Issue #1178 Business

Issue no: 1178/194

• AUGUST 20 - 22, 2019

• PUBLISHED TWICE WEEKLY

FOCUS

PRICE: GEL 2.50

In this week’s issue...

ON FAST & FURIOUS

Filming kicks off in the Georgian capital

PAGE 4

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

On the Anaklia Development Consortium

BUSINESS PAGE 3

Fitch: Russian Ban to Reverse Rapid Improvement in Georgian Tourism Revenues BUSINESS PAGE 6

Deputy Minister: Georgia's Energy Sector Is Very Attractive for Investors

New Developments Planned for Bakuriani this Winter

BY THEA MORRISON

G

BUSINESS PAGE 7

eorgia’s Deputy Minister of Economy and Sustainable Development Davit Tvalabeishvili says Georgia’s energy sector is attractive not only for foreigners but also for local investors.

Tvalabeishvili made the statement while commenting on the adjusted statistics of Foreign Direct Investments 2018 published by Georgia’s National Statistics Office (Geostat) a few days ago, according to which the investments in the energy sector in 2018 were fewer compared to 2017.

The Deputy Minister says the projects launched in 2018 - 2019 alone

Marita Kapanadze’s Interior Design – Superiority of Exclusive Works’ Décor BUSINESS PAGE 11 Prepared for Georgia Today Business by

Markets As of 16ͲAugͲ2019

STOCKS

Image source: Financial Express

will bring more than a billion dollars of investment into the country's economy.

“Energy is one of the most steadily developing sectors of our economy.

There is a growing investor interest in energy, from hydro power, solar and wind energy, to thermal power plants and others,” he said.

Tvalabeishvili explains that the main reason the number of investments in the energy sector were higher in 2017 is that there were record-breaking investments in the economy in general that year and a number of energy projects were underway, which have since been completed.

Continued on page 3

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NEWS

@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: TMT is to launch on the Californian market, a natural oil brand produced by the Sighnaghi Company in accordance with traditional methods. Founder Zurab Uchumbegashvili says that test batches of the product, 1000 bottles, have already been sent to the USA. This is the second line of the company. The first exports took place under the Mikho Papa brand name three year ago, launching in California, New York and Washington. Aside from the USA, the company’s products are currently exported to Israel, the Czech Republic and Germany. Along with oil, the company also has a cannery which has successfully assimilated the same markets. It is to start exporting jams, confiture, compotes and condiments in autumn.

History 1902 is the name of a wine restaurant with a new concept, set to welcome its first guests from September with a signature menu based on Georgian motives. Tina Vashakidze and Ia Dzagania, participants of the popular gastronomic show Masterchef (Ia won!), founded the restaurant with filmmaker Giorgi Ovashvili.

Ia and Tina worked together on launching the brand Amochame, which offers diverse pepper and onion confiture. The ladies visited a 19th-century wine cellar where the French Ambassador to Georgia has been holding meetings since 1902, and were so impressed, it led them to the idea of founding a restaurant. Six months later, their vision came to fruition.

Mzetamze, a bread-producing company which uses Georgian wheat varieties, has a pleasant novelty for customers in the launch of a new line of rye bread called Chvia. Through the synthesis of ancient baking traditions and modern recipes, five new bread types are to be added to the enterprise: malt, sesame, sunflower, caraway and oat flake. Currently, Mzetamze is producing nearly 20 different bread varieties. The major aim of the company is to preserve and develop Georgian wheat varieties and the country’s bread-baking traditions.

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

GEORGIA TODAY

AUGUST 20 - 22, 2019

The Latest Victim of Borderization: Gugutiantkari

BY GT TEAM

R

ussian occupation forces recommenced the illegal installation of barbed wire fences in the village of Gugutiantkari, located close to the occupied region of Tskhinvali (South Ossetia), on Monday. Georgian and foreign politicians, as well as public figures, have condemned the move by Russian forces.

The installation of barbed wire fences was launched by military forces on August 7 and restarted on August 14, after a week-long pause. Later, it was suspended for several days and resumed on August 19. ‘Borderization’ has affected a number of families, seeing them deprived of access to their plots of land, while two houses there have been completely absorbed into the occupied territory.

Gori Mayor Konstantine Tavzarashvili spoke out against the illegal borderization on Monday, saying “Unfortunately, occupation forces have resumed the illegal process of borderization, which is against all international standards and significantly damages the lives of local citizens. All the state agencies are involved to stop this process. The EU Monitoring Mission is involved and a hotline has been activated to prevent additional problems.”

Representatives of the diplomatic corps and the Government of Georgia went to the dividing line on the outskirts of Gugutiantkari on Friday, a delegation consisting of several ambassadors and representatives of more than 20 embassies.

“Wire fences installed by Russia serve no purpose except to cause hardship to

Image source: Reuters

families and divide local communities," Justin McKenzie Smith, British Ambassador to Georgia, said in a statement on his official Twitter page.

“More Russia razor wire fences are going up today in Gugutiantkari, Georgia. They serve no purpose except to cause hardship to families and divide local communities. This has to stop”, wrote the British diplomat, adding “11 years after the Russia-Georgia war, the UK backs the restoration of Georgia’s territorial integrity & sovereignty and a peaceful future for all.”

Ambassador Extraordinary and Plenipotentiary of Japan to Georgia, Tadaharu Uehara, also expressed his concern at seeing the borderization.

“Japan is against changing the internationally recognized borders of Georgia – dividing communities and families is a very serious problem," he stated.

