Issue #1120 Business

Issue no: 1120/165

• JANUARY 29 - 31, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

Sector At A Glance ISET PAGE 4

FOCUS

ON WISSOL GROUP EXPANSION Pizza and donuts are on the 2019 menu despite alleged financial difficulties

Georgia Improves Position in EU Region in Heritage Foundation Index BUSINESS PAGE 5

VEON Georgia CEO on Company Values & Services BUSINESS PAGE 6

PAGE 10

Image source: Bloomberg via Getty Images

Georgian Woman Reveals Jack Shepherd's Intimate Confession

Strengthening the Corporate Securities Market Will Attract More FDI in Georgia BUSINESS PAGE 12

BY SAMANTHA GUTHRIE

M

aiko Tchanturidze, a 24 year old Tbilisi resident, spoke to Chris Pollard, a reporter for British newspaper The Sun, describing her intimate relationship with English fugitive Jack Shepherd and the tearful confession he made to her.

According to Pollard, Tchanturidze met Shepherd in a public park in Tbilisi when he asked to pet her dog.

Continued on page 2

Exhibiting Georgia: Cradle of Wine to Hit Japan Photo: Paul Edwards, The Sun. Source: The Sun

POLITICS PAGE 15 Prepared for Georgia Today Business by

Markets As of 25ͲJanͲ2019

Price

w/w

Price

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 15.91

+2,7%

+21,3%

GEOROG 04/21

102.16 (YTM 5.71%)

+0,9%

+1,5%

Georgia Capital (CGEO LN)

STOCKS

GBP 11.11

+7,8%

+11,1%

GEORG 04/21

105.88 (YTM 4.05%)

+0,2%

+0,5%

GBP 2.34 +14,1%

+11,4%

GRAIL 07/22

105.38 (YTM 6.00%)

+1,1%

+1,7%

+9,2%

GEBGG 07/23

98.74 (YTM 6.33%)

+1,0%

+1,2%

CURRENCIES

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

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

GBP 14.74

Price

+0,8%

m/m

BONDS

w/w

m/m

61,64

Ͳ1,7%

+22,1%

GEL / USD

2,6600

+0,0%

Ͳ0,2%

1 305,25

+1,8%

+2,9%

GEL / EUR

3,0345

Price

+0,4%

w/w

Ͳ0,0%

m/m

GEL / GBP

3,5117

+2,6%

INDICES

Price

w/w

m/m

GEL / CHF

2,6750

+0,2%

Ͳ0,8%

FTSE 100

6 809,22

Ͳ2,3%

+1,8%

GEL / RUB

0,0402

Ͳ

+3,9%

FTSE 250

18 643,58

Ͳ0,6%

+7,7%

GEL / TRY

0,5050

+1,2%

+0,5%

DAX

11 281,79

+0,7%

+6,1%

GEL / AZN

1,5680

Ͳ

+0,2%

DOW JONES

24 737,20

+0,1%

+13,5%

GEL / AMD

0,0055

Ͳ

Ͳ

NASDAQ MSCI EM EE

+4,0%

7 164,86

+0,1%

+15,7%

GEL / UAH

0,0957

+0,5%

Ͳ1,5%

166,01

+1,2%

+10,5%

EUR / USD

0,8766

Ͳ0,4%

Ͳ0,1%

1 032,34

+1,4%

+8,6%

GBP / USD

0,7576

Ͳ2,5%

Ͳ4,0%

SP 500

2 664,76

Ͳ0,2%

+13,3%

CHF / USD

0,9939

Ͳ0,2%

+0,7%

MSCI FM

2 643,74

+0,6%

+7,7%

RUB / USD

66,0074

Ͳ0,3%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

5,2722

Ͳ1,0%

Ͳ0,6%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,6993

+0,2%

+0,1%

MSCI EM

Ͳ3,9%

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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: Sans Group Company, headed by Sergo Dzotsenidze, started producing ketchup and mayonnaise under the brand ‘Qartuli’ with only five members of staff, a bank loan and the support of a government program for start-uppers.

The products were an immediate hit, as much with regular citizens as with professional chefs. Dzotsenidze is to expand the business and launch a unique product “fitness mayonnaise.” Adjika and mustard will also be added and test batches have already been produced.

Love seafood and caviar? The soon-to-open New Fish Company is to offer 150 tons of different fish and caviar annually. Founder Alexander Dadianidze set up his business with the support of government program Integrated Agro-Project on 2,000 sq.m of territory. His Georgian caviar has been presented on the Georgian market under the brand name UMALI. The entrepreneur claims he will soon be able to fully substitute imported products with ones of local production. The next step is to develop a strategy for export.

Racha-based ‘Native Georgian’, already working in pork sales, is reviving a 12th century recipe to bring back Svanetian Ziskhora and other traditional meat products mentioned in the renowned Georgian epic poem ‘Knight in the Panther’s Skin’. Founder Vasil Babluani is sure that with its high quality, his company’s Georgian meat can freely compete with famous foreign products. The ‘Native Georgian’ farm, with the help of scientific and veterinarian works, will cross-breed pigs in order to create unique-tasting products for both local and foreign customers, alongside Georgian Jamon.

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

JANUARY 29 - 31, 2019

Georgian Woman Reveals Jack Shepherd's Intimate Confession Continued from page 1

She had no idea of his identity at the time, or that he was a fugitive, wanted

by Interpol for the death of Charlotte Brown in December, 2015. A London court ruled her death a manslaughter and Shepherd responsible, as he took her for a ride on his speedboat, in poor condition. The British press has dubbed Shepherd "the speedboat killer." Shepherd was tried and convicted in absentia, as he went on the run after skipping bail on his court appearance in July of last year. Shepherd fled to Georgia in March 2018 where he was able to live and work undetected for nearly a year. After months evading justice, he finally handed himself into police in Georgia on January 23.

Before turning himself in, Shepherd revealed his true identity to Tchanturidze

on a tearful video call. Pollard reports that Tchanturidze described the call to him, saying: “He said he had something to tell me.

He seemed upset, his face was red...He was struggling to get his words out, but he said he’d been involved in a boat accident where a girl had died, and that he was wanted by Interpol...He said he was going to hand himself in because he ‘didn’t want to be hunted down like an animal.’ I was beyond shocked and by the end, he was also crying his eyes out.

It was very frightening to hear his story.”

Tchanturidze, along with many Georgians, are sympathetic to Shepherd's claims of innocence. She said, according to Pollard, "I had questions, but he answered them all and cleared even tiny doubts I had."

The relationship, while intimate, was

purely platonic for Tchanturidze, says Pollard, quoting the young woman: "We became close so I introduced him to my sister and friends, and we started going out to bars and restaurants...It developed into a very close friendship. But it never went any further...I don’t know if Jack had feelings for me but as far as I was concerned, we were just good friends.”

After his appearance on Georgian TV news channel Rustavi2, many Georgians have expressed pity for Shepherd, believing his portrayal of himself as a victim.

A Georgian court sentenced Shepherd to three months in maximum security Gldani prison while he awaits extradition. A legal team, for which he is paying himself, is fighting the extradition charges on grounds that Shepherd would not be safe in a British prison, as he has received death threats.

Installation of Gas Detectors to Be Mandatory in Blocks of Flats

BY THEA MORRISON

D

eputy Minister of Economy and Sustainable Development Natia Turnava stated that installing gas detectors in blocks of flats will become mandatory.

Turnava told journalists that people living in old buildings will be offered a

preferential package, the form of which has yet to be determined, though she notes the issue is being considered with Tbilisi City Hall.

“The government and, in particular, the Ministry of Economy, has begun to tighten legislation, which will apply both to gas suppliers and consumers. We are considering the toughening of the code of administrative offences,” she said.

Gas safety standards became a top priority in Georgia following last week’s

gas explosion in a residential building in the Didi Dogomi district in Tbilisi which killed four.

Construction and installation requirements for gas companies will become stricter with the aim of providing safer gas. Moreover, the population will be better informed about safe gas consumption.

On 21 January, two people died from natural gas intoxication in Tbilisi’s Varketili district.

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BUSINESS

GEORGIA TODAY

JANUARY 29 - 31, 2019

Sector At A Glance fish declined. In December 2018, imports of frozen fish decreased sharply, by 15%, from 1831.4 tons to 1548.0 tons compared to the previous year.

The import value of frozen fish also saw a marginal decrease o f 3%. However, the import of smoked fish did not follow the same trend. As shown in the following diagram, in December 2018 the import quantity of smoked fish increased by 40%, from 6.8 tons to 9.6 tons compared to December 2017. Furthermore, the import value of the product increased by 42% in the same period. This might imply that the Georgian consumer demand for smoked fish, or for fish in general, has increased.

INTERNATIONAL PRICES Source: Geostat, 2019

BY SALOME GELASHVILI

I

n 2018, Georgian wine exports reached a record 200 million USD threshold (86 million bottles).

Similarly, Georgia’s food & agricultural exports almost hit their 1 billion USD threshold, attaining a historic maximum since independence – and that certainly sounds like something to celebrate! However, the respective imports have also increased and broken records. As a result, the trade balance (the difference between export and import) remained virtually unchanged at (-394) million USD. Although, compared to 2017, export increased by 23.2% (181 million USD), while the respective imports grew by only 15.5% (179 million USD). Out of sharp increase of 181 million USD, only 26 million USD are attributed to wine, while the rest came from trade in tobacco and cigars. Since Georgia cultivates very little tobacco, the growth was instigated mostly from the import, slight processing and re-export

of tobacco products. Consequently, the export of tobacco & cigars increased by 240% in 2018, and it currently holds second place (after wine) in Georgia’s total food & agricultural exportation (nearly 160 million USD). In 2018, it contributed staggeringly to over 100 million USD in export growth.

Along with wine and tobacco, the export of Georgia’s other main food & agricultural products, such as spirits, natural and mineral water, lamb and mutton, citruses, and peaches & nectarines, also positively contributed to export growth.

While the export of hazelnuts and live cattle saw a decrease from 2017.

