business-Rating, based on public opinion and marketing research by GORBI. The most successful companies of 2016-2017 were awarded at the Tbilisi ‘Garden Hall’. The purpose of the project is to define the most successful fields in national business, support business dialogue among government and society; to create a new image for Georgian business, to introduce new perspective companies, and what is most important, to attract global businesses to invest in Georgia. Business rate contribution is recognized not only by businesses but also by the political world. The 30 best companies of 2016-2017 were: 1. AVERSI 2. Basis Bank 3. GAA Holding 4. Gulf 5. Geoplant 6. Geoproduct 7. Giuani 8. Dugladze’s wine company 9. N C C 10. Wagon building holding 11. Wendy’s 12. Zarapxana 13. Caucasus auto import 14. Kula 15. M G 16. Mtkvari Energy 17. NEO gas 18. Nikora supermarket 19. NewTime 20. Omega group 21. ORBI Batumi 22. PSP 23. Saknakhshiri 24. International energy/energetical corporation

25. Georgian industrial group 26. Socar Georgia petroleum 27. Socar Georgia gas 28. Georgian beer company – Zedazeni 29. Shukhman wines Georgia 30. Hyundai auto Georgia The best investors were also rewarded, and were given various prices. The best of the best were named by a competent jury. The aim of the Investment Award is to show and popularize investors and investment projects, both those with completed projects and those still in process. Media holding Georgian Times and public opinion and marketing research company GORBI have hosted this Award since 1995. The best investors are: 1. Anaklia development consortium 2. Dreamland oasis 3. Lisi development 4. Geosteal 5. Geopars Partners are: 6. N kirom plus 7. University of black sea

8. Hospital by the name of saint Michael (mtavarangelozi) multi profile clinical hospital The best investors of 2016 were Omega Group and Zaza Okuashvili. Project supporters are: • Tbilisi City Hall • Ministry of Economy • Ministry of Agriculture • Ministry of Finance • Ministry of Infrastructure • GCCI • ICC Georgia • Co-Investment Fund Partners of the projects are: • Georgian Trade Industrial Chamber • International Trade Industrial Chamber • Partnership Fund • Co-investment Fund In presenting the best companies and businessmen, independent experts, economical profile heads of department, economical profile journalists, consulting companies, and NGOs took part. A list is compiled by the Ministry of

Finance of those who invested one million GEL or more in the Georgian economy. From these, a vote is made to choose the best. Criteria used in choosing winners includes: Protecting the interests of entrepreneurs, public image, charity, effectiveness of advertising company, new work places, stability of work, social corporative responsibility, success of the company, recognition abroad, relationship with society, effective marketing, financial transparency, investment attractiveness, innovative projects, professionalism of the group, promoting small or medium sized businesses, constant progress and new technologies, and guarantee of quality. As per tradition, the business-rate awards ceremony hosted members of the government... and local foreign representatives of mass media. During the ceremony businessmen of various nominations received a golden cross. The best of the best received a handmade and exclusive “Bolnuri jvari/

cross” made of gold (31.5 grams), silver (12 grams), diamond (1 piece), blue sapphire (1 piece), turquoise (4 pieces), zircon (2 pieces), and green dzotsi (2 pieces). During the past years, in business rate, winner companies and businessmen have been revealed as: 1. TBC group – Mamuka Khazaradze. 2. Cocacola bottlers Georgia- Temur Chkhonia 3. Khazbegi – Gogi Topadze 4. Khazbegi Kastaeli – Gogi Topadze 5. GWS – Levan Gachechiladze 6. LTD Samgori 94 – Avto Tsereteli 7. LTD Tbilaviamsheni – Pantiko Tordia 8. TBC Bank – Vakhtang Buctskhrikhidze 9. United Georgian Bank –Vano Chkhartishvili 10. LTD Samgori 94 – Avto Tsereteli 11. Geocell – Osman Turani 12. Geocell – Osman Turani 13. Geocell – Osman Turani and Georgian Bank – Irakli Gilauri 14. Socar Energy Georgia – Mahir Mamedov 15. Bank of Georgia – Irakli gilauri 16. Wissol Group –Soso Pkhakadze 17. Soccar petroleum Georgia – Davit Zubitashvili Media partners were: Georgian Public Broadcaster, IMEDI, Iberia, TV1, Palitra News, Saperavi TV, Rugby TV, Obiektivi, Starvisia, Music Box, Fortuna Auto Radio, Tbiliselebi, Georgian Times, Georgia Today, Caucasus business wiki, Resonans, Prime Time, Georgian word/ Kartuli sitkva, Svobodnaya Gruziya, Business media, Versia, Kartuli Azri/ Georgian opinion, Geotimes.ge, Award. com.ge, Kvira.ge, Georgianpress.ge, Fox. ge, Liberinfo.ge, NewsDay.ge, Reportiori. ge, Economic.ge, Metronome.ge, Timer. ge and Fact2.ge. The Golden sponsor of the event was Socar Energy Georgia and the General sponsor was Zarapxana.

The best quality traditional Georgian cuisine

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POLITICS

GEORGIA TODAY DECEMBER 19 - 21, 2017

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Lincoln Mitchell on the Israel Issue

Various people can visit Georgia and do business there side by side. That is Georgia’s comparative advantage, and this government and previous one should be credited for that. I would hate to see that jeopardized.

IF OUR GOVERNMENT SAYS SOMETHING PRO-ISRAEL, MIGHT PALESTINE, A NON-RECOGNIZED STATE, JOIN THOSE COUNTRIES WHO RECOGNIZE ABKHAZIA & SOUTH OSSETIA?

