Issue #880 Business

facebook.com/ georgiatoday

Issue no: 880/45

• SEPTEMBER 20 - 22, 2016

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Georgia’s PM Presents Plan to Radically Overhaul the Country’s Infrastructure PAGE 3

FOCUS ON SILICON VALLEY A step to a high-tech future.

Exclusive interview with project manager Mikheil Batiashvili

PAGE 10

Tbilisi Blasts Russia for Polling Stations in Occupied Regions

BY THEA MORRISON

G

eorgia’s Ministry of Foreign Affairs (MFA) said Russia opened 21 illegal polling stations on Sunday in Georgia’s occupied regions of Abkhazia and South Ossetia as part of the Russian Federation's elections to State Duma Elections.

The MFA quickly called the act “another manifestation of Moscow’s blatant annexation policy. One that grossly violates the fundamental norms of international law.”

“Russia chooses to ignore the essential principles enshrined in the UN Charter, including recognizing borders and maintaining a policy of non-interference in a sovereign state's domestic affairs,” the MFA's official statement said.

Continued on page 2

Iset’s Consumer Confidence Index Shoots Through The Roof ISET PAGE 4

Georgian Company to Produce Disposable Packaging Products PAGE 8

Social Entrepreneurship Festival Held in Uplistsikhe PAGE 9

Armenia Taps Ex-Gazprom Exec as New Prime Minister

POLITICS PAGE 12 Prepared for Georgia Today Business by

Markets As of 16ͲSepͲ2016

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

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

INDICES

w/w

m/m

Price

w/w

GBP 29.62

Ͳ2,7%

+6,2%

GEOROG 04/21

105.63 (YTM 5.35%)

+0,1%

+0,5%

GBP 3.07

Price

+5,0%

Ͳ3,4%

GEORG 04/21

BONDS

112.14 (YTM 3.94%)

Ͳ0,4%

+0,2%

GBP 11.25

+2,3%

Ͳ2,4%

GRAIL 07/22

113.00 (YTM 5.13%)

Ͳ0,1%

+1,1%

BGEOLN 07/23

103.25 (YTM 5.42%)

Ͳ

+1,1%

Price

w/w

m/m

45,77

Ͳ4,7%

Ͳ7,0%

CURRENCIES

w/w

m/m

1 310,35

Ͳ1,3%

Ͳ2,7%

GEL / USD

2,3100

Ͳ

Ͳ0,7%

GEL / EUR

2,5618

Ͳ1,3%

Ͳ2,3%

Price

m/m

Price

w/w

m/m

GEL / GBP

3,0007

Ͳ2,1%

Ͳ1,0%

FTSE 100

6 710,28

Ͳ1,0%

Ͳ2,7%

GEL / CHF

2,3562

Ͳ0,5%

Ͳ2,6%

FTSE 250

17 851,87

Ͳ0,2%

+0,2%

GEL / RUB

0,0353

Ͳ0,8%

Ͳ3,0%

DAX

10 276,17

Ͳ2,8%

Ͳ3,8%

GEL / TRY

0,7758

Ͳ0,3%

Ͳ2,3%

DOW JONES

18 123,80

+0,2%

Ͳ2,3%

GEL / AZN

1,3942

+0,6%

Ͳ1,1%

5 244,57

+2,3%

+0,3%

GEL / AMD

0,0049

Ͳ

NASDAQ

Ͳ

MSCI EM EE

125,74

Ͳ3,2%

Ͳ3,4%

GEL / UAH

0,0894

+3,2%

Ͳ4,2%

MSCI EM

885,45

Ͳ2,6%

Ͳ3,3%

EUR / USD

0,8963

+0,7%

+1,1%

SP 500

2 139,16

+0,5%

Ͳ1,8%

GBP / USD

0,7691

+2,0%

+0,3%

MICEX

1 981,96

Ͳ2,3%

+0,3%

CHF / USD

0,9804

+0,5%

+1,9%

MSCI FM

2 497,68

Ͳ1,6%

Ͳ4,1%

RUB / USD

65,2850

+0,7%

GT Index (GEL)

841,46

Ͳ

Ͳ0,1%

TRY / USD

2,9804

+0,4%

+1,7%

GT Index (USD)

720,40

Ͳ

+1,1%

AZN / USD

1,6580

Ͳ0,6%

+1,8%

+2,3%

2

BUSINESS

GEORGIA TODAY

SEPTEMBER 20 - 22, 2016

Ukraine’s Dniproavia to Launch Tbilisi Blasts Russia for Polling Stations in Direct Tbilisi-Odessa Flights Occupied Regions Continued from page 1

BY NICHOLAS WALLER

U

krainian airline Dniproavia will begin regular direct flights between the Georgian capital Tbilisi and Ukraine’s principal Black Sea port city Odessa on 6 October, the airline announced late last week.

According to Dniporavia, the autumn and winter schedule will include a two and a half hour weekly flight carried out every Thursday serviced by a Brazilian-made twin-engine Embraer-145 jet.

