Issue #1096 Business

Issue no: 1096/153

• OCT. 30 - NOV. 1, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

Georgia’s Growth Projections Still Optimistic, but the Downside Risks Are Significant ISET PAGE 4

Dream Big But Don’t Forget To Deliver!

FOCUS

BUSINESS PAGE 6

ON UNCERTAINTY Salome Zurabishvili will face opposition candidate Grigol Vashadze in a second round to be held by December 2

Customer Seminar by AG MELCO Elevator Georgia on Mitsubishi Elevators, Escalators, Air-Conditioning & Factory Automation

PAGE 2,3

Election Round-Up

BY TEAM GT

A

ccording to the results of the 3705 precincts published by the CEC, presidential candidate Salome Zurabishvili, supported by Georgian Dream, received 38.64% of the votes and United National Movement candidate Grigol Vashadze received 37.74%.

According to preliminary information of the CEC, 615,624 voters supported Salome Zurabishvili, and Grigol Vashadze 601,188.

Zurabishvili will face opposition candidate Grigol Vashadze in a second round to be held

by December 2.

International observers say the first round was

BUSINESS PAGE 11 competitive but "an unlevel playing field" affected by private-media bias.

CEC: VOTER TURNOUT LOWER THAN IN 2013 Georgia’s Central Election Commission (CEC) spokesperson Ana Mikeladze stated that at 12:00 on election day (October 28), voter turnout had amounted to just 15.95%. The highest activity (27.4%) was observed in the Ambrolauri district, while the lowest was 12% in Kazbegi. Mikeladze noted that compared to the voter turnout during the 2013 presidential elections, the number of voters was down. "By 12:00, the voter turnout was 15.95%, which is 558,755 voters. If you compare this data to the presidential elections in 2013, then the voter turnout by 12.00 amounted to 17.15%,” she stated.

Continued on page 2

U.S. National Security Advisor John Bolton Visiting the Caucasus

CULTURE PAGE 15 Prepared for Georgia Today Business by

Markets As of 26ͲOctͲ2018

w/w

m/m

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 14.87

Ͳ7,6%

Ͳ14,1%

GEOROG 04/21

102.88 (YTM 5.50%)

na

Ͳ0,2%

Georgia Capital (CGEO LN)

STOCKS

GBP 11.50

+0,3%

+5,0%

GEORG 04/21

105.15 (YTM 4.63%)

+0,2%

Ͳ0,1%

GBP 2.40

+9,1%

+7,4%

GRAIL 07/22

106.17 (YTM 5.87%)

Ͳ0,0%

Ͳ0,2%

GBP 15.74

+3,7%

Ͳ3,6%

GEBGG 07/23

98.07 (YTM 6.48%)

+0,1%

+0,0%

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

Price

BONDS

COMMODITIES

Price

w/w

m/m

CURRENCIES

Crude Oil, Brent (US$/bbl)

77,62

Ͳ2,7%

Ͳ4,6%

GEL / USD

Price

Price

w/w

m/m

2,6979

+0,3%

+3,2%

1 233,53

+0,6%

+3,3%

GEL / EUR

Ͳ0,8%

+0,2%

GEL / GBP

3,4616

Ͳ1,5%

+0,5%

INDICES

Price

w/w

m/m

GEL / CHF

2,7062

+0,1%

FTSE 100

6 939,56

Ͳ1,6%

Ͳ7,6%

GEL / RUB

0,0411

+0,2%

+3,5%

FTSE 250

18 352,90

Ͳ2,4%

Ͳ10,2%

GEL / TRY

0,4824

+1,1%

+12,7%

DAX

11 200,62

Ͳ3,1%

Ͳ9,6%

GEL / AZN

1,5904

Ͳ0,1%

+3,3%

DOW JONES

24 688,31

Ͳ3,0%

Ͳ6,4%

GEL / AMD

0,0056

Ͳ

+3,7%

7 167,21

Ͳ3,8%

Ͳ10,3%

GEL / UAH

0,0958

+0,1%

+2,8%

149,68

Ͳ3,7%

Ͳ7,2%

EUR / USD

0,8770

+1,0%

+3,0%

Gold Spot (US$/OZ)

NASDAQ MSCI EM EE

3,0753

Ͳ0,0%

939,55

Ͳ3,3%

Ͳ10,2%

GBP / USD

0,7793

+1,8%

+2,6%

SP 500

2 658,69

Ͳ3,9%

Ͳ8,5%

CHF / USD

0,9970

+0,1%

+3,2%

MSCI FM

2 465,99

Ͳ1,5%

Ͳ5,3%

RUB / USD

65,5977

+0,2%

Ͳ0,4%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

5,5936

Ͳ0,8%

Ͳ8,5%

GT Index (USD)

1 208,13

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Ͳ

AZN / USD

1,6956

+0,0%

Ͳ0,0%

MSCI EM

2

NEWS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Election Round-Up @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:

Silk Road Group founder Giorgi Ramishvili, Partnership fund CEO David Saganelidze and TBC Bank founder Mamuka Khazaradze officially opened the Radisson Collection in Tsinandali on the grounds of the Aleksandre Chavchavadze museum and historic garden complex. The Tsinandali complex features a 1200- seat amphitheater, 600-seat music hall, wine factory, vineyard and now a 142-room 5-star hotel with event venues, library, restaurants, spa center, swimming pool and fitness club. Total investment in the hotel was $35 mln, while the overall investment in the complex was $60 mln.

Future Laboratory founder Irakli Kashibadze, former GD of GITA, is working on a new education project with the Ministry of Education and Science to foster the idea of innovative education. The aim is to maximize access to new technologies and modern infrastructure to master future professions through updated information, with the help of a new, more facilitating teacher. Future Lab has started pilot programs in several private schools and according to Kashibadze, soon the same projects will be launched at public schools.

Georgian startup winery My Way, aiming to find the balance between traditional Georgian winemaking and modern techniques, presented the App myway.wine. Using their online platform, you can get your very own bottle of wine in 4 easy steps: 1. Chooses your favorite variety and vine in a vineyard in Georgia 2.

Receive an e-certificate and a photo of the vine tagged with your name 3. myway.wine makes a Special Edition wine from its vineyard for you 4.

You get a Bottle of Wine in a vintage wooden box labeled with your name.

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

Continued from page 1

UNITED OPPOSITION CANDIDATE GETS MAJORITY OF VOTES ABROAD Central Election Commission (CEC) preliminary results showed that the candidate of the United Opposition, Grigol Vashadze, led in the elections held abroad, followed by the ruling Georgian Dream (GD) supported candidate Salome Zurabishvili.

The CEC stated that according to the results of 44 out of 58 polling stations opened abroad, Vashadze got the majority of votes in all, excluding Afghanistan, where the majority of the Georgian peacekeepers voted for Zurabishvili.

At the time this was released votes had not been yet counted in the United States, Bulgaria, Ireland, Canada, Lithuania, 5 polling stations of Greece in 1 polling station of Spain.

PRELIMINARY RESULTS SHOW ZURABISHVILI GETS 38,66%, VASHADZE - 37,7% The Central Election Commission (CEC) preliminary results showed that ruling Georgian Dream (GD) supported candidate Salome Zurabishvili led with 38.66%, while the candidate of the United Opposition, Grigol Vashadze, took second place with 37.7%. This was at a time when votes had been counted at 3689 precincts out of total 3705.

At that time it was clear Salome Zurabishvili had been supported by 614,964 voters, while Grigol Vashadze had 599,662 votes.

A total of 3705 polling stations were opened in the country, and the results of 3689 precincts amounted to 99.57% of total votes.

10.97% of voters supported European Georgia candidate David Bakradze, 3.76%

- Shalva Natelashvili, 2,26% - Davit Usupashvili, 2.26% - Zurab Japaridze and 1.33% - Kakha Kukava.

BIDZINA IVANISHVILI ON HIS VOTE & THE SECOND ROUND-OFF “Today, we voted Georgia's European choice,” Ivanishvili announced. “With today's choice, we will eventually reject lies and violence, and will find our right path - Europe and culture.

It will be respect for our great history, which is our greatest wealth. Finally, we will join our big family, which is a developed Europe.”

He then commented on the second round-off by noting, “The probability of a second round run-off is very low, but there is probability. If there is a second round, there is no doubt Salome Zurabishvili will win.”

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

3

Presidential Elections: How Has the Media Reported?

BY AMY JONES

O

n October 28, voting for the presidential elections took place across Georgia.

Media campaign coverage can have a huge impact on the outcome of elections. In fact, the media can be considered a key pillar of democracy. Campaign coverage is essential since the information available to voters comes almost entirely by means of various media outlets. Biased coverage and improper reporting can, therefore, sway opinion and impact voting.

How did the media potentially affect the voting decisions of Georgians through their rhetoric and coverage?

Last Thursday, a meeting held in Tbilisi by the EU and UNDP, together with NGOs, discussed the findings of media monitoring of the presidential elections from 18 June to 15 October. Media monitoring in Georgia has taken place since 2010, covering the past seven elections.

