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BUSINESS WEEK July 15, 2013 #13

caucasian business week

July 15, 2013, Issue 13

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GEORGIA JUSTICE MINISTRY SETS LEGAL MECHANISMS FOR DEBTORS PROTECTION

Bidzina Ivanishvili: Europe is Historic Choice of Our People, not of a Political Party Pg. 2

ustice Ministry has prepared draft amendments, which aim perfection of loan and mortgage agreements as well as regulation of compulsory auctions on debtors’ property. Pg. 4

GIORGI KVIRIKASHVILI – WE MADE PROGRESS IN SIGNING FREE TRADE AGREEMENT WITH EU

he Minister of Agriculture Giorgi Kvirikashvili considers that Georgia has made progress in signing free trade agreement with EU. Pg. 4

RESOURCE TAX FOR BORJOMI AND NABEGHLAVI MANUFACTURERS TRIPLES

REAL ESTATE MARKET REDUCED BY 11,7% IN A YEAR

ublic Registry Agency informs that in June 2013, number of registered transactions on real estate reduced by 11,7% in comparison with same moth of last year. Pg. 7

TI GEORGIA: STATE PROPERTY WITH INVESTMENT OBLIGATION WAS HANDED OVER FOR 1 LARI TO 39 LEGAL ENTITIES IN 2012

I Georgia, Georgian branch of Transparency International, said that state property was handed over for 1 lari to 39 legal entities in 2012. Pg. 9

35.4% 14.9% 5.9% MAJOR PART OF RESPONDENTS BACK GIORGI MARGVELASHVILI IN COMING PRESIDENTIAL ELECTIONS

ccording to the NDI survey, the majority of respondents support “Georgian Dream” coalition presidential candidate George Margvelashvili in the presidential elections. NDI will hold the presentation of the survey of political ratings on July 15, though, prior to this “PirWeli” is informed about the results of the survey according to which ratings of candidates for the presidential elections are as follows: In particular, when asked – if the presidential elections were held tomorrow, whom would you vote for - percentages are distributed as follows (the first choice) - George Margvelashvili - 35.4%, Nino Burjanadze - 14.9%, Davit Bakradze - 5.9%, Shalva Natelashvili - 4.5%, Salome Zurabishvili - 2.5%, Paata Burtchuladze - 1.6%, Giorgi Targamadze - 0.8%, Nestan Kir-

tadze - 0.2%, none - 10.5%, 9.9% - refused to answer, I do not know - 9.6%. When asked - if the presidential elections were held tomorrow, whom would you vote for - percentages are distributed as follows (the second choice) - George Margvelashvili - 9.8%, Nino Burjanadze - 4.5%, Davit Bakradze - 4.5%, Shalva Natelashvili - 4.1%, Salome Zurabishvili - 4.9%, Paata Burtchuladze - 1.1%, Giorgi Targamadze 0.5%, Nestan Kirtadze - 0.4%, none - 29.1% , 14% - refused to answer, I do not know - 22.8%. To be reminded, fieldworks of the NDI’s survey were conducted throughout Georgia within the period of June 12-26 on the basis of selection of 2,338 respondents by face-to-face interviewing. The NDI’s surveys are funded by Swedish International Development (SIDA) and are held by the Caucasus Research Center (CRRC). Pg. 3

AZERBAIJAN AZERBAIJANI BANKS’ ASSETS HIT NEW RECORD

otal assets of Azerbaijan’s banking sector reached a new record in 2012, amounting to 16.309 million manats ($20.775 million) as of November 1 Pg. 10

ARMENIA ARMENIA MAY POST 5.1% ECONOMIC GROWTH IN 2013, 5.3%-2014 AND 5.5% - 2015-2016: IMF OUTLOOK

CIS RUSSIA HITS A 25-YEAR RECORD FOR DAILY OIL EXTRACTION IN JUNE

WORLD NEWS DOLLAR FALLS AS MARKETS REASSESS FED PLANS TO SCALE BACK STIMULUS

PROSECUTION ACCUSES MAIA RCHEULISHVILI AND RUSUDAN KERVALISHVILI OF APPROPRIATING OVER 11 MILLION GEL OF TABUKASHVILI-88 FELLOWSHIP

rosecution accuses Maia Rcheulishvili and Rusudan Kervalishvili in appropriation of amount over 11 million GEL, belonging to comradeship Tabukashvili-88. Founders of Center Point Group Rusudan Kervalishvili and Maia Rcheulishvili were already charged. After leaving prosecutor office, Rusudan Kervalishvili states that she’s not called for questioning and she’s going to cooperate with investigation. Dexus share holder Ivane Tsaguria was also charged for assistance in group fraud and misuse of official position. Prosecutor general informs that during 20042009 members of comradeship Tabukashvili-88 attracted $27 701 299 for the construction of the flats for the union members, among them inputs of developers equaled to $23 380000 equal in GEL. “Maia Rcheulishvili appropriated $1 065 159

from the funds of union members Tabukashvili-88 with various criminal schemes, Rusudan Kirvalishvili appropriated $1 833 806 and 185 069 pounds from the finds raised for residential construction. In addition to this amounts, Maia Rcheulishvili and Rusudan Kervalishvili jointly appropriated $2 023 202 and 2 403 750 GEL. In sum, from the paid funds of Tabukashvili-88 members, which were assigned for house building (which had to be completed by 2007), Maia Rcheulishvili and Rusudan Kervalishvili illegally appropriated over 11 million GEL. It made impossible to build house for the union members”, - says the statement, released by prosecutor genera. Prosecution informs that on the basis of investigation requirement, many real estates of Center Point Group, companies and individuals, connected to it are sequestered, also multiple real estate belonging to LTD Dexus and LTD Alliance Capital, connected to it. Investigation continues.

Mikheil Saakashvili: Signing of Association Membership Agreement is out of Agenda

Pg. 2

Stefan Fule: Both Sides Hope Negotiations on Association Agreement will Be Completed at Vilnius Summit Pg. 2

Archil Kbilashvili: If i Say That The State Will Return Everything, Which Was Illegally Seized, Then We Should Close The State Giorgi Chkheidze: Similar Agro Credits Have Never Been Available in Georgia Pg. 5 Why Russian Billionaire Viktor Vekselberg Has Arrived in Georgia Pg. 5

Fishing of BakuTbilisi-Kars Railway Project Postponed By The End of Next Year Pg. 7

Pg. 5

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MIKHEIL SAAKASHVILI – SIGNING OF ASSOCIATION MEMBERSHIP AGREEMENT IS OUT OF AGENDA

BIDZINA IVANISHVILI: EUROPE IS HISTORIC CHOICE OF OUR PEOPLE, NOT OF A POLITICAL PARTY

urope is the historic choice of our people and it’ can’t be ascribed as a special achievement of a political power or a generation, the Prime Minister of Georgia Bidzina Ivanishvili said at the conference “Georgia’s European Way – EU’s Eastern European Partners – Towards the Vilnius Summit”. He said the new government of Georgia continues to follow the choice of the Georgian people regarding the foreign policy. “The special activity of our western partners indicates that the Western interest in Georgia more and more increases, which is important and a huge stimulus for our country. This is the tenth event, though the first in terms of the new government. We continue this tradition, which shows that our foreign political course is unchanged. We strongly believe that Georgia’s euro-Atlantic integration has no alternative on the way of democratic development. Our people understand that Western integration is the only way that would give possibilities of democratic development to our country. It is the historic choice of our people and can’t be as-

S cribed to as a special achievement of a generation or a political power, as this choice is multi century old. Georgia is one of the oldest European countries with its culture and values. After 2012 parliamentary elections, for the first time the government was changed by elections and a new government came in power, which aims at the implementation of the democratic aspiration. Our goal is to assist the development of the European type of civil society and build a real democracy”, Bidzina Ivanishvili addressed the conference participants. He said that the example of the Modern Europe proves that peace and well being can be the achievement of only a free person. “You Europeans managed to eradicate all religious and ethnic extremisms, the ideology that could kill the human rights. Georgia has the oldest culture and great traditions, though due to historic troubles we now learn to live in democracy and freedom and we hope in the partners’ help in this. We don’t spare an effort to establish rule of law in our country. We assure you that everyone will be equal before the law in Georgia – despite gender or religion”, Ivanishvili said.

STEFAN FULE: BOTH SIDES HOPE NEGOTIATIONS ON ASSOCIATION AGREEMENT WILL BE COMPLETED AT VILNIUS SUMMIT

uropean Commissioner for Enlargement and European Neighbourhood Policy Stefan Fule declared that both sides (European Union and Georgia) hope that negotiations on Association Agreement will be completed on summit in Vilnius. This agreement will bring Georgian citizens closer political relations and economic integration with EU, he said after today’s meeting with Georgia’s Premier Minister Bidzina Ivanishvili. Fule declared that Vilnius summit is a good opportunity for Georgia to confirm again its European choice. A lot of work needs to be done

July 15, 2013 #13

for that end and Georgia should manage to show respect of human rights, he said, pointing at necessity of democratic institutions’ strengthening, political pluralism and media freedom. In his turn, Ivanishvili said that Georgia is on important stage of cooperation with EU today. From now on, we are entering a qualitatively new stage in our relationships, as negotiations on the Association Agreement come to end, he noted. In Vilnius, the Association Agreement will be initialed as well as its part, Deep and Comprehensive Free Trade Agreement, the Georgia’s Prime Minister said, adding that it will make EU integration irreversible.

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igning the association agreement with EU is off the agenda, President Mikheil Saakashvili stated at the press conference in Chişinaú. The President informs that the only thing Georgia is fighting for today is to initiate the association agreement. “Two years ago everyone considered that we’d sign not only the association agreement with Moldova, but would adopt a declaration on the European perspectives of two countries – so that in the future, we would potentially become EU membership candidates. Unfortunately, due to the internal factors, signing the association agreement is off the agenda. The only thing we fight for is to initiate the association agreement – it won’t take effect, but we’ll sign so that this is finally an agreed project. In case of Moldova, it is decided. As for Georgia unfortunately there are questions regarding this too. We were high achievers and we don’t want to turn into failures and be left in the same class”, Mikheil Saakashvili stated. The President of Georgia met with the Moldavian

President, chairperson of Parliament of Moldova and Prime Minister. Security Council Secretary Giga Bokeria, MPA Giorgi Baramidze and Giorgi Kandelaki, also Tbilisi Mayor Gigi Ugulava are in the Georgian delegation.

EDUCATION MINISTER EXPECTED TO RESIGN IN SEVERAL DAYS

eorge Margvelashvili will resign from Minister of Education and Science position in several days. Prime Minister Bidzina Ivanishvili stated about it in Batumi, during the meeting with journalists. In Batumi Prime Minister participates in the Batumi conference: “European way of Georgia Eastern European partners of EU - to the Vilnius Eastern Partnership Summit”. Bidzina Ivanishvili states that George Margvelashvili is not obliged by the law to resign, although he has a desire and is going to resign in several days. Prime Minister promises that governmental resources will not be used on the presidential elections. “All participant candidates in the presidential elec-

tions will have equal rights and governmental resources will no way be used”, - Ivanishvili stated. Prime Minister has not named the person who will occupy position of Minister of Education and Science.

EU TO ALLOT 16M EUR FOR GEORGIA’S BORDER MANAGEMENT AND MIGRATION

uropean Union will allocate 16 million EUR for further capabilities enhancement of Georgian state structures, responsible for border management and migration issues. Respective financial agreement was signed in Batumi today by Alexander Petriashvili, Georgia’s State Minister for European and Euro-Atlantic Integration, and Stefan Fule, EU Commissioner for Enlargement and Neighbourhood Policy.

Support will be directed to capabilities enhancement of Interior Ministry’s Border Police (including Coast Guard Service), Patrol Police, Police Academy and Finance Ministry’s customs service. The agreement envisages application of special equipment and auxiliary information technologies for border management, as well as development of mechanisms for operative information exchange for Revenue Service.

