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BUSINESS WEEK July 7, 2014 #61

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July 7, 2014, Issue 61

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Georgia and Russia meet to sort out EU vs CIS free trade

GEORGIA MULTI-FUNCTIONAL PORT EARMARKED FOR ANAKLIA

“CONTEMPORARY BANKING: THEORY AND PRACTICE”

v. Javakhishvili Tbilisi State University has hosted the presentation of a new book “Contemporary Banking: Theory and Practice” authored by professors Irakli Kovzanadze and Gogi Kontridze. Pg. 8

CIS BELARUS AND KAZAKHSTAN REFUSE TO ACCEPT RUSSIAN TRADE CUTS ON UKRAINE

f Russia wants to raise tariffs on Ukrainian imports or even ban products completely, it first needs the support of its Customs Union partners. Pg. 10

AZERBAIJAN PASHA CAPITAL KEPT IN JUNE ITS LEADERSHIP AMONG BAKU STOCK EXCHANGE BROKERS

asha Capital broker has kept its leadership in the rating of brokers at the government securities market at the Baku Stock Exchange. Pg. 11

WORLD NEWS MACAU SURPASSES SWITZERLAND IN GDP PER PERSON – WORLD BANK

he gambling center of Macau has become the world’s fourth richest territory per person, leapfrogging Switzerland, according to World Bank report. Pg. 13

UGT LOST CONTRACT OF 18,6 MILLION GEL

ompany UGT, which had been announced as a winner of the netbooks tender, was disqualified from the tender. In accordance to the decision of Dispute Resolution Board, the tender commission reviewed adjusted documentation of LTD UGT and considered product sample Acer netbook inappropriate to the tender requirements. Respectively, the company was disqualified from the tender. Still unknown who will supply netbooks to the state for the first-grade schoolchildren. Tender commission does not exclude suspension of the tender. The commission’s protocol indicates that if the price offered by the second tender participant significantly exceeds to the value of the purchase objects (due to changed consequences on the market), the commission is entitled to suspend the tender.

Commission considers reasonable “to research and discuss about the impact of the changed consequences on the market on the market value of the purchase object”. Second tender participant company Algorithm offers the state supply of 46 000 netbooks for 20,4 million GEL. Price difference between first and second candidates does not exceed to 1,8 million GEL. Reminding that Algorithm offers the state supply of 46 000 netbooks for 20,4 million GEL. Price difference between the first and second candidates exceeds to 1,8 million GEL. Reminding that Algorithm appealed winning of UGT in the Dispute Resolution Board. The board required return on the tender in the selection and evaluation regime. Algorithm considers that unlike the product of their competitor, their product fully satisfies tender requirements; therefore they do not exclude winning after the repeated procedures.

RESEARCH: ENTREPRENEURS’ EXPECTATIONS FROM EU ASSOCIATED MEMBERSHIP AGREEMENT 55% of the inquired business companies assert they meet the EU requirements and are ready to take actives steps on the EU market. A major part of the entrepreneurs expects the growth in investment inflows and expenditures after the conclusion of the EU Associated Membership Agreement. Businessmen also expect

the Authorities will help in drawing required finances. 73% of the questioned entrepreneurs expect positive results from the agreement conclusion with EU. A total of 44 companies in various fields were questioned as part of the research that was Pg. 5 conducted in May to June 2014.

Economy Ministry Suspended the Renewed Privatization of Farmland Pg. 4

Nodar Khaduri: Economic Activity Grew by 13% Pg. 4

David Onoprishvili: A Complete Ban on the Sale of Land to Foreigners Creates Problems Pg. 4

Construction of “Hilton” Hotel in Tbilisi on the Verge of Breaking Down Pg. 4

Pg. 2

MAIN EVENTS

GEORGIA AND RUSSIA MEET TO SORT OUT EU VS CIS FREE TRADE

eorgian and Russian trade experts will meet in Prague on July 7 to find out how compatible Georgia’s new free trade with the European Union is with its already existing free trade framework with countries of the former Soviet Union. The announced trade talks will be held two days before the next round of direct talks between a Georgian and a Russian diplomat, also in Prague. Three days after her country signed a so-called association agreement with the EU, which includes free trade, Georgian Foreign Minister Maia Panjikidze told journalists Monday that Georgia is interested in having ‘intense’ trade with EU member states, but also do trade with the Commonwealth of Independent States (CIS), which consists of former Soviet countries. Georgia still has free trade with CIS countries, although leaving the organization after the 2008

war in protest against Russia’s military actions. “We must now sit down and see if something has changed after Georgia joined the new trade space,” she said, referring to last Friday’s signing ceremony in Brussels. July 9, there will be a meeting between Gregory Karasin, Russia’s Deputy Foreign Minister, and Zurab Abashidze, the Prime Minister’s Representative for Russian Relations, according to Panjikidze. She said the experts who are meeting two days prior will sum up their positions regarding the new rules which now are open for Georgia and how compatible these are with the free trade rules which Georgia has with CIS countries. “This is an ordinary technical working meeting, which is very good,” she said. Georgia is sending a team of three from its Ministry of Economy, according to Zurab Abashidze. Russian Foreign Minister Sergey Lavrov said Sunday that his country is ready to hold consultations about Georgia, Moldova and Ukraine signing association agreements, in order to adapt the economic policy. He said, Russia is ready for consultations with Georgia at any time, as Russia now has trade relations with Georgia, which Russia ‘wants to deepen.’ “We are concerned about Russian interests, also the states which are in the Custom’s Union, Belarus and Kazakhstan. They try to assure us that nothing bad will happen and Russia, like Ukraine, will find benefits,” he said. Panjikidze said her Russian colleague’s statement does not contain anything new, and is related to the signing of association agreements with the EU. Swedish Foreign Minister Carl Bildt, who is on a visit to Georgia, said on Monday after meeting his Georgian colleague that he doesn’t see the need for European Commission representatives taking part in the expert meeting on July 7.

RUSSIAN EXPERTS IN GEORGIA TO INSPECT PRODUCE

group of four experts from Russia’s Federal Service for Veterinary and Phytosanitary Surveillance,Rosselkhoznadzor, Monday arrived in Georgia to examine the quality of fruit and other products that are exported to the Russian market. The Russian experts will now join together with specialists from Georgia’s National Food Agency and go on an inspection tour to Kakheti, a region in the east of Georgia. There they will examine potatoes, tomatoes, cucumber, cabbage, eggplant, cherry, apricots, peaches, plums, persimmons, kiwi, and berries which are being prepared for export to Russia. Rosselkhoznadzor’s experts will examine the goods to make sure that there is no food safety

risk involved. After visiting Kakheti, the group will go on to examine products in Gori, a town to the west of the capital. In November, 2013, Rosselkhoznadzor sent inspectors to examine citrus fruits in Georgia that was being prepared to be exported to Russia. Last year, Georgia exported more than 12,000 tons of citrus fruits to its northern neighbor. After the change of government in October 2012, the new coalition started talks with Russia to restore export of Georgian wine and agricultural products to the Russian market, beginning in the end of 2012. In the first five months of 2014, Georgia exported 15,641,383 bottles of wine to Russia, which is 68 percent of the country’s total wine export.

34 TONS OF GEORGIAN FRUIT EXPORTED TO RUSSIA

week-long visit of a 4-member delegation of the Federal Service for Veterinary and PhytosanitarySurveillance of the RF “Rosselkhoznadzor” has ended. According to the National Food Agency, at this stage 134 tons of fruit were exported from Georgia. In particular, 82 tons of peaches and nectarineswere exported from the Kakheti region, 35 tons of cherry – from Shida Kartli. According to the Agency, the process will continue in future. The Georgian phyto-corpsmen carried out certification of products of plant origin on the spot and the cargo which will meet the Russian phytosanitary requirements and free from the quarantine pests will freely enter the market Russia.

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“Rosselkhoznadzor” representatives arrived in Georgia on June 23. According to the National Food Agency, Russian and Georgian experts conducted a phytosanitary control of export consignment of fruit and vegetables. The procedure was carried out prior to loading. The National Food Agency officials say Georgian products of a high phytosanitary risk have been included in the list of export products such as new potatoes, tomatoes, cucumbers, cabbage, eggplant, cherry, cherries, apricots, peaches, plums, persimmons, kiwi and berries on May 26. The year before, for low-risk products- tea, laurel, dried fruit, nuts, citrus, grapes, apples, pears and quinces were allowed into the Russian market.

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RUSSIA NAMED LARGEST IMPORTER OF GEORGIAN WINE

ussia has remembered the delectable taste of Georgian wine. Georgia’s large neighbour has overtaken Ukraine as the largest importer of Georgian wine in the first six months of this year. From January 1 to June 30, Georgia exported 26.8 million bottles of wine, valued at $87.2 million USD, to 34 countries across the world. Of this,

Russia obtained 17 million bottles, which was 66 percent of total exports, said the National Wine Agency of Georgia based on latest state data. The volume of wine exported in the first half of the year increased by 136 percent compared to the same period of 2013. Latest wine export data showed Ukraine was the second highest importer of Georgian wine, followed by Kazakhstan, Poland and China.