This year’s report includes quantitative and qualitative information taken from

72 media outlets.

Speakers George Jologua of the Civic Development Institute, Eka Beridze of Internews Georgia, and Giorgi Mgeladze and Nata Dzvelishvili of the Georgian Charter of Journalistic Ethics, discussed the media coverage from press and online media, radio stations, and TV channels.

Findings showed that the media was generally critical of all presidential candidates with the exception of radio which has had a more neutral tone. For example, the graph below shows that Rustavi 2, Georgia’s most successful private television broadcasting company, scarcely reported anything positive about any of the parties or candidates. Their coverage focused on the Georgian Dream party, who was a typical focal point of coverage for the majority of media outlets.

The minimal praise or criticism of one specific party or candidate could be used to demonstrate that media outlets showed less bias compared to previous years.

Although the decrease in biased reporting is a positive trend, it could also underline a scarcity of scrutiny and analysis that is vital during an election.

The lack of critical analysis means “it

is hard for the public to decipher what is a lie and what is the truth,” said George Jologua. Voters can access more and more information, especially online.

However, the public may be easily misled due to a shortfall of high-quality journalistic work which verifies and scrutinizes evidence. Information was often taken from only a small number of sources and focused on personal attacks, generalized statements, and events, rather than critical analysis and evidence.

Nata Dzvelishvili gave the example of the TV coverage of the marijuana legalization debate. News shows reported on events surrounding the debate rather than the issue itself. They refrained from discussing the social and economic implications of legalization, instead stating basic developments.

Moreover, the media generally shied away from in-depth analyses of the manifestos of candidates, also rarely covering social, regional, and minority issues.

However, independent MP Salome Zourabichvili, supported by Georgian Dream and favored by polls to win on

Sunday, has been targeted by media with an above average amount of negative coverage. Newspaper Asaval Dasavali, ran stories entitled ‘Salome’s Cursing’, comparing her to a horror movie. Offensive terminology towards her was commonplace in many news outlets, perhaps in part due to gender bias as she was expected to become the first female President of Georgia.

Four out of seven newspapers analyzed included offensive terminology from journalists and respondents. It was sometimes present even in the titles of articles, demonstrating the explicit intent of journalists to use such language. Nonetheless, the amount of hate speech has decreased year on year since monitoring began. Only two of eleven online outlets were found to have made grave violations of journalistic ethics. In addition, participants of talk shows were able to speak more freely and there were less physical battles.

The election results showed a marginal win for Zurabishvili over Vashadze, with Davit Bakradze lagging behind. The president will now be decided in a runoff. The political unbias of the media perhaps fuelled the closeness of the two candidates. However, more analytical reporting may have better-informed voters of the differences between candidates.

The media landscape in Georgia is improving in many areas, notably showing a reduction in hate speech and bias.

However, the panel clearly underlined the need for better quality investigative journalism and critical analysis. Munkhtuya Altangerei, UNDP Resident Representative a.i. in Georgia noted that this is important “so voters can make an informed choice about candidates.” Journalism, after all, is not simply a commentary of events, but rather a means by which democracy should be strengthened. More media monitoring results will be released in December.

OSCE Observers Assess the Presidential Election Process in Georgia

BY ANA DUMBADZE

O

n October 28, the day of Presidential Elections in Georgia, OSCE observation leaders monitored the voting process at the polling stations to assess the presidential election for its compliance with OSCE commitments and other international obligations and standards for democratic elections, as well as with national legislation.

Kristian Vigenin (MP, Bulgaria), the OSCE Special Co-ordinator responsible for leading the short-term OSCE observer mission for the presidential election in Georgia, and the Head of the OSCE Parliamentary Assembly’s mission, Margareta Cederfelt (MP, Sweden), closely monitored the election activities, the voting and the work of the election administration and shared their preliminary impressions with the representatives of local media, including GEORGIA TODAY. They noted that a peaceful and transparent election environment is essential for the country’s future development.

The OSCE observation leaders also stressed the importance of this years’ Presidential Election; the rule of appointing the President of Georgia has been changed due to the constitutional changes

and accordingly, in 2024 the President of the country will be appointed through a secret ballot, not through the direct voting.

“There is a huge interest towards the presidential elections in Georgia, which is why we are here today,” stated Margareta Cederfelt, OSCE PA mission Head. “We want to observe the process.

As a result of constitutional changes, the rule of appointing the next President of Georgia will be different. The future President of Georgia will be appointed in a different way, not through direct elections. The OSCE observers are presented here today. We have inter-

viewed the local observers, the representatives of non-governmental organizations and the local citizens within the framework of our work and mission.

Additionally, we talked with the members of the Election Administration of Georgia to find out more about the voter turnout. We will definitely monitor the transparancy of the voting and ballotcounting processes.”

Vigenin noted the interest of international society towards the presidential elections in Georgia is quite high: “The interest of international society towards Georgia’s presidential elections is remarkably high. I want to stress the

importance of the fact that this year an especially large number of OSCE observers is monitoring the election process.

We are here to express our solidarity towards the Georgian people. We want to be confident that the elections are conducted transparently and fairly. We will assess the election process and will present the relevant conclusions at a press conference which will be held [on Monday 29]. We hope that this year’s elections will be peaceful, the Georgian people will have an opportunity to express their choice, and the final result of the elections will be in compliance with the voters’ position,” Vigenin elaborated.

The OSCE representatives talked with the representatives of the local election commission. They had questions about the number of registered voters, the process of voting and the voter turnout.

They also checked the voter lists and the ballot boxes to make sure everything was in compliance with the standards for democratic elections.

“The election process must be free and fair, that is the main thing. Apart from checking the voter lists and the ballot boxes, we also checked if the polling stations were accessible for people with disabilities. Additionally, we looked through the number of women who vote and the number of women who are appointed at the polling stations and serve. So, there were plenty of questions we had for the members of the election

commission,” Margareta Cederfelt noted.

The OSCE observation leaders stressed the fact that the members of the local election commission are well-trained and properly prepared for the election process: “We had some questions to put to them, the answers of which were already clear for us, but we needed to check that they were trained well and knew the right answers. We got the right answers from them. What is also impressive, there were lot of observers from non-governmental organizations, from the candidates, from the different parties, so, from that point of view, interest in the elections is high throughout the country,” said Vigenin.

As for the reasons behind international society’s interest in the Georgian presidential elections 2018, the representatives of the OSCE explained that it is the last election of this kind. Additionally, international society is interested to see how democracy in Georgia is developing and this presidential election is a good step in this direction.

On October 29, the day after the elections, the OSCE Observers presented a statement of preliminary findings and the relevant conclusions at a press conference.

A final report on the observation of the entire electoral process will be issued approximately eight weeks after the end of the electoral process.

4

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Georgia’s Growth Projections Still Optimistic, but the Downside Risks Are Significant EXTERNAL STATISTICS

BY DAVIT KESHELAVA AND YASYA BABYCH

I

SET-PI has updated its forecast of Georgia’s real GDP growth rate for the third and fourth quarters of 2018. Here are the highlights of this month’s release:

HIGHLIGHTS • Growth projections for the 3rd and 4th quarters of 2018 were revised downward by less than 0.1 percentage point.

They now stand at 7.2% and 6.4% respectively.

• Recently, Geostat published its preliminary estimate of real GDP growth for August, which now stands at 2%. As a result, the real GDP growth estimate for the first eight months of 2018 was reduced to 4.8%.

• Based on the August data, we expect annual growth in 2018 to be 6.3%. Although the growth forecast remains unchanged, we expect a downward correction of the annual GDP growth numbers towards the end of the year.

It is noteworthy that the average real GDP growth in the first two months of the third quarter of 2018 was only 3.3%.

ISET-PI’s growth projection for the third quarter of 2018 is expected to have overestimated the actual quarterly growth rate due to a combination of factors.

Most importantly, our model has not yet fully taken into consideration the negative consequences of the Turkish currency crisis and the announced, or already enacted, tightened credit restrictions (the effect of these was partially reflected

EXCHANGE RATE EFFECT

Despite the deterioration of economic conditions in the wider region – notably the currency crisis and economic downturn in Turkey along with the depreciation of the Russian ruble – Georgia’s external statistics continue to improve.

Exports grew by 16.6% year-over-year in August of 2018 and were driven by significantly larger exports/re-exports of motor cars, cigarettes and cigars to Azerbaijan, increased exports/re-exports of copper ores and concentrates to China, and recovered exports of ferroalloys to Russia (which happened despite the appreciation of the lari against the ruble).

However, Georgian exports to Turkey declined significantly due to the lari appreciation against the Turkish lira and the deterioration of economic conditions in Turkey. During the same period, imports increased by 8.3%. The trade deficit thus deepened by 4.1% compared to the same month in 2017 and reached 492.3 million USD. In addition, both remittances and tourism showed significant yearly increases in August. Money transfers increased by 11.4% in the first eight months of 2018.

