Caucasian Business Week #15 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK July 29, 2013 #15

caucasian business week

July 29, 2013, Issue 15

BE INFORMED, DO BUSINESS

GEORGIA BUSINESS ASSOCIATION OF GEORGIA: MORATORIUM ON SALES OF MORTGAGED PROPERTY WILL MAKE SERIOUS PROBLEMS TO REAL ESTATE MARKET

MCC, GEORGIAN GOVERNMENT TO SIGN 140-MILLION TREATY

he Georgian Parliament Library will host a joint ceremony between MCC and Georgia that will bring together high-level U.S Government and Georgian Government officials to mark the signing Georgia’s new $140 million, five-year Millennium Challenge Corporation (MCC) compact today, the U.S. Embassy to Georgia told InterpressNews. Pg. 5

GOVERNMENT WORKS ON THE AIRPORT CONSTRUCTION IN VAZIANI AND CHANGES CONTRACT WITH TAV

eorgian government works on the construction project of reserve airport in Vaziani and simultaneously changes contract with Tbilisi International Airport manager Turkish TAV. Pg. 5

FOREIGN TRADE TURNOVER DECREASED BY 3% IN THE FIRST HALF OF THIS YEAR

akstat reported that Georgia’s foreign trade (excluding non-organized one) totalled in the first half of the year to $4.713 billion, decreasing by 3% year-on-year. Pg. 6

AZERBAIJAN SOCAR COMPLETES NEXT STAGE OF GASIFICATION IN GEORGIA

eorgian Energy and Natural Resources Minister and Director General of Azerbaijani company SOCAR Energy reviewed the completed gasification work in Tianeti settlement and symbolically lit a torch in the center of the settlement. Pg. 9

ARMENIA ARMENIALEADS INNOVATIVE COUNTRIES RANKING INREGION

he Republic of Armenia is the leader in the Caucasus Region by the Global Innovation Index 2013, occupying the 59th horizontal. Pg. 10

CIS GAZPROM COULD GET ARCTIC SHELF SITES BY END OF 2013

WORLD NEWS MCDONALDS SALES FALL IN EUROPE AND ASIA AS ECONOMIC CRISIS BITES

caucasian1

cDonalds warns global weakness means its clients have started saving on burgers. The fast-food chain posted disappointing results after years of double digit increase in profits each quarter. Pg. 12

ECONOMY MINISTER NAMED AS DEPUTY PM

M Ivanishvili named on July 26 Minister of Economic Development, Giorgi Kvirikashvili, as deputy prime minister. The post was previously held by former Education Minister Giorgi Margvelashvili, who is GD’s presidential candidate and who re-

Tamar Sanikidze: Davit Zurabishvili Will no Longer be Deputy Minister of Education Pg. 2

signed from minister’s post last week as he prepares for election campaign. Before Margvelashvili, Defense Minister Irakli Alasania held the post of deputy PM till January, 2013. Another Deputy PM in Ivanishvili’s government is Kakha Kaladze, who holds energy minister’s post.

David Narmania: We have not actually Terminated Projects Pg. 3

Lasha Nodia: EU AND GEORGIA FINISH NEGOTIATIONS One Group Wants to Restrict Pg. 4 ON DEEP AND COMPREHENSIVE FREE People’s TRADE RELATIONS Right for GREMENT The European Union technical approach to EU directions is agreed and and Georgia successfully con- “the periods are set in the manner, which will ease Property cluded negotiations on Deep and harmonization with EU regulations to Georgian Comprehensive Free Trade Area enterpreneurs”. However, the Ministry refrains Ownership

(DCFTA). The negotiations, which were ended today in Brussels, have lasted for 17 months and included 7 rounds. Georgian government hopes to initial the agreement during Vilnius summit of Eastern Partnership in late November. As Georgian Minister of Economy and Sustainable Development Giorgi Kvirikashvili declared today, enforcement of the agreement will require more 1-1.5 year. Before that, further regulation of tax system, reforms of logistics, customs, etc. are necessary, he noted. As Deputy Minister Mikheil Janelidze told Sarke,

speaking on specific details at this moment. EU representation in Georgia reminded today that DCFTA will be included in the Association Agreement and signed as soon as EU and Georgia will complete internal procedures. According to the representation, full implementation of trade-related reforms could increase Georgia’s GDP by 4.3% or by 292 million EUR in long-term outlook. An independent Trade Sustainability Impact Assessment, being ordered by the EU, forecasts that the DCFTA will increase Georgia’s exports to the EU by 12% and imports from the EU by 7.5%.

LIKANI, CENTER POINT, POPULI AND CARREFOUR NAMED AS THE MOST DISHONEST COMPANIES

new webpage with the list of dishonest companies has appeared in the social network. At this stage, the page has registered four companies – Likani, Center Point, Populi and Carrefour. “The webpage was created to register dishonest companies on the Georgian market and actively inform the society on harmful activities of these companies”, the webpage reads. As reported, Likani has decreased the volume of Likani mineral water in 1.25 liter containers by 25%, while the price has not changed. The company abstains to make comments on the issue, but according to previous statements prices were expected to grow, because under the decision of the Economy Ministry, water extraction tariffs will triple in September. Customers are discontent as Likani company has grown the price without informing the society. As to Center Point, the company has not handed over apartments to all customers who have paid the

due price. Moreover, in some cases the company has not even started construction of some apartments. Several years ago Dexus took up the management in Center Point, but in 2013 the company was deprived of this right. Moreover, customers sued Center Point and the company owners Maya Rcheulishvili and Rusudan Kervalishvili were summoned to the prosecutor’s office. As to Carrefour hypermarket, the company is famous for low prices, active and aggressive marketing campaign, but customers show pretences because of difference between the prices on stands and bills. Moreover, customers show pretences over products preservation conditions. Several weeks ago outdated beef products were found in the company network. Pretences are expressed by suppliers and distributors too. They are discontent with many unplanned costs with Carrefour. The webpage was created on July 22.