GT GROUP WON A LARGE TENDER

he state starts renovation of emergency medical service auto park. Ministry of Healthcare signed contract of 4 499 999 GEL value with the company GT Group, in the framework of which the company will supply 80 units of emergency motorcars. The ministry has announced another tender and contract-signing procedure is going with the participant - Blue Light Service Limited. Accord-

ing to the contract, the company will supply 100 off-road cars to the company, for which it will receive 6 208 995 GEL. Reminding that the ministry announced the tender for emergency cars for the second time. In previous tenders the only company STRADA participated, although the company was disqualified from the tender. The reason was technical documentation. Respectively, then both tenders ended with negative result.

WINE EXPORT TO CHINA INCREASED, SPIRITUOUS DINKS REDUCED

ine export from Georgia to China increased, spirituous drinks - reduced. In the 5 months of the current year foreign trade turnover to China equaled to $309 million and 7% of the total turnover. With this data China ranks third among the largest trade partners of Georgia. Export has increased to China, which equals to $22 million. Unlike last year, export of the copper ores and concentrates has been started in the country. Such products of $13 million have been exported. In the same period copper waste and scrap of $7 million has been exported.

Wine is among the top-5 list of the export products. IN the first 5 months of the year wine of $1,6 million has been exported, which is $27 300 more in comparison with 5 months of 2013. Meanwhile, export of spirituous drinks reduced by 281,5 thousand, to 175,1 thousand. Top-5 list also includes aluminum waste and scrap - 38,3 thousand. As for import, in 5 months black metal constructions of $23 million have been imported from China, as well as calculating machines and their blocks of 13,9 million, phones of 10 million. Carbon steel flat-rolled metal imports equaled to $9,6 million, washing machines import - to $8 million.

MULTI-FUNCTIONAL PORT EARMARKED FOR ANAKLIA

feasibility study has revealed Anaklia, a Black Sea city near Georgia’s Abkhazia region, is the best place for constructing a sea port. The in-depth analysis of ten possible locations between Enguri and Tchirokhi rivers across the Black Sea found Anaklia was the best place to invest and build the port. The announcement was made by the press office of the Prime Minister of Georgia after the Economic Council’s meeting today, which is chaired by PM Irakli Garibashvili. The research was financed by the Partnership Fund, the state-owned fund created to attract investments from abroad. Partnership Fund director Irakli Kovzanadze believed the port would be multi-functional and would serve large capacity vessels. “The competitive advantage of the Anaklia Port compared to other locations is its big territory spread over 2,000 hectares and access to a deep sea canyon. Furthermore, there are possibilities in the future to expand and further develop the port,” Kovzanadze said. The Economy and Sustainable Development Ministry of Georgia will announce the expression on interest for building the port next week.

As well as construction of Anaklia Port, development of logistics and industry zones and construction of an airport and liquid gas terminal are also planned for the region. “Government also plans to announce the free economic zone on the territory on Anaklia Port,” the Economy and Sustainable Development Giorgi Kvirikashvili said. He also believed Anaklia Port will increase Georgia’s capacity as a regional transport-transit hub. In early December 2011, the previous government considered building a new city and port on Georgia’s Black Sea, between Anaklia and Kulevi, further north from the port town of Poti on the same territory where the new building is planned. At the time, ex-president Mikheil Saakshvili announced at least half a million people would live in the city in the next ten years but the project initially required 1-1.5 billion GEL for the city to be built. There were many controversial ideas about the future importance of the proposed projects. After the new Government came into power, the project momentum stopped however it always said building the Anaklia Port was still possible.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

PUBLICITY July 7, 2014 #61

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APARTMENT

Every Wednesday At 21:00 On GDS TV Full of humor

Anchors â&#x20AC;&#x201C; Kotiko Toloraia, Levan Gogoreliani will offier refined humor, provide good mood and invite interesting guests for the program audience. The program consists of three parts: the first block offers humor and apolitical monologue with funny video clips, pictures and so on. The second and third blocks are dedicated to famous public figures that will be invited as guests. The show will start Wednesdays at 21 oâ&#x20AC;&#x2122;clock and it will cover all interesting issues excluding politics to guarantee good mood for the audience.

Guests: Lela Tsurtsumia, Kaxa Mamulashvili, Nutsa Buzaladze, Giorgi Kipshidze

INTERVIEW caucasian business week

FINANCE MINISTER: ECONOMIC ACTIVITY GREW BY 13% AN INTERVIEW WITH FINANCE MINISTER NODAR KHADURI

- In April, the economic growth amounted to 2,7%, which in your opinion was associated with decreased activity of casinos. Can you confirm this opinion? - In May, the economy grew by 6,3% - 6,5%, economic activity grew by 13%, including in construction by 31%. As for April, growth was relatively low, but mainly due to the most evident decline in two areas – financial sector and utility payments due to the fact that the cost of cleaning the city was separated from the electricity tariff, resulting in lower prices. There is also a factor associated with the casino. - But the economy does not depend only on the turnover of casinos and moreover, utility tariffs. There was a time when the government stated that casinos turnover equaled 100 million GEL. Has something changed after that? - In this case we are not talking about the budget revenues, especially since the plan for fiscal revenue for the six months was performed by 103%. We are talking about economic growth, only in April. The result is different for all other months. As I said, in May economic activity grew by 13%, including in construction – by 28% , in real estate –by 21%, in agriculture – by 21%, in the mining industry- by 12%. So there is a real progress. In January-May growth was 6.3%, despite the

low rate in April. We predicted a 6% growth, the World Bank 6, 5%, although, in the backdrop of events in Ukraine it was expected that growth would drop to 5,5%. It turns out that the real growth exceeded expectations. - But there is evidence that growth is due to government spending while in private sector a decline was registered. - I cannot agree with it. Many have criticized us for slow implementation of infrastructure projects, which led to problems in the private sector. But infrastructure projects are primarily implemented by the state. - Many say that a shortfall in the 2013 budget amounted to GEL 632 million. How did it happen? - A low economic activity in May 2013 was the main problem, when there was even an economic slowdown. A 5% growth was registered only in April and even closer to the end of the year - in October and November. Naturally, the decline in economic activity entails a reduction in tax revenues. That was the problem and not in the tax system. In the second half of 2013, when political risks were minimized, business became more active, investments came into the country- in particular, in the first quarter of 2014 investments amounted to USD 206 million, which is significantly higher than in all previous quarters. I hope that the business will become even more active, and business people confirm it. Last year we tried to finance all projects that we had, but ran into some problems because of which we failed to master all the allocated funds. We are reproached that we take debts. But in fact this year we covered the external debt of USD 1 billion, most of those debts were taken by last government. Now a volume of external debt has declined. We have also implemented a new practice –we place treasury bonds in Georgian banks and the gained amounts refund to banks at a small percentage so that they could lend long-term business projects. Our banks have no shortages of liquidity, but face problems with long-term money - they prefer to lend short-term projects designed for a quick payback. That is why the government decided to provide part of the received funds to banks so that they could finance long-term projects. Naturally, this has not been reflected in the economic growth figures so far, since such projects need a lot of time.

CONSTRUCTION OF “HILTON” HOTEL IN TBILISI ON THE VERGE OF BREAKING DOWN

ilton Garden Inn” brand’s project could break down and will no longer be built. Construction has been halted for more than 2 months. The reason is a confrontation between the construction company “Redix” and residents. At this stage, the parties are attempting to resolve the issue through the court. Residents living in the area adjacent to the construction accuse “Redix” in appropriating the territory owned by them. The company, in turn, accuses the residents of disrupting the construction. “Redix” founder Lasha Papashvili states “Commersant” that if the court’s decision is not known in time, the project could break down.

As for the deadline of the end of construction, it should be completed by the end of 2016. In total USD 60 million have been invested in the 14story hotel project. The confrontation between the residents and the construction company began a few months ago. Supervision Service of Tbilisi City Hall made a decision to dismantle the fence and imposed a fine of GEL 8 thousand on the company. Commersant was told at Tbilisi City Hall that the company had already paid the fine and the suspension of construction was not associated with their decision. After protest from residents and a fine imposed by the City Hall, a complaint was filed to the court by the company.

RUSTAVI AZOTE HAS A NEW DIRECTOR GENERAL

he company is the only producer of nitrogenous fertilizers in the South Caucasus region. Levan Burdiladze will lead the company. Burdiladze was a head of audit service till now.

Former director general Mark Kantselson is dismissed from the leadership. US citizen Kantselson led the enterprise since October 27, 2011. Reminding that 100% of Rustavi Azote belongs to JSC Agroqim registered in Luxemburg.