These were driven by a rise in remittances from Israel (20.3%), Azerbaijan (51.7%), Italy (28.2%), Greece (9.8%) and France (52.0%). However, remittances

The Real Effective Exchange Rate (REER) appreciated by 1.7% relative to July, and by 4.6% relative to the same month of the previous year. The appreciation of the REER is typically associated with domestic export goods losing competitiveness on foreign markets. Notably, the lari real exchange rate appreciated with respect to the national currencies of two major trading partners – Turkey and Russia. The GEL/TRY and GEL/RUB real exchange rates appreciated compared to the same month of the previous year by 37% and 5% respectively. In August, Georgia’s exports to Turkey declined significantly as a direct result of the lira currency crisis. In contrast, the lari real exchange rate experienced a slight depreciation against the US dollar and the euro (falling by 5% and 2% respectively in annual terms). Overall, REER-related variables had a small negative contribution to the Q3 and Q4 real GDP growth projections.

Source: National Bank of Georgia

in the August growth data).

A number of variables demonstrated significant monthly and yearly changes in August. In particular, the real effective exchange rate appreciated in both monthly and yearly terms, despite the economic difficulties in the region.

Georgia’s external statistics are still quite promising, while higher domestic deposits and the ongoing credit expansion resulted in improved monetary aggregates (however, it should be noted that incoming regulations might have a more pronounced effect on the credit growth figures in the next few months).

from Turkey declined significantly. Were it not for the latter decline, money transfers would have increased by 13.5% instead of 11.4%.

The number of international visitors to Georgia increased by 10.7% in August compared to the same month of the previous year, while the number of tourists increased by 13.9% annually and accounted for 70.8% of all international visitors. According to the model, both tourism and remittances made a significant positive contribution to the GDP growth forecast.

DEPOSITS, CREDIT EXPANSION AND IMPROVED MONETARY AGGREGATES The other group of variables that experienced remarkable monthly and yearly changes and made a significant positive contribution to the Q3 and Q4 forecasts was the volume of domestic and foreign currency deposits in commercial banks. In particular, the total volume of domestic currency deposits increased by 33% annually, while the total volume of foreign currency deposits went up by 15% compared to the same month of the previous year. In addition, despite more restrictive regulations introduced by the National Bank of Georgia, the total volume of

commercial banks’ consumer credit increased by 19% relative to the same month of the previous year.

The credit expansion contributed to an increase in the amount of currency in circulation. All monetary aggregates, including the largest Broad Money (M3) and M2 aggregates experienced significant yearly growth (the M3 and M2 aggregates rose by 17% and 19% respectively). Our model’s outcomes confirm the standard textbook result that an increase in monetary aggregates positively contribute to real GDP growth in the short run.

Our forecasting model is based on the Leading Economic Indicator (LEI) methodology developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian economy, which assumes that all economic variables, including GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published.

For each quarter, ISET-PI produces five consecutive monthly forecasts (or “vintages”), which increase in precision as time goes on. Our first forecast (1st vintage) is available about five months before the end of the quarter in question. The last forecast (5th vintage) is published in the first month of the next quarter.

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6

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Dream Big But Don’t Forget To Deliver!

BY ERIC LIVNY, TBILINOMICS POLICY ADVISORS

P

ART I: THE DREAM

“I never liked Mishiko [Saakashvili] because of how he treated people”, Tamuna Meunargia tells me, “but he knew how to dream big”. We are sitting on the patio of the Legends Tskaltubo Spa Resort, enjoying an exceptionally warm late autumn day. Tamuna is a childhood friend of the owners, Rezo and Andro Dzhishkariani. A classical ‘city girl’, she moved to Tskaltubo two months ago in order to manage the place.

The hotel is the only former ‘sanatorium’ open for business in Tskaltubo once a bustling all-Soviet center of spa tourism, now a ‘sleeping beauty’ in the vicinity of Kutaisi. I am here for a weekend retreat with a group of Caucasus University colleagues. Our only company are a handful of Russian-speaking families, spa tourists from Kazakhstan relishing in Tskaltubo’s radon-rich waters and beautiful autumn colors. However, the high season has just ended, and Tskaltubo is getting ready for a lengthy winter hibernation period.

Previously known as the Military Sanatorium, the hotel is the only Soviet-era resort in Tskaltubo (out of 23) that was not settled – and plundered – by Georgian refugees from Abkhazia (commonly referred to as Internally Displaced Persons - IDPs) in the early 1990s. Rezo and Andro bought it in 2009, having been impressed by Mishiko’s vision to turn Tskaltubo into a crossbreed of Las Vegas and Baden-Baden.

Mishiko dreamed big: Tskaltubo was to be restored to its former glory. Instead of healing the joints of fatty Soviet bureaucrats shipped by a daily train from Moscow, Tskaltubo was now to become an offshore zone, attracting gamblers from all over the (Muslim) world.

The Saakashvili administration amended the Georgian law on gambling establishments, eliminating the licensing fees for casinos located in designated areas, such as Tskaltubo. This was a serious incentive, considering Tbilisi’s licensing fees of 3mln GEL and 1mln GEL in other locations. Plans were quickly developed to rehabilitate the entire 78ha of parks and public recreation areas; repair drainage, drinking water and sewage systems; resettle thousands of IDPs (legally) squatting in 22 Soviet resorts (‘sanatoriums’) and privatize them to new owners; and attract private investors interested in the restoration and operation of nine mineral springs – a critical piece of Tskaltubo’s spa tourism infrastructure.

Adam Smith’s invisible hand would take care of everything else – a shopping mall, restaurants and cafés, nightclubs and beauty parlors, bike rentals and sports facilities.

Rezo and Andro Dzhishkariani wanted to gain a first-mover advantage in the potential Tskaltubo Gold Rush, and quickly staked their claim on one of the best assets in Tskaltubo, the 500-bed, 16ha Military Sanatorium. Other investors followed suit. Zviad Zviadadze acquired Shakhtior, the largest resort in Tskaltubo, once a pearl of Stalinesque architecture; Badri Kakabadze purchased and fully restored the mineral springs #1 and 2; and mineral springs #6 and 9 also sprung to life thanks to another group of private investors.

Legends Tskaltubo Spa Resort, previously known as the Military Sanatorium, is the only Soviet-era resort, out of 23, that is currently open for business in Tskaltubo. 16 are still occupied by IDPs from Abkhazia; six are in various stages of privatization.

PART II. THE REALITY Large parts of Saakashvili’s original dream were implemented, although with a significant delay. Aleko Dadunashvili (39), Tskaltubo’s deputy mayor, gave me a long list of recent accomplishments when we met on a busy Friday afternoon, just prior to Georgia’s presidential elections.

Financed by the World Bank, the rehabilitation of Tskaltubo’s dilapidated

infrastructure started in 2014. A total of 12 large projects have been implemented to date, including constructing new drainage canals, greening of the central park, restoring drinking water and sewage systems. All streets and the main road connecting Tskaltubo to Kutaisi have been repaved and road lights were installed. And, of course, the opening of the Kutaisi International Airport in 2012 made Tskaltubo much more accessible for tourists from an ever growing number of European destinations.

Aided by the general surge in foreign arrivals to Georgia, the number of tourists staying in Tskaltubo has grown over time, from 12,000 in both 2014 and 2015, to 18,000 in 2017, to 19,000 in the first 9 months of 2018. A total of 11 new hotels are now operating in the municipality, not counting private guesthouses and B&Bs. According to Aleko’s rough estimate, at least a 1/3 of Tskaltubo’s 5,658 households currently derive their income from employment in tourism and hospitality services.

So much for the full half of the glass.

On the negative side, of Tskaltubo’s 23 Soviet-era resorts, 16 are still occupied

by IDPs. This is neither good for the IDPs themselves, nor for the local tourism industry.

Another issue is the dearth of local entertainment options, a serious constraint for long-term spa tourists. Casinos are nowhere in sight, which may be fine.

More importantly, tourists have little to do after sunset. The municipality is try-

ing to finance musical performances during the high season, but there is little private sector provision of music, dancing, theater, cultural events, eating and shopping.

This is a classical chicken-and-egg problem. The lack of a vibrant hospitality industry detracts from Tskaltubo’s value proposition, particularly in the low season. And because the high season is neither very high nor long (only 4-5 months), private businesses face an extended payback period for investment in the hospitality industry. A deadlock.

PART III. LESSONS LEARNED Early investors in Tskaltubo’s hospitality industry, such as the brothers Dzhishkariani, may be now beginning to see the light at the end of the tunnel, but the road ahead is still very long. Mishiko’s bonanza will take many more years to materialize, given the lack of a continuous coordination effort by the Georgian government. The WB-financed investment in Tskaltubo’s infrastructure was definitely a necessary condition for Adam Smith’s hand to do its job. But it is far from sufficient.

As long as the flow of tourists staying in Tskaltubo falls below a certain threshold – particularly in the low season – the private sector will not step in to provide modern hospitality services. Tskaltubo municipality’s meager budget and human resources will not be sufficient to address the gap.