Merab Kakulia: Government should Prevent Economic Contaction to Grow into Recession

Pg. 4

Zurab Gvasalia: Suspension of Pg. 8 Execution against Mortgaged Property is not a Solution Partnership Fund Completes New Infrastructural Project

Pg. 2

MAIN EVENTS caucasian business week

July 29, 2013 #15

TAMAR SANIKIDZE - DAVIT ZURABISHVILI WILL NO LONGER BE DEPUTY MINISTER OF EDUCATION

avit Zurabishvili will no longer be Deputy Minister of Education and Science, the New Minister of Education Tamar Sanikidze said after the governmental session at the government chancellery. Sanikidze says that Zurabishvili won’t be the deputy Minister, though considering his political experience; she will offer him the position of an advisor. As for the other deputy ministers, the new Minister declares that she asked for freedom concerning the deputies, to determine what would be right for the Ministry’s work. She considers that this doesn’t mean she is against any candidate, or she is dissatisfied. As Tamar Sanikidze said she has her vision that will be known in several days.

STRATEGIC DOCUMENT ON GEORGIA’S DEVELOPMENT TO APPEAR IN SEPTEMBER

inance Ministry told Sarke that strategic document on Georgia’s development will be ready by September. For the moment, there is a working version prepared. According to the published draft, the strategy will focus on overcoming of 3 hampering circumstances. These include private sector’s competitiveness, human resources development and accessibility of finances. The document notes that in order to maintain sustainable economic growth, Georgia should focus on growth of TFP (total factor productivity) and therefore, “should make innovations a major priority for economic growth”.

The document points that existing level of export development is quite low compared with the country’s potential, while negative balance of foreign payments threatens macroeconomic stability. In order to get maximum from free trade (with EU), it is important to improve quality standard for Georgian goods, the document notes. The document considers also that due to Georgia’s location between Russia and Turkey, it is possible to get considerable revenues through regional trade (on background of energy supply/ consumption). The document points at Georgia’s undeveloped stock market and notes that banking loans are the only source of business funding.

TBILISI TO HOST INTERNATIONAL BUSINESS IDEAS COMPETITION CREATIVE BUSINESS CUP

n July 26 at 12 o’clock the Open Society Georgia Foundation (OSGF) held a news conference for introducing terms for the Creative Business Cup, an international business ideas competition. The project will be held as part of Global Entrepreneurship Week that is organized by the Center for Development of Innovations sand Entrepreneurship. The international competition aims at developing the creative business sector. Applicants are to ensure creative and special introduction of innovative

business ideas and substantiate their competitiveness. The competent jury will select one winner who will leave for a final stage of the competition in Copenhagen. The final stage will be held on November 18 to November 22. The winner will represent Georgia among 40 other participants. The main prize is 50 000 USD. International partners of the project are: Global Entrepreneurship Week Business and Economy Minisry of Denmark Culture and Economy Center of Denmark Kaufmann Fund The Domestic partner is events managemet company Seventh.

PARLIAMENT ADOPTS BILL ON INVESTMENT FUND

aw “On Investment Funds”, approved by the Parliament, envisages specific requirements for investment fund of advised investors. In particular, starting capital should be no less than 500,000 lari. This amount might be reached during one year since the fund registration. Besides, number of such fund’s participants cannot exceed 50, otherwise the fund should register as a stock fund. The assets should be managed by licenced person or group of such persons. Relations with manager and service types, terms and investment criteria are regulated by the agreement and are not subjected to additional regulations.

This kind of fund is restricted to conduct advertisements for the purpose of realization or rising interest to emission shares and stakes. Besides advised fund, the law envisages existence of stock fund, unit fund, etc. Within 10 working days after establishment of investment fund of any type, it applies for registration to National Commission on Securities. Without such registration, the fund is restricted to make investment. The Parliament has adopted the mentioned law and appropriate amendments to bill “On Securities” in these days with 81 votes “pro” and no “contra” (69 MPs did not attend the voting). Initiator of these legislative amendments is David Onoprishvili, head of Fiscal Committee.

“TATA GROUP” RECEIVED A POSITIVE OPINION FROM MINISTRY OF ENVIRONMENTAL PROTECTION

n Indian “Tata Group” has already received a positive conclusion of the environmental impact assessment from the Ministry of Environment. As we reported, Indian investors were going to invest 700 million USD in the construction of HPP in Adjara. According to Deputy Minister of Energy, the company has already filed a part of documents to the Ministry of Economy to receive a permission for the construction and will submit a complete documentation in the coming days, after which the investor will receive a construction permit. The construction of a 180 MW power plant should be completed before August 2016. Georgia’s Prime Minister first met “Tata Group” members in January, at the Davos Economic Forum.

BUSINESS WEEK

caucasian The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili DISTRIBUTED FREE OF CHARGE Editor-in-chief: Evgeni Mikeladze Mobile phone: 591 013936; 555 472234 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

PARTNERSHIP FUND COMPLETES NEW INFRASTRUCTURAL PROJECT

oyal Baton has opened near the Ilia Lake in Kvareli, the Kakheti Region. The asset has been constructed by the co-financing of the Partnership Fund and Winiveria Group. Total investments in the high potential tourism zone that is a 150 kilometer way from Tbilisi made up 2.3 million USD. The Partnership Fund’s ratio in the form of convertible loan marked 1.15 million USD. The hotel consists of 31 suites, including 4 luxury and 27 standard ones. The asset also includes a bar, a restaurant for 150 individuals, a 20 meter long open pool, a duplex cigar room, open verandahs and wine cellars. The hotel employs 40 to 45 persons and a major part of them has been selected from local residents by Winiveria Group by competition. The hotel completely fits the local landscape and represents an important part of the Kvareli Lake tourism infrastructure. Royal Baton hotel is the second infrastructural project that has been cofinanced by the Partnership Fund. The project of a 38-suite hotel started operation in Akhaltsikhe, the Samtskhe-Javakheti Region in April 2013. Gino Wellness hotel that is located near the Rabati Castle was financed by 2.4 milion USD convertible loan by the Partnership Fund . The Partnership Fund’s executive director Irakli Kovzanadze