PRICES – DOMESTIC PRICES On a monthly basis, price levels in the country remained relatively steady; the Consumer Price Index (CPI) in December 2018 saw a slight increase of 0.5% compared to the previous month. While in comparison to December 2017, CPI experienced a 1.5% increase.

For food and non-alcoholic beverages, the month-over-month prices increased by 2.3%, contributing to a 0.69 percent

overall change in CPI. The main drivers were the price fluctuations in the following sub-groups: On an annual basis for food and nonalcoholic beverages, the prices increased by 1.7%, contributing to a 0.52 percentage change in the total CPI. In December 2018, the sharpest price changes on annual basis were observed within the following subgroups:

In December 2018, international prices maintained a downward trend. The Food Price Index, measured by the Food and Agriculture Organization (FAO), decreased by 4.3%, compared to December 2017. The main drivers were the weaker prices of vegetable oil (-22.6%), sugar (-12%), dairy (-7.8%), and meat (-3.6%). Whereas, the Cereal Price Index experienced a significant 9.6% increase, compared to December 2017.

For the whole of 2018, the FAO Food Price Index decreased by 3.5% from 2017.

The prices fell for the following subcategories: sugar (-21.9%), vegetable oil

POLICY WATCH MEPA AND FAO RENEWED PLAN FOR COOPERATION Under the framework of the official visit to Berlin, the Minister of Environmental Protection and Agriculture (MEPA), Levan Davitashvili and FAO Deputy Regional Representative for Europe and Central Asia, Raimund Jehle, signed a renewed

FISH – IN THE SPOTLIGHT In December 2018, fish prices experienced a significant 11.1% increase in comparison to December 2017. According to Geostat data, chiefly the prices of frozen fish (13%) and s m o ke d f i s h ( 1 3 % ) increased. As Georgia is a net importer of these commodities, a shortage in import supply might provide one explanation.

While according to trade statistics, both the import value and quantity of frozen

(-14.7%), dairy (-4.6%), and meat (-2.2%).

Conversely, cereal prices increased by 9% compared to 2017.

TRADE HIGHLIGHTS In December 2018, Georgian agricultural exports (including food) exceeded 70 million USD, which accounts for almost 30% of Georgia’s total export value.

Comparing this indicator to December 2017, the share has fallen by four percent.

While for imports, in December 2018, Georgia’s agro imports reached 112 million USD, approximately 17% of the Georgian total. Year-over-year (compared to December 2017), agricultural imports have decreased by more than 3%.

FRUIT – IN THE SPOTLIGHT

Source: Geostat, 2019

is up by more than half of its 2017 value.

Exports were boosted significantly in the stone fruit (e.g., peaches, cherries, plums, etc.) and citrus fruit categories with 3.5 and 4.1 million USD, respectively, and thus securing a place for citrus fruit as one of Georgia’s top-10 export goods.

While in absolute terms the gain in grape exports was somewhat moderate, in relative terms it outperformed most other fruit. Moreover in 2018, grape exports increased more than eightfold over the previous year, and reached its historic maximum value of 0.8 million USD (see the graph above).

The changes in fruit export figures have been positive over the last year thanks to a good harvest. Although the official statistics for fruit production in 2018 are not yet available, according to the forecasts, 2018 was the one of the best years for citrus production, while the “rtveli” estimates were up by more than 20 thousand tons compared to 2017.

According to GeoStat primary data, 2018 was a productive year for Georgian fruit exports. Over the last year, hazelnut exports dropped by 13.5 million USD compared to 2017, though the export of almost all the other produce in the edible fruit and nuts (Harmonized System Codes 0801-0810) category increased.

An upward trend in fruit (excluding hazelnuts) export has been observed since 2015, when the value equaled just 6.4 million USD, while its corresponding figure in 2018 exceeded 17.6 million USD. On a year-over-year basis, fruit (excluding hazelnut) export over the last year

document on strengthening the capacity of the MEPA for 2017-2020. This document aims to boost agricultural competitiveness and eradicate poverty in rural areas by considering the principles on equality, increasing food production, also implementing activities envisaged under the Agriculture and Rural Development Strategy and Action Plan.

For more information: http://mepa.gov. ge/En/News/Details/7343

LAND OWNERSHIP BY FOREIGNERS WILL BE STRICTLY REGULATED According to the Organic Law on Land, to be initiated in the parliament in February, if foreign citizens own land but do not cultivate it for maximum period of two years, they will be obliged to sell, rent or cultivate that land. According to the head of Agrarian Committee – Otar Danelia, the objective of this initiative is to increase the amount of cultivated land in Georgia. Some restrictions, although not as strict, are expected to be adopted in the future for Georgian landowners who do not cultivate their land.

For more information: https://www.bpn.ge/ article/52210-ucxoelebs-sakutrebashi-arsebuli-daumushavebeli-micis-partobebis-realizacia-daevalebat-gavrceldeba-tu-ara-es-cesisakartvelos-mokalakeebze/

BUSINESS

GEORGIA TODAY JANUARY 29 - 31, 2019

Georgia Improves Position in EU Region in Heritage Foundation Index

Image source: luxembourg.public.lu

BY THEA MORRISON

T

he Index of Economic Freedom 2019, an annual guide published by the Heritage Foundation, Washington's No.1 think tank, reads that compared to last year, Georgia has advanced by one position in the region to 8th place among the European Union’s 44 countries.

Georgia’s economic freedom score is 75.9, making its economy the 16th freest in the 2019 Index among the 180 countries covered by the survey.

The Index reads that Georgia’s overall score is above the regional (68.6) and world (60.8) averages. Georgia is among the states which have the status of ‘mostly free’.

However, the report reads that Georgia’s overall score has decreased by 0.3 points, with a “sharp drop in judicial effectiveness and lower scores on government integrity and monetary freedom exceeding a big gain in financial freedom.”

The index mentions that since the 2003 Rose Revolution, reforms carried out in the country have reduced petty corruption, cut regulation, simplified taxes, opened markets, and developed transport and energy infrastructure.

“The government hopes that further reductions in regulation, taxes and corruption will attract foreign investment and stimulate growth. Its maintenance of monetary stability and overall sound fiscal health has fostered macroeconomic resilience,” the survey reads, once again reiterating that deeper and more rapid institutional reforms to enhance judicial independence and effectiveness are still needed to ensure dynamic and lasting economic development.

The Index says that property rights are recognized in Georgia, and the government has made property registration easier. But the report added that only a quarter of private landowners hold a clear title

to their property.

“Although the Constitution and laws provide for an independent judiciary, political pressure threatens impartiality. Georgia has made great progress in fighting petty corruption, but high-level corruption by public officials remains a problem,” the organization stated.

In terms of business freedom, the report says that Georgia’s economy has maintained strong momentum in liberalizing economic activity.

“It takes only two procedures and two days to start a business, and no minimum capital is required.

The non-salary cost of hiring a worker is not burdensome, but the labor market lacks dynamism,” the Index reads, adding the government is increasing subsidies for green energy and transport projects.

In addition, the survey underlines that with the banking sector growing, access to financing has improved.

“Capital markets continue to evolve, but the stock exchange remains small,” the organization says.

In the world rankings, Hong Kong takes the top position, followed by Singapore, New Zealand, Switzerland, Australia, Ireland, the United Kingdom, Canada, United Arab Emirates and Taiwan.

Algeria, Timor-Leste, Bolivia, Equatorial Guinea, Zimbabwe, Republic of Congo, Eritrea, Cuba, Venezuela and North Korea are at the end of the Index of Economic Freedom 2019 list.

Heritage Foundation measures economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom: 1. Rule of Law (property rights, government integrity, judicial effectiveness) 2. Government Size (government spending, tax burden, fiscal health) 3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom) 4. Open Markets (trade freedom, investment freedom, financial freedom)

44% of Georgians Think Unemployment Remains a Problem

BY THEA MORRISON

R

ecent poll results released by the National Democratic Institute (NDI) and CRRC Georgia revealed that the majority of Georgians think the unemployment rate has remained the same in the country.

In particular, 44% of respondents said that the situation of employment has not changed in the country at all, while 43% believe that the country is going in the wrong direction in this regard.

Moreover, 11% of respondents said that the country is developing in the right direction and 2% said they did not know how to answer the question.

The results reflect data collected from December 6-20, 2018, through face-to-face interviews with a nationwide representative sample of Georgia’s adult population, excluding occupied territories, that included 2,205 completed interviews.

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BUSINESS

GEORGIA TODAY

JANUARY 29 - 31, 2019

VEON Georgia CEO on Company Values & Services

BY ANNA DUMBADZE

T

here have been interesting changes and a lot of developments in the Georgian telecommunication market in recent years, with companies operating in Georgia regularly offering new products and services to customers to win their hearts.

We have three telecommunication companies in Georgia: Magti, Silknet and Beeline. Some experts thought Beeline would leave due to the competitive environment, but not only is it still here, it has plans to introduce new projects, which means some nice offers for Beeline customers coming soon!

We spoke to Andrzej Malinowski, Chief Executive Officer at Veon Georgia LLC (Beeline), to find out more.

Andrzej Malinowski was appointed CEO of Beeline Georgia in April 2017 and since then has introduced a number of important changes in the company’s strategy and activities. As it turns out, he also has quite an interesting view on leadership and, accordingly, has developed an individual approach to his colleagues.

In 2018, we introduced new roaming packages for Georgian users, a product combining roaming and travel insurance, so when you buy the Beeline online roaming internet package, you can order travel insurance in a few clicks, making travelling more comfortable for Beeline customers with the App. We had some challenges in 2018 with quality of service due to the many changes introduced in our company over the past year. I personally spoke to our 1.3 million Georgian customers in a New Year address to apologize for this and to promise 2019 will be better. I’m leading this team and it was my obligation, as the CEO, as somebody who, in the end, is responsible for the experience, to apologize. Transparency is our main priority. You can go to our company’s website and see the results that the company has been achieving as a group.