MIROSLAV LAJČÁK – GEORGIA IS A SPECIAL COUNTRY AMONG 6 EASTERN PARTNERSHIP MEMBER STATES

eorgia is really unique and special among 6 Eastern Partnership member states, the Minister of foreign Affairs of Slovakia Miroslav Lajčák said at the press conference in Batumi. He said Georgia is one of the countries that confirmed its Euro-Atlantic orientation by the October parliamentary elections and democratic transfer of power. “We know that Georgia’s European orientation is not the priority of governments, but it is the national choice. You can learn in the future from your mistakes, or from our mistakes and use our positive experience”, Miroslav Lajčák said.

MAIN EVENTS July 15, 2013 #13

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NDI – 52% APPROVE COUNTER DEMONSTRATION ORGANIZED AGAINST THE RALLY SUPPORTING THE RIGHTS OF SEXUAL MINORITIES

ccording to NDI research, 52% of respondents approve of counter demonstration organized against the rally supporting the rights of sexual minorities, 33% disap-

proved. Asked whether they approved members of counter demonstration breaking through police barriers, 30% approved, 46% disapproved. 49% disapprove of the actions against the sup-

NDI-COMMISSIONED PUBLIC OPINION SURVEY

.S. National Democratic Institute (NDI) released on July 12 part of its commissioned public opinion survey, which shows respondents’ attitudes towards broad range of policy and current issues. The poll also includes ratings of political parties and this segment of the survey will be released by NDI on July 15. The survey was fielded by the Caucasus Resource Research Centers (CRRC) for NDI on June 12-26 and was funded by Swedish International Development Cooperation Agency (Sida). The survey was conducted through nationwide face-to-face interview with 2,338 respondents and has a margin of error plus, minus 2.9%. Compared to the similar survey conducted in March, respondents’ attitude towards the country’s development and democracy has changed. Number of respondents viewing Georgia as moving in the right direction decreased by 13 percentage points and amounted to 45%; 13% of respondents said that the country is going in the wrong direction, instead of 8% in March. 38% believe that Georgia is a democracy now (43% in March), against 46% who think it is not (38% in March). 72% of respondents said that taking everything into account in general they and their household remained the same since October, 2012; 12% responded that they were better off and 16% worse. 62% of respondents think that the current government is making the changes that matter to them; 27% of respondents think opposite. During the March survey 71% of respondents answered positively, and 18% - negatively. Number of respondents, who think that if UNM was in charge it would make the changes that matter to them, has remained statistically the same since NDI’s March survey. The survey shows that jobs remain the number one priority issue for most of the respondents (61%); territorial integrity and affordable healthcare are the second and third priority issues at 34% and 30%, respectively.

Current Issues 51% of respondents think that the detention of exPM and former interior minister Vano Merabishvili, who is now UNM’s secretary general, was the result of impartial investigation; 18% of respondents think that it was a politically motivated arrest; 4% responded that they did not agree with any of these assumptions; 3% refused to respond and 24% responded that they did not know. The survey shows public awareness concerning the May 17 violence against an attempted antihomophobia rally in downtown Tbilisi. 79% of respondents disapproved the decision to hold anti-homophobia rally; 10% - approved it. 52% of respondents approved the decision to hold a counter-demonstration; 33% - disapproved it. 46% of respondents said that they did not approve breaking through police cordon by counter-demonstrators; 30% - approved it. 49% of respondents did not approve any violence against gay rights rally; 25% - approved it. 51% of respondents think that all perpetrators, including clerics, should be punished; 24% did not think so; 20% responded that they did not know. Foreign Relations According to the survey, support for Georgia’s EU and NATO integration remains strong at 79% and 73%, respectively. In a marked change over the March survey, number of respondents, who are satisfied with Georgia’s current relationship with Russia, has significantly decreased. In June only 25% of respondents are satisfied with these relations compared to 38% in March. In June 63% of respondents said that they are dissatisfied with these relations (49% in March). Compared to the March survey, number of respondents, who believe that Russia is “a real and existing threat to Georgia” increased from 26% to 37%. Number of those, who believe that this threat is “exaggerated”, decreased from 42% to 34%. 20% of respondents said Russia “is no threat to Georgia at all.” Civil.ge

porters of sexual minorities, 25% approve. 46% approved of the government investigation of these actions, 29% disapproved. 51% of respondents considered all people, including priests, who committed actions against supporters of sexual minorities deemed unlawful by authorities, should be held legally accountable, 24% of respondents were against. According to the NDI research, 10% approves of this demonstration, 79% disapproved.

VAKHTANG RCHEULISHVILI: FORMER GOVERNMENT FORCED US TO TRANSFER “CENTER POINT” UNDER “DEXUS” MANAGEMENT

akhtang Rcheulishvili appealed to the Prosecutor General’s Office with a request not to require prior imprisonment for Maya Rcheulishvili and Rusudan Kervalishivili. Vakhtang Rcheulishvili said at a news conference today. In his words, the arrest of “Centre Point” founders will stop the company’s activity. “No matter how unpleasant this fact can be for our family, I don’t see the tragedy. We also are interested in the more questions to be answered. However, the tragedy will be if they are sentenced to prison terms. Gross interference in the work of the company and their arrest mean that the company will stop working. Such interference in the business is a disaster. We do not agree with the charges, but we are interested the court to find out whose fault is that the company faces such prob-

lems today, “- Vakhtang Rcheulishvili states. He spoke to reporters on the details of how the “Center Point” company was transferred under management of “Dexus” company. According to Rcheulishvili, the former government demanded to transfer the company under “Dexus” management. “Gigi Ugulava, Tbilisi Mayor, and the National Bank President George Kadagidze narrated the decision, which was agreed with Adeishvili, “go home and “Dexus” will work instead of you”. When Rusudan entered the Parliament, they waited for financial assistance and when they saw that the party funding didn’t occurred then they interested in the company and it became attractive to them,”- Rcheulishvili says . Rcheulishvili said, a property worth 92 million was transferred under “Dexus” management by “Center Point “ company.

TBILISI INTERNATIONAL FESTIVAL OF THEATRE 27,28 SEPTEMBER, 2013

…. A living, breathing patchwork quilt of visual illusions ... both wonderfully uplifting and desperately sad….

Missing

Physical theatre Directed and created by Amit Lahav Duration: 75 minutes, without intermission Venue: Kote Marjanishvilis State Drama Theatre ABOUT PERFORMANCE: IF you look back over your life so far, if you are really honest with yourself, how much do you romanticise the truth in your head? How many details do you overlook? How much have you chosen to forget? Which things stay clearest in your memory and why? How much are you really willing to remember? We would love to know your thoughts on this,

leave a comment below and let us know what this means to you. Everyone will probably have a different answer to these questions, because everyone is different. In MISSING we track the memories of Lily and how her past is shaping her future without her realising...

Gecko, UK Gecko is an award-winning physical dance theatre company based in the UK. The company was established in 2001 and has since created six internationally acclaimed shows which have toured across the world to over 50,000 spectators. Our goal is to inspire, move and entertain our audiences. Working across all age groups, nationalities and forms, Gecko celebrates diversity. September 27/28 Ticket Prices: 55, 40, 25, 15 GEL www.tbilisiinternational.com www.facebook.com/TbilisiInternational

International Program

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JUSTICE MINISTRY SETS LEGAL MECHANISMS FOR DEBTORS PROTECTION

ustice Ministry has prepared draft amendments, which aim perfection of loan and mortgage agreements as well as regulation of compulsory auctions on debtors’ property.

As the Ministry said, the amendments improve legislative state of the debtor, as “current legislation does not define mechanism for debtor’s protection in case of misuse of situation by creditor”. The amendments should be adopted in September. The Minister Thea Tsulukiani defines that loan and mortgage agreements should be registered by notary, so “the debtor’s solvency will be checked in order to prevent future abuse from the private creditor’s side”. The draft preserves the creditor’s right to get the property in ownership in case of agreement, however with obligation to repay the debtor the difference between market value and volume of debt. Request to pay interest on interest is not allowed, upper limit for interest is set for mortgaged loan agreements and requirement on informing the sides about holding an auction becomes obligatory.

ARCHIL KBILASHVILI: “IF I SAY THAT THE STATE WILL RETURN EVERYTHING, WHICH WAS ILLEGALLY SEIZED, THEN WE SHOULD CLOSE THE STATE”

rchil Kbilashvili, Main Prosecutor of Georgia, declares that about 9,560 facts of property transfer by Georgian citizens to the state have been fixed through 8 years. Through 3 months after the new government has come to the power, 20,000 complaints have been submitted to the Prosecutor’s Office, being connected to torture, confiscation of property, unfair verdicts and other issues, Kbilashvili declares. Only in 2011, about 108 million lari was taken from people by plea agreements, he notes. However, “if we say now that the state will return everything, what was illegally seized, then we should close the state, as the budget will not be able to compensate all these”, Kbilashvili declares. “So, we should apply to some prudent policy in order to restore justice and restitute property rights in dynamics and in definite period”, the Main Prosecutor points.

ENVIRONMENT AND NATURAL RESOURCES PROTECTION MINISTRY: LEGISLATION ON FORESTRY ACTIVITY IS OBSOLETE

inistry of Environment and Natural Resources Protection said in its report on national forestry policy that legislation on forestry regulation either is out of date or does not exist at all. Such situation “prevents the government to conduct control over forest managers and users”, the report stated. The Ministry considers that it is urgent to solve the problem of irrelevance between the law and its execution mechanism, as well as to establish firm legislative frames and strong administration, which will regulate the sphere, excluding illegal use of forest. According to the Ministry, the government’s control in regard of long-term forest licenses is insufficient, while license-holders “are not provided with enough authority for forest protection and are not motivated financially or by any other way, in order to protect forests”. In case of changes in forest ownership structure and in scheme of responsibility for forest management, forest protection should became stronger, while management – more steady, if communities and responsible private organizations will take part in forest management, the report states.

July 15, 2013 #13

GIORGI KVIRIKASHVILI – WE MADE PROGRESS IN SIGNING FREE TRADE AGREEMENT WITH EU

he Minister of Agriculture Giorgi Kvirikashvili considers that Georgia has made progress in signing free trade agreement with EU. As the Minister told journalists at the conference in Batumi, all the details will be agreed before Vilnius summit. Kvirikashvili hopes that the association agreement will be initialed. “It has been a very significant dialogue. We have made progress in signing free trade agreement. Six rounds were held, all the details are almost agreed and some technical details remain. We think before the Vilnius summit, everything will be agreed. We hope the association agreement will be initialed, which includes free trade agreement”, Giorgi Kvirikashvili said. The Minister says that the conference indicates that the EU recognizes progress in this direction. As he says the EU space becomes achievable for

the investments carried out in Georgia. As it will be allow to export product produced in Georgia to EU states. “It will be a huge stimulus for the investments and for business development in Georgia”, Giorgi Kvirikashvili said.

REGIONAL DEVELOPMENT AND INFRASTRUCTURE MINISTRY TO CONTROL ROAD-BUILDING REGULARLY

eorgian Ministry of Regional Development and Infrastructure warns the contractor companies to meet their engagements. As the Ministry said in its today’s statement, quality of works, as well as conscientiousness of supervision, implemented by respective bodies, will be controlled periodically. The Ministry reported that independent examination was implemented on 5 road sections, revealing that asphalt pavement on 2 of them does not comply with the state standards and requirements of the tenders. The matter concerns road sections of KutaisiTkibuli-Ambrolauri and Tbilisi-Senaki-Leselidze, which were rehabilitated by Georgian branches of Ergokat Makedonias SA and Modern Service, respectively.

KOKA GUNTSADZE “RAILWAY INFRASTRUCTURE UNFORTUNATELY DOES NOT MEET MODERN DEMANDS”

oka Guntsadze, chairman of supervisory board of Georgian Railway, says in an interview with the newspaper that “railway infrastructure unfortunately does not meet modern demands”. Guntsadze names among priorities such tasks as mastering of new geographical areas and attraction of additional cargo, traffic safety and infrastructure modernization. At that, negotiations are held with respective authorities of different countries on tariff policy harmonization and establishment of single rules of the game, Guntsadze says. While speaking about construction of Tbilisi bypass railway project, chairman of the supervisory board notes that “it was not a profitable project”. Negotiations, aiming turn of the project into profitable one, are underway, he notes and adds that delay of the project for several tens years is considered as well.