The move to offer direct flights between the two cities comes at a time when Georgia’s former President, now Governor of Odessa, Mikheil Saakashvili,

has frequently stated that he wanted to increase the number of transportation links between Odessa and Georgia.

In addition to direct flights, Saakashvili has said he wants to see the creation of a regular, year-round passenger ferry service that travels across the Black Sea from Odessa to Georgia’s ports, Batumi and Poti.

A major cultural center and an ethnically diverse city with close links to Europe, Odessa is Ukraine’s most important seaport and transportation hub.

Odessa’s port and industrial enterprises are vital to Ukraine’s economy as the country’s strategically important oil and chemical processing facilities are located in the city and connected to European networks by pipelines.

Founded in 1996 by Ukrainian billionaire Igor Kolomoisky’s PrivatGroup,

Dniproavia is headquartered in Ukraine’s fourth largest city, Dnipro (formerly Dnepropetrovsk).

Dniproavia currently serves domestic routes within Ukraine as well as international services to Austria, Belarus, Bulgaria, Georgia, Israel and Turkey.

The airline already offers a regular service to Batumi.

Dnipro, an economic power base of 1.1 million people, is an economic and political power base in Ukraine. The city is the hometown of many of the country’s key political and religious figures of the last century, including former President Leonid Kuchma, as well as ex-prime ministers Yulia Tymoshenko and Pavel Lazarenko.

The city is also home to Yuzhmash, one of the world’s largest ballistic missile design bureaus and manufacturers.

Moscow began the process of de facto annexation in the late 1990s by forcing local citizens in Abkhazia and South Ossetia to acquire domestic Russian passports. Russia and several other Moscow-aligned former Soviet republics have continued the old Soviet practice of requiring their citizens to have two passports. One functions as a national ID and is used for internal domestic travel, police registration and collecting social welfare benefits, while the second passport is used for international travel.

Russia first implemented its "passportization process" in the two occupied regions shortly after Moscow began paying local pensions to Abkhaz and South Ossetian residents.

In 2011-2012, Moscow required Abkhazia and South Ossetia's residents to participate in Russia's parliamentary and presidential elections after being forcibly being included on the official list of Russia’s federal voting districts.

Russia’s Central Election Commission said more than 114,000 people residing in occupied Abkhazia and South Ossetia were registered to in Sunday's elections.

The Georgian government is calling on the international community to take steps to punish Moscow for its continued violations of Georgia's sovereignty and territorial integrity.

Tbilisi’s Reconciliation and Civil Equality Ministry also condemned Russia's actions, saying they require residents to vote in Russia's elections, but refuse their right to take part in Georgia's polls.

“Georgia’s government has once again

called on the UN to formulate an appropriate to this provocative act. This is not the first time Russia has illegally opened polling stations in Georgia’s occupied regions,” stated Ketevan Tsikhelashvili, Reconciliation and Civil Equality Minister.

The opposition believes that this action is further proof of the government's incorrect policies and urges the ruling team to make more concrete steps in this direction.

“Russia has again confirmed that it totally disregards international law and ignores Georgia's free will on this issue,” Sergi Kapanadze a member of Georgia's main opposition party, United National Movement, said.

Member of the Free Democrats, Viktor Dolidze, believes this issue should be first on agenda, and Official Tbilisi should communicate with the UN more actively.

Official results from Russia’s Central Election Commission show President Vladimir Putin's United Russia Party will win more than 300 of the 450 legislative seats, enough to secure a two-thirds constitutional supermajority in the lower chamber of the Russian parliament.

The Communist Party with 13.45 per cent of the vote and the ultranationalist Liberal Democratic Party of firebrand anti-Semite Vladimir Zhirinovsky (13.24 per cent) are running a distant second and third.

Candidates from United Russia, which is backed by the Kremlin, the feared FSB security services and the powerful statecontrolled media, are leading in 203 of the 225 single-member constituencies, with half of all ballots counted.

BUSINESS

GEORGIA TODAY SEPTEMBER 20 - 22, 2016

Georgian Wine Badagoni Wins Gold in Tokyo

Photo: Badagoni Wines

Georgia’s PM Presents Plan to Radically Overhaul the Country’s Infrastructure

BY NATIA LIPARTELIANI

BY NINO GUGUNISHVILI

T

he Badagoni Wine Brand has won a gold medal at the Japan Wine Challenge 2016 in Tokyo.

Kakhetian Noble was chosen as the best red wine in the

region among the 1600 wine producers and brands from over 30 countries participating in one of the largest competitions in Asia.

White and red wines Alaverdi Traditional and Tsinandali (2014), also by Badagoni, were awarded silver medals, and Badagoni’s Maestro Saperavi and Badagoni Brut won bronze.

The company was founded in 2002,

in Kakheti’s Zemo Khodasheni village, and gained success due to its clever branding philosophy, quality, and collaboration with Donato Lanati and his well-known Enosis.

Badagoni produces 1.5 million bottles a year and holds an international ISO certificate. Its Alaverdi Traditional is listed among the Top 100 Wines by Decanter magazine.