Uehara noted it “is very hard to see how the lives of local residents are divided by the erection of new fences and artificial barriers there.”

"I am really concerned about the existing situation. I am fully aware the difficulty of the situation these families are in, and I have great sympathy for them.

I hope that the situation will be corrected

as soon as possible”, the Ambassador said.

Further news in the region: eight citizens of Georgia were illegally detained

by Russian occupation forces on charges of crossing the so-called “border” near the village of Akhalubani on August 17.

The detained were taken to a Tskhinvali isolator.

Foreign Ministry spokesperson Vladimir Konstantinidi said that the Georgian side has activated a hotline and informed cochairs of the Geneva international discussions; he also noted that the EU Monitoring Mission had been involved in the process.

“Eight citizens of Georgia have been detained for illegal border crossing”, Murat Jioev, a special representative of the de facto president of occupied Tskhinvali region for the settlement of postconflict issues, told RES agency. "They were under the influence of alcohol and drugs,” he claimed.

At the time of going to press, an investigation is underway to identify the detainees, though their three vehicles, found on the territory controlled by the de facto regime, near the Saint George temple alongside the occupation line, were returned to the Georgian side.

BUSINESS

GEORGIA TODAY AUGUST 20 - 22, 2019

On the Anaklia Development Consortium

BY KETEVAN KVARATSKHELIYA

C

onstruction of the Anaklia Deep Sea Port is one of the major and strategically paramount projects for Georgia today. Initiated in 2013, the project is being carried out by the Anaklia Development Consortium (ADC), made up of specialized firms with diverse backgrounds. The Georgian side is represented by TBC Holding as the project developer and principle partner of the Consortium.

Since the launch of construction works, the Consortium has faced a number of challenges, among them ungrounded rumors and allegations. However, all were met with thorough responses from the administration of the ADC, leaving no suspicions in terms of the crucial importance of launching the Deep-Sea Port in Georgia and the upcoming success of the project.

On August 15, The Conti Group, a major American constructing engineering company, representing one of the founders and shareholders of the Consortium, left said consortium, in doing so withdrawing from the Anaklia Deep Sea Port. The information was later confirmed by Levan Akhvlediani, CEO of the ADC. No official reason has been given as to their reasons for stepping out of the project.

The Georgian political opposition commented on the decision of the American company, stating that the actions of the current government have

led to the decline of US interest in Georgia and its potential. Roman Gotsiridze, one of the leaders of the opposition, said that the government has been fighting the Anaklia Deep Sea Port Project and that it will be responsible if this major initiative fails.

However, the representatives of the government related the withdrawal of the Conti Group to the financial and commercial interests of the company, noting that such shifts in the management of the ADC will have no negative influence on the development of the project.

Levan Akhvlediani in turn put emphasis on the passive role of the Conti Group in the Consortium over the past few months. He also noted that the American company left the Supervisory Board of the ADC in December 2018 and had remained only as shareholders.

“Of course, this is not a positive move,” he added.

“But there is nothing in this decision that will critically damage the project, or the Consortium.”

The Ministry of Regional Development and Infrastructure of Georgia released a special statement on the recent developments, expressing doubts as to the feasibility of the further progress of such a large-scale project without one of the principle shareholders.

It is stated in the Ministry’s document that for the initiative to be fulfilled decently, it is vital to have major experienced investors. As such, the ADC has been told to present such an investor which is able to continue the development of the construction of the Anaklia Deep Sea Port in the shortest time frame.

Deputy Minister: Georgia's Energy Sector Is Very Attractive for Investors Continued from page 1 The Deputy Minister added that over $201 million was invested in the construction of energy facilities in Georgia in 2018 – 2019 and 28 Memorandums of Understanding have already been signed on the construction of further energy facilities in Georgia.

“In April of this year, negotiations were successfully completed on the construction of the Namakhvani HPP cascade in Georgia, where $750 million will be invested. Georgian investors stand behind the projects launched today.”

Tvalabeishvili named the 230 MW thermal power plant in Gardabani as an example, which will be commissioned in 2020 and is being built by a local investor with an investment of at least $170 million.

“We are very optimistic about the development of the energy sector. In the future, we plan to promote the nation's energy potential internationally to a greater extent. After the energy market reform, we expect to grab the interest of more investors,” he said.

Geostat reports that Foreign Direct Investments in Georgia amounted to $1,265.2 million in 2018 down 35.5% from 2017 and up 2.7% from the preliminary data of 2018.

The agency noted that the main reasons the FDI

fell is completion of a pipeline project, transferring of ownership of some companies from non-resident to resident units, providing adjusted profit-loss data from companies and reduction in liabilities to non-resident direct investors.

The share of FDI by three major economic sectors reached 48.0% in 2018. The largest share of FDI was allocated in the financial sector, totaling $270.7 million. The construction sector was the second with $173.0 million, followed by transport and communication with $163.0 million.

In addition, the manufacturing sector has 11.1% of FDI, followed by real estate at 10.4%, energy sector at 9.5%, hotel and restaurants 6.2% and mining 4.9%.

The top countries which invested in Georgia are: Azerbaijan – 19.5%, the Netherlands – 16.5%, the United Kingdom – 14.1%, the United States – 8.1%, China – 6%, Czech Republic – 5.9%, Panama – 5.9%, Russia – 5.5%, Luxembourg – 4.0% and Turkey – 3.9%.