“DEFLATION PRESSURE ON GEORGIAN BUSINESSES – REDUCED REVENUES AND HEAVY DEBT BURDEN”

he article reports that deflation is observed in Georgia for more than a year and negative trend of price change is fixed from February 2012. The article brings comments of expert Lia Eliava and chairman of supervisory board of East Gate Group Irakli Iashvili, who criticize the monetary policy. As Eliava notes, “all tools of National Bank of Georgia (NBG) are intended for reduction of inflation and not for increase, which is so vitally needed for current Georgian economy”.

Currency rate regulation with periodic interventions has become the sole guideline for NBG’s activity, the expert declares and notes that when NBG has tried to seize inflation, it reduced money supply to the economy and “it still does not supply economy with enough money”. According to Iashvili, NBG “can really regulate money supply”. Inflation in such country as ours should be about 5-8%, he declares and adds that “there is more stimulation to develop production in conditions of inflation, than of deflation”.

INTERVIEW July 15, 2013 #13

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TI-GEORGIA MADE INACCURACIES REGARDING PROPERTY DELIVERY TO THE BANKS

BC and Liberty have not purchased property form the state for 1 GEL and they paid millions of GEL for actives. In the report of Transparency International Georgia about the properties, delivered by President for 1 GEL, appeared sale of the area in Tbilisi Justice House to TBC Bank and Liberty Bank. In particular, according to NGO report, president, with March 19 Resolution, gave 359 square meters nonresidential area and land partially attached to it, located on #2 Sanapiro Street Justice House, for symbolic price - 1 GEL to TBC bank. According to agreement, the bank had to open branch till October 1, 2012. TI-Georgia wrote in the report that for 1 GEL non-residential area was delivered to Liberty Bank as well, based on president’s resolution. Although, in the following points of president resolution is written that TBC Bank had to transfer $1,651 million equal GEL

to the commercial account in 10 days after Civil registry requirement As for Liberty Bank, based on president’s resolution, they paid $1,224 million GEL for 156.53 square meters area. “In the justice house, located on #2 Sanapiro Street, in 2012 TBC Bank purchased 359 square meters area for $1,651 million. In particular, according to agreement, signed by TBC bank and Ministry of Economy on March 28, 2012, TBC Bank transferred value of this area - $1.651 million equal in GEL to the account of Civil Registry, which equaled to 2 710 664,34 GEL for the payment day”, - states TBC Bank’s comment. Reminding that Transparency International Georgia informs that the organization studies cases of the state property sale for symbolic prices during 2007-2012, that’s why they required appropriate documentations from the Ministry of Economy and Sustainable Development.

GEORGIAN BEER COMPANY OBTAINS ISO 22 000 CERTIFICATE

SC Georgian Beer Company has been receiving international certificates in unprecedented short terms. In this case, Zedazeni brewery obtained ISO 22 000 certificate on May 17, 2013. The food safety standard of ISO 22 000 is issued to European manufacturers and it includes the HACCP system too. This system determines critical control points and analyzes hazards. The HACCP system represents one of the main preconditions for obtaining ISO 22 000 certificate.

Manufacturers are obliged to control all stages of production and they are responsible for issuing, distributing and sales of high-quality products. “We permanently improve control management systems in line with the international standards. This mechanism is not to swerve from the European way of quality control. Out priority is to carry out product safety ands quality control policy”, JSC Georgian Beer Company director general Vasil Sulkanishvili noted.

GIORGI CHKHEIDZE: SIMILAR AGRO CREDITS HAVE NEVER BEEN AVAILABLE IN GEORGIA An interview with Director of Agriculture Projects Management Agency GEORGE CHKHEIDZE - What is the function of the Agricultural Projects Management Agency? - The main task and function of the agency is the project planning in the field of government policy on agriculture and their implementation. Two projects have already been launched. In particular, small farmers support program that includes distribution of cards for the purchase of agricultural and raw materials. This project is successfully completed and the card-holders can cash them until August 1. Apart from that, 190 thousand hectares of land have been plowed within the project, and according to the preliminary data, most plowed lands are sown, except for rare exceptions. So the project can already be assessed as successful. As for the second project - “Preferential agrocredit”, which is a logical continuation of small farmers support program, we have helped farmers to cultivate the land and buy seed materials, pesticides and other. As for the third component, it provides funding of large enterprises, including the creation of new enterprises and issuance of long-term investment loans or the main means. Its term is 7 years, minimal loan amount is 50 thousand USD and maximum - 600 thousand USD. - How does the flow of the projects meet your expectations? - We are satisfied with the project despite the fact that only three months have passed since the start of the project and in such a short period of time a serious assessment can’t be probably made, but, nevertheless, statistical data provides a basis for assuming that the project has a very good start. This program will continue until the end of the year and if a final evaluation is positive, we are going to continue it next year. Loans worth 50 million GEL have already been issued in the frames of the project, this number changes every day. The first component is a commodity loan, in the frames of which loans worth 850 thousand GEL were issued to 1 544 farmers. Within the second component a loan worth 27 200 000 GEL was issued to 1 400 farmers. As for the third component, 12 600 000 USD were issued to 96 companies. According to official data of the National Bank as of April 1, agro-loan portfolio amounted to 56 million GEL, and we have issued 50 million GEL during three months. - What can you say with regard to start-ups? - Start-ups theme was of a very keen interest. In my opinion, it was stirred. What is start - up? It is usually a new project launched by business group or the creation of a new enterprise unit by an existing business. According to the latest data, 13 new businesses have been created as a start up. In total 2 900 000 thousand USD were issued to fund starts - ups. - What results has this project brought in terms of employment? - Funding of enterprises has just begun. These businesses do not work. They began to buyequip-

ment, construction. When the enterprises are set up and start working, then we will have statistics. This is in the third component. While in the second component there are mainly self-employed. - In what terms are 5 - 100 thousand GEL loans issued? - The agency that implements these projects and the fund which finances them does not accept resolution on the issuance of loans. This is absolutely banks’ discretion. We only set the conditions of the project as well as criteria... - In what terms should the loan be repaid? - In the second component the duration of the loan may be 18 months for the working capital while for the purchase of the main means - 24 months. - What are the main problems identified in the course of the project and taking them into account, what recommendations can you give to farmers? - The public had an expectation that the majority received the loan. Of course, it was not so intended. Everyone cannot get a loan, a loan accompanied with a huge responsibility. It is envisaged that it sholuld be returned and if it is not repaid , borrowers will face the problem, as well as organizations issuing loans and the country, because it means the expenditure ofresources in vain. So we think that the banking sector is the best evaluators of credit risks. Those people who had the expectation that they could easily obtain loans, in some cases, couldn’t get the loans. In addition, we have developed agro-leasing component within the project, which is almost similar to the third component and the only difference is that the project is financed by leasing instead of a loan. Those who are unable to purchase equipment through a third component, can benefit from leasing and mortgage problem will be removed. - Originally it was decided to set up 60 enterprises, but later Prime Minister announced about the creation of 100 new enterprises, whether there are enough resources in the fund and do you expect the emergence of new financers in the future? - The pace of the project suggests that more projects can be financed than it was planned. I think the Prime Minister’s expectations regarding the creation of more enterprises are correct. The amounts for the interest rate co-financing exist and there will not be any restrictions in this regard.

“WHY RUSSIAN BILLIONAIRE VIKTOR VEKSELBERG HAS ARRIVED IN GEORGIA”

nterest of Russian business circles towards Georgia is grown despite the difficult political context, the newspaper states. This is confirmed by visits of Andrey Kostin, president of VTB, and Viktor Vekselberg, chairman of board of Renova group. In his turn, Georgian Minister of Economy and Sustainable Development Giorgi Kvirikashvili confirmed to journalists that he holds systematic negotiations with Russian investors. “If this is not followed by traditional Russian pressure to drag Georgia in Eurasian Union, normalization of the relations will benefit both countries”, the newspaper considers.

BUSINESS caucasian business week

July 15, 2013 #13

ROSSELKHOZNADZOR SIMPLIFIED PROCEDURES FOR THE IMPORT OF GEORGIAN NUTS, SPICES, BAY LEAF

osselkhoznadzor simplified procedures for the import of Georgian nuts, spices, bay leaf, - Gazeta.ru reports. The agency made decision at the end-June, according to which phytosanitary certificate is not necessary for the

export of low phytosamitary risk products from Georgia, although the product will pass quarantine phytosanitary control. The edition mentions that list of low phytosanitary product includes tea, nuts/walnuts, bay leaf and other species. Besides, Russia still prohibits import of high phytosanitary risk products from Georgia. In particular - greens, vegetables and fruit. Their return to the Russian market is being discussed on the governmental level. It’s also noteworthy that prohibition was not cancelled on the quarantine products import with luggage by the citizens arriving from Georgia to Russia.

MAGTICOM PLANS TO BECOME MARKET LEADER

agticom plans to become the leader of the Georgian paid television market. The company sees its main advantage in relation to its rivals in its area of coverage, which encompasses all of Georgia. Magti are already claiming to be among the leaders on the market today. A spokesman for one of its main competitors Silknet has

stated that the variety of channels alone is not a decisive factor on the market, and for Magticom to be considered as a serious rival, it has to offer customers functional variety as well. The head of the Communications Department at Caucasus Online says that Magticom offers services based on a completely different kind of technology. According to him, Caucasus TV uses IP technology, spreading the signal through internet protocol.

RESOURCE TAX FOR BORJOMI AND NABEGHLAVI MANUFACTURERS TRIPLES

orjomi and Nabeglavi producers will pay increased tax for the mineral waters. On Wednesday special session, the parliament adopted draft law on Taxes on Natural Resource Usage with the third hearing. According to amendment, tax for these mineral waters triples. In particular, for the producer will have to pay 30 GEL instead of 10 GEL for 1 cubic meter of Borjomi mineral

water. Tax on Nabeglavi increases from 6 to 18 GEL. Draft law validates from October 1. Ministry of Economy and Sustainable development and LEPL Natural Resource Agency prepared the draft law. The authors state the through tax increase, budgets of Borjomi and Chokhatauri municipalities will considerably increases, which will be spent for the priories of these municipalities.

“CHOOSE GEORGIAN!’’ AND FRUITS AND VEGETABLES STORE PIL PIL BEGIN TO POPULARIZE GEORGIAN GOODS

rademark “Choose Georgian!’’ and the first fruits and vegetables branded store Pil Pil will carry out joint events to promote Georgian products. The two sides also signed a Memorandum of Cooperation. According to the Memorandum, “Choose Geor-

gian!’’ will promote Pil Pil products , the store will benefit from the Georgian trademark, farmers will be found in the regions and their products will be sold in Pil Pil network. They will jointly participate and organize various exhibitions. Pil Pil is the first fruit and vegetables branded shop in Tbilisi which has one facility but in the near future it is planned to open more branches in various districts of Tbilisi. Fruits and vegetables grown byGeorgian farmers are sold in the network. Trademark “Choose Georgian!’’ was designed by the Sales Management Company, the company offers sales management, advertising, consulting and management services, at the stage Georgian tea, honeyand fresh juices LIVO are produced under a trade mark “Georgian”.

TI GEORGIA: CELL NETWORK AD MARKET SHOULD BE REGULATED

I Georgia, Georgian branch of Transparency International, considers that the Parliament, National Communication Commission and the inspector’s office have to start discussion on introduction of anti-spam regulations. The organization says that office of personal data protection inspector, envisaged by law “On Personal Data”, will be opened in the coming months. However, the inspector would be given the right to impose sanctions only after the mentioned law will enter in full force in 2016. At this stage, Georgian legislation does not regulate the mentioned issues, so users have no pos-

sibility to opt out from undesirable ads, notes TI Georgia. As the organization says, GeoSMS and Paradox Georgia, providing mobile advertisement service through SMS, declared that they have databases of several millions of mobile numbers and know age, sex and address of these mobile numbers’ owners. It remains unclear how did mobile marketing companies obtained mobile numbers of citizens, TI Georgia notes, adding that mobile operators told them that they don’t share subscribers’ mobile numbers and information with the third persons.