3

G

eorgia’s Prime Minister Giorgi Kvirikashvili on Friday presented an action plan aimed at modernizing the country’s notoriously poor infrastructure.

Dubbed the Spatial Arrangement Plan, the PM’s initiative is a four-point plan designed to help significantly upgrade public transportation, construction, tourism, manufacturing and energy links throughout the country.

“This implies a significant transfor-

mation of Georgia over the next four years. As a result, the country will become a modern European state, with stable infrastructure, services and power supplies," said Kvirikashvili.

According to the plan, the government will build or reconstruct 1,000 kilometers of surface roads and 550 kilometers of highway. Over 800 kilometers of the country’s worse roads will be rehabilitated, while 300 bridges and 50 tunnels will also be built or retrofitted.

The estimated cost of the total project exceeds 3.5 billion USD. The plan also includes building new airports and modernizing public transportation.

4

BUSINESS

GEORGIA TODAY

SEPTEMBER 20 - 22, 2016

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

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

Iset’s Consumer Confidence Index Shoots Through The Roof

BY ZURAB ABASHIDZE AND ERIC LIVNY

I

n September 2016, ISET’s Consumer Confidence Index added 13 points, the single largest monthly increase in the Index since its launch more than 4 years ago. Having risen from -28.7 to -15.7 points, the CCI rebounded to levels we last observed about two years ago, in autumn 2014 (i.e. at the outset of the GEL devaluation drama). Both the Expectations and Present Situation components of the CCI soared (up by 11.1 and 14.9 points, respectively), breaking historical records for monthly increases.

On the one hand, the latest improvement in the CCI extends a 10-month period of almost uninterrupted recovery of consumer confidence

from the nadir it achieved in November 2015.

On the other hand, however, our data appear to reflect an elections-induced euphoria concerning future economic reforms, as broadcasted by the ruling Georgian Dream coalition and opposition parties. Indeed, while differing in the level of detail and some operational nuances, practically all party programs envisage significant investment in infrastructure, lower taxes and more efficient government services, improvements in education, and increased social spending. Hallelujah!

The September data also betray a sense of uncertainty on the part of many respondents. The share of “don’t know” answers in the survey was much larger in September than is usually the case.

The CCI survey was conducted through phone interviews with 368 randomly selected respondents in the first 10 days of September.

Tbilisi

Rest-of-Georgia

Present Situation Index

-14.2 (up by 22.2 points!)

-26.6 (up by 9.4 points)

Expectations Index

-7.1 (up by 15.7 points)

-12.6 (up by 7.9 points)

Overall CCI

-10.7 (up by 18.8 points)

-19.6 (up by 8.6 points)

With Higher Education

Without Higher Education

Present Situation Index

-15.4 (up by 14.1 points)

-34.0 (up by 8.7 points)

Expectations Index

-7.9 (up by 12.2 points)

-15.3 (up by 7.2 points)

Overall CCI

-11.7 (up by 13.2 points)

-24.6 (up by 8.0 points)

TBILISI AND REST-OF-GEORGIA Interestingly, the CCI achieved much larger gains in Tbilisi compared to rest-of-Georgia. Most strikingly, Tbilisi residents report a 22.2-point improvement in their present situation (as opposed to a 9.4-point improvement for other Georgians).

THE ROLE OF EDUCATION

Perhaps surprisingly, better educated respondents appear to be an easier target for political propaganda (if the latter was, indeed, the main driver of the September surge in consumer confidence).

Respondents with higher education reported much stronger improvement in CCI (up 13.2 points compared with an 8-point improvement for people with a lower educational attainment).

Chart 1: Overall CCI, Expectations and Present Situation indexes in September 2016

Chart 2: Overall CCI: Tbilisi and rest-of-Georgia

Chart 3: Present Situation Index for respondents with and without higher education

Chart 4: Month-on-month comparison of responses to specific CCI survey questions

The September gains in expectations mostly reflect a lot of improvement in people’s perceptions regarding their future ability to save and make major purchases.

People also report significant progress on all aspects of their current situation except major purchases.

BUSINESS

GEORGIA TODAY SEPTEMBER 20 - 22, 2016

5

Vake Reaching Heights with the AXIS Towers

S

oon to be fully erected on Chavchavadze Avenue, Vake, behind the statue of Galaktion, the AXIS Towers are set to become the face of modern and future Tbilisi.

AXIS Towers introduces totally new lifestyle standards and expectations for Georgia. It is an entirely Georgian project, implemented by Georgian specialists in cooperation with global partners.

Construction of the AXIS Towers was first launched in 2006. However, due to the 2008 crisis, the construction was suspended. In 2015, the construction was resumed by the partnership of AXIS Company and the Georgian Co-Investment Fund, which invested USD 83 million.

There are five lines of development in AXIS Towers: residential, hotel, office, commercial and entertainment, all of which will be housed in one building, supplementing each other for the comfort of clients and guests.

Mains electricity is to be supplied directly by central stations, meaning that communications will not overload the network, while funds will be spent on development of the present network and sub-stations.