says the Fund is co-financing several other infrastructural projects in the tourism sector, namely, a five-star hotel Rixos in Likani (spa-resort) and its total investments made up 38 million USD, as well as a five-star hotel Radisson Tsinandali with 16.8 million USD investments. “The tourism infrastructure is one of the important investment directions for the Partnership Fund. Our goal is to promote the projects that are being implemented in the Region and are important from the standpoint of tourism potential. I believe all these projects, hotels in Akhaltsikhe, Kvareli, Tsinandali and Likani contain the very potential. The fund’s investment policy implies the financing of the projects, their completion and putting them into exploitation and then withdrawal from the project. We have already similar case, when a foreign ivestor, namely Slovak Exports-Imports Bank replaced us in Gino Wellness in Akhaltsikhe. In Due time when we select acceptable and reliable investor jointly with the business sector, the same will take place concerning Kvareli, Tsinandali and Likani hotels. The Fund takes into account whether this or that infrastructural project will stimulate the development of tourism infrastructures in the region. I believe the fourth project has been properly selected in this respect”, Irakli Kovzanadze noted.

INTERVIEW July 29, 2013 #15

- How would you assess your ministry’s work and the results achieved during this period? - Our government always keeps the promises it gives and I’m sure so it will be this time. As for our ministry, I can say that as per 6-month data, the cost of infrastructure projects is 10% higher than in the same period of the previous year. The number of tenders held in this period also exceeds the numder in the same period of the previous year. It should be mentioned that a total cost of the projects scheduled until August 2013 is more than in the same period of 2012. 6 months of 2013 were characterized by the fact that most projects launched by the previous government were completed, some are in progress and will be completed by the end of the year. The fact is that projects, which we have got, especially the Municipal Development Fund projects, are characterized by serious flaws. Therefore, we had to correct legally everything. For this purpose we have created a state commission to study the problematic infrastructure projects, which, by Prime Minister’s order, is led by me and is comprised of representatives from various ministries who have some connection with the infrastructure. - In previous years there were frequent discussions about the poor quality of infrastructure projects. If anything has changed in this regard? - As soon as we received the projects, we have done three main things. First, we reviewed instructions and regulations of the methodological part. We updated German standards. We have developed several new regulations and a number of directions with respect to roads and other supporting infrastructure are currently being developed. The second is that we started a strict quality control of the completed works, which revealed, mostly in the road projects, an extremely inconsistent with conditions that it was necessary to involve law enforcement bodies. The third thing we did is an increase in the terms of the warranty considering procurement legislation. For example, there was a one-year warranty for the roads of internal state importnace. We demand a 2 year warranty, and since the next year we’ll move to a 3-year guaranty. It is important that we had proper communication with the Ministry of Finance and the Ministry of Finance has already begun to demand certificates for bitumen on the border. This means that theimporter is obliged to undergo laboratory testing of the imported bitumen and present a certificate of quality compliance to inspector or customer. I’m sure this kind of filter will definitely bring a positiveeffect with regard to the quality of road infrastructure. - You’ve been a minister for 9 months. During this time, was any project launched by theprevious government revised and how many projects will not be implemented at all for one reason or another?

caucasian business week

DAVID NARMANIA: WE HAVE NOT ACTUALLY TERMINATED PROJECTS An interview with Minister of Regional Development and Infrastructure of Georgia David Narmania - We have not practically stopped projects. Obviously, we looked critically at the projects and some of them even suffered serious modifications. One of them is a project for the protection of Batumi coastline, where coast protection measures had to be taken and golden sand beach had to be arranged. We’ve also revised Rustavi- Tbilisi highway project. The only bridge, which we refused to build, isMtskheta Bridge. The denial was based on “UNESCO” report, which said that in a cse of this bridge construction, the status of Mtskheta as a city - museum was at a great risk. - Do the companies close to the former government face any barriers in terms of participation in tenders? - Our approach is that if a company is working in good faith, if the company performs obligations envisaged by the contract, any problems should not be created for it. There are many companies which under the previous government were forced to carry out certain worksat their own expense, which is why they are in a financially difficult situation today and can’t fulfill their commitments. One of these issues is notorious “New Energy “issue which won a lot of projects and had more than 20million GEL of debt to the budget. In fact, this company didn’t perform its obligations. In order not to cause a damage to the state, we had to use bank guarantees and to offer the remaining commitments to subcontractors. Ther are not many such facts, but they still are.

- Your ministry is in the van of the process of reforming self-government. What can you say about this? - Georgian government approved self-government development strategy. In fact, the bill or the Code of local self-government, is almost finished and will soon be made public. - What can you tell about the construction of a highway, at what stage are works on certain sections and when will the project be completed? - Before our government came to power, 80 kilometers of highway had been built. At present, we are working on three parallel sections. These are Agara - Ruisi, Zestaponi- Kutaisi - Samtredia and Kobuleti bypass roads. In the end the highway should join a double-track tunnel at the entrance of Batumi. In addition, in the fall works on the two sections will begin, this will be an extention of Agara Ruisi section in east Georgia. By the end of the year, a company, which will build a next section of Samtredia road, will be revealed. One of the most important road- infrastructure projects will be Rikoti section of the highway. I often hear the question – what can be done on this section. In response, I’d say that something can be done? The Ministry of Finance and the World Bank signed an agreement that one of the components of the next tranche will be spent on the rehabilitation of this section. This work should be completed before spring 2014. - Ministries of Finance and Economic Develop-

ment are working on the counrty’s development strategy. To what extent are you involved in the developemnt of this strategy? Also it’s interesting to know your vision - how do you see Georgia and its economy in 2020? - Of course, we are involved in the work on the country’s economic development strategy and it is defined by the relevant government decree. Meanwhile, we are preparing our ministry’s development strategy for the years 2014-2017. It will be quite a long and detailed document with all its directions. The main thing is that this document does not appear in the empty place, and we don’t begin to think about it only now. I think this document will be based on the main orientations and vectors which we formed in the pre-election program of “Georgian Dream” coalition. There will be separate economic forecasts and the determinant factors, as well as a review of major sectors and specific visions of their development, taking into account the current situation. The employment component and other social moments wil be envisaged in every direction. There will be some kind of calendar at what time reforms should be carried out in order to get a relatively high economic growth in the country. Once again I want to stress that economic growth alone is not our aim. Our goal should be economic growth which affects the well-being of society. I think our government will be successful in this regard by 2020 and every year will prove that its main concern is the interest of every citizen.