WHAT IS THE VEON GEORGIA LEGACY? VEON covers 10 countries and have been in Georgia for a while. When Beeline entered Georgia, the landscape of local communications was totally different, and we were the game changers.

We lowered prices to make our mobile communications more available to people. We want to continue that way.

HOW SUCCESSFUL OR CHALLENGING WAS 2018 FOR THE COMPANY?

TELL US ABOUT YOUR PRODUCTS AND SERVICES.

It was successful overall. VEON Georgia met its targets. Veon Group is one of the biggest mobile operator in the world, serving more than 200 million customers. This means we sometimes have to face challenges in the different locations.

We are not only a team of people inventing and providing products; we help our customers choose right through smart communication- personally and by internet and SMS. According to recent studies, customers expect us to forecast

what they will want in future. Our best 2018 product was the travel insurance, which is getting more and more popular as people travel more. We seem to be the number one choice for people who use a lot of mobile internet, as our connectivity and value impress them.

We also have the ‘MyBeeline' Application and we’ll be developing this in 2019 to combine our office and call center in one, making it very user-friendly.

TELL US MORE ABOUT THE ‘MY BEELINE APP’.

Applications are nothing new in and of themselves, and we have a very good examples in the country. As I know, one of the Georgian banks was even awarded for the best user-friendly application.

With our App, at the moment our customers can self-service themselves and perform most of the operations, but there is lots more we can fit into it and this is one of our key goals for 2019. We want to combine our office and call center in one so there is no need to go to an office to conduct a simple operation. Likewise, you won’t have to call our call center to get the information you need. Everything will be combined inside the application in a very userfriendly way.

HOW DOES BEELINE COMPETE WITH MAGTI AND SILKNET? Competition is a part of a healthy market and economy. There are some specific regulations in existence to make this competition fair, and Georgia has a very skillful regulative body protecting the rights of consumers. Beeline competes by offering value and by build-

ing maybe not the biggest coverage area, but the best network in terms of customer experience.

We have committed to not giving our customers bad surprises, by, for example, suddenly raising our prices. We are predictable and people like that. Keeping loyal customers needs a great deal of work, and skillful communication.

We work to answer our customers quickly and to learn from what they have to say and in this way we can try to develop how they want us to. I always try to communicate with the customers directly myself when I can.

WHAT’S YOUR VIEW ON LEADERSHIP AND WHAT’S YOUR APPROACH TO LEADING THE TEAM AT BEELINE? In April, we’ll celebrate my second anniversary since I was appointed to this position. Every day since, I wake up every morning with the same energy and same intention to make a positive change. As the CEO and employer, my approach is that employees come first, not the customers, as rough as it may sound. If you hire professional employees, then they will take care of your customers. I put probably the same amount of focus on the way our people work and the way our office looks. We invest our resources to improve the conditions of our people working on the front line; the same with the call center. I visit all our offices to be sure that our people have everything they need in order to perform their duties.

I don’t have a separate office: I sit within the general office space, so there is no need to make an appointment with me,

or call my PA to arrange a meeting. If I need to discuss something with my colleagues, it’s me approaching them. We try to use this approach in leadership.

I’m not God, I’m not a superhero: I’m just a regular human being running this business alongside my colleagues. That’s my view on leadership.

WHAT ARE THE COMPANY’S PLANS FOR 2019?

We have to work really hard in order to improve the experience of our network. If you have a high quality network that doesn’t fail during a call or while a customer is watching a video, or whatever you are doing with your phone, then the positive experience goes through the roof. This is what I want to achieve. We’ve heard our customers complaining, giving us very detailed information; specific requests for us to improve our coverage, for example. We already have a full list and this list has been turned into an action plan. In the case of our call center, for example, when customers call in, they’ll be given a realistic estimation of how long they will have to wait for their specific problem to be solved.

As for new products, I don’t want to give away our secrets but I will say that with Beeline, you can always trust they’ll be no unpleasant surprise price hikes.

This has always been our policy and we intend to continue this way. Additionally, we will continue to educate and empower our customers and involve them in more and more digital experiences. It will be a very interesting year, we have a lot to do, but I have no doubt that it will work!

BUSINESS

GEORGIA TODAY JANUARY 29 - 31, 2019

7

EU, UNDP Assist Georgia to Ease Access to Justice & Raise Lawyer Professionalism

I

mproved access to legal aid for over 45,000 people every year, training for 2,400 representatives of the legal profession, increased international cooperation in the field of justice – these are some of the key results achieved by the Legal Aid Service of Georgia and the Georgian Bar Association with assistance from the European Union (EU) and the United Nations Development Program (UNDP).

The achievements of the EU4Justice programme in 2016-2018 were presented to the public on 23 January. ''I am confident that the EU played an instrumental role in developing both the State Legal Aid Service and the Bar Association in Georgia over the last 10 years,” said Catalin Gherman, Deputy Head of Cooperation Section at the Delegation of the European Union to Georgia. “We have done it through direct transfers of funds into the Georgian state budget, and through various projects. Our project with the UNDP brought many tangible results and thus vitally improved the access of people in Georgia to high quality legal aid and services.”

Meliton Benidze, Director of the Legal Aid Service of Georgia, and Ketevan Turazashvili, Head of the Training Center at the Georgian Bar Association, presented the progress made by both agencies in recent years.

Since its establishment in 2007, the Legal Aid Service has assisted over 330,000 people, including court representation in more than 123,000 cases.

With complex support from the EU and

UNDP, the Legal Aid Service has improved its internal systems of administration and management, adopted an organizational development strategy, trained lawyers, consultants and staff, and introduced an electronic case management system – Case Bank. The Legal Aid Service has adapted some of its bureaus for people with disabilities, launched a multi-language website adapted for people with visual impairments and established a call center which serves up to 50 people every day.

The Legal Aid Service also leads a referral network of free legal aid providers which brings together the state, nongovernmental and educational organizations.

In 2018, the Legal Aid Service hosted the Third International Legal Aid Conference, ILAC 2018, the largest global forum on legal aid in criminal justice.

The assistance to the Georgian Bar Association has focused on institutional and professional development of this largest professional association of Georgian lawyers, which represents over 4,000 members and is responsible for the regulation of the legal profession.

Supported by the EU and UNDP, the Association has adopted a four-year Strategy and Action Plan, reformed its human resources system, moved to electronic document management and organized comprehensive training for lawyers in the framework of continued legal education.

“Access to justice is fundamental to democratic transition and sustainable

Image source: 2civility.org

development,” said Munkhtuya Altangerel, Deputy Head of the UNDP in Georgia. “The UNDP is supporting the Legal Aid Service and Bar Association of Georgia as the key institutions to

provide Georgian people with quality justice services.”

The assistance to the Legal Aid Service and Georgian Bar Association is part of a wider EU-funded program

Europe Invests in Ukrainian RES

BY DIMITRI DOLABERIDZE

L

arge investments are coming to the Ukrainian energy sector. At the economic forum in Davos, agreements were signed between the Norwegian NBT, the French Total and the European Bank for Reconstruction and Development (EBRD) on the implementation of the Sivash Wind Energy project.

The amount of investment will be about EUR 150 million, and this is not the first project seeing foreigners invest in Ukrainian renewable energy sources (RES).

“The arrival in Ukraine of NBT and Total shows that Ukraine is now the second largest European market. NBT will have even more projects. Foreign investors are returning to Ukraine,” said Suma Chakrabarti, EBRD President, said during the signing of the agreement.

The decision to approve the project was made at the end of autumn 2018 when the EBRD approved a loan amounting to EUR 150 million for the construction, by SeverEnergia (a daughter of NBT), of a wind power plant (WPP) of installed capacity of 250 MW in the

Image source: ukraine-economy.org

Kherson region. In total, the company plans to build about 700-800 MW of wind power in Ukraine.

“Ukraine has one of the world's highest green tariffs.,” says energy expert

Dmitry Marunich. “So,, there’s nothing supernatural in such investments. Ukraine has made a commitment to increase the share of RES and is doing so. Renewable energy developed well in 2012-2013, then

in 2014-2015 there was a failure due to the fall of the Hryvnia, there was a drop in the economy, and the green tariff retroactively made changes. However, now the trend has unfolded, and the condi-

EU4Justice which is based on the Financing Agreement on "Support to the Justice Sector Reform in Georgia" signed between Georgia and the European Union in May 2015.

tions are such that 5-7-year investments in this sphere are paying off. Western banks lend well to such projects and investors are also in a hurry because the green tariff will decline over time. Therefore, the sooner you implement your project, the faster it will pay off.”

According to the expert, the share of RES in electricity generation last year was 2%.

“The consumer pays for it and the Western companies make a profit,” Marunich continues. “Such projects do not create many new jobs, so do not expect that it will have a strong impact on the economy of Ukraine.”

The expert noted other risks associated with green energy. “Unfortunately, wind does not always blow with the same force, and the sun does not shine constantly, so under RES you need to make a reserve with traditional capacities,” he explains. “In Ukraine, this comes mostly in the form of coal blocks of thermal power plants. But in recent years the share of shunting generation has reduced and no-one is investing in the modernization of equipment. There is a risk that in 5-7 years, when the share of RES grows to 4-5% of the total Ukrainian generation, they will have nothing in reserve.”

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BUSINESS

GEORGIA TODAY

JANUARY 29 - 31, 2019

Georgia’s Medical Education: A Party Soon Coming to an End?

A group of 6 medical students undergoing clinical training at Israel's Tel Hashomer Hospital. In Georgia, clinical training is delivered to groups of up to 20 students.

BY ERIC LIVNY, REZO SURGULADZE, AND VATO SURGULADZE

T

he headline in Haaretz, Israel’s leading newspaper, sounded alarming: “Thousands of Doctors Study Abroad – and They're Threatening Israeli Health Care” The subtitle provided a bit more background: “Israelis who have studied in places like Armenia and Moldova aren’t getting enough experience with patients and the director of the Health Ministry is losing sleep over it.”

The fact that thousands of Israelis are pursuing medical education in low quality schools outside Israel is nothing new.