July 7, 2014 #61

ECONOMY MINISTRY SUSPENDED THE RENEWED PRIVATIZATION OF FARMLAND

eorgian Economy Minister Giorgi Kvirikashvili suspended the privatization of agricultural land, which was renewed after the Constitutional Court invalidated the Moratorium on the sale of farmland to foreign nationals. According to the Minister, at this stage privatization will not be carried out. “My decree suspended the sale of land, as the government is currently working on establishing a mechanism of privatization, and taking into account international practice it will be necessarily to adopt a law that will enable capital investment in land, but will not create a threat to the emergence of social problems. Agricultural land should be sold, but under certain regulations, “the Minister states. Auctions on sale of agricultural land were resumed on May 23, 2014 – in total 95 820 hectares of arable land was put on sale. Prior to this, the sale of land had been suspended for the agricultural sector at the end of 2012, and in June 2013 the government adopted a Moratorium on the sale of land to foreigners. Economy Minister expressed his dissatisfaction with the decision of the Constitutional Court, which recently lifted a Moratorium. “The Moratorium was declared due to the fact that the country faced very serious problems, and things could go on unpredictable scenario. Now we are working on legislation that would remove all kinds of restrictions on the corporate sector, investors, and commercial banks. Therefore, the decision of the Constitutional Court was quite superfluous”, - the Minister notes. According to him, the restrictions on the purchase of land by foreign nationals work in almost all countries, including Europe. “Nobody is obliged to approach the matter from

ultra liberal point of view. Economic growth is certainly very good, but every country, including Georgia, has its own specifics. For example, Georgia is land-poor country, in a complicated region, and based on this, it needs some kind of regulation, “- said Kvirikashvili. “Commersant” reports that the Moratorium and the decision of the Constitutional Court will be discussed at the meeting of the interdepartmental commission. Chairman of the Parliamentary Committee on Sector Economy Zurab Tkemaladze believes that restrictions in any case will remain – in 90% of the EU states the sale of agricultural land to foreigners is prohibited. According to the Chairman of the Parliamentary Committee on Agriculture Gigla Agulashvili, land privatization process will be transparent, with the participation of local municipalities and regional administrations. “In such circumstances, the sale of land does not pose any danger. Also, we should not forget that not only foreigners buy land in Georgia “- the MP notes.

BUDGET AND FINANCE COMMITTEE OF PARLIAMENT: A COMPLETE BAN ON THE SALE OF LAND TO FOREIGNERS CREATES PROBLEMS AN INTERVIEW WITH CHAIRMAN OF BUDGET AND FINANCE COMMITTEE OF PARLIAMENT DAVID ONOPRISHVILI - How much did you expect the Constitutional Court’s decision on lifting the Moratorium on sale of agricultural land to foreign nationals? - The Moratorium was not a constant norm, it was a temporary restriction before the end of the year. The reason for this was a fact that under the previous government there was no detailed information about how much land was owned by the private sector and how much by the state. Moratorium aims to address all these issues. - Was Moratorium a hasty decision, and if it spoiled the investment climate in the country? - Each country has its own vision of this issue. I supported the adoption of the Moratorium, but I think that a complete ban on the transfer of land to foreigners creates problems for investments. There are two radically opposing views - a total ban on the sale of land to foreigners, or vice versa, removal of all limitations. I believe that both approaches are wrong. Many MPs consider it necessary to restore law adopted 15 years ago, which prohibits the sale of agricultural land to foreign citizens - individuals, but not legal entities. Such a rule exists in many countries, as the issue on land ownership is important in terms of investments. So, in my opinion, intermediate variant is most suitable for the country. In a certain sense, the Moratorium has created some inconveniences. There were cases when foreigners wanted to sell the land, but could not - even when the buyer was a citizen of Georgia. Thisis illogical. In general, this question should be better studied. Anyway, I am not a supporter of a total ban. - There is a shortfall in the 2014 budget in the first quarter. What causes this?

- I cannot agree with this assessment. Compared to previous years the situation is normal. An emphasis is placed on the mobilization of tax revenue. Figures would have been better if the government had not committed itself to return the paid income tax to those who earns up to 500 GEL per month. However, even in this situation, the budget is done quite normally. And we still have more positive expectations for the second half of the year. We have a comparative lag in the development of foreign grants and loans. At this stage it is too early to draw conclusions. We see trends and can make some assessments. Parliament intends to discuss this issue in order to study the current problems in more detail. But even so, the budget is executed normally. - What economic growth do you expect in Georgia in 2015-2018? - A draft strategy involving major reference points of the country’s economic development in the coming years has already been sent to Parliament. In 2015, we expect economic growth under 5%, as well asin 2014.

BUSINESS July 7, 2014 #61

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RESEARCH: ENTREPRENEURS’ EXPECTATIONS FROM EU ASSOCIATED MEMBERSHIP AGREEMENT

MAKA SAMUSHIA Iliauni Business School, Business Specialist

mall (28%) and major companies (62%) were questioned. A company is valued as a major one that has got an annualized turnover of over 1 million GEL. The companies were selected in the following sectors: 1. nonalcoholic beverages (23%); food products (honey, tinned products) – 25%, alcoholic beverages (17%); primary farming ventures (vegetables, fruits, crops, greens) – 10.5%; energy sector (4%), heavy industry (4%); light industry – 9%; pharmaceutical companies – 9%. 55% of the companies assert they meet the EU requirements and are ready for active steps on the EU market. 45% say they have to introduce certain changes and new standards and carry out reequipment project to meet the EU requirements. 57% of the inquired companies have already launched exports to the EU market. The ratio of EuroExports in total exports of the companies that are represented on the EU market makes up

10% to 20%. The figure makes up 20% to 40% in 40% of the inquired companies and 40% to 60% in the 17% of the questioned companies. The EuroExports ratio is over 60% in 10% of the inquired companies. As to the expectations, 28% of the inquired companies expect only benefits from the EU Associated Membership Agreement conclusion. 4% of the inquired companies gave moderate appraisals and noted the benefits will be more than the losses, while 21% of the inquired companies assert the losses will be more. Only 6% of them expressed skeptical positions and noted the agreement conclusion will bring only losses. 73% of the inquired companies that have positively appraised the agreement conclusion expect the investment inflows will increase by 47%, sales and exports will grow by 34% and the products quality will be improved by 29%. As to the skeptical part of the inquired companies (21%), they expect losses in the following directions – expenditures will increase by 40%, prices will grow by 36%, sales will decrease by 24%. As to the government steps, the business companies have showed the following expectations: 62% expect the government to help in drawing finances and cheap resources; 15% expect the government to play considerable role on the EU market in terms of marketing activities; 12% expect information coverage on regulations and standards. 11% expect the government should assist them in meeting the standards. The research has showed a major part of the entrepreneurs expects growth in investments and sales and boosting competition on the domestic market. In whole, business companies have showed positive attitude and expectations concerning the agreement conclusion. Entrepreneurs are sure the agreement will bring new opportunities and challenges to their business activities. The research has been prepared by Maka Samushia, Iliauni Business School MA-level Student.

FOODPANDA IN GEORGIA AND FOODPANDA WORLDWIDE

oodpanda, an online food ordering service which is prominent in over 40 countries, has of this year entered Georgia. The German brand has begun operating in Georgia under “foodpanda Georgia”, and despite a short amount of time, it has managed to win the interest of a large part of society. The service, which is a novelty on the Georgian market, has been positively received by consumers. hellofood, together with its affiliated brand foodpanda, one of the world’s leading food delivery marketplaces, announced that it has taken over leading the Ecuadorian food delivery business deliYami. Just a week after acquiring Russian competitor Delivery Club, making hellofood / Foodpanda the market leader in the entire CIS region, continues with another acquisition. The German company recently has been awarded as European Startup of the Year at the Europas

Awards in London. Through this acquisition, hellofood will launch its service in the Ecuadorian market, continuing its global expansion, after rolling out to over 45 countries in the last two years. In Latin America, hellofood is already active in Argentina, Brazil, Chile, Colombia, Mexico and Peru. deliYami started operations in 2012 and currently operates in 2 cities (Quito and Guayaquil) with market leader position. hellofood plans to rebrand deliYami (www.deliyami.com) to join the existing branding hellofood (www.hellofood.com.ec). Luis Villarroel, Founder and CEO of deliYami: “We have worked very hard during the last two years, developing strategic alliances with the main players in the local food industry and building trust among our customers. That together with our working ethics and culture, helped us to become the leader of online food delivery in Ecuador. With the experience, resources and tech-

nology of hellofood, we are ready to take the next big step in order to provide a world class service to Ecuadorian consumers.” Alejandro Ponce, Co-Founder and Managing Director of hellofood Latin America: “We are excited to announce that acquiring deliYami and its talented team, we will become the market leading food delivery marketplace in Ecuador, s tre ngthe ning our leading presence in LatAm and adding a new geography to our global

footprint. This acquisition is in line with our strategy to be the top of mind for every customer, no matter where they are, when it comes to order food online”

BUSINESS caucasian business week

NABEGHLAVI – BLESSING OF GEORGIAN NATURE

ny company that moves from the local market to the international scene represents a face of its country, culture and traditions. This is especially true for brands

from such a small country as Georgia. Products of Healthy Water (“Tskali Margebeli”) are already being exported to 27 countries. Nabeghlavi and Bakhmaro Brands usually find their niches on foreign markets easily, since they

are distinguished by special advantages compared to competitors and enjoy loyalty of customers. Such peculiarity is due to their natural taste and curative features, however the values, culture and traditions on which the brands stand and enrich the benefits granted by nature are also important. Since its establishing, for 17 years now, Healthy Water has been supporter of many projects in cultural, educational and environmental sectors. Education has a leading role in social activities of Healthy Water. Interest in this field is expressed by supporting school as well as higher education projects. The Project For Educated Future is one of the most important educational projects, which is being implemented for the second year with Healthy Water’s support. The project allows winners of the National Olympiad to travel to Great Britain with the company’s assistance to raise the level of English language knowledge. It is noteworthy that many student conferences are being held regularly in Georgia’s university cities. Along with education popularization of Georgian traditional culture, support of international cultural projects have always been priority for the company. Healthy Water is a partner of such important event as Tbilisi International Film Festival,

July 7, 2014 #61

where young people from 25 countries have the opportunity to share their works and opinions an discuss important issues. In addition, the company does not forget the Georgian Culture and annually supports several events starting with concerts of Erisioni National Folklore Ensemble ending with partnership of Art-Geni, one of the most significant cultural festivals in Georgia. The Company by its essence and values represents Guria - one of the most picturesque regions of Georgia. Respectively, Healthy Water team allocates many resources for conducting and promoting environmental activities. In 2013, the company team designed such a form and design for Bakhmaro bottle, which appeared with reduced weight on the market, thus diminishing the harm inflicted by polyethylene. The Company frequently initiates cleaning campaigns across Georgia. Moreover, the aforementioned is backed with multi-year work and expertise of the industry professionals supplemented with natural uniqueness of mineral and spring water that create complex of Nabeghlavi and Bakhmaro characteristics being liked by customers for so many years.