Even the largest hospitality operators

in Tskaltubo, such as the Legends Spa Resort or the 4-star Tskaltubo Palace, are not able to deal with the remaining public infrastructure issues. They are currently strained by the need to complete their private infrastructure projects, e.g. renovating additional Soviet-era buildings or constructing new spa, sports and recreation facilities.

Private actors will not be able or willing to invest in marketing Tskaltubo as a prime spa tourism destination in Georgia’s traditional markets, such as Kazakhstan. Promoting Georgia and its tourism destinations has all the attributes of a public good. Individual operators have the incentives to freeride, hence a role for the government in coordinating a joint marketing effort. * * * Spa tourism to places like Borjomi, Sairme or Tskaltubo is Georgia’s best chance to smoothen the seasonal tourism pattern. What is needed is another big dream and a sustained effort to coordinate public and private sector investment in infrastructure and international marketing.

Our toast this week is for dreaming big but also not forgetting to deliver.

ABOUT THE AUTHOR:

Eric Livny is Founder and President at Tbilinomics Policy Advisors. In 2007-2018, he served as President with the International School of Economics at Tbilisi State University (ISET) and ISET Policy Institute. He may be reached at eric.livny@tbilinomics.com.

The Olive Industry is Growing in Kakheti

BY AMY JONES

A

s the wine harvest in Kakheti comes to an end, there is another crop ripening for picking this year. The village of Saqobo, near Sighnaghi, has begun gathering olives that are to be sold both domestically and abroad.

The trees were planted on 300 hectares of land 7 years ago. In 2016, an olive processing plant was opened in the village

by Dutch-Turkish investments as part of the state-run program for Co-financing Agriculture Products Processing Plants.

With an investment of 5 million GEL, it was the first production plant of its kind in Georgia. Equipped with modern manufacturing machinery to create competitive olive-based products, the plant manufactures olive oil and soap through cold distillation.

“Over the past 5-6 years, tens of successful enterprises have been established as part of the state programs. This enterprise manufactures the core product of olive and processes olive, which is very popular in Georgia and abroad,” noted Luri Nozadze, Deputy Minister of Environment and Agriculture.

The market for Georgian Olive Oil is progressing. Giorgi Svanidze, the founder

of Georgia Olive Oil, announced last week that Georgian olive oil will be available at Carrefour supermarket and Agrohub for the first time. Next year, they plan to sell their olive oil in almost all large supermarkets. Georgia has a long-standing history with olives. The first known olive trees were planted by a monk in Atoni in 1879. However, the tradition was lost during Soviet times. Today, olives are grown in Kakheti, Imereti, Guria, and Kvemo Kartli. The olive industry in Kakheti employs more than 100 people, with plans to continue expansion. In the future, Georgia Olive Oil plans to produce pip, pomegranate, and peach to provide products year-round.

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

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Business-Economic Forum to Promote Closer Collaboration between Government & Business Sector

BY ANA DUMBADZE

O

n December 18, 2018, BMC and Area Group will host the Business-Economic Forum ‘Business-Government Contact’ at the Grand Conference Hall of The Biltmore hotel in Tbilisi. Within the framework of the forum, the State and private sector, together with international organizations, diplomatic corps, chambers of Commerce and more than 150 foreign delegates invited from 15 countries, will discuss the State and business-investment projects and establish future partnerships.

The forum aims to demonstrate Georgia's economic and business potential and current and planned state or private projects in the international market, which will emphasize the country’s positive and stable business-economic and investment environment. Within the scope of the Business-Economic Forum, future partnerships with investors will be established and interesting projects will be created.

The forum is held annually and comprehensively summarizes and promotes the relations established between the government and business sector, and stresses the most successful business and state platforms and agencies of the year. For the last five years, the forum has been held in a different format.

GEORGIA TODAY met the Co-founder and Managing Partner of Area Group, Nino Jinjolava, and the Founder and Director of ‘Business and Media Contact,’ Inga Maakharadze, who elaborated on the main purposes and the importance of the forum and discussed its contribution to the close collaboration of the Georgian government and the business sector.

“The one-day forum aims to promote the collaboration between the Govern-

ment of Georgia and the business sector.

‘Successful business for a successful government, a successful government for successful business’ is the main motto of the forum. The embassies and international chambers of Commerce are actively involved in the process, as they pass the invitations to foreign investors for the Forum. Not only the development sector but all the business directions, including agriculture, will be presented at the International Business-Economic Forum. LEPL Enterprise Georgia and JSC Partnership Fund, as government projects aimed at promoting business development, will be also widely presented there,” Jinjolava explained.

Various international speakers and foreign investors are invited to the forum.

B2B meetings will be held between the representatives of the private business sector and interested investors, while presentations and panel discussions will be held about the existing challenges in different fields of business and important issues of the reforms and the investment environment.

Jinjolava says the development company’s participation in the forum was conditioned by the main purpose to promote strengthening the development sector and popularizing their products.

“Area Group’s participation in the above-mentioned project includes enhancing the development sector directly within the framework of the forum. Our company organizes the involvement of the development companies in the forum. We arrange an exhibition space for them, set up the business panels and arrange their meeting with interested investors. Various panels and discussions will be held within the scope of the forum which will give foreign investors an opportunity to directly speak with the representatives of successful development companies, discover the current situation and tendencies in the Georgian market, draw the relevant conclusions and to establish fruitful business

partnerships,” she added.

In the final part of the event, the Gala Awards Ceremony will be held, where all the participants of the forum will be awarded with certificates and an exclusive award as an honorable participant who contributed to the development of Georgia’s economy and business. The Awards Ceremony and the live videos of the participants will be broadcast on the leading TV channels of Georgia.

According to Inga Makharadze, all the successful State projects implemented by various ministries that contributed to the business promotion in Georgia will be presented at the forum.

“This is an annual International Business-Economic Forum, the follow-up of which will be the Awards Ceremony. All the important reforms and draft laws that significantly contributed to the business development in the country will be awarded and all the successful state agencies will be presented by their own stands at the Forum. The high officials of the agencies will also attend. With the help of the Ministry of Foreign Affairs of Georgia, which claimed an Honorary Award at last year’s forum, the diplomatic corps and chambers of Commerce of various countries are invited to the Forum.

As for the Area Group’s participation, it will be holding an exhibition this year, the main purpose of which is to enhance the development sector.

“We think that our collaboration with Area Group will be very fruitful, as Area Group already has experience related to exhibitions and sales. Their experience will make our Business-Economic Forum more attractive and interesting for foreign investors. We think that this platform is yet another opportunity for the development sector to popularize their products, find new partner companies and collaborate with them,” she elaborated.

Business and Media Contact is the organizer of the Business-Economic Forum. As Makharadze noted, special

TV shows and profile videos will be created about all the participant companies of the forum. Imedi TV is the main supporter of the event, and live videos of the participants of the forum will be broadcast on this channel.

Business and Media Contact started releasing international media products, aimed at supporting and popularizing the Georgian business environment and products in the international market.

Special TV shows in this regard are being broadcast on Imedi TV Channel.

“The first international project, Prime Show from Israel covered the business news and the relations between Georgia and Israel in this direction. While preparing this project, we popularized the Georgian business platform in Israel and the most important investment projects implemented between Georgia and Israel.

This cycle of TV shows significantly contributes to attracting foreign investments and promoting our business platform in the international market. At this stage, promoting Georgian-Chinese international relations is also planned, which means active collaboration with international media. Our project gives us an opportunity to meet many foreign investors, and we help them to establish new partnerships with the Georgian businessmen, itself essential for the country’s economy. We do our best to promote Georgian business and raise

awareness about it throughout the world,” Makharadze told us.

The forum will be widely broadcast by the leading international and local media, such as business-analytic TV shows of Imedi Media Holding and TV Companies Imedi and Maestro, First Channel of the Public Broadcaster, TV 1, Rustavi 2, Kavkasia TV, Palitra TV, Ajara TV, Obieqtv, Starvision and the representatives of international TV companies, who will cover the forum outside Georgia. International Television and Broadcasting Company MIR, which operates in post-soviet countries (Ukraine, Lithuania, Latvia, Armenia, Azerbaijan, Kazakhstan, etc), will also cover the forum.

The honorary participants and nominees of the project include: Tbilisi City Hall, the Ministry of Education, Science, Culture and Sport of Georgia, The Ministry of Environmental Protection and Agriculture of Georgia, Ministry of Economy and Sustainable Development of Georgia, Ministry of Finance of Georgia, Business Chamber of Georgia, American Chamber of Commerce in Georgia, Georgian Business Association, German Economic Union in Georgia, Chamber of Commerce and Industry of the People's Republic of China, Japanese Chamber of Commerce and Industry, and the diplomatic corps of various countries.

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BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Kaspi Innovations Center Tech Park & Vocational College

BY SAMANTHA GUTHRIE

O

n Friday, October 26, Georgia’s Minister of Economy and Sustainable Development Giorgi Kobulia, Vice Prime Minister and Minister of Regional Development and Infrastructure Maia Tskitishvili, and Minister of Education, Science, Culture and Sport, Mikheil Batiashvili were in the central Georgian town of Kaspi to visit the site of the new Innovations Center Tech Park and Vocational College. They were accompanied by the Majoritarian MP for the Shida Kartli region, Irakli Mezurnishvili, and selected regional youth.