The investments in the Georgian energy sector since 2013 look as follows: 2013 – $ 246.1 million 2014 – $ 190.0 million 2015 – $ 123.7 million 2016 – $ 145.0 million 2017 – $ 280.6 million 2018 - $ 120.8 million

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BUSINESS

GEORGIA TODAY

AUGUST 20 - 22, 2019

Tbilisi Welcomes Universal Picture’s Latest Fast & Furious as Filming Begins

BY ANA DUMBADZE

O

n August 16th, Stamba Hotel hosted a press conference on the kick off of shooting of the world-famous Hollywood blockbuster Fast & Furious in Georgia.

The filming of the ninth chapter of Universal Pictures’ Fast & Furious began in Georgia’s capital city of Tbilisi on August 19 and will last until September 20.

The shootings in Georgia are to be carried out

by Georgian production company Enkeny Films.

A number of government agencies, including the Ministry of Internal Affairs, Ministry of Economy and Sustainable Development of Georgia and Tbilisi City Hall, have been working closely with Universal Pictures, Enkeny Films and the film’s production team to organize filming of an action scene that features a car chase through some of the city’s iconic and best-known areas. As the main liaison for the Georgian government, the State agency Enterprise Georgia is responsible for coordinating communication and film making processes with these and other government stakeholders.

The decision to shoot in Georgia was made during a visit of officials from Hollywood film producing companies HBO and Universal Pictures in April.

The visit was initiated and organized by the agency Enterprise Georgia, a government institution focused on increasing the competitiveness of private sector, enhancing country’s export potential and promoting/supporting foreign direct investments in Georgia.

The press conference was led by Enterprise Georgia CEO Mikheil Khidureli, Deputy Mayor of Tbilisi Sophio Khuntsaria, Head of the State program ‘Film in Georgia’ Tatia Bidzinashvili and Founder of Enkeny Films Bacho Meburishvili.

During the press conference, Khidureli once again highlighted the importance of the filming of this global movie in Tbilisi for the country’s tourism development, its prestige and economy.

“We made a breakthrough and the first Hollywood movie will be shot in Georgia,” Khidureli said.

“Enkeny Films started communication on this particular project a year ago, but our agency’s role was to bring and host high-ranking representatives from Hollywood to Georgia to get an official green light for the country itself.

“We offered them a flexible system, fast solutions and a comfortable cash rebate program. Our willingness to help and accelerate processes was crucial during the decision-making. This will be not only to the financial benefit of our country; it will be a most effective marketing activity for Georgia.

Fast and Furious 9 is a movie in which the whole world will see Georgia and Tbilisi,” he noted.

Deputy Mayor Khuntsaria noted that the project

itself is unprecedented not only for the development of the Georgian filming industry, but also for the country’s tourism sector.

“The project carries an unprecedented importance for the development of both the Georgian filming industry and the country’s tourism sector.

Up to 400 representatives of the local filming industry are involved in the process. We hope that after the movie is released, thousands of tourists will visit Georgia and its capital Tbilisi, as statistics note usually happens in the locations where blockbusters are shot. We hope that afterwards, Georgia and Tbilisi will also catch the interest of other important filming industries,” she said.

Bacho Meburishvili, the Founder of Enkeny Films, agreed that the implementation of such projects will further encourage other film studios to come to Georgia and to recognize it as an ideal film location for large-scale projects.

“It is the first time such a big film studio has come to Georgia, and it was preceded by a very long process of convincing them of the suitability of the country for their needs. I’m sure such projects will also encourage other studios to come and work in Georgia. The main part of the action movie will be filmed in Georgia, on several streets of the capital which will be periodically blocked, including the central streets such as Rustaveli Avenue and Vazha-Pshavela. Attendance at the shootings will be restricted due to safety standards. We apologize to the population in advance for the inconvenience caused by the blockade of the streets and kindly ask them to be patient. Emergency services will still be able to freely move on these streets if necessity,” he said.

The five-week filming schedule will see a production crew of more than 600, including up to 425 Georgians, working in Tbilisi and Rustavi.

The project is expected to generate a tremendous

economic impact for Georgia, making it the largest production to film in the country so far.

The agenda of shooting on the major avenues of Tbilisi is as follows: August 18 - August 27: Vazha-Pshavela Avenue; August 26 - September 3: Rustaveli Avenue; September 2-7: area adjacent to the Rustavi Market; September 6-7: Freedom Square and Pushkin Street; September 8-16: Besarion Zhgenti and Avto Varazi Streets, 4th Nutsubidze Plateau September 16: University Street.

A central shopping center in the Georgian town of Rustavi, located near the capital Tbilisi, will also be used as a film set.

Justin Lin, the movie’s director, said, “We are thrilled to film one of our biggest action sequences in Georgia with the support of many government agencies, especially Enterprise Georgia. The moment I saw Tbilisi’s unique mix of historical architecture and modern structures amidst these wonderful colors and textures, I knew we’d found our location. Tbilisi is the perfect backdrop for the ninth chapter in the Fast & Furious saga.”

The filming of the ninth chapter in the Fast & Furious saga is the first Hollywood film to participate in the State program Film in Georgia. The program offers a 20-25% cash rebate on qualified expenses incurred in Georgia and aims to support the development of Georgia’s film industry, attract international filmmakers to the country and position Georgia as the main Eastern European filming destination.

As of July 2019, the incentive has already attracted 28 productions. The accumulated spending of all of these productions has amounted to more than GEL 99,8 mln and more than 13 400 local jobs have been created.