…. And indeed Nabehlavi is better!

THE WORLD’S OLDEST RECIPE IS FOR NONE OTHER THAN....BEER! 14. In the 13th century, it was common to baptize children in beer. 15. In Kentucky, anyone who has been drinking is considered sober until he/she cannot hold onto the ground. Good rule of thumb, I’d say. 16. In 1642, the first brewery in America was built in Hoboken, New Jersey. 17. In Ancient Egypt, the minimum wage was two containers of beer. 18. 4000 years ago in Babylon, it was accepted practice that for a month after a wedding, the bride’s father would supply his son-in law with all the mead he could drink. Mead is a honey beer, and because their calendar was lunar based, this period was called the “honey month”, or what we know today as the “honeymoon”. 19. President George Washington had his own Brewhouse on the grounds of his house at Mount Vernon. 20. By23. In 1600 BC Egypt, beer was used to treat over 100 illnesses. 21. Pabst Brewery produced the first six-pack of

Being one of the oldest crafted beverages in the world, beer has been enjoyed by billions throughout history and remains a favorite today. While the varieties have exponentially grown, the foundation is still there....and it’s awesome! Here are a few things to expand your knowledge for some random bar trivia. Cheers! 1. If you are a beer lover or enthusiast, you are by definition a “cerevisaphile”, while if you collect beer bottles you are labeorphilist. 2. Beer is legally defined as a staple food in Bavaria. 3. Coming in behind tea, beer is the second most popular beverage in the world. 4. According to The Code of Hammurabi of ancient Babylonia, a merchant could be put to death for diluting beer.....eek! 5. A bride would distribute ale to her wedding guests old-age England. In exchange, they would give money as a gift/donation to the newly weds. The beer was known as “Bride Ale”, is which where the word “bridal” comes from! 6. In Ancient Egypt, stonecutters and slaves who were building the pyramids were paid in beer. This type of beer was called “kash”, which is where the word “cash” came from!

7. The very first Oktoberfest was held in Munich in 1810....and still thrives on a yearly basis today! 8. The United State’s national anthem, “The Star Spangled Banner”, was actually inspired by a British Drinking song called “Anacreon”. 9. US President Theodore Roosevelt once took over 500 gallons of beer with him on an African Safari....must have been an interesting ride. 10. The world’s oldest recipe is for none other than....beer! 11. Beer bottles weren’t invented until 1850. Before then, people have to carry their booze home in a special bucket. 12. Cenosillicaphobia is the fear of an empty glass.....(common phobia in pubs) 13. In Medieval England, beer was often served for breakfast.

beer in the 1940s. They did studies which found that six cans were the ideal weight for the average housewife to carry home from the store! 22. The U.S. Marine Corps opened their first recruiting station in a bar. 23. Who said monks in the middle ages didn’t know how to have fun? They were allowed to drink 5 quarts of beer a day! 24. From the 1300s through the 1700s, American and European Universities had in-house breweries to provide beer to the students. Harvard had its own brew house in 1674 and five beer halls. 25. Chinese Imperial Edict, in 1116 BC, stated that heaven required people to drink beer. 26. In Egypt there is a beer called “bousa”, which is brewed from millet and has been around for over 3,000 years. Modern Ethiopia has a version made from wheat. It has been speculated that this may have been the origin for the word “booze.” 27. King Federick the Great at one time banned coffee, to boost beer sales. 3000 BC, Egyptians were already brewing six different types of beer.

STATISTICS July 7, 2014 #61

caucasian business week

PRESENTATION caucasian business week

July 7, 2014 #61

“CONTEMPORARY BANKING: THEORY AND PRACTICE”

v. Javakhishvili Tbilisi State University has hosted the presentation of a new book “Contemporary Banking: Theory and Practice” authored by professors Irakli Kovzanadze and Gogi Kontridze. A 548-page textbook is designed to economy faculty students and it describes almost all directions of the banking, namely: generation of banking and historical aspects of banking, banking management, resources of a commercial bank and types of operations; types of bank credits; contemporary bank products and technologies; types of bank risks and their management and other directions. Besides theory, the textbook contains concrete samples of Georgian and international banking practice, including samples of personal experience of the authors. Teaching practice of many years has dictated us to issue this textbook, Irakli Kovzanadze noted at the presentation. “This is the first textbook in Georgia, in practice, that reflects a systematized view of practical and pedagogical work of our banking pedagogues. The work collects and systematizes all the experience we, the authors, have found, realized and analyzed during our relations with students. Specialists of this field had to deliver our experience and knowledge to students for many years in the form of abstracts and extracts. We are glad to have collected all the main aspects in one textbook that we consider are necessary for students”, Kovzanadze said. TSU Professor Elguja Mekvabishvili is an editor

of the textbook. TSU professors Emzar Jgerenaia and Levan Kistauri area reviewers of the textbook. When working on the textbook, the authors accepted and shared recommendations of the former presidents of the National Bank of Georgia (NBG) Nodar Javakhishvili, Irakli Managadze, Roman Gotsiridze, as well as recommendations of practicing bankers Paata Ghadzadze and Giorgi Chiladze. Digital version of the textbook will be available for all interested bodies. The digital version will be published in the internet and all students will be able to download it free of charge. Irakli Kovzanadze (Doctor of Economy Sciences, Professor) is author of 6 monographs and over 50 scientific works in mathematics and

economy. The works have been issued in both Georgia and abroad. A major part of his works explore systematic and neighboring bank crisis, their genesis, development, forecasts and prevention problems. Irakli Kovzanadze has got an over 20 year experience of working on management positions in bank systems of Georgia, Post-Soviet countries and Europe. In 2004 to 2008 Kovzanadze was a member of the parliament of Georgia and chairman of the finance and budget committee of the parliament of Georgia. In 2007 to 2009 he was chairman of the commission of corporate management issues of the European Bank for Reconstruction and Development (EBRD) and Eurasian Countries of

the Organization of Economic Cooperation and Development (OECD). In 2008 to 2012 Irakli Kovzanadze was an EBRD representative director in supervisory and directors boards of bank and other financial institutions of Post-Soviet countries. Since 2006 he has been a dean for the banks and finances chair of Tbilisi State University Economy and Business Faculty. Gogi Kontridze: (Academic Doctor of Economy, Professor) has got an over 20 year experience of working in the bank sector. He has prepared over 10 scientific works. Since 2006 he has been an invited associated professor for the banks and finances chair of the economy and business faculty of Ivane Javakshishvili State University.

BANKING NEWS July 7, 2014 #61

caucasian business week

OUTPUT OF BANKING SECTOR REDUCED IN MAY

n May total output of the banking sector equaled to 81.2 million GEL. Geostat informs that in May total output of the commercial banks equaled to 77,2 million GEL, output of the National Bank - 4 million GEL. Compared to April, output of the commer-

cial banks reduced by 3,9 million, of the National Bank - by 0,8 million. Overall output has reduced by 4,7 million GEL. Compared to the same period of last year, output of National Bank has reduced by 1,7 million GEL. As for commercial banks, their output has increased by 5,7 million GEL.

DEVELOPERS TALK ABOUT GROWTH OF INTEREST ON MORTGAGE LOANS, BANKERS ABOUT DECREASE

TBC ENABLES CLIENTS TO ATTEND THE MATCHES OF THEIR FAVORITE CLUBS

BC announce grandiose raffle. All persons, who will get credit card (TBC Prime Card) till September 1, will get involved in the raffle. They will get opportunity to win 2-person tours for attending of the games of their favorite football club. Prizes also include: TV-set, PlayStation, official ball of the World Cup and other football attributes.

1 ticket is considered for 20-GEL transaction. On each 100th transaction 100 minutes talk time will be transferred. The grand prize - 2-person tour will be on raffle on September 14. The winner chooses desired team, country and game. Collection of the tickets is possible by POS payments, cashing out by ATMs of any bank, transactions abroad and in the electronic commerce.

RETAIL PORTFOLIO OF TBC EXCEEDED TO 1,2 BILLION

y June 1 share of TBC Bank on the retail lending market equals to 22,6% (01/01/2014 -23%). Individuals’ loan portfolio of TBC has increased by 86 million (8%) since the beginning of the year. By June 1 amount equals to 1,155 billion GEL

(01/01/14 -1,068 billion). Overall loan portfolio of the bank is 2,703 billion GEL (01/01/14 - 2,786 billion). Credit investment of the commercial banks is 10,5 billion GEL. Among them individuals credit portfolio equals to 5,121 billion GEL (01/01/14 -4,7 billion).