AXIS Towers will be served by 22 fast elevators promoting independent movement, vital for such a multifunctional complex.

People who live, work or have fun here do not need to go out to shop or look for high quality service- they can find everything they need in the AXIS Towers “building-city in the city,” spread over 100,000 square meters and 41 floors, 37 of which are above ground and 4 underground. There will be parking space on three of those four underground floors, which will cover 25,000 sq. meters.

One floor will be used for commercial space with a supermarket and various shops.

The residential area, located in the

stone tower, will offer apartments from 43 sq. meters- all light and sunny due to their large reflective windows. All corner apartments have 13.4 sq. meter terraces which can be enclosed by sliding windows, making them safe comfortable spaces for arranging a winter garden in cooler weather.

Each detail is designed for your comfort. Heating-cooling systems, controlled by special apps, allow you to heat or cool all rooms simultaneously and there is a fire safety system of international standards.

Construction of the residential tower structure is complete and soon the facing of the façade will begin- a natural white granite has been selected.

The glass tower and pedestal of AXIS Towers will house an A-class office center, a spa and fitness center, as well as a 25-meter swimming pool with movable roof and an open terrace. A sky bar will open on the top floor of the building.

The 5-star Hotel Pullman, which is a part of the largest French brand Accor Group, will also open there.

All these functions make the AXIS Towers more attractive for investors.

AXIS Towers will also be creating a public area on its territory in recognition of the fact that there is a lack of pedestrian streets in Tbilisi beyond the Old Town. The pedestrian street, which is intended to be entirely set up as a recreation zone, containing around 12 A-class cafes and restaurants, will connect Chavchavadze Avenue with Abuladze Street.

The main objective of the AXIS Towers project is to bring as much benefit to the city as possible. It will promote the turning of Chavchavadze Avenue into a business center and an extension of the tourist zone from the Old Town to Vake district.

ADVERTISING

Apartment

Apartment

Swimming Pool

Hotel room

Office center

6

BUSINESS

GEORGIA TODAY

SEPTEMBER 20 - 22, 2016

Georgian Company to Produce Disposable Packaging Products

BY NATIA LIPARTELIANI

T

he Georgian government’s state-funded ‘Produce in Georgia’ initiative added another asset on September 16 with the opening a new

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disposable packaging plant.

The first facility of its kind in Georgia, it will focus on the production of highquality laminated paper for perishable food and beverage products.

The USD 2 million project will be cofinanced during the first two years of its operations by the Entrepreneurship Development Fund and produce materi-

als for local company Green Pack, which supplies Georgia’s main supermarkets with laminated products. The official launch of the facilities was attended by Vice-Prime Minister Dimitry Kumsishvili, Economy and Sustainable Development Deputy Minister Ketevan Bochorishvili and Entrepreneurship Development Agency Director Ani Kvaratskhelia.

Nikora Supermarket Teams Up with Leading Brands

BY NINO GUGUNISHVILI

O

wners of Nikora’s bonus cards will now have the chance to receive up to 50 percent exclusive discounts on perfumerie brands, optics and clothes. They will

also be able to use Nikora cards in insurance, tourism and real estate companies.

Nikora Trade Ltd. has entered into a memorandum with a number of partners, including some of the most popular brands on the Georgian market, including Gino Paradise, Celio, Etam, Gary Weber, CaptainPlus, IC Group, Heliscore, Aray, Deflos, Roniko, and Voulez-Vous.

Supermarket chain Nikora entered the market in 2000, and now counts itself among the most popular local brands.

With the partnership memorandum signed on September 16, in Radisson Blu Iveria Tbilisi, it attempts to attract more loyal cusomers, aiming to prioritize customer-oriented services, product quality assessment and social responsibility.

8

BUSINESS

GEORGIA TODAY

SEPTEMBER 20 - 22, 2016

PMCG Presents Climate Change Action Plan Recommendations for Georgia Photo: PMCG presentation of research. Source: Konrad Adenauer Foundation

BY NINO GUGUNISHVILI

A

fter signing the Paris Agreement in April 2016, Georgia committed to transforming its economy to low carbon and climate-resilient energy sources. The government has said it will prepare a roadmap for reducing the country’s greenhouse gas emissions- an NDC (Nationally Determined Contribution Document) before the end of 2019. A preliminary NDC document is ready, says PMCG, (Georgia’s Policy Management and Consulting Group), but the final version has yet to be submitted.

A PMCG study, presented last Friday, focused on identifying specific climate change problems in Georgia, as well as developing effective solutions.

“The NDC document is our road to clean technologies. Georgia will have the chance to accumulate additional financial resources, receive grants, and apply for low interest rate loans which will lead to a more competitive private sector overall. Georgia has serious perspectives in this regard if it continues to actively work in this direction,” said Kakhaber Mdivani, PMCG representa-

tive at the presentation on Friday.