REVENUE SERVICE DEMANDS FOR SEIZING BARAMBO REAL ESTATE

ommersant” reports that Revenue Service requires clarification regarding its mediation in the seizure of Barambo property. The service representative explains that the municipal court has not satisfied their demands regarding clarification of lien on “Barambo’’ real estate and Revenue Service ap-

pealed the decision in the Court of Appeal. According to them, the Revenue Department is interested ‘’Barambo” production not to face problems in the future and only the company’s real estate to be seized. The court seized “Barambo’’ property based on the Revenue Service’s appeal. The crediting of “New Energy” by “Barambo” was named a reason.

POSTEUROPE PROVIDES RECOMMENDATIONS TO GEORGIAN POST

eorgian Post reported that experts of PostEurop, association of European public postal operators, prepared recommendations on postal operations’ enhancement and service quality improvement. These recommendations envisage existence of law on post, introduction of postal boxes and join

IPS program (International Postal System, provides shippings’ tracking capabilities). Group of PostEurop’s 7 experts had studied situation in Georgian Post during 11 days. Georgian Post told Sarke that work on the mentioned issues has already begun, in particular, postal boxes will be supposedly ready by the end of September.

RUSSIAN TRAVEL COMPANIES ACQUAINTED WITH GEORGIAN TOURIST INFRASTRUCTURE

elegation composed of 13 representatives of Russian travel companies has visited Georgia on July 7-11. The aim of the visit, being initiated by GTM (Georgian Tourism Marketing), was acquainting with Georgian tourist infrastructure. Besides Tbilisi, the information tour included visits to Mtskheta, Kutaisi, Batumi and Kakheti region. The tour was supported by Georgian National Tourism Administration and Georgian Airways (AirZena).

According to National Tourism Administration, 260,616 visitors from Russia have visited Georgia in 6 months of the current year. This number exceeds by 68.5% the showing of the same period of 2012.

VARTSIKHE 2005 PLANS TO INVEST 25 MLN GEL IN DIVERSION CHANNEL

he company Vartsikhe-2005 is going to launch construction of diversion canal in VartsikheHES-4 hydroelectric station, located in Samtredia district (Imereti region). Expected volume of investments amounts to 25 million lari. The company declared that the project will be implemented in 4 stages, of which the first 2 ones envisage projecting work. In near future, open tender will be announced and the construction company will be selected.

The company’s management estimates that a new diversion canal, aiming protection of nearby villages in case of flood on Rioni river, will be launched in 2015. In this connection, the Energy Minister Kakha Kaladze met today with the company director Zaza Uplisashvili and management of Georgian American Alloys, American owner of the company. Vartsikhe-2005 owns VartsikheHES series of 4 water power stations, which installed capacity totals to 184 MW, while annual output makes up 850 million kWh on average.

KAKHETI WINE CELLAR PURCHASED ITALIAN-MADE WINERY EQUIPMENT AND RESERVOIRS

ational Wine Agency reported that Kakheti Wine Cellar purchased winery equipment and wine reservoirs, manufactured by Italian Della Toffola. For that end, the company borrowed $600,000 within the state program on preferential agricultural crediting. According to Public Register, Kakheti Wine Cellar was established in 2007. Current owner of 100% is Giorgi Kevkhishvili.

ECONOMY July 15, 2013 #13

caucasian business week

FREE TRADE AGREEMENT WITH EU WILL BE INTRODUCED IN NOVEMBER

epresentation in Georgia reported that Deep and Comprehensive Free Trade Agreement (DCFTA) between Georgia and EU is expected to be initialed during Vilnius summit of European Neighbourhood policy in November. Meanwhile, European commissioner for enlargement and European neighbourhood policy Stefan Fule is visiting Georgia, aiming discuss EU’s relations and cooperation with Georgia and take stock of the progress made in the final phase of the negotiations for the Association Agreement (including a DCFTA part). On July 9, Fule will meet the President Mikheil Saakashvili in Tbilisi, while on July 11-12, he

will met Prime Minister Bidzina Ivanishvili, Foreign Minister Maya Panjikidze and several ministers and members of the Georgian Parliament as well as civil society representatives in Batumi, where he will participate in the 10th conference “Georgia’s European way”. In his statement, made on the eve of visit, Fule said that “The run up to the Vilnius Summit is a crucial phase when our partners are expected to demonstrate their engagement to further deepening our cooperation based on our shared values and ensure the benefits of our closer cooperation are shared with the citizens. This is also an opportunity to emphasise the continued commitment and support of the European Union and its Member States to Georgia and [its] citizens.”

EXPERTS EXPECT NO CHANGES ON CONSUMER MARKET AFTER GEL EXCHANGE RATE DEPRECIATION

espite a slight one week impairment of GEL exchange rate, the economists surveyed by radio “Commersant” do not expect significant change in the consumer

market. Last few days, exchange rate of GEL is slightly falling against the USD. Radio “Commersant” wondered whether this process would affect the market. Specifically, on July 1 the rate was 1.6509, today it is established at a level of 1.6561. Economic expert Soso Archvadze says, the currency devaluation is alarming if the process lasts for a month and the currency depreciates by 8-10 points. Archvadze says that there is no significant fluctuation and this process is associated with the

current deflation. In his words, depreciation of the rate should provide consumer prices maintenance and their slightly increase. Archvadze adds that moderate inflation has a better influence in the consumer market. The Director of analytical portal BPI.ge Irakli Lekvinadze announces that in general, currency devaluation affects the general price level. According to him, a slight depreciation is being observed(0.3% from July 1), which may be linked to a reduction of investment and money transfers. However, imports reduced as well as the balance of payments deficit. Lekvinadze says that the current situation does not give grounds for the expectation of seriousfluctuations and the National Bank has all the tools in order the exchange rate of GEL to be stable.

NEW GAS PIPELINE CONSTRUCTION PROJECT VALUED AT 2 BILLION USD

eorgia’s Prime Minister Bidzina Ivanishvili declared that investments in Georgia, caused by construction of new pipeline for gas transportation from Azerbaijan’s

Shah Deniz, should reach $2 billion. He said that total cost of new gas main project makes up $40 billion. Premier declared the mentioned during today’s meeting with journalists and noted that he had already had meeting with representatives of BP and SOCAR. Ivanishvili said that within this project, “volume of cheap gas that we receive from the previous pipeline will increase 3 times”. According to him, initial capacity of the pipeline will make up 14 billion cubic meters, which should increase up to 24 billion cubic meters in future.

REAL ESTATE MARKET REDUCED BY 11,7% IN A YEAR

ctivity on real estate market reduced. Public Registry Agency informs that in June 2013, number of registered transactions on real estate reduced by 11,7% in comparison with same moth of last year. In June 41 881 transactions were registered throughout country on the real estate market.

Compared with May, number of transactions in June increased by 8,8%: growth was mentioned both in the number of primary (8,7%) and secondary (8,8%) transactions registry. Compared with June 2012, transaction number of primary transactions reduced (by 47,0%), secondary ones reduced (by 5,1%). In June 2013 number of primary transactions equaled to 8 071, secondary transactions - 33 810 units.

FINISHING OF BAKU-TBILISIKARS RAILWAY PROJECT POSTPONED BY THE END OF NEXT YEAR

rakli Tsulaia, director of LLC MarabdaKartsakhi Railway, declared that completion of Baku-Tbilisi-Kars railway project is planned for the end of the next year. While making this statement on the press briefing today, Tsulaia denied President Mikheil Saakashvili’s recent declaration about problems in this project. Yesterday, while visiting the construction area, Saakashvili said that “the government creates unclear, artificial problems, including financial ones”. “The railway will not be finished this year and as I see now, it will be completed in no less than 2 years, unfortunately”, the President declared. Tsulaia responded today that “only 28% of total works were done in 2008-2012 (construction has

started in 2008), so remaining 72% of works will be finished in 2013-2014”. In order to fund construction of the Georgian section, Azerbaijan has allotted 25-year credit line of $775 million, which payment will start after launch of the railway. According to Tsulaia, initial allotment amounted to $200 million (interest rate – 1%), and this amount has been already mastered. The second installment amounted to $575 million (interest rate – 5%), of which $175 million has to be spent this year. Tsulaia also declared that investigation is underway “on misspending of millions of lari under the former government of Georgia”. He did not specify either exact volume of argued spendings or other details, declaring only that the Prosecutor’s Office will make a statement on the subject.

GEORGIAN SIMPLIFIES FREE ECONOMIC ZONE ARRANGEMENT REGULATIONS

eorgia has reduced amount of the guarantee for the arrangement of free zones. New regulation reduced guarantees of Free Zone (FZ) organizer’s guarantee amount to 2 Euro for each 1 square meters, to no more than 500 000 Euro. According to instruction valid till now, FZ organizer had to submit guarantee amount of 5 Euro for 1 square meter, no more than 2 million Euros. According to change in the Resolution about the Approval of Instruction on the guarantee amount for creation of free zone, conditions of free zone

and goods storage”, guarantee validation terms submitted by the organization, was also reduced. In Particular, the organizer should submit warranty for at least1 year. Till now to the state requires at least 3 years term. Another amendment was made in the government’s resolution. Insurance kinds was added insurance police. In the case of insurance police as warranty, the insurer should take responsibility to pay any amount to the insured person (user), without any right to rejection or appellation, but no more than warranty amount, in the case of written request.

MELONS’ HARVEST AREA DECREASED BY 21.9% IN 2012

ccording to Sakstat said in its agriculture report for 2012, area of harvested melons totalled to 2,500 ha. This area decreased by 21.9%, if compared with 2011. Kakheti region accounted for the most part of the harvest’s area – 1,600 ha (year-om-year decrease – 30.4%). Area in Imereti made up 600 ha (decrease –

33%), Kvemo Kartli – 100 ha (no area was sown by melons in 2011). In the rest of the country’s regions, 200 ha was sown by melons and harvest was gathered on the same area, while there were no sown areas in 2011. At that, the report says that there is no difference between areas, sown by melons in 2011 and 2012 (3,300 ha).

TELASI REAL INVESTMENTS MARK 24.4% LESS FIGURE THAN PLANNED IN 2012

arget for investment volume of JSC TELASI (Tbilisi energy distributor) amounted to 23.9 million lari, the company’s audited report for 2012 says. However, factual volume made up 15.7 million lari only, i.e. was by 34.3% less. As TELASI says, the investment had to be made by own sources of the company. According to the company, structure of factual investments’ sources is as follows: amortisation – 14.2 million lari, profit for previous periods – 1.54 million lari. energy distributor, plans investment of 18.09 million lari this year, audited report of the company for 2012 says. At that, 6.64 million lari should be spent for technical reequipment and reconstruction, while 6.13 million lari – for new construction and expansion. Other investments should amount to 3.5 million

lari, while other planned capital works have to cost 1.9 million lari. The company says that investment volume will decline in 2014 by 0.52%, but increase in 2015 by 2%. Share of electricity losses in distribution network made up 14% in 2012, audited report of Tbilisi energy distributor JSC TELASI says. According to the company, 2.06 billion kWh was purchased in 2012, while electricity losses in the network totalled to 204 million kWh. This rate is decreased by 35%, if compared with 2011, the report indicates. As TELASI says, in order to decrease losses, cables between buildings’ entrances were replaced in 2012 by external wiring for 686 subscribers, while meters were removed from 1,822 subscribers’ territories, being switched by new isolated input afterwards.

BANKING NEWS July 15, 2013 #13

caucasian business week

TRAVEL LOAN WITH 11,9% INTEREST RATE ENTERED ON THE MARKET

SB Bank introduced travel loan with 11,9%. Bank informs that it’s a fixed interest rate. Summer offer is for those who wish to rest and travel. Usage of 1-month privileged period is also possible. Besides, all participants will get additional bonus, travel card, through which they’ll withdraw money for 0% from any ATM abroad. In the case additional budget is need, the debtor will use 500-GEL credit limit, accepted for the card.