Back in the 1980s, a key destination for wannabe Israeli doctors was communist Romania. Nicolae Ceausescu was happy to export anything, including university degrees and Jews (an “exit visa” for a Jewish family was valued at $10,000, willingly paid by the Israeli government at the time).

With the fall of communism, Romania lost its privileged status as an affordable medical education “hub” and Israelis started exploring education options (a little bit) further to the east. As reported

by Haaretz, a particular school in Kishinev, Moldova, currently has about 1,300 Israeli medical students and 200 dentists enrolled. According to Prof. Shaul Yatziv, the person in charge of licensing medical professionals in Israel, “it’s simply impossible to provide satisfactory clinical experience for 2,000-plus students, Israelis and foreigners, in one hospital. … In Israel, a comparable number of students are trained in 20 different hospitals.”

But the low quality of clinical training (or its complete absence), is not the only concern with the cheaper education providers. With no strong public control in place, there is little to prevent “students” and “universities” from simply exchanging (a little bit of) money for diplomas. This is an excellent business given that all parties to such transactions hardly break a sweat. And we’re not talking about a hypothetical possibility – in November 2018, Israeli police arrested 40 doctors, residents, and pharmacists who were able to obtain diplomas from Armenian “schools” without spending almost any time in Armenia.

IS GEORGIA THE NEXT ARMENIA? Bumping into an Israeli guy studying medicine in Tbilisi came as something of a surprise. And yet, here he was, Ameer Falah, a 3rd year student at the Tbilisi Medical Academy, waiting on my table at Sivan and Shalva’s Israeli Hummusbar.

Ameer, 28, came to Georgia in March 2016, having decided to reinvent his life after eight years in Israel’s restaurant sector. “My older brother, Ahmad, studied medicine in Italy,” he tells us. “He convinced me to follow in his footsteps, and promised to help, both financially and academically.”

As Ameer tells when we sit down for an interview, he may be the only Israeli at Tbilisi Medical Academy, a relatively small private school in Avlabari. Foreigners constitute about 50-60% of TMA’s 800 students, and of those, the majority are from India.

Ameer is happy with the deal he’s getting. He pays $5,000 in annual tuition fees (“now students have to pay $6,000”) and spends another $800-900 per month on rent and living expenses. The univer-

sity takes good care of all his needs, and the city is safe and fun to live in. He is lucky to study in a very small group of seven students. Five Indians and a Georgian guy, in addition to himself. Most groups include 10-12 students.

Ameer’s three years at TMA covered basic theory, taught from standard international textbooks used at any university around the world. Practically all theory lecturers at TMA are young Georgian women (“Men don’t work here,” he says.

A friend once sent him a picture of Mother of Georgia and a guy - Father of Georgia? - lying on his back next to her.

Ameer thought it provided a good summary of the city’s spirit.) The teachers are doing a good job. But, even if something is not clear, one can always watch the “World’s Most Popular Medical Lectures” by Dr. Najeeb, a major online resource for medical university students worldwide. (Having watched just one lecture by Dr. Najeeb, we started wondering whether it would not make sense to have him teach the entire world population of medical students).

While Ameer is a happy man, his account contrasts with those of other students we’ve interviewed, especially those in the more advanced stages of their studies. For example, M., a 6th year Indian student at the Tbilisi State Medical Academy (one of Georgia’s most prestigious medical schools) describes the inefficiency of waiting outside the teacher’s office for a chance to observe an examination of an occasional patient.

There are 20 students in the line; the patients are few and far between; and only three students are allowed in. To add insult to injury, a lot of time is wasted on translating Georgian language conversations (which few foreign students are able to understand) to English. Likewise, M. sees little benefit in doing nightshifts at a hospital where he does not get to do or learn anything new. Another issue is the great variation in his teachers’ motivation and attitude. Some are great, but many simply don’t care.

Ameer and M. are just two of more than 7,000 foreigners who have studied in Georgia’s medical schools in 2017-2018 – a staggering figure for a country of Georgia’s size! Mind you, the foreign student population in Georgian medical schools almost tripled in just three years (since 2015-2016). At this rate of expansion, Georgia’s hospitals have long exhausted their capacity to provide meaningful clinical experience to thousands of foreign and domestic students.

There are simply not enough hospitals (or patients) to supply the students’

clinical training needs.

À LA BUSINESS COMME À LA BUSINESS Medical education is serious business and a major source of foreign currency earnings for Georgia. Assuming an average tuition rate of $6,000 (programs preparing foreign students for the United States Medical Licensing Examination (USMLE) cost closer to $10,000 per year), Georgia’s medical schools generate more than $40mln in annual revenue. Moreover, as assessed in “Brief Migration Profile: Foreign Students in Georgia” tuition constitutes only 39% of foreign students’ total expenditures, which includes rent, food, transportation, and utilities. Applying this ratio, we estimate that, in 2017-18, foreign medical students have spent over $100 million, accounting for close to 0.7% of Georgia’s GDP in 2017.

Because it is serious business, Georgia’s medical education sector is treading the Armenian (and Moldovan) path. Georgia’s National Agency for Education Quality Enhancement (EQE) is doing what it can to protect the sector’s integrity, but the crude authorization and accreditation tools at its disposal do not allow it to do enough. While Israel may be too elitist when it comes to selecting medical students, Georgia’s 24 medical schools do not even bother administering entrance exams. The ease of getting in (also thanks to special arrangements with Indian recruitment agencies) is, in fact, their major selling point.

Georgia does require foreign students to demonstrate English language proficiency. Few Georgian schools, however, make an admission decision conditional on official certification, such as TOEFL. Tbilisi Medical Academy, for example, promises to accept any applicant who can “demonstrate fluency to the University special comity (can be done through the Skype call)” [sic!]

Judging by how English language requirements are spelled on TMA’s official website, we doubt its “special comity” has the capacity to assess the candidates’ English language proficiency.

And given its business interests, it may not have the motivation to do so, either.

department, EQE has already revised its “sector benchmarks” (e.g. concerning labs and own clinical facilities), as well as accreditation standards and procedures. These will become mandatory as of 2023.

There are several implications for EQE itself, Georgia’s medical schools and their students.

First, WFME recognition raises the quality bar for the authorization of medical schools and program accreditation.

Second, in contrast to the current situation, only students of WFME-accredited schools will be allowed to take the soughtafter US Medical Licensing Examination (USMLE).

Third, authorization/accreditation committees will include international experts hired by EQQ (relevant costs will be charged to medical schools seeking authorization/accreditation).

Fourth, all authorization/accreditation decisions will be made by an independent council (separate from EQE), whose members will be appointed by Georgia’s Prime Minister. This council will consist of 16 members, including representatives of students, NGOs, academia, and the medical profession. A 75% majority will be required for approval. * * * At least on paper, these new regulations could have the potential to prevent Georgia’s medical education from following the Armenian scenario. If all goes well, the sector is likely to see a greater investment in the quality of faculty, lab equipment and clinical facilities, on the one hand, and a gradual process of consolidation, on the other. The latter is essential because Georgia does not have the capacity to train 8 or 10 thousand medical students, and it can ill afford losing its reputation given its ambitions to join the European family of nations.

About the authors: Eric Livny and Rezo Surguladze are president and research economist with Tbilinomics Policy Advisors. Vato Surguladze is dean of Caucasus University’s School of Medicine and Healthcare Management.

THE PARTY COMING TO AN END? The situation in Georgia’s medical education sector may change very soon. In 2018, the EQE joined an exclusive club of accreditation agencies recognized by the World Federation of Medical Education (WFME). According to Lasha Margishvili, head of EQE’s higher education

Volume of Lending by Commercial Banks in Georgia Increases

BY THEA MORRISON

T

he volume of lending by commercial banks, including loans to non-residents, in December 2018 increased

by GEL 480.3 million ($180.75 m) or by 1.8 % compared to the previous month and constituted GEL 26.6 billion ($9.99b) by January 1, 2019.

The information was released by the National Bank of Georgia (NBG).

The NBG says that the volume of loans in the national currency increased by GEL 159.3 million ($59.95 m) and the volume of loans in foreign currency increased

by GEL 321 million ($120.8m) or by 2.2% in the same period. The NBG added that as a result of operations, or exchange rate effect excluded, the abovementioned indicator increased by 2.6%.

Image source: businessincameroon.com

In addition, the NBG reports that by the end of December 2018, the total volume of national currency denominated loans issued by commercial banks amounted to GEL 3.4 billion ($1.28b) that is 0.9% more compared to the previous month.

Meanwhile, foreign currency denominated loans to resident legal entities constituted GEL 8.1 billion ($3.05b), 2.4% more than in the previous month. The exchange rate effect excluding volume of lending in the foreign currency increased by 2.9%.

In December 2018, the volume of lending to resident individuals increased by 1.6% or GEL ($84.11m) million, and constituted GEL 14.2 billion ($5.34b) by January 1, 2019.

NBG reports that the Larization ratio for total loans constituted 42.96% by January 1, 2019 and decreased by 0.18% compared to December 1, 2018.

To note, “Larization” is the de-dollarization of the Georgian currency. The term may have two meanings: 1. The percentage share of Lari in all currency usage. The Larization of the economy is the percentage share of Lari in the total money supply of the economy.

2. The process when the percentage of Larization is increasing.

Larization was launched by the Georgian government to ensure a stable economic environment, as in this case the country’s currency is less at risk of decreasing in value and, accordingly, external shocks will have less influence on the national economy.

Under the condition of increased Larization, the monetary policy of the National Bank becomes more effective, a necessary precondition for economic stability. Therefore, one of the primary tasks for the National Bank is to increase Larization.

BUSINESS

GEORGIA TODAY JANUARY 29 - 31, 2019

9

Georgia & Silk Roads: Belt & Road Initiative

BY EMIL AVDALIANI

T

he ancient Silk Road, or as it is more often called nowadays silk roads, was an ancient trade route from eastern China to various major markets of the ancient and medieval periods (Roman/Byzantine empires, Sasanian Iran, the Arab Caliphate, etc).