KSB REDUCED INTEREST ON THE CREDITS

SB once again reduced loan interests. The bank announced about extension of the promo with preferential terms, in the framework of which consumer loan in the USD and national currently will be issues for the interest from 7,9% (effective - from 10,5%). Loans are for any aim, from 3 months term. The promo continues till August 31.

LIBERTY COMPLETED 5 MONTHS WITH 7,3 MILLION PROFIT

SC Liberty Bank completed JanuaryMay 2014 with 7,3 million GEL profit (01/06/13- 2 million). By June 1 non-banking deposit portfolio equals to 1,2 billion GEL (01/06/13- 892 million), loans - 735,6 million GEL (01/06/13477,6 million GEL), Overall obligations - 1,302 billion GEL (01/06/13- 937,8 million).

Actives equal to 1,462 million GEL, market share - 8,2% (01/06/13- 1,05 billion, 7,2%). By Q1 2014, stockholders of Liberty Bank are Dan Cortache Patriciu (73,07%), Lado Gurgenidze (7,3%) and BNY (NOMINEES) LIMITED (11,26%). Stock capital of the bank is 159,7 million GEL (01/06/13 -116,6 million).

PROFIT OF REPUBLIC EQUALS TO 13,7 MILLION FOR 5 MONTHS

ank Republic completed JanuaryMay 2014 with 13,677 million GEL profit (01/06/13 -9,4 million). By June 1 amount of non-banking portfolio equals to 501,2 million GEL (01/06/13 - 434 million GEL), credit portfolio - 712,5 million GEL (01/06/13 - 612 million GEL), overall obligations - 849,5 million GEL.

Overall actives stand at 1,010 billion GEL, market share - 5,7% (01/06/13 - 810 million GEL, 5,5%) The bank operates since 1991. Stockholders are SOCIETE GENERALE (93,6%) and EBRD (6,36%). Stock capital equals to 160,8 million GEL (01/06/13-130,1 million GEL).

olvency of consumers of mortgage lending fell - CEO of the construction company “Arci” Tornike Abuladze says. According to him, this is evidenced by the number of mortgage loans, which currently amounts to about 22 000. “Today, banks offer mortgage lending service for Georgian natives working abroad. These loans are issued on more complex conditions, but it is a step forward. With regard to interest, they are still high - if recently one could get a mortgage loan at 7. 5-8.5%, now it rose to 11-11, 5% “- he notes. However, at the same time, bankers say that on the contrary, the interest on the mortgage loans decreased. “Commersant” interviewed leading Georgian banks in this regard. For example, Bank “Republic” gives a mortgage in dollars or euros at 12%, the annual effective interest – 13. 6%, the maximum loan term - 15 years, a minimum income - USD 400 per month (or the equivalent in GEL). An interest rate in local currency is 16%, the effective rate – 19.7% per year, the maximum term - 3 years, the minimum income - 700

GEL per month. The interest rate in “Bank of Georgia” starts from 9% “ - (effective - 10, 27%), the amount - from USD 3 000 to 175 000 (or equivalent in GEL), loan term - 15 years. In the “BG” declare that the interest rate has tended to decline and now the bank gives customers the opportunity to obtain a loan at an effective rate of 10.27% per year. “Bank of Georgia” also notes the seasonality of mortgage lending, particularly in the summer demand is growing. In the first quarter of 2014 “BG” issued mortgage loans in the amount of 458.6 million GEL, which is 19% more than in the same period of 2013. “TBC Bank” talks about the trend of lower interest rates on mortgage loans. “In particular, if in 2013 the interest rate started from 12%, now one can take a loan at 9% per annum (effective rate – 10.76%). Overall mortgage portfolio is constantly growing. In addition to low interest rates, “TBC Bank” has another competitive advantage - partnerships with several development companies that provide access to the loan even for apartments which construction has not yet begun, “- said in the bank.

MFOS REDUCED FINANCING OF TRADE

icrofinance organizations of Georgia issued loans amounting to GEL 661 million in 6 months of 2014, which is 18.2% more than in the same period of 2013. In the same period, commercial banks issued loans in the national currency in the amount of GEL 341.2 million, which is 2 times higher than in the same period of 2013, in foreign currency - GEL 336 million, which is 39% less than in same period of 2013. Thus, the amount of loans issued by the microfinance sector in this period is 2.5% less than by the banking sector. Loans issued by MFOs to sectors were as fol-

lows - consumer loans - 45, 3% (GEL 299, 1 million,growth by 53, 8%), agriculture - 23, 4% (154, 5 million GEL), growth of 0, 7%, trade - 20, 5% (135, 6million GEL) - a decline of 8.1%. At the same time the structure of loans granted by commercial banks in national currency looks like this - financial intermediation - 36, 3% (123, 9 million GEL), an increase in 684 times, trade 35, 5% (121 million), a 65, 3% growth, industry 9, 7% (GEL 33.1 million) - a decline of 22, 7%. Trading leads by loans received in foreign currency - 55. 5% (GEL 186. 5 million), down by 36.5%, industry - 16, 2% (54, 4 million), down by 63,9%, and construction - 9, 2% (30, 8 million GEL), down by2%.

MFI PROFITS RISE SHARPLY

onsolidated profit of microfinance institutions amounted to GEL 18 million in the first quarter of this year, that is 30.2% highercompared to the same period in 2013. As per March 31, 2013, a total of 80 microfinance institutions were registered in Georgia, by the end oflast year their number was 67. 13 of them do not have any employees or offices and branches.

As of March 31, the total assets of MFIs totaled GEL853.1 million, which means a 17% growth. Liabilities reach GEL 635.2 million (a 18.2% growth). As for MFOs capital, it reaches GEL 217.8 million, an increase totals 13.4% in a year. As of the first quarter, MFOs employed 3 474 people and opened 273 branches and service centers.

VTB INTRODUCED MOBILE BANKING FOR IOS DEVICES

TB introduced to clients mobile application - VTB Mobile. VTB Mobile enables management of banking accounts and cards distantly, transfers, getting information about loans and deposits, filling mobile balance, payment of communal and other service fees. VTB Mobile has additional functions, which enables consumers to main to the banks, learn about currency exchange rates, see the closest branches

and ATMs of the bank, also get introduced to the demo version of mobile banking before authorization. VTB Mobile is for iOS devices. The application is free and can be downloaded from the App Store. The consumer will get username and password of VTB Mobile in any branch. In the case of usage of call center, registration is possible distantly. Registration and service of VTB Mobile is free of charge.

10 IRISH STOCK EXCHANGE HALTS TRADE OF UKRAINE’S PRIVATBANK BONDS

he Irish Stock Exchange has suspended trading of two issues of 2031 mortgage bonds issued by Ukraine’s PrivatBank, Prime news agency reported Tuesday, citing a stock exchange statement. The bank belongs to Ukrainian businessman Igor Kolomoisky, who is financing the military operation in eastern Ukraine. The trade in the $47 million issue was suspended until July 1. The bank is expected to publish its annual report and accounting report in accordance with the rules of the stock exchange. 13:29

EU COUNCIL POSTPONES DECISION ON SANCTIONS AGAINST RUSSIA FOR A WEEK

E R

U Council has postponed for a week a discussion on new sanctions against Russia, Itar-Tass reported, citing the council’s press service. The decision was taken after a meeting of permanent representatives of the EU states in Brussels.12:44

GAZPROM MAY JOIN GERMAN GAS PROJECT IN ARGENTINA - REPORT ussia’s Gazprom could get a share in one of the projects of Germany’s Wintershall in Argentina, according to a report by Vedomosti. The talks are expected to close soon, and legally binding documents could be signed in mid-July, the paper said, citing industry sources. The deal could reportedly be part of the exchange of assets between the Russian gas giant and Wintershall, a subsidiary of the chemical group BASF. The basic agreement on the swap was signed in November 2012. 08:21

GAZPROM REPLACES HEAD OF EXPORT UNIT

ussian oil producer Gazprom has replaced Aleksandr Medvedev as head of its exporting arm, Gazprom Export, with one of his deputies, Elena Burmistrova, Reuters reported. “Gazprom’s ambitious plans for external markets call for new structural and functional decisions,” Gazprom CEO Aleksey Miller said in a statement. President Vladimir Putin met Burmistrova and Miller on Wednesday to discuss eastern projects, according to Kremlin spokesman Dmitry Peskov. Medvedev, 58, will continue in his role as a deputy CEO at Gazprom, overseeing foreign economic activities, social and sport programs, the company said. 12:36

RUSSIAN BILLIONAIRE TO DEVELOP $264MN IRRIGATION PROJECT IN SYRIA

he Syrian government signed an agreement with the Russian company Stroitransgaz controlled by billionaire Gennady Timchenko to construct an irrigation project to fight drought in northeast Syria, the country’s news agency SANA said. The total cost of the contract is estimated to exceed $264 million. Stroitransgaz is expected to construct a pumping station in the town of Ein Diwar near the border with Turkey and Iraq. The irrigation project will be developed in the province of Al-Hasakah, using water from the Tigris River.