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BUSINESS

GEORGIA TODAY

AUGUST 20 - 22, 2019

Experience – Opening a Hostel in Georgia as a Foreigner Max was sitting at home when he got the call. He told them he had to think about it, so he went to eat a burger and fries. Then he had an epiphany. While waiting for his food, he decided to take a leap of faith and, without even having met Emanuela, he joined the adventure.

BY AMY JONES

N

estled amongst the vast canyons, natural hot springs and ancient monasteries of Samegrelo, Martvili is a stunning area of Georgia that is gaining popularity among tourists, especially those who fly to Georgia via Kutaisi. Emanuela, Wout (Woody) and Max, from Belgium and Poland, decided to settle in the area and open a hostel. The charismatic trio worked nine months to renovate a beautiful house on the outskirts of the village.

Now that Karma hostel is open and the dust has finally settled, we caught up with them to find out more about the project.

HOW IS YOUR RELATIONSHIP WITH THE LOCALS? “The concept of ‘neighbor’ in Georgia is very different from what we are all used to in Europe, and we love it,” they told us. “There are no such things as doorbells in the village, so our neighbours just come by bringing wine or freshly home-made cheese. They help us out whenever they can, and vice-versa.

“We really feel like we’ve already become part of the community here.

They have taken us to amazing hidden places in the region where we can now also take our guests. We’ve become regulars at the local markets and families nearby deliver us their delicious, organic veggies.

Our neighbors love us but they also think we are slightly crazy: we moved from a European country to the Georgian countryside to start a hostel here- who does that?! Much to their amusement, we also have a dog, cat, pig, and two sheep who all have names and are all very cuddly.”

WHAT WERE YOU DOING BEFORE YOU CAME TO GEORGIA? Emanuela, from Poland, was in feminist theater and working as an actress, photographer, videomaker and queer activist, which she still does now. Max, from Belgium, was working as a social worker with children with social, emotional and behavioral problems whilst Woody, also from Belgium, was an academic researcher at the UNESCO Water Institute in Bangladesh involved in migration and climate change.

WHY DID YOU COME TO GEORGIA? Emanuela first arrived in Georgia ten years ago, and Georgia never let her go.

Five years later, she moved permanently

Image source: KARMA Hostel

to what had become her beloved second home. After spending many summers in Samegrelo, especially around Martvili, she had the idea to create a space for travellers in the area. She saw how much potential the region had for a cool hostel.

Then, in the summer of 2017, she met

Woody who was travelling around Georgia. After telling him her idea of starting a guesthouse in Martvili - he was hooked.

Woody and Max originally came to Georgia together and they both fell in love with the country. So, when Emanuela told Woody her dream, he called up his best friend Max to join them in the venture.

WHAT WERE THE BIGGEST CHALLENGES? “Finding and buying our house was far from easy and took a long time as there is a small housing market in the Georgian countryside,” they said. “The renovation took nine months and we did

almost everything ourselves. As neither of us had prior experience, we had to rely on help from the neighbors, friends, family, and youtube. We also had help from a lot of volunteers through Workaway, an online platform through which travellers work abroad in exchange for food and lodging. It was also tricky that not all the materials and tools were available in Georgia, so we often had to improvise. But Georgians are generally quite good at that. The biggest challenge was probably the language barrier, although Georgians can be very forgiving with foreigners who only speak rudimentary Georgian.”

DO YOU HAVE ANY ADVICE TO PEOPLE LOOKING TO OPEN THEIR OWN HOSTEL IN GEORGIA? “If you’re a foreigner looking to buy a property for a business in Georgia, you should find a legal advisor,” they warn.

“Opening a business is very easy, but buying property in the countryside is quite complicated. We were lucky to have a good Georgian lawyer who helped us through the whole process.

“Also, a neighbor once told us that neighbors are like family in Georgia, because you will rely a lot on each other – and he was right! If you have a good relationship with your neighbors, they will help you a lot with your business.”

If you would like to discover Martvili and meet this friendly trio, you can book a private room or dorm bed at Karma hostel on Airbnb or send them a message via their Facebook page – https://www.facebook.com/KARMAmartvili/

Fitch: Russian Ban to Reverse Rapid Improvement in Georgian Tourism Revenues

BY THEA MORRISON

F

itch Ratings Inc., one of the "Big Three credit rating agencies," affirmed Georgia's LongTerm Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook, however, it noted that the Russian ban on direct flights with Georgia will partly reverse the recent rapid improvement in tourism revenues.

The report reads that Russia suspended flights to and from Georgia from 8 July, invoking security issues after an address by a Russian MP in the Georgian parliament reignited long-standing bilateral tensions, leading to large demonstrations in Tbilisi.

Fitch noted that Russia is the largest source of tourist arrivals in Georgia, although the bulk of these travel by road.

The agency says that Georgian authorities are assessing the impact from the ban and their policy response.

“The flight ban will partly reverse the recent rapid improvement in tourism revenues, with international visitors' growth slowing to 4.3% y-o-y in July, from 19.9% in June, but Fitch expects continued growth over the forecast period,” the report reads.

Fitch assumes the IMF will allow some adjustment of the EFF to accommodate the tourism shock.

The report also reads that dynamic tourism exports and lower import growth following the completion of large energy projects led to a narrowing of the cur-

rent account deficit to 7.7% of GDP in 2018, from 8.8% in 2017.

“Fitch forecasts the current account deficit will narrow further to an average of 5.3% over 2019-2021 versus 3% for the current 'BB' median, as a slowdown in consumer lending and rising domestic savings following the launching of the funded pension pillar ease pressure on imports,” it says.