TBILISI INTERNATIONAL FESTIVAL OF THEATRE International Program

24 SEPTEMBER, 2013 ”Always on the edge between the real dialogue and the sliding into the surreal, the irrational, the virtual. In dreams. Beckett’s play includes in the performance a sort of cinematographic editing. A pathway of short, spasmodic moments which mark in a more obvious way the deviations towards fiction, towards the imagination of the two. Towards the hallucinating oscillation between essence and appearances.”

Samuel Beckett

WAITING FOR GODOT Directed by Silviu Purcărete

About Performance: „Waiting for Godot” is not a play with a thesis; it brings no moral to be imposed to the audience, it hides no particular hope within. In order to understand such a play, one must see in it the infinity of the world reduced to the dimensions of their own spirit and in the two vagrants, an endless ambivalent humanity.Beckett sees not to put at our disposal the key to the events that we are forever searching for and he proves his technical ingeniousity by playing with our expectations. „Waiting for Godot” has the power of an infinite adaptability. The play speaks of feelings and emotions that have not been yet expressed but which, with Beckett as guide, we can identify as being our own... Godot’s waiting – an invocation, a reflex, a wall... Gogo and Didi, two actors, two extraordinary characters in a tandem directed by Silviu Purcărete, reveal Beckett’s world directly, clearly and at the same time, all wrapped up in some warm, particular, emotional mystery. Duration: 120 minutes With One Intermission Web-site: www.tnrs.ro www.tbilisiinternational.com www.facebook.com/TbilisiInternational

INTERVIEW caucasian business week

July 29, 2013 #15

LASHA NODIA: ONE GROUP WANTS TO RESTRICT PEOPLE’S RIGHT FOR PROPERTY OWNERSHIP

An interview with a founder and managing partner of“Nodia Urumashvili & Partners” company Lasha Nodia - How would you assess the bill on suspension ofthe execution against the mortgaged property, andwhat consequences might it entail? - It will cause negative consequences not only forbanks and for microfinance organizations, but will affectthe country’s economy. The main problem that can be seen in this initiative is a restriction of the rightto property. We have reviewed the legislative initiative and its goal is to create a database of those wholost their property. The creation of the base will give absolutely nothing, a similar base may be needed for the government for the analysis, and it can be made at the government‘s initiative level. The second main factor that caused our concern is the limitation of the right of ownership. One groupwants to restrict the right to property so that no one to be warned about it. There is one more thing: the purchaser cannot enjoy of the item purchased at auction, even though he bought the property, but the government tells him that he cannot use it for a few months. - Or property rights are violated in the case of the third party? So the person who buys an

apartment at the auction cannot use the purchased property for 6 months? - The right to property means that the owner will be able to benefit from what he owns. The Constitution allows the restriction of the right to property only in a case of expropriation of real property for public needs. Otherwise, the Constitution does not allow the limitation of property rights.And this public need should be such that the essence of the property not to be violated in a democratic country - What should we expect when 6 months pass? - The law does not have the answer to this question. We will have only damage. We’ll conduct diversification. - How often do banks apply to the practice of forced eviction? - For example, the two financial institutions - in this case the bank – has recently issued 30 thousand mortgage loans and only in 32 cases applied to eviction from the house. - What solution do you see, what initiative will allow to avoid similar problems? - We can only recommend the government regarding this matter . We recommend the government not to conduct a forced execution without the court decision. In our country coercive enforcement andeviction from the apartment without a court is observed rather often than through the courts. - What are the most serious consequences of this initiative? - The act contrary to the Constitution will have a negative impact not only on the banks, it will hurt the country’s economy. - As a result of these changes, is there a side that will remain in the win in the case if this initiative enters into force? - Only that the eviction will not happen in 6 months. -Do you plan to take any steps and appeal to the legislature? - We know that the government has a negative attitude towards this initiative and it gives us hope. We are confident that this bill will fail to gain the support of the majority. However, we would definitely appeal to Parliament for this purpose. - According to the authors of the bill, after August 2008 the government helped the banks, so the banks should help clients, in your opinion, did the majority propose the initiative on thepostponement of the execution against the mortgaged property for this reason? - How many cases do you know when the bank is interested in purchasing real estate? There is neither economic nor legal logic in it. Banks often conduct restructuring; there are very few cases when a loan is not delayed. If there is any chance of repayment a loan, the bank will apply to all ways up to the court.

TI GEORGIA: FREEZING EXECUTION PROCEDURES ON MORTGAGED PROPERTY WILL DAMAGE STATE ECONOMY

I Georgia, Georgian branch of Transparency International, declared that amendments, drafted for Civil Code and law “On Execution Procedures”, “will not solve problems of the citizens, but will incur loss to the country’s economics”. The matter concerns the amendments, which envisage moratorium on realization of mortgaged property in favor of creditors until February 1, 2014. These amendments were initiated on July 11 by group of the Parliament deputies. TI Georgia explained that many financial insti-

tutions, especially micro-financial organizations, in which activity mortgage loans play essential role, would face serious financial problems, as their ability to take back borrowed money will be limited. Meeting commitments of financial institutions towards creditors and depositors will be complicated, the non-governmental organization stated, adding that credits might rise in price, while payment of accrued interest to depositors might have certain problems. The draft law also contains a danger of international financial organizations’ trust decline to Georgian financial system and worsened investment environment of the country, TI Georgia pointed, calling the Parliament not to approve this draft law. To remind, Business Association of Georgia spread statement with similar content yesterday.