EURASIAN ECONOMIC UNION MAY ESTABLISH CENTRAL BANK BY 2025 - KAZAKHSTAN

urasian Economic Union of Russia, Belarus and Kazakhstan could establish the organization’s central bank by 2025, Vesti.ru quoted the head of Kazakhstan’s Central Bank, Kairat Kelimbetov, as saying. It as earlier announced that the single financial regulator of the Eurasian Economic Union will be set up in Astana, Kazakhstan’s capital. The union is expected to become operational within the Customs Union of Belarus, Kazakhstan and Russia from January 1, 2015, which was signed in May.

CIS caucasian business week

July 7, 2014 #61

BELARUS AND KAZAKHSTAN REFUSE TO ACCEPT RUSSIAN TRADE CUTS ON UKRAINE

f Russia wants to raise tariffs on Ukrainian imports or even ban products completely, it first needs the support of its Customs Union partners. If it doesn’t get it, it may act alone, says Deputy Prime Minister Igor Shuvalov. However, Shuvalov didn’t specify how Russia could do it on a unilateral basis, Vedomosti newspaper reports. Russia failed to persuade its economic allies in the Customs Union – Belarus and Kazakhstan

– to support it and introduce increased fees on Ukrainian imports, says the paper citing a government official who participated in the Eurasian Economic Committee talks. The refusal seems logical at the moment, the official said. Kazakhstan is now trying to join the WTO and Ukraine could block its accession. Belarus in turn has a vast border with Ukraine and closing it would mean huge losses for the country, he explained. This week Ukraine will hold trilateral talks with

the EU and Russia to sort out the details of how Kiev will balance trade between Moscow and Brussels. Currently Ukraine is part of a formerSoviet state Partnership and Cooperation Agreement, a trade pact the country signed in 1998. “This is a conversation that concerns all sides Ukraine, Russia, and all our partners at the common economic space,” Dmitry Peskov, President Putin’s spokesman, said, as quoted by Vedomosti. “Protective measures are needed, and we will continue the dialogue so that the measures are multi, and not unilateral,” he added. Ukraine signing the free trade agreement with the EU will complicate its trade relations with Russia, which insists Kiev can no longer enjoy preferential trade treatment. On Friday, Ukraine’s President Petro Poroshenko signed the economic portion of the Association Agreement with the EU, which slashes trade tariffs between the ex-Soviet state and the European market. Georgia and Moldova also signed both political and economic parts of the Association Agreement on Friday. Armenia has expressed interest in joining the Eurasian Economic Union and so has Azerbaijan.

US AND GERMANY WANT GAS HUB IN UKRAINE NAFTOGAZ DIRECTOR

erman and US companies want to start using Ukraine as a gas hub, according to Aleksandr Todiychuk, Deputy Chairman of the country’s national oil and gas company Naftogaz. “For them [Germany and the US] it’s an opportunity to gain a foothold in the region. Our underground gas storage is interesting for both sellers and buyers of gas. This is why potentially everybody who’s interested in creating a hub, are talking about our high potential in this field,” Todiychuk said in an interview with the Russian daily Kommersant. Gazprom, the world’s largest producer of natural gas, has stopped using Ukraine as a transit route for gas deliveries, worried the indebted country will start to siphon off deliveries intended for Europe. Because of its $4.5 billion debt, Gazprom switched Ukraine to a prepayment system in June. Europe depends on Russian gas via Ukraine for 15 percent of its energy needs. Ukraine borders seven European countries - Belarus, Poland, Slovakia, Hungary, Romania, Moldova, and Russia. Its location on the Black Sea also creates a water border with Bulgaria, Turkey, and Georgia. Ukraine will develop a plan to change its underground gas storage system in the fall, which will

increase the convenience and flexibility for gas consumers, including a rapid injection feature and gas lift, said Todiychuk Naftogaz has also announced a scheme to start reverse gas flow to make up for any shortfall in Russian supplies. Ukraine plans to import 30 billion cubic meters of gas per year from Slovakia. “Practically we have five pipes in the corridor. And very often, unfortunately at the official level, statements are made that Slovakia and Ukraine can’t pump gas in two different directions in one pipe. That’s not true,”Todiychuk said. Ukraine’s reverse gas flow from Europe artificial – Putin Gazprom doubts that the current contract, which last another 5 years, allow Ukraine to legally start reverse gas flows. “Ukraine was never going to undermine transit or not fully comply with our gas obligations. We have enough space in the pipe for everything,” Todiychuk said. According to Todiichuk, the pipeline between Ukraine and Slovakia is only used at 60 percent capacity during peak winter periods and less so in the non-winter months. “We have a lot of free space in the pipe, and we can arrange the gas flow in the opposite direction,”Todiychuk said. Deliveries from Slovakia could satisfy up to 20

percent of Ukraine’s natural gas demand, which in 2013 was 55 billion cubic meters. NOVEMBER DEADLINE Ukraine has enough underground gas in storage to last through November, and if the country applies extra energy conservation measures, perhaps even longer, Todiychuk said. The company head explained that Ukraine has 14 billion cubic meters of gas in underground storage, slightly less than revealed in the middle of June, when Ukrainian Energy Minister Yury Prodan said 15 billion cubic meters were stored. Either way, Ukraine will make sure to be extra careful with gas consumption over the next couple months, Todiichuk said. Consumption of gas in eastern Ukraine, where violence continues to rage between anti-Kiev forces and the Ukrainian army, has decreased, according to Todiichuk. “Many industrial companies in eastern Ukraine have stopped working, and some are partially destroyed. At Naftogaz, we aren’t sure if the gas consumption drop is related,” Todiichuk told Kommersant. Gazprom maintains the majority of the supplies in storage are unpaid Russian gas. Gazprom CEO Miller cited an 11.5 billion cubic meter figure as potentially belonging to Gazprom.

HSBC: RUSSIA ENTERS TECHNICAL RECESSION, AS UKRAINE’S DRAG WEIGHS

ussia has slipped into a technical recession, as the growth has been negative for the past two consecutive quarters, and stagflation could be on the horizon, a new HSBC report reveals. Political tension in neighboring Ukraine is being blamed. “In June, the Russian economy showed zero growth, and slipped into a technical recession in the first half of 2014”, HSBC analyst Artem Biryukov commented in a Thursday note. “Unfortunately, the recent spike in geopolitical tensions amid the Russia-Ukraine standoff will likely have long lasting negative effects on private fixed investment growth in Russia. This will hamper economic recovery in Russia in 2014-15, despite large investments further to the signing of the Russia Chinagas deal,” Biryukov said. Ukraine is Russia’s third largest trading partner with a turnover of around $22 billion in 2013. Souring relations with some western countries that don’t agree with Russia’s actions in Ukraine is hitting Russian foreign trade. In March 2014 it fell 11.4 percent compared to March 2013. According to Biryukov, the most likely outlook for the second half of 2014 is stagflation - low

economic growth coupled with high inflation. “Stagflation remains our baseline scenario for 2H 2014. The shaky improvement of manufacturing and services sector activity in June is unlikely to be sustained for purely statistical reasons. Once positive base effects fade in 2H 2014, we could see even negative annual GDP growth data appearing,” Biryukov wrote. Russia could further fall into the financial abyss, HSBC warns. In the first quarter of 2014, between January and March, Russia’s seasonally adjusted GDP fell by 0.5 percent. HSBC analysts used manufacturing, service industry, and business activity indicators as proof the Russian economy has slowed, nearly to a halt. Russia’s Purchasing Managers Index (PMI) in June grew to 49.3 points, but still didn’t break 50, the threshold that denotes expansion.

The Production Index was 50.1 points after it hit a minimum of 47.1 in May. The economy only added 0.9 percent in the first quarter of 2014, revised from the previously assessed figure of 0.8 percent, according to Rosstat, the country’s statistical office. It was a 0.3 percent drop compared to October-December 2013. At the height of the conflict in March when Crimea rejoined Russia, Russia’s GDP growth was 0.9 percent, compared to 1.3 percent the year before.

AZERBAIJAN July 7, 2014 #61

caucasian business week

AZERBAIJAN REDUCES CAR IMPORT PASHA CAPITAL KEPT IN JUNE ITS FROM GEORGIA LEADERSHIP AMONG BAKU STOCK of 2013. By comparison, the country exported some 15,860 cars worth $152.41 million to AzerEXCHANGE BROKERS baijan in January-May, 2013.

round 10,930 cars, totaling $121.7 million, were exported from Georgia to Azerbaijan in January-May, 2014, Georgia’s National Statistical Service said in a report on July

1. The report added that the share of car export in the total volume of Georgia’s export to Azerbaijan stood at 50.62 percent during the reporting period. The volume of car export from Georgia to Azerbaijan dropped by 20.15 percent, or by 4,930 in quantitative terms compared to the same period

The decrease in Georgia’s car export to Azerbaijan is mainly due to the country’s transition to the environmental standard of Euro-4. Implementation of this standard started from April 1, 2014. Introduction of the Euro-4 significantly restricts the imports of used cars which constitute a large part of car imports from Georgia to Azerbaijan. Around 1,320 trucks worth $8.84 million were exported from Georgia to Azerbaijan during the reporting period. By comparison, some 1,400 trucks worth $9.65 million were exported from Georgia to Azerbaijan in the first five months of 2013. Cars are delivered to Georgia from abroad. In total, around $240.42 million worth of goods were exported from Georgia to Azerbaijan in January-May, 2014. The amount of export to Azerbaijan decreased by 10.38 percent compared to the same period of 2013. By comparison, some $268.26 million worth of Georgian products were exported to Azerbaijan in January-May, 2013.