INVESTBANK ENDS JANUARY TO JUNE PERIOD IN 845 322 GEL LOSSES

SC Invest Bank completed January-June 2013 with 845 233 GEL loss (2012 profit: 3,3 million GEL). By July 1, non-banking deposit portfolio was defined by 11 million GEL (2012 -15,9 million GEL), loans - 8,2 million GEL (2012 - 6,9 million GEL), overall obligations 17,8 million GEL (2012-17 million GEL). Bank actives equal to 31,9 million GEL (2012 32,3 million GEL). Invest Bank operates since 2003. 70% of the bank actives belong to KSN Foundation, 30% TRENDFOR HOLDING LTD. Beneficiaries are Michael Hagen (70%), Brenda Patricia Cocksedge (15%), Stefan John Kelly (15%). Stock capital of the bank equals to 14 million GEL (2012 -15,3 million GEL).

TBC ANNOUNCED ABOUT WINNING CAMPAIGN ON WESTERN UNION TRANSFERS

BC Bank announced about winning campaign on Western Union transfers. Persons involved in the campaign will pay 1% less than standard fee. Besides, each transaction provides cashback - filling mobile balance with $1. Bank informs that main financial prize equals to $1000 and it will be issued for 10 winners. Each client will get one-time cards for Western Union transfers from Georgia; under which protective cover special code is place. The code should be sent by sms on the number: 598 308 308 and the person is automatically engaged in the action. Firs five winners will be revealed on July 5, next ones - on September 2.

2Q13 RECORDS 3.9% GROWTH IN RESERVE MONEY AND 3.3 UPTURN IN NATIONAL CURRENCY TURNOVER

ational Bank of Georgia (NBG) reported that reserve money amounted to 9.53 billion lari in the 2nd quarter. If compared with the 1st quarter, the volume is increased by 3.9%. Growth in comparison with the same period of 2012 made up 33.5%. As for national currency in circulation, this showing made up 5.38 billion lari in the reporting quarter, being increased respectively by 3.3% and 15.2%.

COMMERCIAL BANKS OWN 75.8% OF GOVERNMENT-ISSUED SECURITIES

ational Bank of Georgia (NBG) reported that securities, emitted by the government in national currency, amounted to 778.02 million lari as of late June (year-on-year growth – 8.4%). At that, NBG account for 5.14% of total volume, while local commercial banks – for 75.8%. Other (non-banking) residents own 3.86%, while nonresidents – 19% of total securities.

Nonresidents are fixed as owners of securities, emitted by the government in national currency, since November 2011, while non-banking residents – since November 2012. To note, NBG started publishing data on secondary market of Georgian state securities and their owners since this month. Data on deals on secondary market is subjected to update before 18:00 of the same day, while statistics about owners of Georgian state securities – no later than on 5th of each next month.

GOLD BAR’S AND 10 GOLD INVESTMENT CERTIFICATES SOLD IN Q2

ational Bank of Georgia (NBG) reported that 2 certificates for 20-g gold bar were sold in the 2nd quarter. Price per gold bar made up 1,563 lari (both certificates were sold on the same day). No gold bar certificates were sold in the 2nd quarter of 2012. According to NBG, price of the gold bar certificate has been decreased by 28.8% since the beginning of the year, making up 1,342

lari by the end of the 2nd quarter (NBG sets the prices daily). Besides, NBG said that 10 investment certificates for 1 ounce of gold were sold in the 2nd quarter. The certificates, being sold in the same day also, cost 2,292 lari each. To note, sell/buy process of these investment certificates has started in the 3rd quarter of 2012. In 2012, only 1 certificate was sold. No certificates were sold in the 1st quarter of this year.

GEORGIAN ENERGY DEVELOPMENT FUND TO BUILD 7 WATER POWER STATIONS

eorgian Energy Development Fund (GEDF) and Bank of Georgia signed today a memorandum, which envisages construction of 7 hydroelectric stations in different regions of the country. Total installed power of these stations makes up 180 MW, while total cost amount to $300 million. At first stage, Bank of Georgia accounts for 85% of total funding, while GEDF participation makes

up 15%. This stage (12-14 months) aims feasibility study of the projects. Preliminary technicaleconomical estimation documents are already prepared with financing of USAID. As Energy Ministry says, based on results of the first stage, decision will be made on construction of all economically profitable stations. As it was stressed, construction of the mentioned power stations will be implemented by foreign investments, attracted jointly by Bank of Georgia and GEDF.

GEORGIA’S CURRENCY RESERVES EQUALED TO $2,8 BILLION BY THE END-JUNE

nternational reserve actives are $2,982 billion by July 1, 2013. According to National Bank’s statistics, reserve actives in June are reduced by $56 million, increased by $200,7 million since analogic period of last year. Reserves of foreign currencies are $2,8 billion by July 1. Actives, excluding foreign currency reserves, include special drawing rights (SDR) and data about reserve position in IMF.

BANK OF GEORGIA LOWERS INTEREST RATE ON STUDENT CARD

ank of Georgi reduced recently rate of accrued interest on Student Card – to 5% for cards, opened in lari, and to 2% – for ones in the US dollar and euro. These rates so far were 8.25% and 3.75%, respectively. As the bank told Sarke, accruing of interest with changed rate has became effective on July 3, while until that, old rate was in effect. To note, the interest for balance of Student Card is accrued in case this balance exceeds 100 lari (the US dollar or euro, respectively.

KSB INTRODUCES 11.9% INTEREST RATE TAVEL LOAN

OR Standard Bank (KSB) announced about start of travel loans’ promotion, setting interest rate at 11.9% for them. The volume of this 1-year loan varies within 500-7,000 lari. The action is valid until September 30. As the bank told Sarke, the loan will be issued to clients, having monthly income of at least 500 lari, who should confirm it by presenting 3-month banking extract. According to KSB, all borrowers will get a travel card with 2-year validity period, which makes available cash withdrawal in ATM abroad for 0%. In Georgia, the fee for such withdrawal is 2%. Besides, the card has option of use credit limit of 500 lari during travel, available for 29%, the bank said.

BTA COMPLETES JANUARY TO JUNE PERIOD IN 1.806 MILLION GEL LOSSES

LIBERTY BANK EXCLUSIVELY INVOLVED IN THE TRANSFERWISE TRANSFER SYSTEM

TA completed 6 months with 1,806 million GEL loss Tbilisi (GBC) - JSC BTA Bank (Georgia) completed January-June 2013 with 1 806 143 GEL loss (01/06/13-1,463 million GEL). By July 1, bank’s deposits (without banks’ deposits) are 42 million GEL (01/06/13 - 40,5 million GEL), credit portfolio - 73 million GEL (01/06/13 -75 million GEL), overall obligations 102,4 mil-

iberty Bank exclusively involved in the Transferwise transfer system. Bank informs that, unlike other systems, its advantages are low fees and flexibility. It also enables online transfers. Innovative approach differs from existing transfers with economic concepts as well. Currently Liberty Bank is involved in 21 international transfer systems.

lion GEL (01/06/13 - 101 million GEL). Bank actives equaled to 127 million GEL (01/06/13 -124 million GEL). BTA Bank operates since 2001 on Georgian market. 49% of the stocks belong to JSC BTA BANK, 51% - to Silk Road Financial Groups. Large beneficiaries are fund Samruk Kazian (39,9%) and George Ramishvili (31,6%). Stock capital of the bank equals to 24,7 million GEL.

RESEARCH July 15, 2013 #13

caucasian business week

TI GEORGIA: STATE PROPERTY WITH INVESTMENT OBLIGATION WAS HANDED OVER FOR 1 LARI TO 39 LEGAL ENTITIES IN 2012

I Georgia, Georgian branch of Transparency International, said that state property was handed over for 1 lari to 39 legal entities in 2012, being charged with investment obliga-

tions. Namely, 8,000 square m in Kazbegi municipality (Mtskheta-Mtianeti region) was handed over to LLC Geoland (registered in 2003, owner of 50% is Irakli Ugulava, brother of Tbilisi Mayor) in exchange of obligation to build mountain hut and arrange camping territory during 2 years after signing the contract. LLC Ganmukhuri Hotel got 14,699 square m in Zugdidi, while undertook construction of middle- or high-class hotel during 18 months after completion of the base, implementing investment of $1 million for that end.

LLC Avante Hospital Management Group was given 100% stake in LLC Chkhobadze MedicalRehabilitation Clinic Center for Disabled and Elderly Persons and territory of 15,140 square m with buildings in Zugdidi. In exchange, the company had to create 2 high-class medical objects with 280 beds and maintain their medical profile during 7 years since signing the contract. LLC New Office (founder – Silk Road Business Center) got territory with a fountain on Rose Revolution Square in Tbilisi, totaled to 3,780 square m, undertaken arrangement of the territory until May 1, 2013. TI Georgia considers necessary to conduct control on fulfillment of investment obligations after property alienation for symbolical price, as well as to perfect legislative regulations and raise executives’ accountability.

TI GEORGIA: ONLY 4% OF GEORGIAN CITIZENS CONFIRM BRIBE PAYMENTS IN 2012

I Georgia reported that, according to the new Global Corruption Barometer (GCB) survey, only 4% of Georgian population confirmed payment of bribes during the last 12 month. The survey was conducted in September 2012. To compare, according to previous GCB (2010), only 3% of interviewed people responded positively to the question. Within the recent GCB research, 42% of respondents considered that during the last 2 years level of corruption declined slightly, 28% – declined significantly, 19% – remained the same, 7% – increased slightly, 5% – increased significantly. At that, 51% of respondents named the court as the most corrupted structure, 42% – the media and 34% – the Parliament. In contrary, institutions perceived as the less corrupted are religious organizations – 81%, the army – 73% and NGOs – 71%. The survey emphasizes that nepotism in public sector remains a problem in Georgia. 38% of surveyed people answered that private contacts are important for relations with the state, 28% did consider them as important and 15% said that such contacts are very important.

63% of Georgians declared that while revealing fact of corruption, they would appeal against. At that, 49% would call official hotline, but TI Georgia points that such hotline does not exist in Georgia. A large part of interviewed people, who said that they would do nothing while facing corruption, considers that it makes no sense to raise the voice against that fact (46%). More than 25% claims that they do not know to whom and how to inform about corruption and 21% declares that they would refrain due to caution. The survey, being ordered by TI Georgia, was conducted by Institute of Polling and Marketing (IPM) through face-to-face polling of 1,000 citizens of Georgia (except Abkhazia and Tskhinvali region). GCB of 2013 reflects opinions and experiences of 114,270 persons in 107 countries of the world. TI Georgia points that Georgia has one of the lowest rate of bribe payment among the mentioned 107 countries. Due to that, Georgia is included in one group with such countries, as Japan, Australia, Denmark, Finland, the organization told Sarke, adding that Armenia is out of this group, while in Azerbaijan survey is not conducted.

STATE PROPERTY WITHOUT INVESTMENTS OBLIGATION GOES TO SIX LEGAL ENTITIES

I Georgia, Georgian branch of Transparency International, said that state-owned immovable property was handed over for 1 lari and without any investment liabilities to 6 legal entities in 2012. Besides, 1,365 state-owned movables were sold directly to 7 LLCs with the same conditions, the organization pointed. Among the mentioned realty, TI Georgia named 4,490 square m in Tbilisi, being handed over to LLC Hospital Digomi, land site in Bolnisi – to Caucasus Mining Group, land site in Kvareli and Lopota Tour Service (4 land sites in Telavi) – to Godako+, land site with 2 buildings in Tbilisi – to flat-owners’ partnership, 2 land sites in Tbilisi (total area – 3,000 square m) – to Inter Business Service, land site of 1,312 square m in Kvareli – to LLC Caucasus Road Project. TI Georgia states that “the decision, which results in property alienation without any investment liability, bears risks”. The organization considers that “necessity of property alienation should be grounded in such cases” and notes that “the documents on cases, which we have studied, lack such grounding as a rule”.

ILIAUNI BUSINESS REVIEW: MAJOR PART OF CUSTOMERS PREFER SANTE DIARY PRODUCTS

ccording to IliaUni Business Review, while buying dairy products, 35% of Tbilisi customers prefer production of Sante GMT Products. Next are Soplis Nobati (brand of Wimm-Bill-Dann Georgia) – 33% and Ecofood (brand of Georgian Eco) – 27%, while other brands occupy 16%. At that, 31% of interviewed customers prefer Sante’s milk, 31% – cottage cheese and 28% – sour cream. In case of Soplis Nobati, these figures are respec-

tively 29%, 27% and 26%, in case of Ecofood – 28%, 26% and 24%, while in case of other brands – 12%, 16% and 22%. The survey was conducted in 77 shops in Tbilisi in the beginning of June

ILIAUNI BUSINESS REVIEW: CUSTOMERS PREFER OLEINA SUNFLOWER OIL

ccording to poll, conducted by IliaUni Business Review, 42% of customers prefer sunflower oil of Ukrainian Oleina. Georgian Mziuri is on the second place with 28%, while Russian Sloboda - on the third position with 22%. The remained 8% is distributed among other brands. The poll was carried out in 70 trade outlets of Tbilisi.