In addition to tourism challenges, the agency says Georgia's ratings are supported by governance and business environment indicators that are above the current medians of 'BB' category peers, and a track record of macroeconomic resilience against regional shocks.

However, Fitch believes Georgia's external finances are “significantly weaker” than the majority of 'BB' category peers.

The report also reads that net inflows of foreign direct investment (FDI) are forecast to cover the current account deficit each year. Net FDI is projected to average 5.9% of GDP over 2019-2021, after declining to 5.5% in 2018 from 10.8% in 2017 due to the completion of major infrastructure and energy projects.

Fitch forecasts economic growth to decelerate to 4.3% in 2019, from 4.7% in 2018, as credit growth slows down and the Russian flight ban hinders expansion of the tourism sector. Nonetheless, it will remain above the forecast current 'BB' median of 3.3%. Acceleration of infrastructure spending and a slightly looser fiscal policy will support a pick-up in growth to an average 4.7% in 2020-2021.

The report also notes governance and business environment indicators are well

Image source: BBC

above the current medians of 'BB' category peers, with Georgia ranking 6th out of 190 in the 2019 World Bank Ease of Doing Business Indicator.

Natia Turnava, Georgia’s Minister of Economy and Sustainable Development, says the government is doing its best to neutralize the main challenges for Georgia named by Fitch – the travel embargo imposed by Russia and reduced number of tourists.

"Due to these factors, Fitch has reduced

Georgia's economic growth forecast by 0.3% points, but the Georgian government will do its utmost to complete 2019 at a high rate," Turnava said.

Meanwhile, the opposition parties claim the government is unable to develop the country’s economy.

Roman Gotsiridze, the United National Movement MP says it is ridiculous that the government blames only the reduced number of tourists for the current situation in Georgia.

“The fact that Fitch reduced the economic growth forecast for Georgia means that the government has no ability to move the country forward,” he said.

However, Business Ombudsman Irakli lekvinadze says although Fitch's economic growth forecast for Georgia was reduced by 0.3% in 2019, it still exceeds the 3.3% median of the BB category, and in light of the challenges facing the country's economy today, this can only be positively assessed.

BUSINESS

GEORGIA TODAY AUGUST 20 - 22, 2019

7

New Developments Planned for Bakuriani this Winter

BY SAMANTHA GUTHRIE

G

eorgian Prime Minister Mamuka Bakhtadze, Minister of Economy and Sustainable Development Natia Turnava, and other government officials spoke from the ski resort town of Bakuriani on Wednesday, August 14. They announced significant investments in local infrastructure for the 20192020 winter sports season and beyond.

Bakhtadze and Turnava presided over the signing of a cooperative agreement

The construction of three new ropeways is the first project in our program to bring world-class international sporting events to Georgia

between Austrian-Swiss Company Doppelmayr Garaventa Group and the Mountain Resorts Development Company of the Ministry of Economy and Sustainable Development of Georgia, by which three new ropeways in the Didveli area of Bakuriani will be constructed.

The primary impetus for the construction is the 2023 Freestyle Ski and Snowboard World Championship, which Georgia is hosting for the first time. Speaking to reporters, Bakhtadze emphasized, however, that while “as an ordinary Georgian, I am very proud that Georgia will host the 2023 Freestyle [Ski and Snowboard] World Championship,” the international event is not the only reason for the investment.

His government has prioritized developing Georgia’s rural, often neglected mountain regions. Bakhtadze also expressed his gratitude that Georgia was selected to host the championship, noting that it is a significant victory for the country, that comes with significant responsibility. The selection, he said, indicates that the International Ski Federation trusts Georgia to implement the championship successfully and that Georgia’s international partners recognize national strategies towards of winter resort development.

Georgia has also applied to host the Youth Olympics in 2025, with the aim of helping the country gain experience and prepare for a more ambitious goal – to one day host the Winter Olympics. As Bakhtadze said: “Georgia and the Georgian nation deserve it.”

At the signing ceremony, Turnava also spoke to the assembled crowd, sharing her belief that the ropeway project sig-

nals a recognition of the great potential of Georgia’s many mountain resorts. The selection of Georgia for the 2023 Freestyle Ski and Snowboard World Championship “is, however, a challenge and a major responsibility at the same time,” Turnava noted, adding that her “team is responding to this challenge with new large-scale constructions, development and major infrastructural projects.”

The Minister explained that “The construction of three new ropeways is the first project in our program to bring world-class international sporting events to Georgia. We plan to create additional infrastructure – new ski areas, a biathlon track, ice rinks, and it is also very impor-

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tant to rebuild the ski jump infrastructure that has been defunct for 40 years, and to restore this sport in [international ski jump champion] Koba Tsakadze’s homeland. We will be fully prepared to host the largest winter sports events in compliance with international standards.”

Over the weekend, the Municipal Development Fund of the Ministry of Regional Development and Infrastructure of Georgia announced that the Bakuriani Bypass road is nearly completed. The new route takes drivers around the main resort complex and directly to the Didveli ski zone. It is designed to reduce congestion and traffic that clogs the narrow, icy roads of

Bakuriani, which were never intended to see such a volume of vehicles. In recent years, traffic at the resort has increasingly worsened, making a ski vacation to the mountains feel more like a typical day in a Tbilisi rush hour traffic jam, and lowering the quality of life for locals.