An important aspect to those trade routes was their changeability over time. This depended mostly on the political situation in the Middle East and this necessitated the seeking out of alternative routes to get important products from Central Asia and western China.

Contrary to widespread arguments, Georgia appeared on those trade routes only from time to time as a result of political disturbances (invasions, economic

problems, etc.) in the region. The trade route across Georgia passed from North to South, from Georgia itself further south to Armenia and Iran as well as from East to West. Thus it is difficult to say that Georgia was either totally absent or dominated ancient and medieval trade routes.

The Russians at times opened the Georgian transit route for European products to reach Iran in the 19th century. But the success of this commercial road ultimately depended on Russian political decisions.

As is also well known that in Soviet times, virtually no international trade routes ran through Georgia as the Union was a closedborder one.

Thus, for the first time in many centuries, Georgia now has the chance to become a transit corridor for trade and energy from the Caspian area, Central Asia and even from western China. Refocusing on Georgia’s transit potential is linked to China’s economic and military

rise which is arguably one of the central themes in 21st century geopolitics. Like many other rising powers throughout history, China has strategic imperatives that clash with those of the US. Beijing needs to secure its procurement of oil and gas resources, which are currently most available through the Malacca Strait.

In an age of US naval dominance, the Chinese imperative is to redirect its economy’s dependence, as well as its supply routes, elsewhere.

This is how it comes to the almost trillion-dollar Belt and Road Initiative (BRI), which is intended to reconnect the Asia-Pacific with Europe through Russia, the Middle East, and Central Asia. There are several major corridors pinpointed by the Chinese: 1. China to Europe through the New Eurasian Land Bridge; 2. The China-Mongolia-Russian Corridor;

Image source: Dmitrii Vaccinium/Unsplash

3. Central and West Asian countries.

4. The China-Indochina Peninsula Corridor linking China with the South Pacific Ocean through the South China Sea; 5. The China-Pakistan trade corridor; 6. The Bangladesh-China-India-Myanmar trade route.

As seen, neither Georgia nor the South Caucasus feature on the list and many analysts think that this is proof that China will unlikely be interested in the South Caucasian route. Yet, the nature of the BRI is not static; it undergoes constant changes and it is likely that Beijing will always adjust its trade routes to rising challenges and new opportunities, trying to operate through difficult geographic terrain as well as politically unstable regions. These are Beijing’s major enemies which make any routes vulnerable and susceptible to re-routing. And this is very much similar to how transcontinental trade routes operated in ancient

and medieval periods.

Thus China has and is likely to have in future, an individual approach to each country, which makes the fact that Georgia does not feature on the above-mentioned list of trade routes not an obstacle per se. China is responding to rising opportunities and in that sense Georgia’s ability to develop its Black Sea ports, internal railway and highway networks will facilitate China’s decisions on the active inclusion of the South Caucasian route in its BRI or any future commercial undertakings.

Surely the Chinese also look at the security of the South Caucasus and it is difficult to imagine that Beijing will not take into account Russian moves in the region. Mitigating the Russian challenge together with opening the Georgian market to other powerful players in Eurasia is arguably a modus vivendi for the region’s successful development.

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BUSINESS

GEORGIA TODAY

JANUARY 29 - 31, 2019

Wissol Group Has Big Plans for 2019, Despite Alleged Financial Struggles

BY SAMANTHA GUTHRIE

O

ne of Georgia’s largest business conglomerates, Wissol Group, is coming under scrutiny for its alleged failure to repay a $1.5 million loan on schedule.

100% of the shares in Wissol Group are owned by D&B Georgia, a limited liability company headed by Georgian brothers Samson and Levan Pkhakadze.

Samson “Soso” Pkhakadze serves as President of Wissol Group and Chairman of the Wissol Board of Directors while younger brother Levan Pkhakadze is Vice President of Wissol Group and Deputy Chair of the Board of Directors of Wissol Petroleum Georgia.

D&B Georgia took out a $10.6 million loan from OPIC, the United States’ Overseas Private Investment Corporation, in 2015 to begin opening franchises of Dunkin Donuts restaurants in Georgia. The project description for the loan’s official public information summary explained that the brothers planned

to establishment as many as 35 Dunkin’ Donuts restaurants in Georgia. The loan was issued on a nine-year repayment schedule with a 24-month grace period.

The summary also explained the project’s proposed economic impact in Georgia, saying it would be “highly developmental.” Specifically, providing “much needed economic stimulus in Georgia at a time when the economy and foreign direct investment are declining due to the Russian-Ukrainian crisis.

The Project will have strong human capacity-building impacts by creating hundreds of new jobs through the development and operation of up to 35 quickserve restaurants in both rural and urban locations of Georgia, a country with high unemployment, especially amongst youth. The majority of quick-service restaurant jobs, like those expected to be created by the Project, are typically held by young people.”

Following the company’s initial success, they took out a smaller loan for $1.5 million in February 2018 to further expand the chain. According to the company’s 2018 annual financial report, as reported by Caucasus Business Week

(CBW), D&B management are in the process of attempting to restructure the loan to achieve a more favorable payment schedule.

Although Dunkin Donuts has been expanding in Georgia, with six new restaurants opening in 2018, CBW reports that their revenues are down several million over the last two years. A November 27 letter from Soso Pkhakadze assured stakeholders that D&B investors are willing to provide additional financial resources to the company, which plans to continue normal operations in the future. Another six new Dunkin Donuts restaurants are planned for 2019.

Wissol Group describes itself as “one of the largest business groups in Georgia. With the largest chain of petrol and CNG stations and with aviation fuel deliveries, Wissol Group is the leading

player in the country's energy sector.”

Wissol Group includes several major Georgian companies and franchises: Wissol Petroleum, Vianor vehicle service centers, Dunkin Donuts, Wendy’s, grocery store chain Smart, outdoor advertisement service Alma, and real estate and construction firm Vellagio.

Last week, Wissol Group announced they are adding a new venture to the list – a chain of pizza restaurants. The restaurants will initially be integrated into existing Wendy’s locations throughout Georgia, with plans to expand them as free-standing restaurants.

“We have worked on establishing the pizzeria network for about 18 months.

Based on the corresponding research of the consumer market, we confirmed that pizza is an in-demand product in our country and a high-quality product will bring real success,” said Wendy’s

and Dunkin Donuts Georgia General Director Giorgi Mshvildadze. He continued, “We believe the pizzeria project will be excellently implemented within the Wendy’s network. We developed the pizzeria concept and submitted it to the Wendy’s [corporation], along with the brand platform, corporate symbols and so on. Three months ago, we received consent to test the project. We arranged a pizzeria corner at the Wendy’s restaurant in Kutaisi…the pizza sales exceeded expectations by 2.6 times.

As a result, Wendy’s gave its final consent to implement the new project.”

Wendy’s pizzerias will offer five types of pizza: Baconator – named after one of Wendy’s most popular and wellknown burgers, Four Cheese, Margarita, Pepperoni, and Vegetarian. All five toppings options will cost 11.40 GEL ($4.30) and will be 33 cm in diameter.

Image source: dailydot.com

HUAWEI Presents HUAWEI P Smart 2019, Sporting the Latest Technologies & Design the HUAWEI P Smart 2019 is equipped with improved front and rear cameras.

It is distinguished by a wide-range 16MP front-facing camera that has new AI and AR capabilities and useful features such as gesture control function and improved quality of photos taken in portrait mode, which will please selfie lovers. The HUAWEI P Smart 2019's front camera can also see and optimize eight categories of Selfie backgrounds, so users can freely snap high-quality and distinguished selfies for their social networks.

The HUAWEI P Smart 2019 is designed to provide more comfort for consumers, in any situation and without hassle. The new budget smartphone's internal 64 GB memory can be increased up to 512 GB. The 3400mAh battery provides allday battery life for everyday users of the HUAWEI P Smart 2019 is designed for

BY MARIAM MERABISHVILI

T

he screen size and improved shooting function have been increased again in the latest budget-class smartphone from HUAWEI with the HUAWEI P Smart 2019. Its main cameras boast Artificial Intelligence support and it comes equipped with the latest 8-kit chipset Kirin 710 (also possessing AI), which allows the smartphone to identify more than 500 scenes and objects.

Through the latest HUAWEI P Smart

2019, HUAWEI is offering a more sophisticated and more capable smartphone, using both technology and design that differ from its predecessors and guaranteed to satisfy the dynamic needs of today's users.

SO, WHAT DOES THE DISPLAY LOOK LIKE? Comparing the HUAWEI P smart 2019 with its predecessors, consumers will immediately recognize the more expansive viewing area made possible by the 6.21-inch 19.5:9 HUAWEI Dewdrop Display.Furthermore, the 415ppi high pixel density of the panel affords a higher

FHD+ (2340x1080) resolution, which combined with the support for 85 percent of the NTSC color gamut, makes for a truly compelling viewing experience. Given how consumers are spending more and more time with their smartphones, HUAWEI P smart 2019 includes a new TÜV Rheinland-certified Eye Comfort Mode, which effectively filters high-energy blue lights to alleviate user eye fatigue during extended session.

A NEW SMARTPHONE WITH NEW AI AND AR CAPABILITIES Alongside a premium quality screen,

everyday smartphone users. According to the company's internal testing results.

The battery supports up to 10 hours of Internet browsing on 4G networks, up to 18 hours of continuous video playback, and up to a groundbreaking 96 hours of continuous music playback.

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

BUSINESS

GEORGIA TODAY JANUARY 29 - 31, 2019

11

Masque - Italian Niche Perfume Brand Presented in Georgia themselves to be free and outstanding”stated the specially invited brand ambassadors at the event.

THE LIST OF MASQUE FRAGRANCES INCLUDES: Terralba; Montecristo; Russian Tea; Times Square; Luci Ed Ombre; Mandala; (Homage To) Hemingway; L’attesa; Romanza; Tango.

It has been claimed that the Tango Fragrance is the closest to the Georgian nature and character. All the guests were given this fragrance on the celebration event at L’Arome Boutique.