MERAB KAKULIA: GOVERNMENT SHOULD PREVENT ECONOMIC CONTACTION TO GROW INTO RECESSION

erab Kakulia, former vicepresident of National Bank of Georgia and director of Research Center for Financial Stability and Competitiveness, declares in an interview with the newspaper that the government’s main objective at the stage is to prevent economic slowdown’s develop into recession. The real danger for that already exists, he points. Kakulia indicates to the foreign investment reduction, which is conditioned by uncertainty, followed to parliamentary elections and change of the government. He considers important to restore trust of investors, including local ones, depoliticize business and strengthen fiscal stimulus of economy. In particular, Kakulia declares that local large business structures “must be got out of political shock, in which state they appear after the elec-

tions as a result of cancellation of very vicious “game rules”, established by the previous government”. As the expert explains, significant part of Georgian companies had close relations with the previous government, enjoying advantages due to that: they “won” privatization auctions and state procurement tenders, while “they lost all these privileges under the new government”. According to Kakulia, social policy of the new government (growing dynamics of social expense) has not managed to overlap negative macro-economic effect of delay of capital expenditure and decline of the government consumption (procurement of goods and services). If the government does not intensify infrastructure projects and state procurements, it will become difficult to overcome economic slowdown and to avoid recession, the expert regards.

BUSINESS ASSOCIATION OF GEORGIA: MORATORIUM ON SALES OF MORTGAGED PROPERTY WILL MAKE SERIOUS PROBLEMS TO REAL ESTATE MARKET

eorgian Business Association is concerned about initiated amendments in law “On Execution Procedures”, which envisage declaration of moratorium until February 1, 2014 on mortgaged property’s realization in favor of creditors. The Association declares that “this initiative will not only create huge problems for banking and financial sectors, but also strike a serious blow on real estate market”. It “will reduce international financial institutions’ confidence towards Georgian banking system, harm the investment climate and most important, will not solve the social problems, for which the mentioned amendments were initiated”, the Association points. Based on data of 2 biggest banks of the country’s, the Association reports that there were only 30 evictions this year countrywide, while number of mortgage loans, issued by these banks, exceeds 35,000. “Banks and other credit organizations have already begun revision of their credit policies, which will inevitably lead to reduction in number and rise in price not only of mortgage

loans, but also other types of loans”, the Association points. The statement, which was issued by the Association today, notes that works on the draft amendments in law “On Execution Procedures” and Civil Code are already underway, so consideration of parallel initiatives “only causes a sense of confusion and non-coordination in business society.” The Association hopes that the Parliament will stop consideration of legislative initiative about the moratorium.

BUSINESS July 29, 2013 #15

caucasian business week

GOVERNMENT WORKS ON THE AIRPORT CONSTRUCTION IN VAZIANI AND CHANGES CONTRACT WITH TAV

eorgian government works on the construction project of reserve airport in Vaziani and simultaneously changes contract with Tbilisi International Airport manager

Turkish TAV. Minister of Economy George Kvirikashvili stated about it after the Friday governmental session. Minister stated that construction of airport in Vaziani is a far perspective and theoretically, on the initial stage, plan of cargo airport construction is discussed. Minister says that experts evaluate construction of the airport in Vaziani as a very perspective. As for TAV contract, Kvirikashvili states that next round of negotiations with Tbilisi and Batumi airports operator company is scheduled on July 29 and proposals are sent to the Turkish side, which Tbilisi made up with assistance of authoritative legal company. “In existing contract there were too many white spots and it should be changed by all means... de-

velopment of Tbilisi International Airport will continues, because many investors are interested in development projects around it, among them building of logistic centers”, - Kvirikashvili stated. Prime Minister Bidzina Ivanishvili also talked about the idea of new airport construction. “Building of the new landing line in Tbilisi International Airport will cost 60 million and my ideas was that construction of the new airport might be better... We consciously procrastinated building of the new landing line, because quality and standard issued had to be sold... I also met with airport owner Turkish TAV owner, invited in Tbilisi and if the meet these standards, we are ready for cooperation. In the other case we’ll choose other applicants”, - Prime Minister stated on July 3 press conference. According to existing contract, signed by TAV and previous government of Georgia, Turkish company had to build a new landing line and instead their contract would have extended for 10 years.

GEORGIAN GREENS EXPECTED TO ENTER RUSSIAN MARKET IN OCTOBER

SERVICE QUALITY DEPARTMENT ESTABLISHED AT NATIONAL TOURISM ADMINISTRATION

Service Quality Department is being established at the National Tourism Administration. The body’s Chief Advisor Siko Gegiadze has told TV3 that initially, the program of studying and assessing the quality of the existing tourist establishments will be put in place, and then gradually transformed into a department. He states that the need for establishing such a service has arisen due to the low standards in customer service which currently exist in the country. Its primary aim will therefore be to improve the quality of service at

the existing tourist establishments. The visual and customer service standards at hotels and catering facilities are currently being studied, while travel companies and transport services will be added to the program later on. The establishment of the Service Quality Department has been welcomed by representatives of various hotel chains. Thus, a spokesman at the Holiday Inn has stated that the fundamental problem within the local tourism industry is the lack of qualified personnel, and that the new Department will need to attract employment in this area.

RATE OF DEPOSITS’ DOLLARIZATION DECREASES

ational Bank of Georgia reported that rate of deposits’ dollarization made up 61.7% as of July 1. If compared to showing of the same period of 2012 (62.55%), the rate is decreased by 0.85 percentage points. At that, if compared with showing at the beginning of this year (64.08%), decline made up 2.38 points.

NATIONAL TOURISM ADMINISTRATION TO CREATE QUALITY ASSURANCE SERVICE

ational Tourism Administration announced that it establishes quality assurance service, which will be engaged in tourist objects’ service quality development country-

wide. According to head of the Administration Giorgi Sigua, one of the mechanisms of quality control will be hidden visitor’s status. He also suggests creation of database of the organizations with quality mark and launch of web portal, similar to online shop, in tourism field. Within the mentioned initiatives, National Tourism Administration organized today the meeting for

managers of leading hotels and restaurant chains of Georgia, as well as donor organisations. According to the Administration, participants of the meeting unanimously pointed at unsatisfactory level of service in the country, which significantly hampers tourism development. At that, executive manager of Tbilisi hotel Radisson Blu Iberia Michael Jacobi sees way out only in existence of long-term (10-15 years) state strategy. The meeting also discussed initiative of the government, which is going to provide full funding for vocational education, including one for hotel and other specialists of service industry.