FRENCH ALSTOM TO SUPPLY 50 FREIGHT LOCOMOTIVES TO AZERBAIJAN

rench Alstom Transport SA Company will supply 50 freight KZ8A locomotives to Azerbaijan Railways CJSC in 2016-2018, Head of the Azerbaijan Railways CJSC Arif Asgarov told lo-

cal media. Asgarov said a total of 11 contracts were signed between the two sides during the AzerbaijaniFrench business forum held in Baku in May, 2014. Azerbaijan’s Transport Minister Ziya Mammadov and President of Alstom Transport SA Henri Poupart-Lafarge signed the documents. The total amount of the signed contracts is 300 million euros, while Alstom’s share stands at

around 150 million euros. The contracts may also include the construction of a depot for technical assistance and maintenance affairs, as well as a training center for Azerbaijani Railways’ staff. Alstom also signed a memorandum of understanding (MoU) with the Azerbaijani company on the reconstruction of the ‘May 28’ metro station and the second stretch of the ‘green’ KhataiHazi Aslanov-2 branch. The MoU is aimed at developing the modern metro cars of both new lines and gradually replacing the existing fleet of Baku metro. Both parties agreed to sign a final agreement on this issue in the coming two months. Being a global leader in the manufacturing of equipment for generation and transmission of electrical energy and railway infrastructure, Alstom operates in about 100 countries. The company has been operating actively in Azerbaijan for over 20 years. KZ8A locomotives rank among the most powerful locomotives in the world (8,800 kW) with asynchronous traction, able to run at 120 km/h and to haul up to 9,000 tons. The modern KZ8A freight locomotives will help increasing the carrying capacity in transportation of raw materials and goods in Azerbaijan.

GEORGIA INCREASES IMPORTS OF AZERBAIJANI GAS

eorgia imported 685,520 tonnes of natural gas in the oil equivalent in the amount of $133.84 million from Azerbaijan in January-May 2014, the report of the Georgian National Statistical Service said. Azerbaijan is the main supplier on this type of fuel to Georgia with specific weight of 83.5 percent out of the total imports in this category. The report said that since the beginning of the year Georgia in total imported natural gas in the amount of $160.28 million. The remainder of the gas supply accounts for Russia and other sources. In annual terms, the volume of the Georgian

natural gas import from Azerbaijan rose by 20.9 percent (in quantitative terms - by 46,760 tonnes in oil equivalent). For comparison, Georgia imported 638.760 tonnes of gas in oil equivalent from Azerbaijan in the amount of $110.71 million in January-May last year. The specific weight of gas in total volume of import from Georgia to Azerbaijan for the reported period amounted to 53.7 percent. Georgia imported products amounting to $249.02 million from Azerbaijan in January-May, 2014. The volume of imports from Azerbaijan to Georgia grew by 3.98 percent. For comparison, during the first five months of 2013, Georgia imported Azerbaijani goods worth $239.49 million.

asha Capital (Paşa Kapital) broker has kept its leadership (kept in February and March, and returned in May) in the rating of brokers at the government securities market (with the exception of repo operations market) at the Baku Stock Exchange. The International Transaction System was the leader in January and Chelsea

Capital in April. According to the BSE, in June 2014 the ranking of brokers was headed by Pasha Capital with brokerage services provided for AZN 1,571,779,703.26. The second leading broker was Invest-Az with brokerage services of AZN 917,690,800.00. Chelsea Capital held the third place with services for AZN 811,379,697.89.

Ranking of brokers at government securities market for June 2014 Current place on transaction volume

Previous position

Pasha Capital

Invest-AZ

917690800.00

Chelsea Capital

811379697.89

International Transaction System

446358031.20

Standard Capital

157846715.53

Brokdil-Az

147732854.26

Xalq Kapital

98496722.91

Unicapital

69812098.48

Broker

Sum of brokerage services (AZN) 1571779703.26

Texnika Capital Management

64600277.57

BoB Broker

36445439.27

ADB-Broker

33835645.55

Yapi Kredi Invest

12002466.00

Caspian Financial Ltd

1398905.86

AZERBAIJAN’S REAL ESTATE MARKET INCREASED BY 27.4% YEAR-ON-YEAR

he Central Bank of Azerbaijan reports that real estate market turnover for Jan-May grew by 27.4% yearon-year. Over 2013 its growth was 40.9% compared to 2012. In 2012 it grew by 24.86% against 2011. The CBA reports that as of June 1, 2014, turnover of real estate market (the cash flow of notary’s offices) reached AZN 1.992 bn versus AZN 1.563 bn a year earlier. The transfers to notary’s offices accounts for purchase/sale of real estate totaled AZN 927.291 million versus AZN 684.911 million a year earlier (+35.39%), and the withdrawals from these accounts made AZN 1.065 bn versus AZN 878.926 million (+21.2%). At that, the CBA reports of a decline in revenues of mediators (banks, notary’s offices and realtors) for residential real estate transactions by 28.9% for Jan-May. As of 1 June 2014, mediators’ earnings were AZN 138.006 million versus AZN 194.015 million a year earlier. The share of the bank’s mortgage loans in mediators’ participation reached 38.2% for Jan-May.

The banks issued mortgage loans for AZN 52.7 million against AZN 49.5 million a year earlier. Jan-May’s mortgage provided only 4.95% of payments on real estate transactions. Turnover of real estate market (the cash flow of notary’s offices) reached AZN 3.983 bn for 2013 versus AZN 2.828 bn a year earlier. The transfers to notary’s offices accounts for purchase/sale of real estate totaled AZN 1.752 bn in 2013 versus AZN 1.228 bn a year earlier (+40.45%), and the withdrawals from these accounts made AZN 2.231 bn versus AZN 1.599 bn (+39.5%). At that, the CBA reported of a rise in revenues of mediators (banks, notary’s offices and realtors) for residential real estate transactions by 29.2% in 2013. As of 1 January 2014 mediators’ earnings were AZN 479.621 million versus AZN 371.307 million a year earlier. The share of the bank’s mortgage loans in mediators’ participation grew from 20.3% to 23.5%. Last year the banks issued mortgage loans for amount of AZN 112.9 million against AZN 75.2 million a year earlier. Last year mortgage provided only 5.05% of payments on real estate transactions.

THE STATE GRAIN FUND BUYS GRAIN FROM LOCAL PRODUCERS AT THE PRICE OF AZN 240 FOR A TONNE

he State Grain Fund operating under the Azerbaijan’s Ministry of Emergency Situations, announced that it would start purchasing grain from July 2, 2014. According to the Azerbaijan’s Ministry of Agriculture, the Grain Fund will buy grain from local

producers at the price of AZN 240 for a tonne. “The Grain Fund will buy only such grain that confirms to quality requirements imposed by the Cabinet of Ministers on July 7, 2009, in particular, with the moisture content no more than 13%, gluten content no more than 23%, gluten quality of at least 2 group etc”, - the Ministry informed.

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WORLD NEWS July 7, 2014 #61

caucasian business week

MACAU SURPASSES SWITZERLAND HELLFIRE IN IRAQ OPPORTUNITY IN GDP PER PERSON – WORLD BANK FOR KURDISH OIL PLAYERS

he gambling center of Macau has become the world’s fourth richest territory per person, leapfrogging Switzerland, according to World Bank report. The growth was mainly due to mainland Chinese gamblers and tourists. The Chinese territory reached per capita gross domestic product of $91,376 in 2013, an 18.4 percent jump from the year before. Macau is right behind Luxembourg, Norway and Qatar, and ahead of Switzerland which has an income of $80,528 per person in a fifth place. In 2012 Macau was ranked sixth by the World Bank behind Bermuda and Switzerland. The 2013 list does not include Bermuda; however as in 2012 its GDP per capita was estimated at $84,471, so it would probably trail Macau. The ranking does not include Monaco and Liechtenstein, which based on the latest available figures, would almost certainly top the rankings, says the Financial Times.

Since 1999, when Macau was returned to China, its economy has grown 557 percent mostly driven by the gambling sector. In 2006 Macau became the world’s biggest gambling center, and last year revenues were seven times that of Las Vegas at $45 billion. CLSA, one of the most bullish brokerages on Macau, suggests revenues could reach $90 billion by 2018, citing high-speed rail and other transport links will boost the economy. By 2017 Macau is expected to start benefitting from the world’s longest bridge that will provide a 30-minute road link from Hong Kong airport, a strategically important transport hub, which has more capacity than Macau’s own airport. However in June Macau experienced its first yearon-year decline in gaming revenues since 2009. Analysts suggest the fall in growth was caused by people spending money on the World Cup as well as the austerity and anti-corruption campaigns by Chinese President Xi Jinping.