The Group’s main recommendations include: • Setting up a sophisticated data collection system capable of compiling verifiable information on greenhouse gas emissions; • Creating a system that would effectively coordinate working groups and all private shareholders to develop more environmentally friendly construction projects.

Mdivani gave the example of the Clean Technologies Fund, which has 17 member countries and USD 3.5 bln mobilized for projects set up to lower greenhouse gas emissions and improve waste-free production.

Today, Georgia is among 185 countries having signed the Paris Agreement, which has been ratified by 27 countries thus far, hitting out at 40 percent of the total global greenhouse gas emissions.

PMCG representatives state that working with donors more effectively and setting strict priorities in accordance with the country’s needs is vital as it will result in a low emission development for Georgia and will see a step forward towards sustainable development.

Before the actual ratification, PMCG recommends analyzing the available human and technical resources, with

realization and investment plans to be set before the Paris Agreement comes into force in 2021.

Institutional arrangements are also regarded as an important part of the work plan, to be implemented with a long-term de-carbonization schedule, as is regular monitoring.

“A clear strategy is an absolute must,”

said PMCG representatives.

The presentation also introduced possible barriers, threats and challenges for implementation of the NDC. Lack of information was identified among the most tangible challenges, with the agricultural sector named as the most problematic in this regard.

“It is essential for all the sectors involved

to have the maximum information on each step of the process. Ineffective management and use of human resources are also barriers towards NDC implementation, as is lack of coordination and communication between the local and central governments. Institutional changes need to be made,” PMCG representatives stated.

BUSINESS

GEORGIA TODAY SEPTEMBER 20 - 22, 2016

9

GWS Organizes Media Tour Marking 40th Anniversary

Social Entrepreneurship Festival Held in Uplistsikhe

BY NINO GUGUNISHVILI

T

he medieval Georgian cave town Uplistsikhe, outside Gori, was a beautiful setting for ASB (Arbeiter- Samariter - Bund) to choose as a venue for an eye-catching social entrepreneurship festival this weekend.

Instantly grabbing the attention of tourists, passersby, and people who knew exactly what they were going to see, the festival proved a roaring success with the crowds.

The moment you stepped onto the territory, the atmosphere swept you up: an informal flair, with friendly lazy dogs laying around, children running, natural greenery, foreigners and locals wandering through the stands taking photos, and the Uplistsikhe complex in the background: a unique atmosphere of bonding and sympathy, which at the same time focused the visitors’ attention on the concept of social entrepreneurship, the central theme and main topic of the event.

From a mobile car workshop, natural juices, wooden crafts, wines, and handmade postcards, to scarves, carpets and Svaneti salt, it was a lavish illustration of emerging social enrepreneurial skills in Georgia.

The idea of organizing the festival belongs to ASB Georgia which opened its office in the country in 1992, initially focused on supporting IDPs (Internally Displaced Persons). After re-establishing its Georgia office in 2010 following a 13-year break, social entrepreneurship became a very active direction of its work, with projects having already been financed and realized in Pankisi, Western Georgia, and Gori. ASB also offers Disaster Risk Reduction and multi-lingual First Aid trainings.

Putting a strong emphasis on social enterprises for IDPs, ASB aims to promote the development of social services throughout Georgia by spreading information on a range of services to even the remotest regions, and providing technical and financial assistance to establish social enterprises

Photo: Social Entrepreneurship Festival. Source: ASB

BY NATIA LIPARTELIANI

in close cooperation with local authorities and with the engagement of local communities. ASB sees social entrepreneurship as an opportunity to support persons with disabilities, children and older people.

“We’re here to celebrate social entrepreneurship and to demonstrate the diverse places and possibilities that a social entreprise can work in. But none of this would be possible without the initiative, motivation and creativity of those here today.

You are the driving force,” Matthias Wohlfeil, ASB country director, told Festival participants. He went on to note the importance of partnership between state and private sectors in order to make much needed changes in the social enrepreneurship sector. He then thanked David Oniashvili - Head of Gori Municipality for his assistance and involvement in the project.

“We wanted to organize an event to show the entrepreneurs from the Shida Kartli region and beyond. We believe that such festivals are a great tool to promote social entrepreneurship, to fill the existing gaps and to help eliminate social problems,” the ASB director said, highlighting the noteworthy fact that 90 percent of entrepreneurs are women.

“Social enterprises are of extreme importance to persons with disabilities who need social inclusion in our society,” Oniashvili said. “It is thanks to the hard work of ASB that so many people are now involved in social entrepreneurship and able to demonstrate their skills. Through social enterprises, they can participate in the process of the economic development of our country and play an active role in it.”

T

he Georgian Wines and Spirits Company (GWS) organized a media tour in conjunction with the vineyard’s 40th anniversary.

This tour was attended by the company’s partners, the diplomatic corps, as well as members of the National Wine Association and the local authorities.

Guests were introduced to traditional winemaking technologies, including Georgia’s

UNESCO protected 8,000-year-old Qvevri method of fermentation, and a film was shown about the company's history and a tour given of its vineyards in the nearby Kakhetian town of Akura.