EPRC: REACHING 6% IN ECONOMIC GROWTH IS UNREAL AL IN REMAINING PART OF THE YEAR

conomic Policy Research Center (EPRC) says that in order to reach 6% in annual economic growth, average monthly growth in remaining period of the year should make 8.7%. “According to existing statistics, this is unreal”, the experts state. Relatively optimistic task is achievement of 3-4%, EPRC notes, pointing however that “even

this is quite difficult, if no important positive changes are made in economic policy”. EPRC indicates at decrease of VAT payers’ turnover in the first half of 2013 by 6.2% year-on-year. Despite following during 6 months the same tendency by growths of VAT payers’ turnover and of real GDP, difference between which was within 3 percentage points, in May this difference made up 6 percentage points, the experts say. Due to such results, they consider necessary to explain in which particular economic sector, which is released from VAT, important growth had place.

EPRC: STATE BUDGET TAX REVENUE PLAN PERFORMED BY 43% IN 6 MONTHS

conomic Policy Research Center (EPRC) said that tax revenues, mobilized in the state budget in the first half of this year, amounted to 2.98 billion lari. This volume makes up 43% of the target for 2013, EPRC points and adds that for the same period of 2012, mobilization made up 47% of the respective target. EPRC experts say that gap in the state budget’s tax revenues amounted to 265 million lari in 6 months. They point that the gap will increase in the rest part of the year, if the tendency goes on. EPRC also indicates that the budget spent 276.2 million lari on infrastructure projects in 5 months of this year. This volume is by 36.1% less than the showing of the same period of 2012.

The country should not refuse economical stimulation policy and should intensively finance such kinds of projects until private sector intensifies activity, says EPRC. EPRC recommends to work out economical development plan, defining short-term and longterm targets, and set concrete measures for its implementation.

10 AZAL INTENDS TO LAUNCH FLIGHT TO BEIJING AND NEW YORK

zerbaijan Airlines (AZAL) intends to launch the Baku-Beijing and Beijing-Baku direct flights in the beginning of September, 2013, with an objective to further expand the flight geography, AZAL said on July 11. The first flight, originally scheduled for May 10, was postponed to a later date due to China’s new requirements on AZAL. The flights will be carried out twice a week on Tuesdays and Fridays by Airbus А-340 and Boeing 767. “All issues have been coordinated and the flights will launch in September,” the source added. In addition, AZAL jointly with the Chinese airline partners offers special transfer tariffs to passengers traveling to such Chinese cities as Guangzhou, Shanghai, Shendzhen, Hangzhou, Zhengzhou, Xi’an, Chengdu and to the airports of Eastern and South-Eastern Asian countries. AZAL also intends to launch flights to the United States with the ability to refuel in one of the European countries. According to AZAL, opening the flight from Baku to New York will be possible this fall. Relevant discussions will be carried out with the representatives of the Federal Aviation Administration of the United States (FAA) during their visit to Azerbaijan, the source noted. The flight will be carried out through a European country three times a week by Airbus A-340-500, whilst the transit country wasn’t named. AZAL, the biggest Azerbaijani airline and national flag carrier, offers passenger flights to countries in Europe, the CIS, Middle East and Asia. After purchasing new Boeing aircraft for long-haul flights in 2014, the airline plans to open regular flights to destinations in North America and South-East Asia. The company is a regional and CIS leader for the number of new aircraft. Its fleet currently consists of modern aircraft meeting all safety requirements, including Boeing 757-200, Airbus А319, ATR 42, ATR 72, Airbus А320 and Boeing 767-300. It cooperates with about 60 airlines to provide its passengers with the opportunity to travel freely around the world. AZAL was certified by IATA Operational Safety Audit, a program that is an internationally recognized evaluation system designed to assess the operational management and control systems of an airline.

AZERBAIJAN, SAUDI ARABIA DISCUSS COOPERATION

he Azerbaijani government has offered Saudi Arabia to hold the next meeting of the intergovernmental commission on trade and economic cooperation in Baku in September. The proposal was made by Azerbaijani Minister of Economic Development Shahin Mustafayev at a meeting with the newly appointed Saudi Arabian Ambassador to Azerbaijan Musaed al-Salem on July 10. “The cooperation between Azerbaijan and Saudi Arabia is developing successfully, and the activity of the intergovernmental commission, which has held two meetings, plays an important role in the development of our relations,” the minister said, noting the importance of official visits and negotiations. Mustafayev said that so far 10 economic documents have been signed between the two countries. The Saudi Arabian diplomat in turn said the efforts to further expand the cooperation are being made, as Saudi Arabia attaches great importance to its cooperation with the fast-growing Azerbaijan.

AZERBAIJAN July 15, 2013 #13

caucasian business week

AZERBAIJANI BANKS’ ASSETS HIT NEW RECORD

otal assets of Azerbaijan’s banking sector reached a new record in 2012, amounting to 16.309 million manats ($20.775 million) as of November 1, compared to 15.998 million manats as of October 1, the Central Bank of Azerbaijan (CBA) said in a report published on its website, according to Trend news agency. A positive trend on banking assets was seen in 2012. The assets have increased by 17 percent since early last year and by 20.8 percent over a year (13.503 million manats as of November 1, 2011). Loans allocated to customers in the amount of 10.405 million manats (annual growth of 17.7 percent), investments (over 1.334 billion manats, an increase of 4.65 percent) and the funds held on correspondent accounts (839.9 million manats, a decrease of 14.2 percent) form the basis of the assets of the domestic banking sector, accounting for 63.8 percent of the total. Loans and deposits granted to the financial sector amounted to 742.6 million manats, with an increase of 25.4 percent reported. Deposits, which total more than 7.202 billion manats, account for a large share (44.16 percent) of liabilities, increasing by 18.4 percent compared to the same period of the previous year. Loans and deposits obtained from the financial

sector accounted for over 4.830 billion manats, increasing by 11.8 percent. Growth in total assets of the banking sector will be at the level of 15-20 percent in Azerbaijan in 2013, CBA Director General Rashad Orujov told Trend news agency last October. “We believe that we need a moderate, healthy and stable growth -- somewhere around 15-20 percent,” he said. There are 43 banks in Azerbaijan. According to the CBA board’s decision made in July 2012, the minimum total capital of existing banks and authorized capital of newly established banks increased from 10 million manats (over $12.7 million) to 50 million manats ($63.7 million). The new requirement for capitalization of the existing banks will come into force from January 1, 2014. Russian trade representative in Azerbaijan Yury Shchedrin in late November welcomed the CBA’s decision, saying it can reduce the total number of operating banks in Azerbaijan from 43 to 10-15 as a result of mergers. “Generally, the CBA’s decision was of interest for foreign banks, in particular, Russian ones, and opens up good opportunities,” Shchedrin said. The official exchange rate as of January 2 was 0.785 AZN (manat) per USD.

AZERBAIJANI BANKS DIRECT MORE FUNDS TO DOMESTIC ECONOMY

he Azerbaijani banks increased lending to the country’s economy by 5.4 percent in January-May 2013 and by 26.33 percent per annum, the Central Bank of Azerbaijan reported. According to the CBA report as of JanuaryMay 2013, banks provided loans totaling over 13.406.3 billion manats, including over 9.444.3 billion manats in national currency. The figure was over 10.611.5 billion manats (including over 6.994.3 billion manats in national currency) in the same period of 2012. Of the total portfolio 768.7 million manats (5.73 percent) accounted for overdue loans compared to 720.1 million manats as of January-May 2012. The statistics on overdue loans does not include loans of non-bank credit organization Aqrarkredit. Within a year, the volume of overdue loans increased by 6.7 percent. As of Janury-May 2013, the volume of short-term loans amounted to over 3.197.7 billion manats compared to almost 377.1 billion manats in the same period of 2012. Within a year, the volume of short-term loans increased by 8.1 percent. As of early June 2013, around 30.66 per cent of short-term loans were in freely convertible currency (980.5 billion manat). The volume of long-term loans amounted to over 10.208.6 billion manats as of June 1 compared to 7.652.7 billion manat (343.1 million manat overdue loans) as of January-May 2012.

The long-term loans increased by 33.4 percent per year. As of early June 2013, 29.2 percent of long-term loans accounted for freely convertible currency (2.981.5 billion manat). According to the CBA, the only state bank in the country (the International Bank of Azerbaijan) delivered the loans totaling 4.570.5 billion manat with a specific weight of 34.1 percent, while private banks - 8.482.1 billion manat with a specific weight of 63.3 percent. The remaining 2.6 percent fall to the share of non-bank credit organizations. They issued 353.7 million manat. Most of all loans are granted to households in Azerbaijan. According to the CBA, as of January-May 2013, households received 38 percent or loans worth 5.088.7 billion manat The sphere of trade and services (15.9 percent or 2.132.5 billion manat) ranks second, the real estate and construction sector (15.4 percent or 2.066.9 billion manat) ranks third. It should be stressed that industrial and production sector received 9.6 percent of the total lending amount of the Azerbaijani real sector, which hits 1.284.4 billion manat in nominal terms. Some 3.3 percent (448.3 million manat) fall to the transport and communication, 4.5 percent (609.9 million manat) - agriculture and processing, 2.2 percent (290.1 million manat) - energy, chemistry, and natural resources, 11.1 percent or 1.485.5 billion manat loans - on the other spheres Around 43 banks operate in Azerbaijan.

ANDORRA FIRM TO RUN HOTELS IN AZERBAIJAN’S NEW SKI RESORT

he newly built ski resort Shahdag, the only summer and winter tourist complex in Azerbaijan, transferred management of its hotels to Andorran company PGI Management for a three-year term on July 10, the Culture and Tourism Ministry said. According to a relevant agreement, three hotels of the resort, Zirve, Gaya Residence and Shahdag Hotel&SPA, will be overseen by PGI Management. From November 2012 to May 2013 PGI managed the technical maintenance of the complex in the field of artificial glaciations, control over cable railways, mountain rescue services and training of local professionals. Founded in 1995, PGI Management is the largest tour operator in Andorra having a number of tourist resorts and hotels in Portugal, Spain, Russia and other countries. The company provides services to 5 million tourists a year. Azerbaijan has considerably improved its tourism infrastructure recently due to the opening of such major hotels as JW Marriott Absheron, Four Seasons, Jumeirah, Sheraton, Hilton and Kempinski. According to the Culture and Tourism Ministry, some 50 new hotels are commissioned every year. The services provided by the hotels are getting better as well. 514 hotels operate in Azerbaijan. Also, the number of travel agencies in Azerbaijan has reached 200. The prices charged at Azerbaijani hotels have decreased 15-20 percent in the past two years. Previously Azerbaijan attracted most of tourists in summer, but a new mountain skiing facility, Shahdag, was constructed to change the situation. Built in the northern Gusar region, it will be able to function all year round with artificial snow and is expected to receive 10,000 tourists daily. During the two-month test mode operation, 50,000 tourists visited this facility, which is a record number for Azerbaijani tourist facilities. Most of these tourists are locals. The number of foreign nationals who arrived in Azerbaijan last year increased by 2.4 percent compared to 2003 and reached 2.480 million.

IRAN UPS NONOIL EXPORTS TO AZERBAIJAN

ran exported over 141 million dollars worth of non-oil exports to neighboring Azerbaijan in the first three months of the current year, which started on March 21. The amount shows 5 per cent increase compared to the same period of time previous year, the IRNA News Agency reported. The figures do not include technical and engineering services exports and tourism. Iran’s exports to Azerbaijan in the mentioned period also showed 58 per cent increase in terms of weight. Construction materials, cement, clinker, ceramic, food stuff, and agricultural products were the main exported items. Tehran also imported 5 million dollars worth of goods from Baku in the mentioned three-month period. Fruit juices, wood, and packing machineries were Iran’s main imported items.