The bypass, at 3 km long, is planned to open this month. The construction began in the summer of 2018 and cost approximately 6 million GEL ($2.1 mln), financed by the European Investment Bank.

The Municipal Development Fund has investment a total of 55 million GEL ($18.8 mln) in infrastructure in Bakuriani leading up to the 2023 Freestyle Ski and Snowboard World Championship.

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8

BUSINESS

GEORGIA TODAY

AUGUST 20 - 22, 2019

CENN/WRI Study Shows Social Cutting Is the Main Driver of Tree Cover Loss in Georgia

T

he unsustainable use of forest resources is one of the most urgent issues in Georgia today, with tree cover loss affecting the national capacity to produce goods and ecosystem services, including many protective, scientific and commercial services ranging from living space and food, to climate regulation and genetic resources. The State Forest Fund is a highly valuable national asset and its misuse can be a threat to sustainable development.

One of the key elements of a sustainable forest management system is comprehensive forestrelated information, including data on the driving factors behind tree cover loss. Quantitative nationallevel information on the factors causing deforestation and forest degradation are widely unknown

in Georgia. Given the current gap in the knowledge, CENN began investigating the factors that lead to tree cover loss in the country, in cooperation with the World Resources Institute (WRI), under the Global Forest Watch (GFW) initiative, funded by the Global Environment Facility.

This study provided essential information for policymakers at local and national levels to craft necessary policy actions and reduce the negative impacts of deforestation and forest degradation.

The study indicates that social cutting is by far the main driver of tree cover loss in Georgia, perhaps the result of interactions between social, economic and political influences. This is followed by forest fires and forest conversion into agricultural land. Mining and industry also play a role,

as does, to a lesser degree, urban expansion.

Since 2011, entities specified by Government of Georgia are eligible to obtain firewood and timber resources by means of social cutting. Considering the low purchasing capacity of firewood, rural households are not in a position to reduce their consumption level, despite gasification as an alternative energy source in some rural areas.

The New Forest Code of Georgia 2019 plans to abolish the current method of “social cutting,” which often sees illegal logging of firewood by “social loggers” who aim to sell the resources for profit.

To improve coordination, accountability and transparency, within the New Forest Code, it is planned to establish the “Organized Forest Consumption” approach, whereby the eligible entities

purchase firewood from “specially designated places” monitored by the state body.

The government has already sent the revised Forest Code to Parliament for confirmation.

By carrying out such studies as the one presented here, both governments and citizens are better enabled to define strategies and interventions to deal with national and local drivers concerning the factors driving forest loss. Such knowledge-sharing also allows for a more informed decision-making process and, on a larger scale, helps support ongoing international climate discussions and negotiations.

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BUSINESS

GEORGIA TODAY AUGUST 20 - 22, 2019

9

Trump’s Wish to Buy Greenland Says a Lot about the World's Economy

BY EMIL AVDALIANI

S

everal days ago, information was leaked to the US press that President Donald Trump was considering buying the world’s largest island (save the continent of Australia) – Greenland – from Denmark. Unsurprisingly, internationally this was met with widespread hilarity. Moreover, there was indignation in Greenland and Denmark. Both firmly said that the territory was not for sale.

At the same time, Trump sought to portray the idea as “essentially a large real estate deal.”

Trump’s intention is nothing new considering the US history of land purchasing. In 1803, Thomas Jefferson bought a large piece of land from France for $15m, which became known as the “Louisiana Purchase”. More than half a century later, in the 1860s, Andrew Johnson paid $7.2m to the Russian Empire for Alaska. Actually, even Denmark once sold territory to the US when in 1917 Woodrow Wilson got the Danish West Indies for $25m.

The islands were later renamed the US Virgin Islands.

As unserious as it might sound, Trump’s statement on Greenland actually represents and follows Washington’s earlier attempts to buy the island. The purchase of Greenland was first mentioned under the presidency of Andrew Johnson when in 1867 a report by the US State Department suggested that Greenland's strategic location was an ideal option for acquisition. In 1946, US President Harry

Image source: news.sky.com

Truman offered Denmark $100m for the territory. Thus, there is certain consistency in the US approach to Greenland.

Putting Trump’s offer into the context of larger international relations might help us to understand the strategic reasons behind Washington’s drive for the purchase.

Greenland’s location is at the core of the US drive. The island is between the Russian Arctic and the East Coast of the US. Having a larger presence on the island would give the US, which already has a military presence in Greenland, the Thule Air Base, opened in 1943, a bigger impact on Arctic affairs where

Russia is working hard to increase its presence.

Surprisingly, another strategic reason behind American thinking on Greenland is China. China is also active in the Arctic, and although this is to a lesser extent than Russia, it has been Beijing’s recently very active economic and scientific

policies on Greenland that likely worried the Americans. Indeed, there were even reports a few years ago of the intention to buy an abandoned port (as many thought, for military purposes). It did not work for the Chinese, but their intention was alarming to the US. The Greenland issue also fits into the recent trade competition between the US and China. Everyone remembers Beijing’s warning to the White House that it might stop exporting a whole set of rare raw materials to America.

On the periodical table of elements, the last two rows are lanthanides, rare materials most of which are found in China and extremely vital to the US military as well as for other important sectors. Americans understand they are dependent on Chinese goodwill which might easily change considering tensions between the powers. Thus, for America, it is crucial to find an alternative source of these rare elements to mitigate Chinese threats of export cutting.