The description of Tango is presented below:

BY KETEVAN KVARATSKHELIYA

O

n January 18, alongside a number of important and honored guests, L’Arome Boutique celebrated the launching of the Italian Perfume Brand MASQUE on the Georgian market. The perfume house was established by two refined Italian man – Alessandro Brun and Riccardo Tedeschi in 2010. They based the main conception of MASQUE on their personal experiences: adventurous emotions,

imagination, passions for travelling, literature and inspiration from playwrights obtained from the Opera backstage. The founders of the perfume house put down their memories and managed to write their own Libretto, which was later unveiled in 10 different fragrances.

9 ‘noses’ work for the MASQUE Perfume house currently, creating fragrances from natural ingredients and in limited quantities.

“Today, MASQUE offers 10 incredible fragrances, carrying the Italian, emotional character. Meet each of them and join the group of those individuals, who allow

Image source: MASQUE

TANGO — ACT III SCENE IV Whispers all around you, the party is merry. The soft music in the background gets gradually louder. A crescendo. A glass, another glass. Inebriating, amber nectar. Inebriating as the smell of the blooming jasmine, carried along by the warm summer gusts. A crescendo. You meet her gaze – she whispers a couple of words. You spot it – it is Lunfardo.

Your forehead drenched with sweat.

Salt melts in the sugar of the liquor.

The shuffling Gotan rhythm makes you brave, the night and the tango are on your side. A crescendo. Deafening summons. The air gets even hotter. You are aware it will hurt you. Yet you can’t

resist. You stand up and head towards the dance floor… her face lights up with a smile that brightens the night… That is all you long for, now. A warm and sensual perfume. Intense crescendo.

Amber nectar.

Interpreted by Parfumeuse CÉCILE ZAROKIAN Head Notes Bergamot, black pepper, cardamom Heart Notes Sambac jasmine abs, Damascena rose oil, cumin, patchouli Base Notes Vanilla bean, tonka bean, melilot abs, amber accord, leather accord, benzoin, muscs

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BUSINESS

GEORGIA TODAY

JANUARY 29 - 31, 2019

Strengthening the Corporate Securities Market Will Attract More FDI in Georgia OP-ED BY LEVAN KOKAIA

L

ike all post-soviet countries, currently one of the most important challenges for Georgia is to ensure its economic prosperity. At different times, many economic strategies have been elaborated, the core substance being to attract and keep stable foreign direct investments (FDI). For this reason, for more than 25 years the central priority of the Georgian economic policy has been to constitute the appropriate interesting circumstances for this.

Enormous budgetary resources are collected for this aim. Georgia has a special governmental agency and joint stock companies (JSC) with 100% governmental ownership. Among the leading missions of these institutions is the promotion of Georgia’s investment image worldwide and the engaging of more FDI. Georgia has had changeable political, macro-economic and fiscal indicators which adequately reflected the attitude and expectation of existing and potential investors. Undoubtedly, to establish new business entities, installing franchising of nominated brands and moving official representations of foreign companies will play a positive role for the Georgian economy, but reality shows that there are several reasoning preconditions to strengthening the national economy only by attracting FDI. More concretely: Georgia does not always have the charming political and economic climate needed for grabbing the attention of profitable FDIs. Indeed, these factors play a nominal role, because with the general political and economic atmosphere one of the vital issues for FDIs is the existence of a balanced way to finance the business and/or the source and infrastructure to extend its activity as a stabile investor.

Georgia is in a situation whereby the domestic long-established economic sectors, such as tourism, production and export of wine, mineral water, agricultural products, infrastructural and real estate sectors have yet to dynamically affect the national economy, as seen in many international evaluations and in the country’s high poverty index.

It is essential to take into consideration that Georgian political and macro economical frameworks are changeable; that dependence on various regional factors is unstable; and that the charming transit geographical location of the country maintains its uniqueness in the region.

Each of these circumstances provides conditions to create an improved investment atmosphere.

According to recent studies, both private banks and stock markets promote growth, with stock markets proving the more powerful. Only a well-organized stock market can measure the real value of enterprises: On the one hand, national and non-resident entrepreneurs can evaluate the opportunities and, based on this data, evaluate the best corporate strategies, and on the other hand, all potential investors (especially foreign institutional investors) can determine their different commercial possibilities.

This is simple arithmetic, as capital market-oriented financial reporting presents more objective and realistic information for all interested investors.

The current Georgian financial market includes the following components: products of commercial banks, nonbanking sector (micro financial organizations, credit lines), brokerage and insurance companies and stock exchange.

From these components, capital markets include the state securities market, corporate stocks and corporate bond markets, currency and monetary market, currency forwards and derivatives.

From the initial stages of the formation

Image source: Getty Images/iStockphoto

of domestic private financial institutions, Georgia took a path on behalf of the private banking sector as opposed to the capital markets. Presently, this sector is the most successful not only among the financial institutions, but generally among all domestic industries. In parallel, Georgian financial institutions belonging to the capital market sphere still remain as a nominal source of financing.

Unlike private equity market capitalization, the existing capital market tends to rely on bond issuance with comparatively valuable local liquidity.

The institutions of well–developed capital markets depend on several factors. Considering that the Georgian governmental securities market operates in better conditions, the fundamental cause of under developed capital markets is weak corporate stock and the corporate bond market. Accordingly, the financial instruments belonging to these institutions are not highly in-demand not only among the population, but also with the domestic and foreign investors.

Relative growth of capital is not seen among small and mid-sized companies.

Consequently, in order to really positively affect the various economical parameters, Georgia needs more institutional foreign investors, the best way being the creation and operation of JSCs. Large JSCs determine the trends of one or another market and generally the rate of a country’s business indexes. The nature of a JSC is to associate a lot of stable investors (shareholders), where all (in share type and ownership structure) should feel multilaterally stable and secured. The shareholders operate on different liquid stock markets instead of the company’s daily internal matters.

Each shareholder is potentially interested in extending the quantity of capital as an institutional investor by buying shares and/or placing shares on the stock exchange. With the equity market, it would be a great motivation for different investors to place corporate bonds.

Georgia, as a small country with a still underdeveloped business climate, is unflavored with a large number of welldeveloped and profitable JSCs. Based on the official statistical data, currently in Georgia 236,767 capitalized private entities are registered, of which only 80,330 have active status (33%).

Georgia has 234,240 LLCs, of which only 79,423 are active, while 2,527 are JSCs, from which only 907 have an active status.

Considering this, Georgia scores the following position: 1. Proportional rate of registered LLCs from all capitalized companies: 98.89%; 2. Proportional rate of active LLCs from all active capitalized companies: 98.88%; 3. Proportional rate of registered JSCs from all capitalized companies: 1.1%; 4. Proportional rate of active JSCs from all active capitalized companies: 1.13%.

This data indicates that the demand for starting and operating “great businesses,” such as active JSCs, is quite low.

Moreover, the existing legal framework does not include the concept of the publicly-owned LLC which would be authorized to issue securities. The cause for this position may be different: the law, macroeconomic indicators, political tension, tiny markets of different services and products, or the flexibility of small-

sized legal entities. One of the leading factors remains the underdeveloped corporate securities market.

The cornerstone of my conception includes reforming and strengthening Georgia’s corporate securities market institutions and, in parallel, not letting weaken the existing attempts to attract more FDIs which, from time to time, are transformed into a source of portfolio investment.

There are various specifications determining the attractiveness of FDI, which mainly depend on the type of industry, targeted region/country, and/or the origination of investment. More specifically, the significant factors effecting FDIs are: 1) Favorable geographical location; 2) Internal and external political stability; 3) Low bureaucracy and logical scope of liberation of business from government pressure; 4) Modern infrastructure; 5) Labor skills and wage rates; 6) Macro-economic parameters; 7) Tax rates and the existence of bilateral agreements about concessionary taxation; 8) Exchange rates of national currency; 9) Property rights (basically focused on the intangible meaning of shareholders’ rights); 10) Sophisticated internal regulations balancing fair expropriation; 11) Access to the free trade spaces; 12) Clustering effects and size of economy, which determine the potential of the economic growth.

Some of the enumerated factors have a direct correlation with the potential of the commercial securities market and transect the potential interest of investors. But how do they correlate with the commercial securities market? Internal and external political stability, macroeconomic parameters, tax rates and existing bilateral agreements about concessionary taxation, exchange rates of national currency, intangible property rights, clustering effects and size of economy widely effect the FDI climate, although targeting the development of the commercial securities market will affect their meaning and necessity. An interaction of factors will not produce solid results on behalf of the commercial securities market if no step is taken to enlarge this market.

As an intermediate conclusion, we get such a chain: Further work on the improvement of these parameters and the overall FDI environment is needed, in parallel with work on the development of the commercial securities market and a connection of these processes.

Why will an improved commercial securities market attract and preserve more profitable FDIs? 1) A securities market of high quality demonstrates public trust and confidence of the different companies, as the central actors, in this market. Accountable enterprises are obliged to operate wholly transparently, and the neutral self-regulated market rules determine the clear rating and real value of the corporation.

In distinctive jurisdictions, there are many approaches to the bureaucratic scopes imposed on one or another market. There is no doubt that the financial market needs moderately determined

bureaucracy. One of the unique characters of capital markets is neutral selfregulation in compliance with the principles of international best practices.

Preeminently, authoritative international organizations and consideration of the recent trends of trans-national corporations elaborate these principles. The concept of the “not-anarchical,” and in some regions the “incorporated” rules, of self-regulation in the best way meets Adam Smith’s idea of an “invisible hand”.

In all points, the requirements of the corporate securities market benefit from this idea: “self-regulated markets”; “real competition” (along with sober competition among the actors of the financial market); “basic neutral supply-demand mechanism” and the “self-interest” of the corporations, where all decisions are made based on “the best corporate interests”; 2) A financial market where only a well-developed banking sector has the predominant position effects the investors’ subordination to the banking rules, where no-one is motivated to establish a modern corporate governance system and more transparent financial accountable standards. In turn, this will negatively effect minority shareholders’ rights.