Kobulia noted that it is important that the services and benefits of the Innovations Center will reach beyond the Kaspi district to the whole region. "The construction of such centers is very important for our country - not only in term of economic development but in general, it is a strong driving force to encourage our young people to gain knowledge, develop, get acquainted with new technologies, and be creative. This greatly facilitates the entire population to find full intellectual realization and to further develop their potential. I think this will greatly contribute to the economic development as well as to the social welfare and human well-being,” said Kobulia.

The Tech Park complex will be constructed in Kaspi by the Municipal Development Fund of the Ministry of Regional Development and Infrastructure of Georgia. Construction is scheduled to

Image source: Ministry of Economy and Sustainable Development

begin in February of next year. Currently, the Ministry is searching for a company to construct the facility – an open tender was announced October 10 and will close on November 9. Constructions plans include a two-story building with educational classroom space, a Fab-Lab offering digital creation and 3D printing services, conference and auxiliary halls, co-working spaces, and support facilities designed for 200 students. The entire Tech Park will be developed for various activities and will include a parking lot and landscaping. The Innovations Center and Tech Park will be fully accessible

for people with disabilities. The entire complex will cost an estimated 2,156,093 GEL ($800,034) and is funded by the European Investment Bank.

Describing the process of designed the Tech Park, Tskitishvili said, “We had a very good meeting with the youth of Kaspi Municipality. It is important that both projects, the vocational college and the tech park, will be completed simultaneously, which will enable the youth of Kaspi to study and work in practice too. It means that they will be able to combine professional education with the opportunities that the tech park pro-

vides for them. Kaspi Tech Park, as well as Tbilisi Tech Park, provides young people with access to technologies: 3D printers, various machine tool stations and all the equipment which the Tech Park is to be equipped with. The youth will be enabled to participate in grant financing to implement their projects and share information and knowledge of experts. Most importantly – everything will be located in Kaspi and nobody will have to leave for Tbilisi. It will be an educational center for technological education and development that will unite the youth and give them the oppor-

tunity to realize their potential completely.”

The vocational college will offer courses based on regionally in-demand professions. The institution will focus on applying new technologies and collaborating with the tech park.

“I am sure that we have great potential in the region to develop th innovative fields. This is the field by means of which we will be able to overcome and decrease employment, especially amongst the youth. I am glad that such a platform is being formed in the Kaspi region and that I am part of it,” said Mezurnishvili.

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Image source: OGT

Omega Group Resumes Work

BY THEA MORRISON

O

mega Group has been allowed to renew production after it paid part of its debt to the State, which accumulated due to its not paying taxes for four years.

Georgia’s Revenue Service (RS) told media that after paying GEL 1 million to the budget, the accounts of the Omega Group Tobacco (OGT) were unfrozen and the company purchased excise stamps in accordance with Georgian legislation.

“On October 26, the company OMG transferred a part of the debt, GEL 1 million, to the state budget.

The company asked for permission to renew operations for the purpose of maintaining production and existing jobs. The Revenue Service satisfied the request of the company,” the statement of the RS reads.

The agency says that now Omega Group has to present a schedule how it is going to pay back the remaining debt, which is up to GEL 51 million.

The previous statement of the RS reads that OGT first violated the obligation to pay taxes in October 2014, which initially amounted to 18,444 GEL, which increased year by year.

The agency explains that as of January 26, 2016, OGT's tax liability increased to GEL 3,402.943. At the same time, the payer's request was satisfied and a new schedule was set up which, according to RS, was violated almost every month.

The RS said the company applied to them 11 times to postpone compulsory measures against them and all their requests were satisfied. However, by the end of 2017, the taxpayer was no longer paying taxes and the debt had reached GEL 38 million.

In March 2018, the Revenue Service appealed to

Tbilisi City Court to obtain a permit for the sale of seized property of OGT. In June, the Tbilisi City Court satisfied the request of the Revenue Service, which was appealed by the company. On the decision of the Appeals Court on 25 July 2018, the company's complaint was not satisfied and the Revenue Service was granted permission to sell the sequestered property of Omega Group.

Omega Group Tobacco work was suspended for three months before they paid GEL 1 to the budget.

The company accused the authorities of pressure, saying the reason was Omega-owned oppositionminded Iberia TV Company, which suspended broadcasting this month due to lack of finances.

The authorities rejected the accusations, saying everyone has to pay taxes and if Omega avoids this responsibility, proper legal measures would be carried out, including selling their shares.

General Secretary of the ruling Georgian Dream (GD) party and Mayor of Tbilisi Kakha Kaladze stated every job is important for the government.

“As soon as Omega started paying taxes, it was allowed to resume working… Business is very important for us. It creates welfare in the country, contributes to economic development and employs people,” he stated.

Economic expert Soso Archvadze says it is a very positive step that Omega started paying the debt.

According to him, the company realized that everyone has to pay taxes and the state’s approach in this regard is quite strict.

“The fact that the company started paying debt before the October 28 presidential elections and not after is even better. This means the company is well aware of its responsibilities. Everyone has to pay taxes,” he said.

The expert says that Georgia has a very liberal tax regime and the state's attitude towards business requires a similar attitude from the companies.

Frida Kahlo Exhibition to Open in Tbilisi

BY AMY JONES

T

he exhibition “Diego and Frida. A smile in the middle of the way” will open in Tbilisi October 30 at the Georgian National Museum, following significant public interest. Presented by the Embassy of the United Mexican States in Georgia and the Ministry of Foreign Affairs of Georgia, the exhibition depicts the personal life of the well-known couple.

Frida Kahlo was a prominent Mexican artist famed for her vibrant colors and progressive ideas, especially regarding feminism and the LGBTQ movement.

Visitors can see over 100 photographs depicting the daily life of Frida and Diego, a relationship spanning 25 years from their marriage in 1929 to

Photo source: blog.teacollection

Frida’s death in 1954. The exhibits cover all angles of their relationship: from love to hatred, and togetherness to separation.

The exhibition will run until November 8 from 10 am to 5.30 pm Tuesday to Sunday. Admission to the opening event at 5 pm on October 30 is free.

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GEORGIA TODAY

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Sector at a Glance: The Georgian Sheep Market also higher compared to the previous year and exceeded to 300 million GEL. This indicator is 85% higher compared to the previous year (162 million GEL).

INTERNATIONAL PRICES International prices decreased in September 2018. The Food Price Index, measured by the Food and Agriculture Organization (FAO), decreased by 7.4% in September 2018, compared to the previous year. Prices dropped for the following sub-categories: Vegetable Oil (-21.5%), Sugar (-21%), Dairy (-14.6%), and Meat (-4.5%).

TRADE HIGHLIGHTS

Source: Ministry of Finance, 2018; Note: 2018 data refers to the period January-September

B

ack in 2015, the Georgian sheep market was in the spotlight due to the increased demand for sheep from Arabic countries. Prior to 2015, Azerbaijan was the most important export destination for live sheep, while in 2015, in addition to Azerbaijan, Georgian sheep were exported to the United Arab Emirates, Jordan, Lebanon and Saudi Arabia. Current trends in the trade data show that exports of live sheep are decreasing, while exports of sheep meat are on the rise, which is a sign of sheep market development and increased potential for higher value added in the sheep value chain.

While generally switching from primary exports to more value addition is good news for the sector, the imports of live sheep and sheep meat dramatically increased in 2018, which might negatively affect domestic production. Particularly dangerous is re-export of sheep meat which requires strict control to ensure that imported foreign sheep meat is not re-exported as Georgian sheep meat. In the absence of control, there are food safety related risks which might adversely affect domestic sheep farmers and Georgia’s relations with its trade partners as well.

DOMESTIC PRICES Month-on-month prices went almost

unchanged in the category of food and non-alcoholic beverages (-0.1%). Compared to September 2017, the prices of food and non-alcoholic beverages increased by 1.8%, contributing 0.55 percentage points to the annual inflation rate. In September 2018, prices for fruit and grapes dropped by 9.9% compared to September 2017. According to Geostat data, prices declined mostly for plums (-35%), kiwi (-32%), apples (-24%), pears (-17%), lemon (-16%), and grapes (-14%).

The low prices of fruit and grapes might be the result of a comparatively good harvest and increased production in 2018. 2017 was a bad year in terms of harvest for Georgia’s agriculture; a spring frost followed by a summer drought created unfavorable weather conditions for deciduous fruit trees. In addition, the Asian Stink Bug, an agricultural pest which attacks fruit trees and vegetables, damaged the crops. Consequently, we saw a significant annual decrease in production of the following crops in 2017: apples (-70%), plums (-55%), lemon (-53%), and pears (-48%).

2018 seems to be a good year not only for plums and apples, but for grapes as well. As of today, more than 230 000 tons of grapes have been processed; that is 72% higher compared to the previous year (134 000 tons). The revenues of Georgian grape growers this year were

During September 2018, Georgia’s agricultural exports (including food) amounted to $59 mln, which is almost a quarter of total Georgian export value.