This is how Greenland came to light, as the world’s biggest island has many of said lanthanides. Moreover, Greenland also boasts iron ore, lead, zinc, diamonds, gold, rare-earth elements, uranium and oil.

Greenland is home to more than 57,000 people as of 2018, and mostly relies on Denmark for its budget revenue. Denmark is a member of NATO and Greenland is already under the US military security umbrella, but having the island as a 51st state would expand the US outreach to the Arctic, control of the Atlantic Ocean and secure import of rare elements integral to America’s defense and technological sectors.

10

BUSINESS

GEORGIA TODAY

AUGUST 20 - 22, 2019

Minister of Economy Promises 5,000 Imereti Families Will Have Gas this Winter

Image source: Ministry of Economy and Sustainable Development

BY SAMANTHA GUTHRIE

M

inister of Economy and Sustainable Development Natia Turnava visited Imereti last week, and promised that by the end of the year, more than 5,000 families will have their homes connected to the country’s natural gas network.

The Georgian government is currently in the midst of implementing a three-year gasification program 2019-2021 that will bring natural gas to households in 226 settlements. Speaking to assembled guests on Friday, August 16, Turnava said “Today, I saw the works in Zestafoni and Terjola municipalities - some of the villages are already gasified and some are starting now, and we think that before the start of the winter season, these villages will also have gas.” Most families without a natural gas connection heat their homes using wood burning stoves, which produce an uneven distribution of heat, encourage illegal deforestation and increase air pollution, including inside the home.

During her visit, Turnava met with populations in several villages in the Zestaponi and Terjola municipalities and later visited the gasification work sites in the villages of Rkvia, Skande, and Shimshilakedi. She explained that 29 settlements in Imereti will be reached by the three-year gasification plan, which are inhabited by 5,150 families.

Gasification works started in the village of Rkvia, in the Zestaponi municipality, on August 16 and will be finished on October 23, reaching 158 households. The construction work to build and install 22,751 meters of gas lines is being carried out by the company Energy Invest 2009 at an estimated cost of 599,990 GEL ($205,124).

In the Shimshilakedi village of the Terjola municipality, gasification works have been ongoing since July and will be finished in next month. In total, 39 families will receive natural gas. The estimated cost of the work is 64,508 GEL ($22,054). Company LTD Mnatobi 2013 is installing 2,419 meters of gas line.

For the village of Skande, also in the Terjola municipality, gasification works began in July and will be finished in September, supplying gas to 215 households through 14,912 meters of gas line. The work, estimated to cost 383,710 GEL ($131,182), is also being conducted by LTD Mnatobi 2013.

Throughout the three-year gasification plan, more than 1.3 million households nationwide will be connected to natural gas – 85% of Georgia’s total consumer population. “At this rate we are the leading country in Europe,” said Turnava. “The gasification plan, which has been discussed and approved by the Georgian government with the involvement of the Ministry of Economy and Sustainable Development, also includes settlements where there has historically been no natural gas,” she added, as opposed to settlements where gas lines lost functionality after the collapse of the Soviet Union and the difficult times for the country in the 1990s.

State Representative in Imereti Zviad Shalamberidze, Zestaponi majoritarian MP Shalva Kiknavelidze, and representatives of local municipalities and the gas company traveled through Imereti together with Minister Turnava late last week.

On Friday, Turnava also discussed other issues of importance to the Imereti population, including the challenges the region faces and planned government projects. She listened to public complaints and responded, saying, “We are doing our utmost to provide the people, especially those living in the regions [outside Tbilisi], with all the tools to create economic prosperity and new development opportunities for you. In addition to gasification, there is talk about high-speed, fiber-optic internet, which will cover the whole of Georgia and, of course, the Imereti region. In September we are also announcing a microgrants program that will give you a real chance to turn your idea into a business or expand your existing business.”

Turnava also noted that Imereti has the potential to develop agrotourism and to set up more guesthouses. "If you choose this area of activity, the National Tourism Administration of the Ministry of Economy will assist you in properly positioning and marketing your business,” she promised.

Non-edible Coloring Found in Georgian Products

BY NINI DAKHUNDARIDZE

T

he NGO Center for Strategic Research and Development of Georgia (CSRDG), which monitors production on the Georgian market, found non-edible coloring in six out of 42 investigated varieties of Tkemali. Some of these harmful products are issued under the name of famous brands, among them “Kula”, “Supremo” and “Marneuli Food Factory.”

The organization reports that after purchasing varieties of Georgian bottled sauces in different stores, they sent them to a laboratory in Germany, where they were checked for 12 non-edible colorings.

The NGO offers further details about the investigation: “While it is true that the amount of non-edible coloring found in the abovementioned production was rather small, the permanent use of these colorings can cause cancer or genetic mutation," reads the CSRDG publication.

The research results were published on momxmarebeli.ge. Reportedly, coloring of the "Sudan" category was found in some products, a category of food coloring used to redden products. However, Georgian laboratories are not credible to investi-

gate the use of the abovementioned coloring category.

"We are sending letters to the relevant entrepreneurs and the National Food Agency. We will be looking closely to see the outcomes of our investigation - how the producers will react and how the problem will be solved,” reads the NGO’s publication.

Marneuli Food Factory responded to the recent CSRDG findings, reporting that only local foodstock is used in their production, aside from intermediate products that are not produced in Georgia.

These include salt, sugar and spices.