MCC, GEORGIAN GOVERNMENT TO SIGN 140-MILLION TREATY

anufacturers of Georgian agricultural products are waiting for “Rosselkhoznadzor” representatives. Director of “Herbia” company Zurab Janelidze explains to сommerant. ge that they still did not appeal to the National Food Agency, but as soon as the check is completed, the company will submit an application for access to the Russian market. He adds that the company’s products will presumably enter the Russian market in October and the products capacity will be determined as soon as the Russian partners inform them about demand. Note: The National Food Agency states that

“Rosselkhoznadzor” representatives will arrive in Georgia in the near future, and will check a mechanism of certificates issuance by Food Agency as well as the quality of security protection in the country. “Herbia” Director General explains that Georgian agricultural products will be competitive in the Russian market and will be able to compete with the products of other countries both in quality and price segment. “Georgian agricultural products were exported to the Russian market earlier but through other countries and were sold expensively, this time they will come directly from Georgia and the price will be reasonable,” – Janelidze notes.

CHINESE “HUALING” BEGAN FURNITURE PRODUCTION IN KUTAISI

he Chinese company “Hualing” began furniture production simultaneously with wood processing in the industrial park organized by the company. According to the company’s representative, due to the lack of demand in the local market, products are mainly exported to Europe and Iran via Turkey. The management has the development plans for the near future, which are not announced at this stage. The Chinese “Hualing’’ appeared on the market in 2007 and except for wood production, carries out the construction of the “Olympic Village’’.

through investments in education and workforce development. In particular, the compact will focus on improving education in the science, technology, engineering, and math (STEM) fields and investing in teacher training and school rehabilitation to increase the learning potential of Georgians. MCA-Georgia, a Georgian Government entity, will manage and implement the compact. The compact builds on the success of Georgia’s first compact, completed in April 2011.

FAO TO ASSIST GEORGIA IN IMPLEMENTATION OF LONG-TERM AGRICULTURE STRATEGY

he UN’s Food and Agriculture Organization (FAO) undertakes support to the Georgian government in its efforts on implementation of agricultural development strategy for 2012-2022. FAO will also assist Georgia in implementation of strategic action plan for 2013-2015 and Millennium Development Goals. The mentioned tasks are envisaged by the country program framework (CPF) for 2013-2015, which was signed today by Georgia’s Minister of Agriculture Shalva Pipia and FAO representative in Georgia Tony Alonzi. According to this document, cooperation will be implemented in 6 key directions. Those include policy creation, income growth and food safety of population in post-conflict environment, animal health, plant protection, food safety and consumer protection, forestry and fisheries.

BUSINESS & ECONOMY caucasian business week

FOREIGN TRADE TURNOVER DECREASED BY 3% IN THE FIRST HALF OF THIS YEAR

akstat reported that Georgia’s foreign trade (excluding non-organized one) totalled in the first half of the year to $4.713 billion, decreasing by 3% year-on-year. At that, export volume makes up $1.24 billion (growth – 9%), while import – $3.48 billion (decline – 7%). Accordingly, negative trade balance of Georgia amounted to $2.24 billion (48% of foreign trade turnover). In the reporting period, Georgia’s trade with EU member countries amounted to $1.23 billion, declining by 10% year-on-year. Export to EU made up $211 million (growth – 6%), while import from EU – $1.014 billion (decline – 13%). Trade with those countries accounted for 26% of

Georgia’s total trade turnover, export – for 17% of total export, while import – for 29% of total import (against of respective 28%, 17% and 31% in January-June of 2012). EU member countries accounted for 36% of total trade deficit (38% in the same period of 2012). Trade with CIS member countries amounted to $1.56 billion (year-onyear growth – 5%). At that, export to these countries amounted to $682 million (growth – 22%), while import – to $878 million (decline – 5%). Share of CIS countries in Georgia’s total foreign trade made up 33%, in total export – 55% and 25% in total import (against of respective 31%, 49% and 25% in January-June of 2012). These countries accounted for 9% of Georgia’s total trade deficit (in January-June of 2012 – 14%).

5 COMMODITY GROUPS ACCOUNT FOR ONE-THIRD OF TOTAL IMPORT

akstat reported that oil-products remained the largest commodity group (11.2%) in Georgia’s import in the first half of the year, amounting to $391 million. However, import of this group has been decreased by 10.7%, if compared

with the same period of 2012. Import of cars occupied the second place with $341 million (9.8% of total import), increasing by 2.9% year-on-year. Gas was the third largest article of Georgia’s import – $144 million (4.2% of total volume), declining by 0.9%. Import of drugs amounted to $132 million (3.8% of total), increasing by 25.1%. Telecom equipment (for cellular or other wireless networks) occupied the fifth place with $61 million (1.8% of total import), increasing by 15%. Next came cigarettes – $46 million (1.3% of total, growth – 18%), wheat – $44 million (1.27%, decline – 47%), refrigerators – $37.6 million (1.1%, growth – 10.3%), computers and their parts – $35 million (1%, decline – 29.1%), trucks – $33.3 million (0.95%, decline – 14.3%).

July 29, 2013 #15

LITIGATION BETWEEN RUSTAVI STEEL AND GEORGIAN STEEL ON RUSTAVI METALLURGICAL PLANT CONTINUES

LC Rustavi Steel plans to appeal against the court verdict, which partially satisfied demand of JSC Georgian Steel. The court made corresponding decision in case, being initiated against Rustavi Steel, on July 19. In the statement, spread today, director of Rustavi Steel Thomas Blake declares that the verdict annulled sale of Rustavi metallurgical plant’s assets to Rustavi Steel, being conducted after signing of a purchase agreement on December 27, 2011. According to Blake, execution of this decision will return the plant back to its previous insolvent state, harming creditors, employees and shareholders. Blake points that during 2008-2011, Joseph Kay (Georgian Steel) “gained control on the plant with support and patronage of Saakashvili government and destroyed main workshops, which were dismantled and sold as scrap”. Director of Rustavi Steel claims that Kay has withdrew millions of dollars from the plant to

his own accounts and left debt of several tens of millions of dollars to the plant, resulting in putting Georgian Steel on the verge of bankruptcy in July 2011. Blake declares that family of Badri Patarkatsishvili (Rustavi Steel) undertook additional significant financial commitments in order to purchase assets and pay liabilities, while creditors of Georgian Steel approved sale of the plant’s assets during bankruptcy process, which was supervised by Tbilisi city court.