While comparing this indicator to September 2017, it is down by 4%. As to imports, in September 2018, Georgia’s agri imports reached $88 mln, which constitutes 16% of total Georgian imports.

Year on year (compared to September 2017), agricultural imports shrank by 7%.

EXPORT DIVERSIFICATION As already mentioned in our previous publications, the country’s export/import diversification can be measured by the Herfindahl-Hirschman Index (HHI), which ranges from zero to one. The lower the HHI, the more diversified trade is.

In the last month, Georgia’s export diversification stayed at the same level (HHI=0.11) as in June 2018, while export diversification by product slightly decreased.

opment Agency, the Government of Georgia plans to support organic production by offering tax relief to organic producers. According to the Ministry of Environment Protection and Agriculture (MEPA), organic production is an important component of the green economy, which aims for sustainable development without degrading the environment.

For more information: https://commersant.ge/ge/post/biomeurneobebistvis-shegavatiani-sagadasaxado-rejimidawesdeba

RURAL DEVELOPMENT PROGRAM The Ministry of Regional Development and Infrastructure announced the renewal of the state support program for rural development. According to the ministry representative, currently the ministry is working on the selection of projects to be implemented in regions.

For more information: https://bpn.ge/ ekonomika/49556-regionuli-ganvitharebisministris-moadgile-2019-tslidan-soflis-mkhardatceris-programa-aghdgeba.html?lang=ka-GE

IMPORT DIVERSIFICATIONLIGHTS In September 2018 Georgia performed quite well in terms of its import diversification by country. The HHI index fell to its record low (HHI=0.09) since January 2017 mainly due to the shift from Ukrainian market to other trading partners. Import diversification by product also increased, yet it has remained more concentrated than usual since last July.

DEVELOPMENT OF ORGANIC PRODUCTION AS PART OF THE GREEN ECONOMY With a grant from the Austrian Devel-

6th Volume of Fuckup Nights Tbilisi Held at Fabrika

S

ometimes, the best stories start with wrong decisions!

On October 25, the sixth volume of Fuckup Nights Tbilisi took place at Fabrika, with interesting speakers and even more interesting stories of failure.

The sixth volume of Fuckup Nights Tbilisi was different from its predecessors, as, with Fintech.ge's support, all four speakers of the event were the representatives of the financial technologies’ field and accordingly, the failure stories were related to this direction.

The speakers of Fuckup Nights Vol.6 included: Shota Giorgobiani, Co-founder & CEO, Optio.Ai David Mizandari, Co-founder & CEO, Biletebi.ge Levan Labartkava, Entrepreneur, Business Consultant Koba Kurdadze, Founder & CEO, UniPAY After the speakers’ speeches and pres-

entations, a Q&A session was held and the attendees of the event had an opportunity to get answers to their questions from successful people who know what failure is and have experience overcoming the difficulties and challenges.

With the partnership of the Tbilisi Startup Bureau and Impact Hub Tbilisi,

Fabrika was proud to host the sixth event of Fuckup Nights Tbilisi.

"We try to present professional failure in a different way and show everyone that failure is a part of knowledge and is valuable experience that is worth talking about. In general, each event of Fuckup Nights brings together a variety

of people with different professions and experiences, but this time we decided to talk about a particular direction, namely Fintech, which is the most relevant and interesting field in the era of digital technologies,” the event organizers said.

The partners of Fuckup Nights Tbilisi Vol. 6 included the Friedrich Naumann Foundation for Freedom South Caucasus, Grant Thornton Georgia, Kedari Ventures, Blue Ocean, Snap Fitness Georgia, adjaranet.com and Estrella Damm.

The movement Fuckup Nights was launched in Mexico in 2012 and nowadays represents a global movement and series of events, within the framework of which once a month, 3 or 4 successful people share their experience of professional failure with a wider audience.

The speakers of Fuckup Nights are people who have experienced failure yet did not give up: they learned and developed from their own mistakes, now being ready to share their experience with

others and give them insight into their own mistakes.

The project is intended for entrepreneurs, businessmen, executive directors, managers, creative professionals, students, and for everyone who wants to learn from others' mistakes and spend time in a good environment surrounded by interesting people.

Learning from your mistakes makes you smart, but learning from others’ mistakes makes you a genius – that is the main motto of Fuckup Nights.

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Customer Seminar by AG MELCO Elevator Georgia on Mitsubishi Elevators, Escalators, AirConditioning & Factory Automation

ADVERTORIAL

A

G MELCO Elevator Georgia Co. L.L.C., exclusive distributor of Mitsubishi Elevators and Escalators, hosted a customer seminar on October 11, 2018 at The Biltmore hotel, Tbilisi.

Leading developers, consultants and engineers of Georgia attended the insightful and interactive seminar. The event was organized to explain the technical superiority of the Mitsubishi Vertical Transportation System and announce the addition of the new solution to the existing portfolio – AirConditioning.

AG MELCO Elevator Georgia Co. L.LC. is a fully owned subsidiary of AG MELCO Elevator Co. L.L.C., UAE which is a joint venture with Mitsubishi Electric Corporation, Japan and operational in 23 countries. AG MELCO offers design, sales, installation, maintenance and modernization solutions and takes great pride in their highly precise installations and strict compliance to Japanese standards of service procedure.

AG MELCO-Georgia has been operational for more than a decade and within this time-span has gained the trust and confidence of reputed clients through their exceptional service and high-quality products.

Through the event, AG MELCO-Georgia shared comprehensive information with the audience regarding products and services, a company overview, latest technologies, eco-friendly solutions and more.

Mr. Abdul Mujeeb, CEO, in his key-note address, highlighted the company philosophy of adapting a business model to develop long-term relationships to sustain profits. The utmost priority is always given to customers, followed by the employees and lastly, the profits. “Like in agriculture; you have to first sow, nurture, protect and then reap the benefits,” stated Mr. Mujeeb.

Mr. Hiro Ishiyama, Deputy CEO, addressed the attendees on how Mitsubishi Electric Corporation sets the world’s highest standards in elevator and escalator innovation, efficiency, safety and comfort.

Other speakers from AG MELCO Corporate office included Mr. Yoshitaka Asaba, Strategic Planning; Mr. Taha Mahmood, GM - Global Sales & Marketing, and Mr. Antony Duarte, GM - Global Service Sales and Modernization.

Mr. Yoshitaka Asaba and Mr. Taha Mahmood emphasized the eco-friendly components of Mit-

subishi Elevators and AG MELCO’s Global operations and processes. Mitsubishi firmly believes and considers environment protection a companywide priority. A range of eco-friendly products and components are available for Mitsubishi Elevators and Escalators, such as the PM motor, Regenerative Converter and Variable Traveling Speed Elevator system which all increase energy efficiency during their operational times.

Mr. Antony Duarte explained why Mitsubishi takes pride in having the lowest breakdown rate and strongly advised and recommended that service and maintenance should be through authorized distributors of Mitsubishi in the region, to ensure a safe, smooth and comfortable ride for years to come. Local third-party companies tend to use spurious spare parts and under-qualified technicians, not only risking the lives of the passengers but also reducing the life of the product.

AG MELCO-Georgia’s latest addition to its product portfolio is Air Conditioning Systems for residences and commercial buildings (including hotels and shopping centers). The systems provide process cooling for automotive, manufacturing, food, logistic, plastic molding, and pharmaceuticals.

Precise temperature, humidity control and filtration for information and communication technology (Data centers and Telecom applications) give an added value to the portfolio. Ms. Tatiana Bitner, Customer Manager at Mitsubishi Electric – Russia briefed the audience on the solutions and benefits.

Mr. Husnu Dokmeci, Director of Business Development for Factory Automation, Mitsubishi Electric – Turkey shared insightful details regarding Mitsubishi’s Factory Automation solutions which includes Programmable controllers, AC servo systems, inverters, industrial robots, processing machines, and more.

An interactive Q&A session followed through which the attendees were able to have all their queries solved and clarifications sorted through the expert panel. Mr. Jegannath Mariappan, Branch Manager – Georgia conveyed the vote of thanks for the valuable time given by the guests to attend the informative seminar.

AG MELCO ensured the attendees were given a detailed overview of AG MELCO’s Global Operations, Network, Japanese standard of Service procedures and information regarding ‘green technologies’ adopted by Mitsubishi Electric Corporation, to ensure their solutions contribute to the realization of a sustainable society.

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GEORGIA TODAY

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Giorgi Kobulia Meets with Vice President of Hitachi

BY SAMANTHA GUTHRIE

O

n Friday, October 26, Georgia’s Minister of Economy and Sustainable Development Giorgi Kobulia met with senior vice-president of Hitachi, Yasuo Tanabe, who has had a long career in international trade policy making.