"For the anniversary we organized a media tour and degustation of our wines," the company's brand manager Nata Kandelaki said.

GWS is one of the oldest and best-known companies in Georgia. It currently owns more than 350 hectares of land, with 70 percent of its grapes of a traditional indigenous variety.

The company also produces sparkling wines and high alcohol products.

10

BUSINESS

GEORGIA TODAY

SEPTEMBER 20 - 22, 2016

INTERVIEW: Silicon Valley Georgia for Professional Development to give a chance to well-trained young professionals.

BY NATIA LIPARTELIANI

O

n the 16th of September, Georgia’s ambitious new high-tech research and development center Silicon Valley Tbilisi officially opened, a complex in the city center that will house Tbilisi’s University of Business and Technologies, an IT Academy, as well as laboratory and research centers within one space. Specific initiatives such as this aim to establish Georgia as one of the leading exporters of technological innovations.

To get more insight into the project that can potential radically alter Georgia’s educational and economic sector, GEORGIA TODAY contacted the manager of the project, Mikheil Batiasvhili to find out more.

HOW DID YOU COME UP WITH THE IDEA FOR THIS PROJECT? In Georgia, students have a good theoretical knowledge, however, they lack in practical knowledge: they study 4-year Bachelor’s degrees then do a Masters for 2 years and only after that do they have an opportunity to attain practical experience. This means wasting a considerable amount of time, as graduating later very often necessitates re-trainings in order to get a desired job. Our aim is to provide both practical and theoretical knowledge in business and technology.

In this direction we’ve made and are still working on more than 100 agreements and partnerships. We aim to create a space that ensures good education, practical experience and the creation of job opportunities. We aim to have a future generation that has adequate and specific skills and knowledge for today’s global and local market conditions.

WHICH COMPANIES ARE INVOLVED IN THIS PROJECT? Numerous companies are, including Silknet and Georgian Airways, and international companies such as Microsoft and Mercedes-Benz. What is most important: they are willing to provide job opportunities for students and ensure their training. As one of the problems for companies is finding the right candidates for job vacancies, they are eager

ROUTING

TBILISI - ISTANBUL ATATURK AIRPORT

ISTANBUL ATATURK AIRPORT - TBILISI TBILISI - ISTANBUL SABIHA GOKCEN AIRPORT ISTANBUL SABIHA GOKCEN AIRPORT - TBILISI BATUMI - ISTANBUL ISTANBUL - BATUMI

WILL JOB EMPLOYMENT OPPORTUNITIES BE SOLELY DEPENDENT ON THOSE PARTNERSHIPS? In today’s globalized world, there are numerous instances of distance working. Geographical location plays practically no definitive role in terms of attaining a job position. Thus, there are many jobs, for example in the USA, Britain or France that can be carried out from Georgia. We have exclusive access to several information bases.

Each day, we see more than 10 million vacancies. Some of them from the design sectors, some for IT. Our employment and retraining programs aim to ensure such distance employment for students. If we say it in rough terms, each day, there is the potential to earn around 5 million GEL, thus each day approximately 5 million GEL is lost due to incompetence or lack of information about vacancies.

THE UNIVERSITY OF BUSINESS AND TECHNOLOGIES OPENS NEXT YEAR. WHAT WILL THE ANNUAL FEE BE FOR STUDENTS? Even though the University itself starts functioning from next year, lots of retraining programs will be introduced before then. The approximate annual fee will be 2250 GEL- this is the minimum amount we were able to set. Our aim is to give opportunities to as many prospective students as we can. It should be noted that scholarships for academic excellence will also be offered. The University itself is extremely well equippedour students will be in touch with the latest technologies there. The location is practically perfect; it’s in the center of Tbilisi, in an ecologically clean area.

WE HEARD A MEDIA SCHOOL WILL ALSO BE INTEGRATED INTO SILICON VALLEY. HOW DOES THIS FIT INTO THE PROJECT OBJECTIVES? It is quite naïve to assume that nowadays spheres such as fashion and media are far from technology. In today’s reality, new media and technologies are practically inseparable. New media is everything from social platforms to any tech-

FLIGHT NUMBER

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nologies that ensure the spread of the information, thus a media school is very much in-line with our organizational objectives and goals.

THERE WILL ALSO BE A MIDDLE SCHOOL. IS IT A SEPARATE ENTITY THAT SHARES A PHYSICAL SPACE WITH THE UNIVERSITY OR ARE THE UNIVERSITY AND THE MIDDLE SCHOOL SOMEHOW RELATED? Not only do we plan a middle school, but we’re also preparing Sunday businessoriented schools for kids. Of course, the middle school will have a technological profile. Our aim there is to prepare a new generation that is technologically versatile and advanced.

HOW IS THE GEORGIAN SILICON VALLEY SIMILAR OR DIFFERENT FROM ITS AMERICAN ANALOGY? The USA Silicon Valley has existed for nearly 100 years. It is very difficult to draw comparison, as the time context is that much different: we are starting just now. However, we aim to ensure fast integration into the world market so that we are not behind the innovations that are happening in the world right now.