CHINESE COMPANY TO INVEST IN ENERGY SECTOR OF GEORGIA

hinese Guodian Xinjiang Electric Company has expressed its readiness to invest in the energy field of Georgia, Ministry of Economy of Georgia says. The decision was announced at the meeting held between representatives of the Guodian Xinjiang Electric Company and Deputy Minister of Economy and Sustainable Development of Georgia Mikhail Janelidze. “Rep-

resentatives of the Chinese company are studying several specific projects that involve the construction of several power plants in Georgia, with total capacity of 1,170 megawatts,” – the Ministry of Economy says. Guodian Xinjiang Electric Company is a subsidiary of one of the largest energy companies in China, Guodian Corporation. According to 2012 data, its capital amounted to $ 118 billion and its annual profit - $ 37.7 million.

POLISH BUSINESSMEN ARE INTERESTED IN ENHANCING TRADE RELATIONS WITH GEORGIA

bilisi hosted Georgia-Polish business-forum, which was attended by representatives of 8 Polish companies. Event was organized by Georgian and Polish Chambers of Commerce and Industry and Polish embassy in Georgia. Polish business was represented by vacuum packaging of food and goods, furniture manufac-

AUTOMOBILES MAINTAIN LEADING POSITION IN GEORGIA’S EXPORTS

akstat reported that cars maintained first place in top ten of commodity export groups in the first half of the year. In the reporting period, export of cars amounted to $318 million, accounting for 26% of Georgia’s total export. Compared to the same period of 2012, growth makes up 21.9%. Ferroalloys occupy the second place with export volume of $129.5 million (11% of total, growth – 8%). Nitrogenous fertilizers take the third place with $54.3 million (4.4% of total export, de-

cline – 17.5%). The next leading export articles are copper ore and concentrate – $49.38 million (3.9% of total volume, year-on-year growth – 28.8%), mineral water – $44.4 million (3.6% of total, growth – 45.7%), ethyl alcohol and alcoholic drinks – $40.3 million (3.3% of total, growth – 1.5%). The rest members of top ten of exporting articles are raw or semi-finished gold – $35.5 million (decline – 1.4%), natural grape wine – $33.6 million (growth – 31.5%), iron and unalloyed semi-finished steel goods – $29.1 million (growth – 10.5 times), drugs – $26.8 million (growth – 9.3%).

turing, production of farming machinery, etc. Besides, representatives of Kostrzyn Slubice special economic zone also visited Georgia. They are interested in establishing trade relations with Georgian companies. Sakstat reported that import from Poland amounted in 2012 to $85.82 million (year-on-year growth – 36%), while Georgian export to this country – $5.3 million (decline – 44.3%).

33.3 MILLION GEL INVESTMENTS TO GO TO KHELVACHAURI INDUSTRIAL ZONE DEVELOPMENT

inistry of Finance and Economy of Ajara reported that project on development of Khelvachauri industrial zone, cost 33.3 million lari, is planned. The zone will be located within 7 km from Batumi port and within 500 m – from Batumi airport. The Ministry declared that Turkish side already expressed its desire to invest in industrial zone. In this regard, the Minister of Finance and Economy of Ajara David Baladze met today with representatives of Turkish Chamber of Commerce and Industry and Turkey’s Eastern Black Sea Development Agency. According to the Ministry, Khelvachauri industrial zone will be primarily oriented on manufacturers of import substituting and exporting goods.

MADE IN GEORGIA July 29, 2013 #15

caucasian business week

SOFT DRINKS FESTIVAL 26-7 JULE

BANKING NEWS

VTB GROWS DEPOSITS INTEREST RATES

BANK OF GEORGIA RATIO IN SECTOR’S LOAN PORTFOLIO ACCOUNTS FOR 34%

ank informs that according to new conditions, rate for 1-year deposit in USD was defined at 6%. Usage of improved conditions is possible in any currency, for the other deposits as well. Besides, new, convertible deposit of VTB enables customers to convert their savings in the desired currency, without loosing benefit. Deposit can be opened from 100 GEL (USD, EURO), for 3-24 months term. Besides, on the growing deposits, amount adding is possible on the monthly basis. Reminding that recently VTB offered increased rates to the customers in the framework of 1-month promo action. Considering high activity of the customers, after the promo, on July 23, management made a decision to increase rates.

VTB INCREASES STOCK CAPITAL BY 12,3 MILLION GEL

ussia VTB, owner of 96,% of VTB Bank Georgia, made a decision on emission of 12 250 000 common stocks of 1 GEL nominal value. VTB head Andrei Kostin talked about capitalization growth with Georgina Prime Minister Bidzina Ivanishvili in June. During the entrance of the Russian partners in the former United Georgian Bank, at the end of 2004, Georgian side’s share in the bank was 51%. Since then stock emission has made several times. Georgian side little by little reduced share and by 2012 it was not represented in the stockholder structure. By this time EBRD also left. By second quarter 2013, Russian VTB and its affiliated Lakarpa Enterprises Limited (2,8%) are bank stockholders. Bank’s stock capital is 62 million GEL.