Describing the meeting, Kobulia said “During the meeting with the vice president of the renowned Japanese corporation, we discussed investment opportunities in Georgia. It is true that the course of our government, in terms of simplifying the tax regime and liberalizing the business environment is correct, as our foreign guest said that this factor is one of the main advantages over other countries in the region. We welcome both Hitachi and other Japanese investors to the Georgian market, for which we will continue to work in this direction. We discussed that Hitachi will study the Georgian market and come back with specific proposals.”

The Georgian side introduced national economic trends, tax and investment legislation, and major investment projects in the country, including construction, real estate, heavy industry and

Image source: Ministry of Economy and Sustainable Development

tourism, and reported that the Japanese representatives were very interested in these details.

After the meeting, Tanabe said that during his visit to Georgia, he took the opportunity to study the economy and market of the country. “We know that

Georgia has a very good geographical location and it is possible to use this as an advantage. We also know that many reforms are being implemented in Georgia to make it more attractive to foreign investors,” he noted.

Tanabe explained that Hitachi is a large

conglomerate and is represented in many business sectors, including information technologies, public and industrial infrastructure, energy systems, home appliances, motor parts, and more.

“So, I think what we can do in Georgia,” Tanabe continued, “is to use these reforms

focused on politics and profitable geographical policies. We can offer digital solutions on the Internet and an artificial intelligence base and provide the Georgian economy with relevant services that will help develop its higher levels.”

Also attending the meeting was Deputy Minister of Economy and Sustainable Development Genadi Arveladze and Director of the Produce in Georgia program, Mikheil Khidureli.

Georgia and Japan are currently in the process of negotiating an Agreement on Protection and Promotion of Bilateral Investments between the two countries.

In August, the 4th round of negotiations on the document was held in Tbilisi.

Initial consultations between Georgia and Japan began in May 2017. The agreement is designed to facilitate investments between Georgia and Japan and will strengthen trade-economic ties, encouraging Japanese investors to consider Georgia as a strong, reliable investment option.

Japan is already one of Georgia’s most active investment partners. The countries have cooperated since 1997. From 2007-2017, Japanese investments in Georgia totaled $152.16 million. Investment has recently been ramping up: in the first quarter of 2018, Japanese investors invested $16.21 million in Georgia, up 96% from the first quarter of 2017.

New Radisson Collection Hotel Opens in Tsinandali

BY THEA MORRISON

A

new hotel complex of the Radisson Collection of the Silk Road Group has been opened in Telavi Municipality, Kakheti region, 79 kilometers east of Georgia’s capital Tbilisi.

The five-star hotel has 142 rooms and also features a library, outdoor and indoor restaurants, a spa-center, swimming pool and a fitness club, an amphitheater, and a concert hall. It also has a winery equipped with the latest technology and restored vineyards.

The project amounted to $35 million, of which $10 million was paid by the state-owned Partnership Fund. The project was also co-financed by TBC Bank.

The hotel was opened by the Prime Minister of Georgia, Mamuka Bakhtadze who said the place is unique and special as it consists of a mix of old and new architecture, with the hotel being located near the Tsinandali Palace Museum of Prince Alexander Chavchavadze, a memorial to the founder of Georgian Romanticism and an important cultural attraction in its own right.

“It is no coincidence that the best traditions of Georgian culture continue here in Tsinandali, near the Chavchavadze Palace, where cultural life brimmed with activity as early as the 19th century. In addition, classical Georgian viniculture originated here on the Tsinandali Estate and here our winemaking traditions spanning 8,000 years continue today, with European viniculture also taking roots," the PM said.

Image source: gov.ge

Bakhtadze thanked the Silk Road Group for implementing the project, and the Partnership Fund of Georgia, the project's financial supporters, and every representative of different branches of art involved in the creation of the beautiful infrastructure.

"This unique place offers everything to make Tsinandali an attractive year-

round destination for visitors and tourists. I am convinced that this exceptional complex with its hotel, concert halls, historical vineyards and wine, will make a tremendous contribution to the promotion of our country, including its positioning the country as the cradle of wine,” he added.

The Prime Minister underlined that

the government always supports such initiatives and projects, adding Georgia is the regional hub and should be a cultural center too.

“Projects of this scope always have a spillover effect, such as new jobs, attraction of private investments, development of tourism, services, and businesses, which make up one of the key precondi-

tions of the country's progress,” he added.

The Silk Road Group (SRG) is one of the leading private investment groups active in the Caucasus and Central Asian regions with participation in different sectors of the Georgian economy, including transportation, trading, real estate, retail, telecommunications and banking.

BUSINESS

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

13

Forbes Magazine: "No Company Can Offer as Much as HUAWEI”

and enhanced in the new models of HUAWEI. Through the 4200 milliampere battery and 40W fastest charging technology, it is now possible to charge 70% of the battery in 30 minutes.

• The HUAWEI Mate 20 Pro is the first smartphone in the world to have support relevant to 4.5G LTE Cat. 21 standard, giving the users an opportunity to benefit from 1.4 GB/s download speed. It also has the fastest Wi-Fi connection, allowing for max. 10 seconds downloading.

• HUAWEI Mate 20 Pro has the support of 3D Face Unlock. Through this feature, it is possible to identify the user in just 6 seconds. A camera with 3D in-depth sensor is installed on the front, which allows the device to see even the smallest details of the subjects with the highest precision.

• HUAWEI Mate 20 series is also distinguished by a portrait-colored video regime created on the basis of AI which allows it to isolate the image of a person and divide it into colors in the way that emphasizes their personal characteristics. The lighting system created on AI identifies videos with mutual themes and automatically montages them.

• With the fingerprint access installed directly in the screen, 3X optical zoom, 4K support, an innovative processor, unique design, innovative camera technologies and limitless AI possibilities, the HUAWEI Mate 20 series creates perfection in an industry of innovative technologies.

HUAWEI products and services are available in over 170 countries and are used by a third of the world's population. 16 research and development centers operate throughout the world, in the USA, Germany, Sweden, Russia, and India and China.

HUAWEI Consumer BG is one of HUAWEI's three business units, and their main direction is the production of smartphones, personal computers, tablets, and cloud services. HUAWEI Global Network is based on 20 years’ experience in the telecommunication business and offers innovative technologies for consumers worldwide.

F

orbes Magazine has responded to the release of the HUAWEI Mate 20 smartphones. The English edition of Forbes writes: “We are sure that no company can offer as much as HUAWEI offers through its new smartphones.”

Alongside the Forbes’ appraisal, the HUAWEI Mate 20 series has become a topic of discussion among experts and other foreign editions that unanimously recognize the superiority of HUAWEI's innovative devices: “The features of new HUAWEI Mate 20 Pro make me wanna change my Iphone.” (www.businessinsider.com) “HUAWEI has created the best Android device in the world.” (bgr.com) “The HUAWEI Mate 20 Pro - Excellent design and the best innovation among the smartphones.” www.forbes.com) “HUAWEI Mate 20 and HUAWEI Mate 20 Pro, undoubtedly the highest level.” (www.androidheadlines.com) It was unexpected for everyone when HUAWEI beat Apple's sales and occupied the second place, but after the presentation of the new Mate 20 series, experts predict HUAWEI will make first place and replace Samsung.

Why the unconditional leadership of the HUAWEI Mate 20 series?

• The most refined and attractive design, with

unique and innovative colors; • The HUAWEI Mate 20 series is equipped with the most innovative and small 7 nanometer processor - Kirin 980, that works more efficiently by 20% and consumes less time by 40%.

• The new Kirin 980 gives customers improved graphics by 46%. Additionally, while playing games, AI can determine the working pressure and find resources for optimal image and quality. In comparison with the previous generation, the Kirin 980 provides the fastest loading of applications.

• The old tradition is preserved in the new smartphone, and all three main cameras are created in collaboration with Leica, giving users an opportunity to capture objects at minimum distance and focusing at even 2.5cm from the lens. Unlike the previous models, there is a more enhanced lens with a broader view (16 mm).

• The HUAWEI Mate 20 series is equipped with operative system EMUI 9.0 based on Android Pie, through which users can access all the working and entertainment functions of the smartphone with a simple touch to the screen. EMUI 9.0 is followed by the GPU Turbo 2.0 – with more support for game-lovers.

• Yet another important function of the system is HiVision, which enables the camera to capture the famous attractions, paintings and deliver the users the information about them.

• The working time of the battery is improved

14

CULTURE

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

Russia’s Economic Offensive in Central Asia

BY EMIL AVDALIANI

R

ecent months have seen a wave of Russian economic moves in Central Asia which are likely to increase Moscow’s geopolitical clout in

the region.

On October 19, the Russian President Vladimir Putin, with a large team from almost every sector of the Russian economy, visited Uzbekistan. The state visit brought about a record number of longterm and short-term strategic projects, the largest of them an $11 billion nuclear power plant. Overall, Putin’s team signed 785 agreements and memorandums, altogether worth $27.1 billion, which is the biggest overall sum that the Uzbek President Shavkat Mirzyoyev has signed since he came to power in 2016. This sum of potential investments even outstrips what Mirzyoyev reached when he visited China.