CHINA’S MONTHLONG BLOCK OF GOOGLE HITS BUSINESSES

hinese business says it’s being increasingly hit by a monthlong government clampdown on Google, and is realizing how reliant it is on the service. The controls are part of Chinese government attempts to reduce foreign influence it considers pernicious. Since 2009 when Google stopped censoring searches, the service has been subjected to a cycle of impediments from Chinese authorities. The last restriction of such scale was in November and lasted just a few days during the Communist Party’s Third Plenum, the Financial Times (FT) reports. The so-called Great Firewall, a censorship and surveillance project operated by the Chinese Ministry of Public Security, was designed to block subversive content on the national internet and has been implemented against Facebook, Twitter, and Google content. Taxi cab operators and smartphone online gamblers as well as real estate companies all felt the impact of the restrictions on their activities. “Our global business runs on Gmail,” FT quotes Francis Bea of PapayaMobile, a Chinese mobile technology company. “It can

be hugely frustrating.” A lion’s share of PapayaMobile revenue comes from software selling through the Google Play online marketplace. In particular the Slots Fever game developed by the Beijing-based company was named the Google App store’s 20th highest grossing game in 2013. “If there are any disruptions with Google products, it can slow down productivity especially for a company that has international reach,” said Mr Bea. Besides the interference to online shopping, Google Maps are also subject to the restrictions. Uber taxi, an $18 billion transport company, faced difficulties when routes failed to load on its app which is based on Google Maps, according to Financial Times tests. However Uber said it “has not experienced or received negative user feedback on this matter.” In order to avoid the access problem, many users use a virtual private network connection. “We’ve checked extensively and there are no problems on our end,” a Google spokesperson said. Property websites such as Juwai.com and Sina. com also faced difficulties with showing the location of real estate such as St. Tropez villas or Pacific Heights mansions. Neither Google Maps, nor Google Street View which are part of both websites could provide customers with the location of choice. “Sometimes they load and sometimes they don’t,” said Juwai. Meanwhile Sina has already switched some of the listings to maps on Autonavi, a Chinese mapping service owned by e-commerce giant Alibaba.

BNP PARIBAS SETS UP SANCTIONSAVVY SCHEMES TO GET AROUND DOLLAR BAN

rance’s largest bank, BNP Paribas, is devising ways to retain its US customers after being banned from dollar-based transactions over breaking US sanctions. The ban will contribute at least $40 million more to a record settlement of nearly $9 billion. The bank pled guilty on Monday to two criminal charges of violating US sanctions against Sudan, Cuba and Iran, and will be paying out $8.97 billion. While the sum is an obvious blow, the bank’s current primary problem is the possibility that it may lose many of its US customers as a result of its inability to process dollar-based transactions which will come into force on Jan 1 next year. Firstly, BNP Paribas will need to spend some $40 million on sourcing and using third-party banks. Additionally, it will not be able to serve as a clearing agent for other banks.

The system will take half a year to devise and develop before the “dollar clearing” is imposed. The premise behind its development will be to ensure it operates so seamlessly that its customers will be unaware that a third party – the usage of which is expected to cost the bank millions of dollars – is involved. “The biggest worry would be losing clients, but so far it looks to be contained,” Jean-Pierre Lambert, an analyst for Keefe, Bruyette & Woods in London, told Bloomberg. “They want to make sure it’s set up properly, so that’s probably why they negotiated a transition period.” In addition to third-party banks, BNP Paribas’ technology infrastructure will have to be adjusted to adapt to its changing economic conditions. Under the terms of the settlement, BNP said that it would not be clearing any transactions instigated by oil and gas trade finance departments across several countries including Italy, Singapore and Switzerland. The hiatus placed upon the bank’s dollar-clearing privileges ignited impassioned responses from Italian, Belgian, British, French and Swiss regulators. BNP reiterated that it would not be attempting to sidestep the ban by offloading business to other departments within the same firm.

Iraq’s crumbling authority could be a golden opportunity for smaller oil companies that operate in the Kurdish north. Britain’s Genel Energy, a key operator in the region, stands to gain as other companies are driven out. Turmoil in Iraq is bad for oil giants Exxon and BP, who have significant projects in Iraq’s south where Sunni jihadists are gaining ground and are nearing Baghdad. With the country on the brink of all-out civil war, BP and Shell pulled their employees out earlier this month. The chaos should benefit the Kurdish oil industry and its regional partners. North of Kirkuk, Iraqi Kurdistan provides an oasis of tranquillity, and small companies like Genel are reaping the benefits. Genel Energy is a partner of the Kurdish Regional Government. Genel Energy is run by former BP boss Tony Hayward, and the company recently began pumping oil along its new KRI pipeline which runs from Iraqi Kurdistan to Turkey, where it is sold on world markets. The UK-based company produces as well as transports oil from the Kurdistan Region of Iraq, whether Baghdad likes it or not. “The Iraqi government is accusing the Kurds of stealing Iraq’s national oil. And British companies operating there, one way or another, could be helping that cause,” Mamdouh Salameh, an oil economist and World Bank consultant, told RT. Baghdad is trying to prevent Genel from export-

ing to Turkey, and has even opened an arbitration case to prevent the first batch of oil being sold. The Kurds see value in the partnership with Genel because it helps fund their mission to break free from Iraq. Oil assets in the region include Taq Taq, Tawke, Miran and Bina Bawi fields and the KRI pipeline. The company produces 80,000 barrels of oil per day, and by 2014 expects to pump 145,000 barrels. Kurdistan produces 200,000 barrels per day compared to 3 million barrels in southern Iraq, according to Bloomberg data “They are too small to be considered for major oil fields in Iraq. They will never, and I repeat never, be permitted to operate in Iraq” Salameh told RT. Genel Energy was formed out of a merger between Turkish Genel Enerji and Vallares, Hayward’s investment arm. Proven reserves include 453 million barrels of oil equivalent and 1.1 billion barrels of oil equivalent in contingent reserves, both are 2013 estimates made by the company. The company, though small, has about $600 million cash on hand. In May it raised $500 million in an uninsured bond sale. Hayward departed BP in 2010 following the PR disaster the company faced after the Gulf of Mexico oil spill. Hayward could soon leave Genel to lead the trading and mining company Glencore, as he was appointed Chairman in May.

SHANGHAI FAVOURITE TO BECOME BRICS BANK HQ

hanghai is considered to be the frontrunner between Russia, China, India and South Africa to become home to the new BRICS bank, media reports. The bank is an attempt by emerging economies to challenge the US-based global lending institutions. Four of the BRICS countries – China, Russia, India and South Africa are putting forward cities to host the new financial institution. However Brazil is not nominating a city. The choice of city is expected to be made at the leaders’ summit in Brazil on July 15, but Shanghai is seen by analysts as the firm favorite, says the Financial Times (FT). The leadership of the bank will be decided in the same month, and will be likely rotated every five years. The bank is scheduled to be officially launched at the same summit. China is starting a separate bilateral institution in Asia which is a rival to the Asian Development Bank, which is considered to be over influenced by the US and its allies. The Research Center of Shanghai’s Fudan University says China has a strong advantage in terms of economic and political stability compared to India and Russia. China is the world’s second largest economy, with the largest trade and investment volumes, the research report added. On top of that, “China’s total bank-scale ranks among the highest in world, demonstrating its

strong ability to resist risks,” the Fudan University report concluded. Each BRICS member is expected to put an equal share into establishing the startup capital of $50 billion. BRICS officials also plan to set up a joint $100 billion emergency swap fund for financial crises available only if needed to meet the bank’s obligations. To compare, the World Bank has capital of $223 billion, and most of it is callable. Despite initially being a small rival the World Bank or the International Monetary Fund, it will serve as a reminder to the US of the shift in the global economy towards the developing world. “This is a considerable group of countries from around the world that have come together to create something without US or European involvement, this is significant,” the Financial Times quotes Oliver Stuenkel, Assistant Professor of International Relations at the Getulio Vargas Foundation in São Paulo. Since 2010 the US Congress has received proposals to increase the influence of emerging nations in the International Monetary Fund; however the program has not yet faced further development. “Congress is not ratifying [the changes] and that has caused a certain amount of disquiet and unease among the BRICS countries,” said Jose Graça Lima of Brazil’s external affairs ministry. “This arrangement [the BRICS bank and reserve fund] is not a response to that [but] it is an indication that it is possible among the BRICS to create mechanisms to realise certain objectives,” Graça Lima added.

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TBILISI GUIDE July 7, 2014 #61

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16

caucasian business week Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy 7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CHINA TOWN Tbilisi , 44 Leselidze St. (ent. from Chardin St.) Tel: 43 93 08, 43 93 80, Fax: 43 93 08 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 PICASSO Tbilisi , 4 Miminoshvili St. , Tel: 98 90 86 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30 LOFT 11. I. Mosashvili str, Tbilisi Tel: (+995 32) 230 30 30 RESTAURANT NERO 21 Abano Street, Tbilisi Tel: (+995 32) 292 10 15

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89 GEORGIAN NATIONAL MUSEUM - PICTURE GALLERY Tbilisi. 11 Rustaveli Ave. Tel: 98 48 14 KARVASLA’S EXHIBITION HALL Tbilisi. 8 Sioni St. Tel: 92 32 27, KOPALA Tbilisi. 7 Zubalashvilebi St. Tel: 99 99 02, Fax: 99 99 02 MODERN ART GALLERY Tbilisi. 3 Rustaveli Ave. Tel: 98 21 33, Fax: 98 21 33 M GALLERY Tbilisi. 11 Taktakishvili St. Tel: 25 23 34 ORNAMENT - ENAMEL GALLERY Tbilisi. 7 Erekle II St. Tel: 93 64 12, Fax: 98 90 13

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

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July 7, 2014 #61