ARMENIA July 15, 2013 #13

caucasian business week

DEVELOPMENT OF INDUSTRIAL AGRICULTURE IN ARMENIA CONTINGENT ON EXPORT POTENTIAL: STUDY SAYS

ARMENIA MAY POST 5.1% ECONOMIC GROWTH IN 2013, 5.3%-2014 AND 5.5% - 2015-2016: IMF OUTLOOK

nternational Monetary Fund anticipates a 5.1-percent economic growth for Armenia in 2013, 5.3-percent growth –in 2014 and 5.5 percent –2015-2016, IMF Mission Chief to Armenia Mark Horton told ARKA Thursday. Given the increase in gas and electric power tariffs, the IMF will review its forecasts for Armenia, according to Horton. World Economic Outlook for April forecasted 4.5-percent and 4.1-percent GDP growth in Ar-

menia in 2013 and 2014 respectively. Armenian regulator confirmed the new tariffs for natural gas and electric power which got effective since 7 July. The tariff for those consuming up to 10,000 cubic meters per month has risen to 156,000 drams ($376) from previous 132,000 drams ($318) per 1,000 cubic meters. Those consuming over 10,000 cubic meters will now pay 277 dollars instead of previous 243 dollars. The new day-time electricity tariff will be 38 drams per 1kWh (including VAT) instead of the current

30 drams, and night-time tariff –28 drams (including VAT) instead of the current 25 drams. The state expenditures program for 2014-2016 expects a 6.9-percent GDP growth in 2014, about 10-percent growth in 2015, and 11 percent –2016. GDP growth in 2012 was 7.2%, in 2013 it is predicted at 6.2%. Armenian President instructed the government to reach a 7-percent economic growth in 2013. ARKA

EBRD WILL PROVIDE $3.8 MILLION LOAN TO SARANIST, LEADING ARMENIAN MANUFACTURERS OF GLASS CONTAINERS The European Bank for Reconstruction and Development (EBRD) said today it will provide a $3.8 million loan to Saranist Company, a leading manufacturer of glass containers in Armenia. Part of the funds will be channeled into construction of a furnace with two additional production lines and another part into upgrading the workshop with modern technology that will reduce the loss of raw materials and energy consumption. Founded in 1989, Saranist is one of the leading manufacturers of glass containers in Armenia. The company produces a variety of bottles and containers made of clear and colored glass, selling them at the domestic market and importing part to Georgia. When this project is implemented the company will be able to increase production to meet the growing demand for glass containers in Armenia and Georgia by offering an alternative to more expensive imported glassware.

Earlier, the Bank assisted the company to improve information systems management as part of a broader program designed to boost small businesses. “We are pleased to continue to work with those customers who expand their production, improve the quality and efficiency and develop from a small company into a leader of the sphere. This program is an excellent example of the Bank’s involvement in promoting production,” Bruno Balvanera, the director of the Bank for the Caucasus, Moldova and Belarus was quoted as saying. The EBRD is the largest investor in Armenia.

Since the beginning of its activities in the country it has invested about 650 million euros in 120 programs. In 2012, the EBRD financed 15 projects in Armenia with a total budget of 94 million euros. ARKA

HSBC BANK ARMENIA REWARDS BEST FIVE TRADE FINANCE COMPANIES

oday HSBC Bank Armenia awarded its best trade finance customers of 2012. The five selected companies demonstrated success, achieved tangible results and expanded internationally by making use of HSBC geographic footprint covering more than 80 countries in 5 continents and the bank’s r innovative, forward looking trade finance solutions. The Best Trade Customer Grand Prix was awarded to Euroterm CJSC. The company was founded in 1998. One of its major activities is import, sale and installation of heating systems. It also owns Noyan brand of juices, drinks and vegetable and fruit preserves. The innovative wine and cognac production plant founder Golden Grape Armas LLC got the CEO’s Special Award. The company was founded in 2009. The Best Newcomer Trade Award went to Mentor Graphics. It has been present in Armenia since 2002 and is a leader in the field of electronic design and software production for automated systems. The Innovative Trade Award was granted to Piralyan company dealing with imports of footwear and clothes and Alfa Pet LLC won the International Trade Award.

“HSBC Trade Awards is an opportunity to showcase our customers, their achievements and success in today’s international trade world. It also demonstrates HSBC’s strategy and commitment to be acknowledged as the world’s international bank. In HSBC, we aim to connect customers to opportunities, enabling businesses to thrive and economies to prosper, and, ultimately, helping people to fulfill their hopes and realize their ambitions. Trade has always been at the heart of our business – when HSBC started its voyage in 1865 and when it financed commerce between Europe, North America and Asia. Today, HSBC is a leading international trade bank, with 10% market share in terms of revenue. HSBC’s competitive advantage is its international connectivity. We cover 77% of global trade volumes via HSBC’s geographic footprint. Our trade and receivables experts work with colleagues across the world, helping customers to make the most of opportunities in both established and emerging markets,” HSBC Bank Armenia CEO Thies Clemenz said. HSBC Bank was named the best trade finance bank in the world in 2012 by the London-based Global Trade Review magazine for the fifth time in a row and the best trade finance bank for the

12th time by the Global Finance magazine. HSBC Bank Armenia is part of “HSBC Bank plc. Seventy percent of it is owned by HSBC Europe BV and 30% is held by Wings Establishment. ARKA

iven the small size of the local market, development of industrial agriculture in Armenia is contingent largely on export potential, according to the findings of a study conducted by Ameria consulting company. The study called ‘Development of industrial agriculture in Armenia” indicates the prerequisites, constraints and risks for the development of this sector. The focus in the study was on development of greenhouses, horticulture and fish farming. Experts point out that gardening in Armenia will have no serious development obstacles in the next 10 years given that anti-hail stations are built and effectively run. The major risks and obstacles to the development of this industry are natural and climatic factors, mainly hails. “The growing land under vineyards and fruit trees show the potential for development of horticulture in Armenia”, the study says. About twothirds of fruit trees are in Armavir, Ararat, Aragatsotn and Kotayk regions. Ararat and Armavir account for bulk of fruit and vegetables output. According to the study, there are 900 greenhouses in the country with a total area of 130 hectares. The largest greenhouse is on 5 hectares. About 60% of their output are vegetables- tomatoes, cucumbers, beans and peppers, and 40% are flowers and ornamental plants. According to Ameria experts, the prospects for the development of large greenhouse in the next five years are estimated as average, while the prospects of small and medium-sized greenhouses are assessed as not promising. As the findings of the study show, the average annual growth of aquaculture in the last 10 years was about 28.5%, while export of fish and fish products have increased by 4.7 times. Prospects for the development of fisheries are also evaluated as average. The study says if some regulation issues are resolved this sector may advance tangibly. Founded in 1998, Ameria is a leading Armenian advisory company, offering professional services in administrative, financial and legal consulting. ARKA

ICE-CREAM OUTPUT IN ARMENIA GROWS 22.1% IN JAN-MAY TO 1.7 MILLION LITERS

ome 1,750,100 liters of ice-cream were produced in Armenia in JanMay 2013 – 22.1% year-on-year growth, the National Statistical Service of Armenia reports. Some 819,500 liters of ice-cream were produced on May alone. According to the statistical report, one kilogram of ice-cream may be bought for 1,000 drams now, while in June 2012 one kilogram cost 994.5 drams. The price for one piece of chocolate icecream is 220.3 drams against 217.3 drams in June 2012. ARKA

CIS caucasian business week

Kazakhstan

July 15, 2013 #13

RUSSIA HITS A 25-YEAR RECORD FOR DAILY OIL EXTRACTION IN JUNE

onfectionery f i R Rakhat k sells 76 percent stake to South Korea. Kazakhstan Confectionary JSC Rakhat announced its intention to sell 76 percent of its common shares to South Korea’s LOTTE Confectionery. As reported, the completion of the transaction is expected in the second half of 2013. It is also noted that the value of the share capital of JSC Rakhat in a transaction valued at approximately $ 157 million. Founded in 1942, Rahat, produces a total of 250 types of confectionery, including chocolate, candy, cookies and wafers. Meanwhile, the shares are placed on KASE Rahat, the total market value - 17 billion 993 million tenge ($ 119 million).

azakhstan will buy a stake of ConocoPhilips in Kashagan by pre-emptive right. The Ministry sent the company ConocoPhilips notice of intent to use the pre-emptive right to acquire stake of ConocoPhilips in North-Caspian project and acquire the stake of ConocoPhilips in production sharing agreement in the North Caspian Sea at a rate of 8.4 percent. It is noted that the pre-emptive right is provided by the Law of Kazakhstan “On Subsoil and Subsoil Use”. Acquisition of stake of ConocoPhilips in the Kashagan project will be carried out by national JSC KazMunaiGas (KMG). In addition, the KMG is already starting to design all the necessary procedures. Earlier, it was reported that China National Petroleum Corporation (CNPC) was planning to buy a 8.33 percent stake in the development of the Kashagan field from KMG for over five billion dollars.

Uzbekistan

apan and Uzbekistan will conduct joint exploration for uranium in Uzbekistan in the hope of securing stable supplies with an eye to restarting Japan’s nuclear power plants, industry ministry officials announced. A deal will be struck between the government-run Japan Oil, Gas and Metals National Corp. and Uzbekistan’s state-owned Navoi Mining and Metallurgical Combinat, the Ministry of Economy, Trade and Industry officials said. Japan is completely reliant on imported uranium to run its nuclear plants, all but two of which remain off-line because of safety fears generated by the triple meltdowns at the Fukushima No. 1 power station in 2011.Under the deal, JOGMEC and the Uzbek entity will conduct joint exploration for around five years and verify the amount and quality of Uzbekistan’s uranium deposits. If Tokyo sees potential in mining high-quality uranium, it will try to secure concession rights to both import it and export it to other countries via trading houses and other entities, the officials said.

zbekistan directs $48.3 million to develop Jizzak zone’s infrastructure. The Uzbek government has approved an accelerated infrastructure development programme for the Jizzak special industrial zone. Around $48.312 million will be allocated for the implementation of 17 projects in the transport, industrial, engineering and communication sectors in 2013 -- 2018, while $28.915 million will be spent in 2013 -- 2015, the Cabinet of Ministers’ regulation on ‘Measures on accelerated development of the transport, industrial and engineering infrastructure of the Jizzak special industrial zone’ said. According to the regulation, it is planned to implement five projects for the development of roads to the sum of $20.335 million, three for the development of railway infrastructure to the amount of $2.256 million and five for the development of water supply, irrigation and drainage worth $24.803 million. Moreover, two projects will be implemented to develop electric power supply and another two on gas supply development worth $0.918 million. The programme is planned to be financed through the state budget to the sum of $21.372 million, selffunded enterprises to $2.946 million and international financial institutions funds worth $4.597 million in 2013 -- 2015. It was previously reported that Jizzak was created on the presidential decree in accordance with the Memorandum of Understanding on the establishment of a Uzbek-Chinese industrial park in the country to establish modern high-tech industrial facilities. The term of the Jizzak special industrial zone’s activity is 30 years with the possibility of a further extension. There will be a special tax concession and customs privileges during this period.

aily oil extraction in Russia in June was at its highest since 1988. Experts are not being overoptimistic, saying the oil industry is a “subtle matter,” that desperately needs long-term investment. June daily oil extraction stood at 10.53 million barrels, according to the Central Dispatching Department of Fuel Energy Complex (CDU TEK). A higher number was fixed 25 years ago in the Russian Soviet Federative Socialist Republic, when it stood at 11.070 million barrels a day, as Vedomosti refer to BP data. After the peak in 1988 daily oil extraction slid to a minimum of 6.06 million barrels of oil a day in 1996. In 2012 the number was at 10.37 million barrels. The record result came on the back of increased extraction in Rosneft’s Vankor Field in Russia’s Krasnoyarsk region, which was coupled with Gazprom’s

higher production of gas condensate, Andrey Gromadin, JPMorgan analyst for oil and gas, told Vedomosti. This year Rosneft plans to extract Vancor’s all time high of 25 million tones in the oilfield, which compares to 18.3 million tones in 2012. Rosneft’s aspiration for new records in oil extraction looks logical, as the world’s oil giant has now a number of huge long-term contracts. Starting from July Rosneft needs to supply 8.6 million tonnes annually for the next three years to Polish oil major PKN Orlen, with another 365 million tonnes going to Chinese CNPC between 2014 and 2039. Russia outpaced Saudi Arabia in terms of oil extraction long ago. Daily extraction stood there at 9.47 million barrels a day in June, according to Bloomberg. However, the Saudis could easily increase the number to 12.5 million barrels a day, said Andrey Polishuyk, Raiffeisenbank analyst. It

doesn’t use its potential to avoid a collapse of oil prices, Polishuyk added. The dynamics of oil extraction in Russia is “too subtle a matter,” according to a Vedomosti source. Oil workers have continuously repeated that stable conditions for long term investment are necessary to provide for industry efficiency, the person reminded. Analysts agree that daily extraction numbers are not going to increase much higher. The June record is a peak and there are no short – term preconditions for further growth, according to JPMorgan’s Gromadin. And Artur Akhmetov, an analyst at Solid IFC, expects extraction to remain at 10.5 million barrels a day. Exploration of shelf and problematic deposits could help lift the daily numbers to 10.8 -11 million barrels a day, Akhmetov concluded.