To be honest, Silicon Valley in Georgia is very much aimed at the global market.

For this reason it will be defined by global trends and specifics, however, of course, some local factors will have an influence as well. These will become clear as the project kicks off.

DO YOU THINK GEORGIA, AS SMALL AS IT IS, HAS THE POTENTIAL TO BECOME ONE OF THE IMPORTANT EXPORTERS OF TECHNOLOGICAL INNOVATIONS? Yes, I believe Georgia answers one of the main prerequisites for becoming the exporter of technological innovations.

A huge percentage of the country’s population has access to the Internet and technologies. We have conducted several studies and found that the level of computerization in the country is quite high.

Now all that is left is to make the right steps and be well trained. For Georgia, a similar precedent happened in the tourism sector and it can happen in the technological sphere as well.

10 Galaktion Street

ONE OF THE MAIN PRIORITIES OF YOUR PROJECT IS TO HELP YOUNG ENTREPRENEURS TO INTRODUCE INNOVATIVE PRODUCTS. HOW DO YOU ENSURE THAT IN TODAY’S SEA OF STARTUPS SIMILAR IDEAS ARE NOT SIMULTANEOUSLY DEVELOPED IN ANOTHER COUNTRY?

is happening in the world is available everywhere and we, of course, have access to the databases in order to keep track of the recent inventions and possible gaps in the market that can be filled.

The fact that there is a competitive global market is not intimidating- it can act as a stimulus. Let’s look at Estonia where Skype was invented. Even though the USA is a much bigger country with a large economy, it does not necessarily mean inventions cannot occur in developing and small countries as well. Information about what

We have lots of partnerships and agreements, some of which are still in the negotiation stage. Of course, exchange programs are planned, but we are still making our first steps. This project is like a living organism and we will do everything in order to ensure the professional development of our students.

DO YOU HAVE PARTNERING INTERNATIONAL UNIVERSITIES? WILL ANY EXCHANGE PROGRAMS BE IMPLEMENTED?

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

BUSINESS

GEORGIA TODAY SEPTEMBER 20 - 22, 2016

EBRD to Host International Conference for Consulting Professionals in Tbilisi

BY NINO GUGUNISHVILI

T

he European Bank for Re c o n s t r u c t i o n a n d Development (EBRD) plans to hold an international conference for consulting professionals ‘Competitive Consulting 2016’ on 3-4 November 2016 in Radisson Blu Iveria Tbilisi.

With funding from the European

Union under the EU4Business initiative, the EBRD assists consultants to strengthen their competencies, “to provide high quality services that the small and medium-sized enterprise (SME) sector is ready to pay for long into the future.”

The conference will consist of sessions from leaders in the consulting industry and business sector, exploring the latest challenges of the industry in the region, future perspectives and global trends.

The event will include detailed sessions in which participants will look into new techniques, models and approaches for agile consulting, combining experience with innovation.

In addition, a complementary seminar on effective proposal writing is to be offered on 2 November.

Competitive Consulting 2016 will bring together consultants from a wide range of markets, as well as a number of international consulting firms interested in engaging with local partners.

French Le Figaro to Feature Georgian Tourism

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Galt & Taggart Provides Investors Access to Regional Bond Markets

G

alt & Taggart enables investors to trade on regional debt markets. To this end, the company launched a new monthly report, the Regional Fixed Income Market Watch, which covers the debt markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine.

There is a scarcity of information on these markets, which are part of a growing region, at a time when there is growing interest in emerging and frontier market securities. The new report aims to arm investors with the relevant information on the macro environment of these countries, as well as on the available fixed income instruments.

Meanwhile, Galt & Taggart’s brokerage department provides trading execution

and custody access to these hard-to-reach markets. The Regional Fixed Income Market Watch provides market data for both locally and internationally listed debt issuances from these countries.

Furthermore, the report includes country-level macro indicators, such as sovereign ratings, monetary policy rates, economic growth, fiscal and current account balances.

“This is an important strategic step in the further development of Galt & Taggart, which envisages a regional expansion of our coverage area,” said Archil Gachechiladze, Chairman of Galt & Taggart. “With this move, we enable investors to take a regional view of the fixed income market, as they make investment decisions based on their risk appetite and expected return.”

German Business Association Shows off German Businesses in Georgia

BY KATIE RUTH DAVIES

T

his Saturday saw a festive German atmosphere take over a small corner of the vast expanse of Mtastminda Park as the German Business Association (DWV) and its partners introduced the first "Oktoberfest der Deutschen Wirtschaft" to Tbilisi.

Though the first few sun-drenched hours proved slow in visitor numbers, the aroma of German and Bavarian style

food, and the sound of children’s laughter and play soon pulled a crowd.

On offer was a broad program with exhibition stands from Lufthansa, Knauf, ASB (Arbeiter-Samariter-Bund)- including CPR training, and Hello Companyoffering educational toys, a wheel of fortune with free gifts, various activities for children and culinary delights offered

by Rainer's European Restaurant, Stelzenhaus and Zedazeni with König Pilsener.