This Russian economic offensive in Uzbekistan followed other political decisions made by Moscow in the past year and a half. Russia, for instance, agreed to military concessions to Tashkent that up until that point were available only to full members of the major Russia-led organizations such as the Eurasian Economic Union (EEU) and the Collective Security Treaty Organization (CSTO).

Russia began to sell military hardware to Tashkent at domestic prices, which makes Uzbekistan the only non-CSTO country in the post-Soviet enjoying this privilege.

Both countries have increased their

military cooperation and held their first bilateral military exercise in 2017, after a 12-year pause under the former Uzbek President Islom Karimov.

At the same time, Russians have made interesting moves in the neighboring Turkmenistan.

Ashgabat’s relationship with Russia’s Gazprom has always been difficult over gas which the country sold to the Russians. In early January 2016, Gazprom stopped purchasing Turkmen gas. This put Ashgabat in a difficult position, with no other major buyers except for China.

This changed on October 9, 2018 when Gazprom CEO Aleksei Miller visited Turkmenistan and both sides agreed Gazprom will resume buying Turkmenistan’s gas from January 1, 2019. It is also interesting that the agreement follows the resolution on the Caspian Sea. Officially, no third party can intervene if Turkmenistan and Azerbaijan decide to build the Trans-Caspian Pipeline (TCP).

Fear on the Russian side that Ashgabat might succeed in selling its resources to other regions might have been a driver behind Miller’s visit and the agreement.

In a way, this Russian economic offensive in the Central Asian region is not surprising. You increase your influence where it is possible, where geopolitical space allows you to do so. When looking at the map of Russia, there are three discernible geopolitical areas which have historically attracted Russian economic and political attention: Eastern Europe, the South Caucasus and Central Asia.

However, over the past decades there have been developments which show how constrained the Russian ability to expand its influence in some regions of

Image source: news.bitcoin.com

its neighborhood has become.

The current crisis between Russia and the West, the product of many fundamental geopolitical differences in both the former Soviet space and elsewhere, is likely to remain well into the future, barring large concessions by one of the sides. Thence come Russian failures on its western border which diminished Moscow’s projection of power even

throughout what constituted the former Soviet Union territory. Essentially, Russia’s modern western borders are nearly at the same level as it was in the prePeter the Great period in the late 17th century.

Russia has also reached the limit of its geopolitical expansion in the South Caucasus. Armenia, due to its difficult relations with Azerbaijan and Turkey, will

remain Moscow’s close ally, while Azerbaijan is unlikely to join Russia-led unions as Baku has its own resources to build a more or less independent foreign policy. Even with relations with Georgia, both Tbilisi and Moscow have reached a stage where neither of the sides wants to concede.

It is clear that Georgia is strongly proEuropean due to the popularity of political parties and more importantly, large anti-Russian sentiment. In Ukraine too, Moscow is very unlikely to push further with its military involvement in Donbas and hopes for change in Kyiv which might bring in a pro-Russian government. Large-scale geopolitical disturbances could usher in changes positive for Moscow, but there is no real basis for this as the US and EU pressure on Russia is increasing.

Thus, the successful western expansion into what was always considered the “Russian backyard” halted Moscow’s projection of power and diminished its reach to the north of Eurasia. True that this does not mean that Russia will not be playing an important role in the affairs of Ukraine or the South Caucasus countries, but it nevertheless shows that the only region out of three crucial geopolitical arenas where Moscow can still hope for more than it has is the Central Asian region. Other geopolitical competitors such as China might hinder Russian advances, but still there is a much larger space for Russian actions.

Unlike in Ukraine or the South Caucasus, Western influence in Central Asia is minimal, making it the only region Russia can hope to enhance its position in.

Education Minister Promotes Georgian Language in Marneuli

BY SAMANTHA GUTHRIE

W

ith the support of the Government of Georgia, the Embassy of Bulgaria, and the European Union in Marneuli, the International Education Center Georgian-language private school and kindergarten "Future" was opened in Marneuli. The Minister of Education, Science, Culture and Sport, Mikheil Batiashvili visited the new school and met with teachers, students and parents.

Batiashvili emphasized the importance of the school being taught in Georgian and that there are young teachers. He thanked donors and the private sector for supporting the success of the project.

"In the multiethnic environment of Marneuli, Georgian language education has state significance," said Batiashvili.

The modern, high academic standards for teaching are supported by the educational environment of "Future." The school is staffed by young and experienced teachers from the local area and the capital. Currently, the school has about 150 students, the majority of whom are ethnic Azerbaijani.

The school, with a capacity of 500 students, has been operating since September.

Photo: Ministry of Education, Science, Culture, and Sport

CULTURE

GEORGIA TODAY

OCTOBER 30 - NOVEMBER 1, 2018

15

U.S. National Security Advisor John Bolton Visiting the Caucasus consultations." He says no date has been set yet, but noted that Trump and Putin are also planning to meet in Paris on November 11 at events marking 100 years since the end of the first World War. Eurasianet quotes the director of the Georgian Institute of Politics, Kornely Kakachia, as explaining that Georgian government officials are likely to steer conversations towards issues such as security cooperation rather than being drawn into a U.S.-Iran conflict. “Georgia remains a steadfast supporter of U.S. initiatives. However, due to permanent pressure from Russia it can't endanger its national interest, which seeks pragmatic and balanced relations with Iran. So, as in the last decade, Tbilisi will try to find a delicate balance between its regional interests and those of the West,” said Kakachia.

While in the Georgian capital, Bolton met with Prime Minister Mamuka Bakhtadze, Vice-Prime Minister and Minister of Internal Affairs Giorgi Gakharia, and Defense Minister Levan Izoria, among other senior officials.

After their meeting, Bakhtadze tweeted: “I just met with good friend of #Georgia @AmbJohnBolton. We are grateful for his steadfast support. The

Photo: Ministry of Internal Affairs

BY SAMANTHA GUTHRIE

U

nited States National Security Adviser John Bolton is in Tbilisi today. He spent October 24 in Baku, and the 25th in Yerevan. It marks the highestprofile visit from a Trump administration official to all three South Caucasus countries.

None of the three countries currently have a U.S. ambassador.

Bolton’s visit has focused mainly on regional security, particularly in relation to dealing with

#Georgia-#US relationship is at an all-time high and we are further exploring opportunities to strengthen existing #Synergy.”

According to Bakhtadze, the meeting focused on the possibility of the Georgia-U.S. free trade agreement and “the most painful issue for Georgia, the catastrophic humanitarian situation in the Georgian occupied regions, as well as the peace initiatives [offered by the central Georgian government] which are meant to help us, the Georgian government, respond to existing security challenges.” He said Bolton was supportive, and promised that Georgia is highly strategically important to the U.S. Speaking with reporters, Bolton also mentioned that he “was told [by representatives from the U.S. Chamber of Commerce] that there is a certain level of corruption in Georgia, but this level is the same as in many other developed countries, in the US among them.”

Earlier in the day, Bolton met with Georgian Defense Minister Levan Izoria to discuss the 20162019 agreement between the Georgian Defense Ministry and the US Defense Department.

Bolton plans to leave the Caucasus tomorrow.

major regional players Iran, Russia, and Turkey.

Bolton has long been a staunch opponent of Iranian nuclear ambitions and pushes against the country’s attempts to gain influence and power.

Eurasianet’s Joshua Kucera writes, that Bolton is “expected to try to enlist the region's three governments in Washington's campaign of isolating Iran.

But leaders in the Caucasus, wary of confronting Tehran, will likely instead be promoting their own interests to an administration that has thus far largely neglected the region.”

During a press briefing in Tbilisi, Bolton announced, "We have invited President Putin to Washington after the first of the year for, basically, a full day of

Georgian Schools Among Those Awarded the European Quality Label 2018

BY SAMANTHA GUTHRIE

T

he EU-funded eTwinning Plus project has announced the schools awarded the European Quality Label 2018. The European Quality Label is a second mark of success and indicates that a project conducted within the eTwinning program has reached a certain European standard.

It is awarded by the Central Support Service (CSS) to teachers in a project which has been proposed for the European Quality Label by at least one National Support Service, after a screening process and includes at least two partners that have received the National Quality Label. The European Quality Label is awarded once a year.

A total of 1,204 projects received the 2018 European Quality Label for outstanding work, including schools and teachers from four Eastern Neighborhood countries: Armenia, Georgia, Moldova and Ukraine.

A detailed list of the distinguished schools, teachers and the projects that helped them obtain their Quality Label can be found here. 24 projects in Georgia were awarded, including projects implemented by teachers in public schools in Tbilisi, Kutaisi, Tsalenjikha, Gurjaani, Baghdati, Kareli,

Photo: eTwinning

Gori, Zugdidi, and Khashuri.

The eTwinning Plus project offers a platform for staff (teachers, head teachers, librarians, etc.), working in a school in an EU Eastern or South Neighborhood country (Armenia, Azerbaijan, Georgia, Moldova, Tunisia, Ukraine, Jordan and Lebanon). The safe, online platform allows staff to connect with counterparts in European schools, facilitating communication, collaboration, joint project development, and information sharing.

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