EU FILES FIRST WTO CASE AGAINST RUSSIA OVER VEHICLE RECYCLING FEES

he EU opened its first trade dispute with Russia, since it entered the WTO in August 2012. The EU claims Russia’s “recycling fee” imposed on imported motor vehicles, which leaves domestically produced cars untouched hits trade in a key European industry. The EU requested consultations at the World Trade Organization (WTO) with Russia on its “recycling fee” imposed on motor vehicles, according to the EU mission to the WTO. The request is formally the first step in a dispute at the WTO dispute settlement system. “It [“recycling fee”] is severely hampering trade in a sector which is key for the European economy. We expect Russia to engage in WTO consultations with us to find a solution to this problem

The new LADA Kalina

quickly,” EU Trade Commissioner Karel De Gucht said in a statement. The so-called “recycling fee” is a levy on cars, trucks, buses and other motor vehicles, that Russia introduced on September 1, 2012. The fee is imposed on all imported cars from the EU, Russian–made vehicles are exempt, as well as cars from Kazakhstan and Belarus that are part of form a customs union with Russia. Instead of paying the fee car makers such as Avtovaz, Kamaz, Gaz Group and Sollers undertook the obligation for safe and independent recycling of the cars they produce. The EU’s filing “will be the first since Russia entered the WTO, but the news wasn’t out of the blue”,commented Timur Nigmatullin of Investcafe. Russia has been postponing decision making

on the “recycling fee”, and it was initially planned to make a decision in July. “It is expected that the government will have finally made this step by the end of the third quarter,” Nigmatullin added. “Introduction of the “recycling fee” can influence the final price of home-produced cars and will add pressure on the falling sales of Avtovaz, the company that has 17% of the market,” Investcafe analyst explained. In June Avtovaz sales contracted 6% month to month to reach 41, 887 vehicles. In the first six months of 2013 the contraction was 16% year on year. Russia needs to respond to the request within 10 days and enter into consultations within a maximum of 30 days after the date of the receipt of the request.

WORLD NEWS July 15, 2013 #13

caucasian business week

PC SALES SEE ‘LONGEST DECLINE’ IN HISTORY

lobal personal computer (PC) sales have fallen for the fifth quarter in a row, making it the “longest duration of decline” in history. Worldwide PC shipments totalled 76 million units in the second quarter, a 10.9% drop from a year earlier, according to research firm Gartner. PC sales have been hurt in recent years by the growing popularity of tablets. Gartner said the introduction of low-cost tablets had further hurt PC sales, especially in emerging economies. “In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC,” said Mikako Kitagawa, principal analyst at Gartner, said in a statement.

75.6 million units in the second quarter. However, it said that the numbers were better than it had expected and were likely to improve in the coming months. “With second quarter growth so close to forecast, we are still looking for some improvement in growth during the second half of the year,” said Jay Chou, a senior analyst at IDC Worldwide PC Tracker. But he warned that the sector was facing risks and much work needed to be done to turn around things. “Slower growth in Europe and China reflect the risks, while the improved US outlook reflects potential improvement. Still, the weakness in emerging markets is a threat to a core long-term growth area,” Mr Chou said. “In addition, while efforts by the PC ecosystem to bring down price points and embrace touch computing should make PCs more attractive, a lot still needs to be done in launching attractive products and addressing competition from devices like tablets.” BBC

‘Some improvement’ Separate data released by research firm IDC also showed an 11.4% decline in global PC shipments during the period, from a year earlier. IDC, which uses a slightly different method to calculate the data, said that shipments totalled

FOREIGN DIRECT INVESTMENTS IN 2013 TO MAKE $1.45 TRILLION: UNCTAD REPORT

lobal foreign direct investment -- or investment of foreign assets into domestic structures, equipment, and organizations -- fell by 18 percent last year to $1.35 trillion, according to the latest annual report by the U.N. Conference on Trade and Development’s (UNCTAD). It says developing countries, for the first time ever, received the majority of investment. UNCTAD’s annual survey of investment trends finds global Foreign Direct Investment, or FDI, declined in 2012 to below the pre-economic crisis level. It attributes this mainly to economic fragility and policy uncertainty for investors. The report says developing countries took the lead in attracting foreign direct investment in 2012. For the first time ever, it says developing economies did better than developed countries, accounting for 52 percent of global FDI flows. The report says FDI inflows to least developed countries rose by 20 percent in 2012 to a record $26 billion. The report says FDI flows to African countries increased by five percent to $50 billion in 2012, mainly due to investment in extractive

industries. While natural resources are still the mainstay of FDI flows to Africa, the report notes consumer-oriented manufacturing and services are attracting more investments. Developing economies in Asia remain the largest source of direct foreign investment, accounting for three-quarters of the developing country total. According to the U.N. report, the top investor is China, which has moved up from sixth to third place, after the United States and Japan. U.N. economists forecast 2013 FDI levels will remain close to 2012 levels of $1.45 trillion. But, they say as macroeconomic conditions improve FDI flows may climb to $1.6 trillion in 2014 and $1.8 trillion in 2018. Established in 1964, UNCTAD promotes the development-friendly integration of developing countries into the world economy. UNCTAD has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development.

DOLLAR FALLS AS MARKETS REASSESS FED PLANS TO SCALE BACK STIMULUS The dollar dropped against a swath ofcurrencies on Thursday as remarks made by Federal Reserve Chairman Ben Bernanke assured investors the U.S. central bank was unlikely to scale back its asset purchase program earlier than expected.

fter notching steep losses the previous day, investors continued to shed bullish bets on the dollar after Bernanke sought to assuage market fears by saying the Fed would continue its accommodative monetary policy due to low inflation and weakness in the labor market. The Fed’s $85-billion monthly bond-buying program, known as quantitative easing, is tantamount to printing money. Investors had recently been piling on long dollar positions on expectations the Fed would reduce its monthly purchases in the coming months. Minutes of the Fed’s last meeting, released Wednesday, showed that half of the bank’s policymakers believed the stimulus program should stop by the end of this year, but many wanted reassurance the U.S. jobs recovery was on solid ground before any policy retreat. U.S. jobless claims data showed the number of Americans filing new claims for unemployment benefits rose last week, although the level still pointed to healing in the nation’s job market. “Overall, this is a correction more than a reversal of a trend for the dollar,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C. The most recent Commodity Futures Trading Commission data showed long-dollar positioning building into the end of the second quarter, but still below the peak seen in May, suggesting further upside for the greenback. The dollar index, which tracks the greenback against a basket of six currencies, .DXY fell to 82.418, its lowest since June 25 and down 2.8 percent from a three-year high of 84.753 touched on Tuesday. It last traded down 1.3 percent at 82.978. The movements of the U.S. dollar have been highly correlated to Treasury yields, which move inversely to price. Treasuries, as well as stocks, rallied on the perceived dovish comments from Bernanke. Any push back in the timeline of Fed tapering will probably put downward pressure on yields and the dollar over the near-term. Higher yields could also impact the housing market’s recovery. Mortgage finance company Freddie Mac said U.S. 30-year fixed-rate mortgages stood at 4.51 percent in the week ended July 11, the highest since July 2011, against 4.29 percent a week earlier. “As long as European, U.K. and Japanese monetary officials are biased towards continued policy accommodation while the Fed is eyeing an exit strategy, the long-term trend of dollar strength should remain in tact,” Esiner said. The general market view had been that the Fed could

begin to scale back its massive stimulus program by September, but markets have been less certain about that time-frame after the release of the Fed minutes and Bernanke’s comments on Wednesday. “The dramatic drop in the dollar highlights how one-sided (dollar bullish) the market had become and how quickly traders raced to close out long dollar positions,” said Camilla Sutton, chief foreign exchange strategist at Scotiabank in Toronto. “The longer-term view remains unchanged, with monetary policy diverging between the U.S. and Europe, which should support the dollar into year-end; however ,the market had gotten ahead of itself with positioning,” she said. Separate U.S. data showed prices for imports and exports fell in June for a fourth straight month, a sign of cooler economic growth worldwide that could weigh on the American economy and unnerve policymakers. In late morning New York trade, the euro was up 0.5 percent against the dollar at $1.3042, having earlier risen to a three-week high of $1.3201. The single currency has been under pressure as the European Central Bank last week clearly indicated it would keep interest rates low for an “extended period.” ECB policymaker Jens Weidmann, however, said Thursday the central bank could hike rates if inflationary pressures re-emerged. The dollar extended losses after the Bank of Japan kept its policy on hold and had its most upbeat assessment in two and a half years. But analysts said the fall in the pair was likely to be short-lived. The dollar dropped to a two-week low of 98.27 yen. It was last down 0.9 percent at 98.74 yen. Chartists said a weekly close above 98.75 yen would be a signal that the dollar is retaining its upward bias. Reuters

APPLE MARKS FIVE YEARS OF APPS, LOSES E-BOOK CONSPIRACY CASE

here was mixed news for Apple on Wednesday. As the tech giant celebrated five years of its app store – and the success and riches that come with that – a US judge rejected its strategy for selling electronic books on the internet. On the plus side, applications – the programmes downloadable to smartphones and tablets for things like taking pictures or listening to music – have mushroomed. There are now 900,000 available. In five years 50 billion have been downloaded and in the first three months of this year alone apps generated 1.16 billion euros, with 70 percent of that going to the app developers while Apple takes 30 percent. They have led the mobile boom, crossed over to Apple’s rival Android operating system and helping the decline of traditional desktop and laptop computers.

Conspiracy The dampener on the five year celebrations was that on Wednesday a federal judge in New York ruled that Apple conspired with five major publishers to raise the retail prices of e-books. It was accused of doing that to undercut online retailer Amazon.com’s e-book dominance, The decision could expose the company to substantial damages.Steve Berman, a partner at Hagens Berman Sobol Shapiro, who is pursuing consumer class-action litigation against Apple, called the decision “a very big deal”. “It exposes Apple to hundreds of millions of dollars in damages, which is what we’ll ask for,” Berman said. The company had argued that it never conspired with the publishers to raise e-book prices and it plans to appeal. Only Apple went to trial, while the publishers agreed to pay more than $166 million (129 million euros) combined to benefit consumers. Last year, Apple settled a separate case over e-book pricing with the European Commission’s competition watchdog, without admitting wrongdoing.

EXHABITION caucasian business week

July 15, 2013 #13

TBILISI GUIDE July 15, 2013 #13

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 4 Odessa St., Tbilisi Tel: 224-48-58 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: 75 21 11, Fax: 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 61 Agmashenebeli Ave. Tbilisi Tel: 91 01 94, 91 01 95, 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 Resident Mission of the Asian Development Bank (ADB) Address: 1, G. Tabidze Street. Tbilisi Tel: +995 32 225 06 19, EXT:101 Cell: +995 577 900 128 e-mail: qtvalavadze.contractor@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

PUBLICITY caucasian business week

July 15, 2013 #13