As we discussed above, only JSCs can determine the trend of one or another market where numerous shareholders are accumulated. As an environment where minority shareholders’ rights are weak, Georgia will not be able to attract durable institutional investors. Consequently, the Georgian financial market will become closer to better anti-monopoly circumstances than in such an environment where only the banking sector is developed; 3) Considering that for a long-term source of financing, it is more flexible to use the capital market platform than the money market, as opposed to a shortterm source of financing, one of the main interests of investors is to operate in the long-term. This comes with risks of lost capital. Where different sources of financing are developed is a high probability of continuing an existing activity and/ or re-investing capital to other financial instruments by a neutral, self-regulated transparent market. Such possibility gives additional investment opportunities, where investors are interested in allocating additional capital; 4) With the dynamic corporate securities market, one additional space for investment is the allocation and affiliation of capital within an organized investment fund. Particularly, an effective securities market will enhance the formation and operation of venture capital.

In a certain time, it will be generated into the defined experience of joint business activity and push the formation of institutional investment funds. Moreover, based on the best practice, for instance, mutual funds can passively track stock and bond market indexes and allow limited investors to buy diversified shares of a number of investment holdings within the fund’s investment objective.

Without considering the well-developed securities’ market, it is difficult to have a mature base for investment funds. That is why, as a first step, it is important to ensure better conditions for the commercial securities market, which will push the development of investment funds. This chain will present, for FDIs, additional motivation and the capacity to be involved in diversified investment possibilities by using different methods of capital flow; 5) A well-developed commercial securities market will clearly influence the national macro parameters proportionately to the various international assessments, which, in the long-term perspective, will attract more FDIs. Namely, the macro factors will keep such circumstances that indirectly affect the supplydemand relationship of additional capital, and will be able to raise the national GDP due to its solid connection with

the amount of existing capital in the country.

MAJOR REASONS OBSTRUCTING THE DEVELOPMENT OF THE COMMERCIAL SECURITIES MARKET Today, the following factors are obstructing the development of the Georgian commercial securities market: • Legislative failures regulating legal attitudes among the actors of capital markets. One of the least developed actors of the portfolio investment is the private equity market. Therefore, by legislative failures I mean the existing mutually opposed legal norms, a number of unregulated issues and/or not highlyenough qualified regulations. For instance, according to the existing Georgian legislation, it is quite possible to trade securities listed to a stock exchange out of the competitive regime - directly to the shadow, which reveals turbulent circumstances of the prices of traded securities.

On-exchange trades are held using the delivery versus payment (DVP) principle. More clearly, buyers do not gain their securities until reimbursement, and sellers do not receive their payment until conveyance. The mentioned scheme negatively affects the stable and protected investors’ rights, especially those of minority investors; • Unequal circumstances among financial institutions. Particularly, Georgia formally has a bipolar financial market: commercial banks and the actors of the capital markets. The predominant status of commercial banks deteriorates the liquidity of the commercial securities market. This reality founds factual monopolar circumstances among the actors of the financial market; • Insufficient transparency of the securities issuers, which is shown as low standards of corporate governance. Furthermore, the existence of an ineffective system of creditworthy appraisal of companies; • Fair access to the same information equals trade in identical conditions. The existing system does not ensure this possibility due to faulty procedures for the effective prevention of insider-influence on the fairness of trading and subsequent adequate reaction to the insiders’ fulfilled dealings; • The publicity of the capital markets is low throughout the Georgian population, although almost all adult citizens know something of banking products and capital market functions; • Undeveloped taxable system of capital market participants; • Absence of flexible organizational requirements for investment firms; • Absence of legal frameworks for the domestic rating corporations.

SOME CORE PRINCIPLES WHICH SHOULD BE ENVISAGED The following basic measures need to be taken into consideration in order to gain a better commercial securities market: • Institutional reformation of JSCs, as by its nature a JSC should be an entity with many shareholders (as opposed to the so called “family businesses”) and the publicly issuance of their securities and trade on the exchange; • Creation of real competitive circumstances among the domestic corporate financial institutions by the anti-monopoly agency and the National Bank; • Considering the core principles of international best practice, the elaboration of a code of corporate governance for existing and all potential future stock exchange(s) and its (their) members. It is important to subordinate the rule of “comply or explain” of the chosen international principles of corporate governance to the National Bank of Georgia instead of the Service for Accounting, Reporting and Auditing Supervision; Continued on page 13

BUSINESS

GEORGIA TODAY JANUARY 29 - 31, 2019

13

Idea for Ferry Service Floated Between Georgia & EU

BY SAMANTHA GUTHRIE

M

inister of Economy and Sustainable Development Giorgi Kobulia has announced that, after a meeting with an international shipping company, the discussion of a ferry line between Georgia and the European Union has been renewed. Swedish marine shipping company Stena Rederi AB has expressed interest in developing a ferry route between Georgia’s Black Sea coast and a European Union port on the other side.

The European Union port could be in either Romania or Bulgaria. Ferries have intermittently connected Bulgaria and Georgia for the last two decades. Currently, regular ship traffic travels between Bulgaria and Georgia, including a ferry between Batumi and Burgas, Bulgaria, used primarily by truck drivers accompanying their payloads.

In 2013, a delegation of the Ministry of Transport of Romania visited the ports of Batumi and Poti and held a bilateral

working meeting on the subject of reopening a ferry service between Constanta, Romania, and Georgia. Then-Deputy Minister of Economy and Sustainable Development of Georgia, Natia Mikeladze, and Marian Buica, then-State Secretary of the Ministry of Transport of Romania, signed a Memorandum of Understanding on “Cooperation of the Ministry of Transport of Romania and Ministry of Economy and Sustainable Development of Georgia in the field of Ferry transport.” The Embassy of Romania in Georgia said that the memorandum would “promote reopening the ferry service between the ports of the countries that will boost the increase of turnover and the development of Georgian transit potential, the precondition for creating new jobs.” But no ferry ever came of the agreement.

Last week, Prime Minister Mamuka Bakhtadze and Minister Kobulia expressed similar optimistic sentiments after a meeting with Stena Rederi AB CEO Carl Johan Hagman while at the World Economic Forum in Davos, Switzerland.

The meeting touched on issues related to Georgia’s maritime potential, noting

that a ferry service could increase interest in the region from major global transportation companies in Europe and Asia, drawing attention to Georgia as a transit hub by sea as well as by land, said the Ministry of Economy.

“A ferry service with Europe will significantly increase the transit potential of Georgia and will make the European market much more accessible for Georgian producers,” said Kobulia.

The announcement is part of a broader pattern of focus on naval and maritime economic activities by the Georgian government. While in Davos, Kobulia also met with the chairman of one of the largest conglomerates in The Netherlands, Kommer Damen of Damen Shipyards. According to the Ministry of Economy, the pair discussed Georgia’s current and planned coastal infrastructure projects, accompanied by Giorgi Bachiashvili, Executive Director of the Co-investment Fund of Georgia. Kobulia emphasized that Georgia welcomes new investments in its ports. For his part, Damen expressed his company’s interest in cooperating with Georgia, and raised the topic of finding qualified staff

Dollar Set to Fall again in Ukraine

Image source: Vesselfinder

to hire, including the potential of offering vocational training courses. After the meeting, Kobulia confirmed that Damen Shipyards is interested in opening a shipbuilding and repair workshop in Georgia. “This will facilitate the increase of employment in the very sector and help us to better contribute from being the seafaring country,” said Kobulia.

Strengthening the Corporate Securities Market Will Attract More FDI in Georgia Continued from page 12

Image source: ft.com

BY DIMITRI DOLABERIDZE

U

krainians are to get a nice pre-election gift in the low dollar this week. In recent years, the mid-winter cost of USD was 29-30 UAH, and this is already selling cheaper at 28 Hryvnia and still but surely making a further decrease.

Over the past week, the dollar fell to the UAH in all segments of the foreign

exchange market by 0.5-0.9%. Since last Friday the official rate of the US dollar, established by the National Bank of Ukraine (NBU), decreased from 28.03 UAH to 27.79 UAH (-0.9%).

Average rates of purchase/sale of cash USD in banks decreased during the week from 27.82/28.08 to 27.68/27.94 (-0.5%).

“We have seen a strengthening of the Hryvnia in recent weeks, a rollback after the fall seen in late December-early January,” said senior analyst Alpari Vadim Iosub. “Several factors contributed to its recovery: the increase in the sale of for-

eign currency earnings by exporters, the decrease in liquidity in UAH in the banking system (on correspondent and transit accounts of commercial banks in the NBU), and the sale of foreign currency by buyers of government bonds denominated in UAH.” The NBU last Wednesday had to enter the market to buy currency. This week we can expect a decline in the dollar, traded down by week-end to 27.6 UAH, and cash in banks by the end of the week to around 27.5/27.8 UAH.

In an October 2018 meeting between the Foreign Ministries of Georgia and Bulgaria in Sofia, the counterparts made special mention of the transport and energy potential of the two countries, due to their strategic locations, to link Europe and Asia. In this context, they stressed the need to bolster and expand ferry traffic between Georgian and Bulgarian ports and to establish new routes.

• Infrastructural reformation of the stock exchange, by which I mean the further development of the IT system of the stock exchange is also significant; • Provision of appropriate educational activities for market participants, potential investors, financial professionals and an audience with the high interest of the financial market; • Adequate reforms of the national legislation. This is not about making technical amendments of the appropriate legislation but elaborating an extensive legal framework for national trust companies and covered bonds or socalled “mortgage bonds”. (In turn, all these amendments should affect the consequences for adopting proper tax treatment); • Ensuring low transactional cost and a more flexible taxation system. It is essential to tax the net investment revenue instead of certain transactions. The interest incomes of bank deposits are not taxable income, but other financial instruments are under the obligation of taxation. This factor pushes potential investors to use banking instruments instead of securities market instruments; • Ensuring more transparency of the financial statements of issuers.

LAST BUT NOT LEAST Nowhere is there an adapted panacea of “the best model” of one or another system.