The evening focused on a real Bavarian Oktoberfest atmosphere with beer and food in the large marquee with the accompaniment of live music.

Photo: Giorgi Chogovadze, Head of Georgian National Tourism Administration with journalists

BY NINO GUGUNISHVILI

A

t the special invitation of the Georgian National Tourism Administration (GNTA) and the Georgian Ministry of Economy and Sustainable Development, journalists from one of the best-known French magazines ‘Le Figaro’ attended a press tour in Georgia and now plan to write a massive 10 page coverage on its tourist potential.

Hosted by Giorgi Chogovadze, Head of the GNTA, during a one week tour, French media representatives had a chance to visit Tbilisi, Kazbegi, Borjomi, Vardzia, Akhaltsikhe and the region of Kakheti, where they discovered traditional Georgian wine-making techniques.

The article featuring Georgia and its tourism potential will appear on the pages of Le Figaro in spring 2017 and is expected to boost interest towards the country, its history and cultural heritage. The magazine has a circulation of 400,000 in France, while its online edition boasts approximately 31 million monthly readers.

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POLITICS

GEORGIA TODAY

SEPTEMBER 20 - 22, 2016

Armenia Taps Ex-Gazprom Exec as New Prime Minister

BY NICHOLAS WALLER

M

onths of social and political upheaval in Armenia came to a head earlier last week as former Gazprom executive Karen Karapetyan was named the tiny South Caucasus nation’s new prime minister.

In an official statement released Wednesday, Armenia's presidential press service said Sargsyan had signed a decree appointing Karapetyan as prime minister on September 13.

The 53-year-old Karapetyan previously served as the chief executive of the Armenian-Russian joint venture, ArmRosGazprom, before becoming mayor of Armenia's capital Yerevan from 2010-11.

Karapetyan later moved to Moscow, where he was personally appointed by Alexey Miller – the CEO of Russia’s state-run gas giant Gazprom and a close confident of Russian President Vladimir Putin - as the first vice president of Gazprombank.

Miller appointed Karapetyan as deputy CEO of Gazprom's Mezhregiongaz unit, before later tapping him as a deputy director-general of another Gazprom subsidiary Gazprom Energoholding in 2015.

Gazprom fully controls Armenia's gas and electricity supply, as well as its vitally important distribution networks via its local gas-import subsidiary, Gazprom Armenia.

Karapetyan’s predecessor, former Prime Minister Hovik Abrahamyan, resigned on September 8 amid growing criticism of his government’s inability to tackle a growing number of crises in the country.

Abrahamyan’s government had been widely criticized by President Serzh Sargsyan’s inner circle for its handling of a four-day conflict with arch rival Azerbaijan over the breakaway region of Nagorno-Karabakh and its inability to halt mass street protests supporting

Sargsyan's choice of Karapetyan is widely viewed as having been orchestrated by Moscow

a controversial opposition political party who opposed the increasingly authoritarian policies of Sargsyan.

Rumors that Abrahamyan would be sacked had circulated for weeks before his official announcement, as both Sargsyan and close ally Russia had grown impatient with Abrahamyan’s perceived ineffective leadership in light of growing civil unrest.

Sargsyan's choice of Karapetyan is widely being viewed as having been orchestrated by Moscow as the Kremlin has grown increasingly alarmed at the Armenian public’s support for opposition parties and civil activists.

The Armenian public’s widespread support for the mass protests known as Electric Yerevan that broke out in July 2015 as a response to steep utility price hikes, and this summer’s sizeable demonstrations in support of a fringe opposition group demanding the release of political prisoners and Sargsyan’s immediate resignation, are thought to have caught both Sargsyan’s inner circle and the Kremlin off guard.

Russia is particularly opposed to the growth of grassroots civil disobedience movements, with Putin paying a watchful eye on the former Soviet republics where Moscow continues to hold significant sway.

Ever since Georgia’s 2003 Rose Revolution and Ukraine’s Euromaidan Rev-

olution in 2013-14 ousted pro-Moscow leaders in favor of pro-Western governments, the Kremlin has attempted to shore up its strategic influence in countries such as Armenia – one of five exSoviet states that comprise the Russianled Eurasian Customs Union – as means of halting the spread of citizen-led democratic movements on its borders.

In addition to owning a controlling stake in all of Armenia's strategic assets, Russia maintains a huge military presence in the country. Moscow's permanent base in the northern Armenian city Gyumri is the second largest contingent of Russian troops based in the

South Caucasus after the detachments it has in Georgia's Moscow-backed separatist regions of Abkhazia and South Ossetia. Russian troops patrol Armenia's borders with its far larger neighbor and traditional rival, Turkey.

The landlocked nation’s deep reliance on aid and direct investment from Russia has stunted its economic growth and forced it to become a de facto dependent of Moscow. Armenia relies heavily on remittances from its citizens working in the Russian Federation, which is a badly needed source of income and a key contributor to the country’s Gross Domestic Product.