“All our suppliers are from Georgia and all of them own certificates of quality. To follow up the recent findings of the CSRDG, we will be sending all our final products to European laboratories, with whom we have experience, and we will await their feedback and inform our customers about the results. Before then, at this time, we are pausing the production of the products highlighted by the CSRDG,” reads the statement from Marneuli Food Factory.

"Our company salutes the demanded high quality in Georgian markets, transparent processes of product and foodstock origins. We are hopeful that similar studies will be frequent and will not turn into PR work," Marneuli Food Factory added in its statement.

BUSINESS

GEORGIA TODAY AUGUST 20 - 22, 2019

11

Marita Kapanadze’s Interior Design – Superiority of Exclusive Works’ Décor TRANSLATED BY KETEVAN KVARATSKHELIYA

M

arita Kapanadze is a young interior designer, creating various fascinating projects in Georgia and beyond its borders. The unique style, envisaging working with a diverse technique, represents the main secret of her success.

Processing new and modern items with batik, silk paper, lamb wool, threads and other interesting materials, is a very complicated procedure. However, their final appearance represent a result, which has helped Marita to strongly establish herself in the sphere and find her own niche.

She is equally enthusiastic about the work despite the difficulty of the particular interior in terms of design, and always manages to add distinctive features and give a new life to the property through her exclusive works. You will see her items on walls as decorated panels, or the work will represent a dividing wall, ideal for arranging different zones in one area. Marita has brought together these wonderful multifunctional and diverse pieces under one brand entitled MARITA DESIGN STUDIO. The brand has been serving for the local and international projects since 2010, while it has been actively participating in various design competitions and festivals since 2012, and has obtained a number of awards, including A Design Award in Italy, International Architecture Prize in 2012 and 2017, and more.

Marita has been developing herself professionally in the USA for already two years, astonishing wider audiences with wonderful creations. In addition, she has also adapted the profession of architect and she has launched various projects in New York.

“I started working in interior design for a furniture enterprise when I was a student. I was creating different types of furniture in a program, and after my clients requested the full image, I started working on interiors. It was certainly very difficult to ignore the pleasure of seeing the happy reactions of customers. One client recommended me to another, and my working field gradually transferred into interior designer. Currently, I work as a designer on numerous houses and commercial areas in Georgia and abroad.”

WHAT HAS CHANGED IN YOUR WORKING ROUTINE OVER THE YEARS? My work changes according to demand.

Sometimes I work on furniture or decor or I create interior design through a digital program and try to bring my ideas to life.

These are related professions, but at the same time all of them require different

skills. In the USA, I became interested in architecture and started working on such projects. There are a number of houses designed by me in New York now.

My love of my profession, which gives me strength to work hard and create pieces that bring aesthetic pleasure to people, has remained unchanged. The emotion that is felt of a satisfied customer is priceless and makes me unimaginably happy.

TELL US ABOUT THE PRODUCTS YOU CREATE. All my products are exclusive. I think, even if I try, I would not be able to create identical items. I work with different materials and have the copyright on some of my works. All techniques have their specific features and challenges.

DESCRIBE THE WORKING PROCESS. Working on each piece is specific, needing different technics and processing.

Working on batik starts with drawing the sketches in color and is then trans-

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George Sharashidze COMMERCIAL DEPARTMENT

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GEORGIA TODAY

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

forming them on silk. It’s a difficult and long process. I work with fire and melted wax, then I paint, dye, freeze, evaporate and try to create desirable colors for hours.

I use this technology for various décor pieces. Constructing dividing walls, requiring different materials and a great number of details, is equally difficult, though.

WHEN DID YOU LEAVE FOR THE USA? TELL US ABOUT YOUR LIFE THERE. I came to the USA two years ago, completely alone. I left my family and 12-yearold child in Tbilisi. However, I brought my child here very soon, as despite my friends’ warnings, I could never imagine that staying alone would be so incredibly difficult. Now we are together and fulfill each other.

I got actively engaged in the New York art industry right after coming here. I have participated in almost 10 exhibitions introducing my handmade decorations, which have caught the eye of many foreigners. They were asking me to sell

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

my works, but due to the legislation, I have no right to commercial work here yet. I also have offers for further collaboration from a number of architectural and furniture companies. I have one important project in Miami, which I started in Georgia. It is to be completed soon and I will present my creations to supporters and critics.

I have gained many friends in New York and other states, traveled to Miami, Las Vegas, Philadelphia, New Jersey and currently plan to visit the mesmerizing Niagara Falls.

WHAT’S YOUR FAVORITE KIND OF INTERIOR DESIGN? It is challenging for a designer to have one specific style. Sometimes I have to work on a house with ornaments and carves of the renaissance epoch, which is not to my taste. But I of course work with the same eagerness and devotion.

I personally prefer minimalism. This is the environ where I feel free and no needless items restrict my freedom.

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WHAT DO YOU CONSIDER THE MAJOR FACTOR IN BEING A SUCCESSFUL DESIGNER? I believe a designer has also to be a little bit of a psychologist at the same time. It is important to thoroughly learn the aspirations of the clientele and their views about aesthetic-functional issues.

DO YOU THINK OF RETURNING TO YOUR HOME COUNTRY? TELL US ABOUT YOUR FUTURE PLANS. This is the painful topic, which I cannot speak about with certainty. I can change my mind about returning to Georgia at least three times a day.

Sometimes I wake up with voracious nostalgia and feel ready to buy a ticket home. But, by afternoon I delve into my work and the desire to return is put off till ‘tomorrow’. I think, in Georgia it would be difficult to start constructing the stairs to success from scratch.

But, who knows?

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