Multilateral studies, extensive, systematic

and informal consultations with the private sector and the various comparative qualified evaluations of all related issues are the fundamental parameters of being closer to “the best model”. There is no reason to stay in a passive and satisfied position; to remain and support the status quo of the existing financial system because of the well-developed commercial banking sector. Bearing in mind the importance of all the above, steps to directly improve the commercial securities market should be taken at the right time.

There are many endeavors to ensure strict compliance with the EU directives in almost all socio-economic sectors.

This should be no different with regards the reformation of the Georgian capital market. Unquestionably, this process is positive, but it should not maintain the context of formally requiring EU standards. It is essential to make a broad analysis of the existing system considering all features of the domestic financial market. This approach will provide for the success of Georgian commercial securities market and will generate wealth and a unique national experience of engagement, keeping both FDIs and, in parallel, the different sources of portfolio investment.

Levan Kokaia is a lecturer at the Georgian Institute of Public Affairs (GIPA). He regularly publishes articles concerning Georgian business legislation, mainly focusing on corporate governance issues and the legal regulation of capital markets and investment funds.

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14

BUSINESS

GEORGIA TODAY

JANUARY 29 - 31, 2019

Guangzhou Automobile Group to Come to Georgia

Image source: Beyond.ca

BY AMY JONES

A

s part of the World Economic Forum held in Davos, Switzerland, from January 22 to 25, Prime Minister Mamuka Bakhtadze met with Zeng Qinghong, the Chairman of Guangzhou Automobile Group (GAC). It was announced that the car manufacturing company will open an office in Georgia by the end of the year.

With more than 84,000 employees, Guangzhou Automobile Group is China’s leading car manufacturer. The company produces passenger cars under the Trumpchi brand, as well as commercial vehicles, SUVs, buses, and motorcycles. In 2012, GAC produced over 728,000 vehicles that were sold around the world. The group’s fixed capital is over $18 billion.

Qinghong and Bakhtadze discussed Georgia’s favorable investment environment as well as an initiative which offers considerable tax cuts to companies that operate regional offices in Georgia.

It is not the Prime Minister’s first meeting with Chinese businesses and investors. On January 22,

he also met with Lyu Benxian, the President of the Chinese Misheng Investment Group, to discuss Georgia’s investment environment.

China is currently looking to develop its infrastructure and investments in Asia, Europe, and Africa as part of its Belt and Road Initiative. The development strategy, adopted by the Chinese government, should “construct a unified large market and make full use of both internal and domestic markets, through cultural exchange and integration,” said Professor Kuik Cheng-Chwee. The initiative should help “to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database.”

Bakhtadze spoke positively about Georgia-China relations. However, some critics of the Belt and Road Initiative consider it to be a step towards Chinese dominance in global affairs with a Chinacentered trading route.

The establishment of a GAC office in Georgia will nonetheless create extra jobs and help to grow the Georgian economy. After opening the office, they will study Georgia’s environment before making decisions on investment and construction of sites.

UNWTO Secretary General Praises Georgian Reforms in Tourism

Image source: MFA Georgia

BY THEA MORRISON

Z

urab Pololikashvili, Secretary General of the United Nations World Tourism Organization (UNWTO), while attending international tourism fair FITUR 2019 in Spain, said that Georgia is among the world’s leaders in tourism.

Pololikashvili praised the Georgian reforms in the tourism field, saying that they have been very successful. He added that Georgia has been actively participating in FITUR for 15 years already.

“All this once again confirms and reflects the motivation of Georgia to be represented as the leading country on the international tourism mar-

ket,” he state.

The UNWTO Secretary General added that FITUR is the most important international event in the field of tourism, one that is traditionally opened by the King of Spain. David Zalkaliani, Minister of Foreign Affairs of Georgia, also visited the fair, where Georgia had its own stand.

FITUR is a global meeting point for tourism professionals and the leading trade fair for inbound and outbound Ibero-American markets.

FITUR 2019 took place from January 23 to January 27. Last year it beat the participation record with 10,190 exhibiting companies from 165 countries/regions, 140,120 trade participants and 110,860 people from the general public. The volume of agendas organized by FITUR within the B2B event reached 6,800 business appointments.

POLITICS

GEORGIA TODAY JANUARY 29 - 31, 2019

15

Exhibiting Georgia: Cradle of Wine to Hit Japan

BY MARIAM MERABISHVILI

G

eorgian wine, folklore, feasting traditions and culture are important and praiseworthy facts for every Georgian. After the great three-month experience at the Cite du Vin Wine Exhibition in Bordeaux, France, in 2017, where Georgia was Guest of Honor, various other countries have come forward wanting to cooperate.

Georgian wine, which is already making a name for itself in Europe, is on its way to becoming just as popular in Asia.

‘Georgia- Cradle of Wine’ is an exhibition set to take place in Tokyo, Japan, from March 10.

Why Japan? Because of the great dynamics, high interest and future prospects.

During the Georgian delegation’s working visit to Japan, Advisor to the Chair of the National Wine Agency David Tkemaladze, and Director of the Georgian Wine Association Tina Kezeli, negotiated with the representatives of the famous exposition space Terrada Warehouse and Sony Music Communications Company. Terrada Warehouse offers a large exhibition hall, where the two-month Georgian project will be held.

The modern, convenient and high-rated spacious hall is located in the heart of Tokyo, making for truly dynamic scenery which maximizes the whole structure.

With the hall, visitors will have the chance to relax on the terrace and taste wine

while watching video clips dedicated to Georgia.

As the 2017 Bordeaux exposition made such a great impression, the organizers will keep the main essence of the design but will also make some alterations to guarantee a unique experience for Japanese attendees. In parallel with the 8,000year history of Georgian winemaking, the exhibition will include thematic film-shows, talks about Georgian history and cuisine, folklore performances, a presentation of a Georgian “Supra” (feast), art and culture, seminars from masters of wine and, of course, tastings of Georgian wine and food.

Sony Communications Company, the financial and technical partner of the project, is to offer the ‘Warp Square’ project, a space that uses ultra-short throw projectors to cast interactive, highdefinition imagery on the four walls of a room with a floor area of around 20 square meters, letting multiple users share an immersive audiovisual experience. The technology is new and is set to grow fast in popularity. One of the first users will be the Georgian delegation at the Tokyo Cradle of Wine exhibition, where numerous historic and city shots will be represented through it: a Georgian wine cellar, clay Qvevri wine vessels, grape pressing, the Caucasus Mountains, and more.

The exhibition is a great opportunity for Georgian wine companies to participate and popularize their products.

B2B business meetings will be arranged during the event.

Image source: ajaratv.ge

The National Wine Agency of Georgia (NWA) is holding on-going negotiations regarding the remaining details with the Japanese side. They have connections with embassies and, without quantity restriction, premium class wine and alcoholic drinks will soon be sent to the Terrada Warehouse. The NWA has hired companies in Japan to make a PR campaign in Japanese cities through social media, transport banners, TV, press, and print media in order to attract more visitors. The forecasts show that a min-

Hong Kong Film Financing Forum Shortlists Georgian Documentary

BY AMY JONES

T

he Hong Kong-Asia Film Financing Forum (HAF) has shortlisted Georgian documentary film ‘The Platform.’

The film could benefit from the HAF forum, a leading Asian film project. The forum connects filmmakers with film financiers, producers, bankers, buyers and distributors over the course of the three-day event in Hong Kong.

Footage for the film by Georgian directors Nino Orjonikidze and Vano Arsenishvili was shot from 2014 - 1016, but the documentary is still a work-in-progress.

‘Platform’ follows a one-day train ride through the Imereti Gorge to reveal the hardships of everyday life and death in central Georgia. Orjonikidze and Arsenishvili founded the Artefact production

Photo source: The Platform

company 10 years ago in Tbilisi. They have since worked together on many films, such as the award-winning documentary ‘English Teacher.’

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Of the over 1000 filmmakers who apply to attend the HAF forum each year, around 25 - 30 projects are chosen to participate.

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Maka Lomadze, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison Photographer: Irakli Dolidze

imum of 150,000 people are expected to attend.

The exhibition will be opened on March 10; however, the Grand Opening will be held on March 15 in Tokyo when the Georgian government delegation, wine companies, media and all involved parties will unite to celebrate the project.

The ‘Cradle of Wine’ project also gives Georgian wine companies an opportunity to participate in other famous expositions in Japan this year, including FOO-

DEX (from March 5-8) and WINE AND GOURMET (April 17-19). The three-four days events in Tokyo will welcome a large number of visitors from various countries, comprising importers, manufacturers and professionals from the wine, spirits and food service. Georgian wine companies will be able to participate in all three exhibitions in order to receive experience, provide comprehensive information to visitors, to find future partners and to adequately represent Georgia.

Nenskra HPP Project Investor CEO Visits Georgia

M

r. Hak Soo Lee, the Chief Executive Officer of Korea Water Resources Corporation (K-water), the Investor company of Nenskra Hydropower Plant Project, was in Georgia on a three-day official visit on January 28. During his visit, Lee held a number of meetings with representatives of the Government of Georgia and Partnership Fund – a shareholder of Nenskra HPP Project company JSC Nenskra Hydro. The current status of the Project and the plans for the year 2019 were discussed.

Korea Water Resources Corporation (K-water) is a state-owned company that was founded in 1967. The company implemented 67 projects of high complexity in 24 countries. Currently the company manages 16 multipurpose dams. Hak Soo Lee joined K-water in 1987 and was appointed as the CEO of the company in 2016.

JSC Nenksra Hydro, the Nenskra HPP Project company, was established in 2015 as a result of cooperation between K-water and JSC Partnership Fund. The company will construct the Nenskra Hydropower Plant in the Nenskra and Nakra river Valleys in Mestia Municipality. The 280

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MW Nenskra Hydropower Plant will generate approximately 1’200.00 GWh of electricity annually, which will be fully consumed by the Georgian market.

The preparatory works for the Project, which include the rehabilitation and construction of the roads and bridges in both Nenskra and Nakra valleys, as well as power supply line installment, are to be carried out throughout the year.

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