Jerusalem. Photo source: gettyimages

EXCLUSIVE INTERVIEW BY VAZHA TAVBERIDZE

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n a week perhaps deemed ordinary by his own high standards, POTUS recognized Jerusalem as capital of Israel and ordered the US Embassy to move there. To say Trumps’ decision caused an uproar would be a wild understatement. Palestinians took to the streets, Erdogan and Iran, in a rare show of unity, condemned US policies in the Middle-East, the EU flat-out refused to have anything to do with it and Israel celebrated what it deems a massive diplomatic victory. The real impact of that decision, however, remains to be seen – so we asked long time Middle East and South Caucasus analyst Lincoln Mitchell to share his insights on the matter.

HOW FINAL IS THE DECISION AND HOW MUCH TIME WILL BE NEEDED TO IMPLEMENT IT? The American government does not work in a way that the US President makes a decision, clicks his fingers and it immediately happens. On the contrary. So, this will take some time. The impact is not clear, either. There have been odd statements from the White House “we are doing this to accelerate the peace process” I don’t really understand that. And I’m somebody who’s paid attention to the peace process in the Middle East pretty closely for the last 30 years. Moving the US Embassy to Jerusalem without negotiating, without making a deal of some kind, sets the peace process back because the US gives away one of its bargaining chips. Setting the location of the US Embassy after the peace process is something we should be thinking about. Everybody knows that the final status of the city of Jerusalem is central to the peace process. It is a city both Palestinians and Israelis claim to have a deep significance; for good reasons, as well as being the historical capital. This was a decision made by the Trump Administration for reasons that have more to do with domestic American politics than with the politics of the Middle East. The demand to move the capital to Jerusalem belongs to hawkish American policies on the Middle East, and does not come from American Jews voting overwhelmingly for Hillary Clinton and Obama. The demand comes from Evangelical Christians who are Trump’s supporters. American Jews are more for the peace process and negotiations. Based on reasons from Christian ideology, which I’m not entirely familiar with, they believe that Jewish people should have their capital in Jerusalem. So, this was done by Trump for Evangelical Christians so they will support him, even though he will be delivering very little in substance of policies. Unfortunately, the prospects of the peace process in the Middle

East may worsen because Trump first needs to improve his domestic policy. Yet another thing is that this will make Israel less safe for everybody in the next coming days, weeks and months. I’m concerned about the physical safety of friends and their families in Israel. Many Evangelical Christians do not have friends in Israel, but many American Jews do. So, POTUS has made my family in Israel less safe.

SO, EVEN THOUGH YOU’RE JEWISH, YOU’RE NOT CELEBRATING TRUMP’S DECISION LIKE OTHER JEWS AROUND THE WORLD? It’s a cynical move by the President. I am, as you pointed out, Jewish, but I am American, and I only have one passport and it’s an American one. And as an American Jew, I’m much more troubled by the POTUS that has facilitated and in some cases encouraged anti-Semitism. The USA is a much less safe country for American Jews than it was 1-2 years ago. That’s because of the rise of anti-Semitism that’s been facilitated by this President. This is the President that has allowed people like Sebastian Gorka, with ties to Nazi organizations, into high positions of power. Trump allowed, unabashedly, anti-Semite people like Steve Bannon into positions of power.

REGARDING THE POLITICAL WEIGHT OF THAT DECISION, DO YOU FORESEE SOME CHAIN REACTION INTERNATIONALLY FOLLOWING IT? No. We don’t have that kind of momentum right now, although the US has a great role in global leadership. Obama and Bush were able to build coalitions, but now the US is doing that alone. Other than the US and perhaps Georgia, there are not too many countries outside Israel where there is a strong pro-Israel voice. This was not a decision made by Trump with our allies in mind. This was a decision made by Trump unilaterally.

YOU MENTIONED GEORGIA BEING OUTSPOKENLY PRO-ISRAEL. CONSIDERING THAT, AND THE SAFETY CONCERNS YOU MENTIONED, DO YOU THINK THERE ARE REASONS FOR US IN GEORGIA TO WORRY ABOUT WHAT MIGHT UNFOLD IN ISRAEL? No. I don’t think Georgia is any less safe than it was yesterday.

WE SAW PRESIDENT ERDOGAN’S VERY CRITICAL REMARKS ON TRUMP’S DECISION. WHAT DO YOU THINK MIGHT CHANGE IN THE REGIONAL POLITICS, AND HOW MIGHT THIS AFFECT THE SOUTH CAUCASUS? The Middle East, which has not been the most stable region in the world, may become even less

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so. As for Georgia, it has successfully presented itself to the world for the last decade as a place where people can come together - whether you are from Iran or the Gulf state or Israel or the US.

Perhaps. If I were advising the Georgian government, I would say – who cares? Palestinian authority is not an international powerhouse, and even if there are many Muslim countries who sympathize with Palestinians, they are still not going to jeopardize their own state interests. The USA, China, EU, Australia and Japan all view Abkhazia and South Ossetia as part of Georgia. That is the position of almost all powerful countries of the world, with the obvious exception of Russia. That’s not going to change regardless of Georgia’s position on Israel. Those countries value relationships with the US, EU and, in some cases, value relationships with China, thus they know that recognizing Abkhazia or South Ossetia will jeopardise those relationships. Georgia has had deep relations with Israel for a number of years. This and previous governments of Georgia have made it clear that they want good relations with Israel, and I do not think that’s going to change.

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