TBC BANK ENDS 1H13 IN 30.8 MILLION GEL PROFITS

B NONBANK DEPOSITS GROW TO 8.5 BILLION GEL AS OF JULY 1

he volume of lending by commercial banks (including loans to nonresidents) in June, 2013, compared to the previous month, increased by 197.5 million GEL (2.2 percent) and reached 9.2 billion GEL by July 1, 2013. The volume of loans provided in the national currency increased by 78.0 million GEL (2.6 percent) and the volume of loans in a foreign currency increased by 119.5 million GEL (2.0 percent). By the end of June 2013, commercial banks issued to resident legal entities 828.9 million GEL worth of national currency-denominated loans (2.3 percent or 18.8 million GEL more compared to the previous month) and 4.0 billion GEL worth of loans in a foreign currency (2.6 percent or 101.5 million GEL more compared to the previous month). Out of the total volume of lending to legal enti-

ties, the biggest share falls on trade - 46.7 percent. Compared with the previous month, in June, 2013 the volume of loans provided for trade increased by 2.8 percent or 60.0 million GEL and exceeded 2.2 billion GEL. Share of loans provided to the industrial sector constituted 19.8 percent of all loans to legal entities and amounted to 954.4 million GEL by July 1, 2013 (4.3 percent or 39.2 million GEL more compared to June 1, 2013). 9.4 percent fall on construction, amounting to 453.5 million GEL (4.4 percent or 19.1 million GEL more, respectively). Therefore, 75.9 percent of the total volume of lending to the legal entities falls only on three sectors - industry, construction and trade. The volume of lending to resident individuals increased by 1.9 percent or 72.8 million GEL, during the June 2013, and reached 4.0 billion GEL by July 1, 2013.

PRESIDENT OF ASSOCIATION OF BANKS: SUSPENSION OF EXECUTION AGAINST MORTGAGED PROPERTY IS NOT A SOLUTION

SC TBC Bank completed first half 2013 with 30,8 million GEL profit (first quarter 2013 - 22,3 million GEL). By July 1, bank’s credit portfolio is 2,307 billion GEL (fist quarter 2013 - 2,249 billion GEL), deposits - 2,307 billion GEL (first quarter 2013 - 2,273 billion GEL), overall obligations - 3,072 billion GEL (first quarter 2013 2,273 billion GEL). Bank actives equal to 3,605 billion GEL, market share - 24,1% (first quarter 2013 - 3,4 billion GEL, 24,4%). The bank operates on the market for over 20 years. Main stockholders are TBС HOLDING, European Bank of Reconstruction and Infrastructure EBRD, IFC (International Financial Corporation), DEG (Deutsche Investitions- und Entwicklungsgesellschaft mbH), development organization of German Bank KfW, Dutch Development Bank FMO (Nerlandese Financierings-Maatschappi Voor Ontwikkelingsladen N.V.). Bank Capital equals to 582,6 million GEL (first quarter - 567,5 million GEL).

resident of the Association of Banks of Georgiapredicts deterioration of the environment in the bankingsector as a result of the suspension of the execution against the mortgaged

property. Recall that Parliament is beginning to consider

theinitiative proposed by the majority member Gedevan Popkhadze about the mortgaged real estate. According to the draft, the enforcement mechanisms against themortgaged property are delayed until February 1. According to Zurab Gvasalia, representatives of all leading banks attended a meeting with the bill’s author . Banks are interested in resolving the issue in civilized forms, but a Moratorium is not a solution. In his words, there are banks that do not have any cases of eviction in exchange for the loan: including “TBC Bank”, “Liberty” and “Constanta”. “Bank of Georgia” where 18 thousand mortgage loans are issued and only 20 such cases were registered. The Head of Social Assistance and Development Centre, which is working on these issues, says that a large share comes on the private creditors. In her words, banks are more humane, 40% of the evictions come on banks, and “Bank of Georgia” has the highest rate.

JUNE RECORDS CONTRACTION IN PLASTIC CARD TRANSACTIONS

KSB BANK LOWERS INTEREST RATES ON DEMAND DEPOSITS

SB Bank reduced rates on the deposits on demand. Annual rate of Universal and Royal Deposit in GEL, USD and EURO is 6%, 3% and 2% (was 7%, 5% and 3%); savings - 3%, 2% and 1% (4%, 3%, 2%). Bank states that loan interest reduction preceded this process. KSB started 3-month promo on the consumer loans this month. Loan rate is fixed 12,9%. In June the rate reduced by 2%, to 14%.

July 29, 2013 #15

caucasian business week

une transactions by plastic cards, emitted by resident banks equaled to 684,012 GEL. According to National Bank of Georgia’s (NBG) statistics the number is reduced by 132 million in comparison with last month. ATM transactions are reduced by 62 million, to 539 million GEL.

It’s reduced by 2,9 million, to 70,7 million GEL through POS-terminals in the trade centers; through the bank terminals it’s reduced by 2,3 million, to 33,5 million GEL. By July 1, 2013, 4 406 781 units of debit and 1 163 979 units of credit cards are into circulation. Over 90% of the cards come on the VISA, other part on EC/MC and other system cards.

y June 1, 2013 credit portfolio of the Bank of Georgia is 3,133 billion GEL (first quarter 2013 - 2,990 billion GEL), market share - 34% (first quarter 2013 - 35%). Portfolio increased by 96 million GEL in June, in the second quarter - by 143 million GEL. The bank is a market leader with all data, the only exception is individual deposits, which amount more than 1 billion GEL. Bank’s actives equal to 5,179 billion GEL, market share - 34,6%.

2Q13 RECORDS 64 MILLION GEL GROWTH IN BANK SECTOR’S REVENUES

n the second quarter 2013, Banking sector got 64 million GEL (12%) higher income than in the first quarter and made 36,2 million GEL (8%) more expenditures. According to National Bank’s statistics, incomes in the second quarter equal to 583 million GEL, in January-June - 1,123 billion GEL. In the first quarter 2013 expenditures equal to 951 million GEL (second quarter - 494 million

GEL). 63% of the incomes - 707,6 million GEL is received from the individual and legal entities’ loans. 28% of the expenditures - 262 million GEL is spent on the deposits. Banking sectors spent 180,7 million GEL on the administration maintenance (164 million GEL in the second half 2012). In the first and second quarters almost equal amounts, 90 million and 90,7 million GEL. Currently banking sector of Georgia is represented by 20 commercial banks.

VOLUME OF PAST-DUE LOANS GREW BY 38%

ccording to data of the National Bank of Georgia [NBG], as of the end of June of this year, a volume of outstanding loans made 265.97 million GEL. Compared with the corresponding period of the previous year a volume has increased by 38.4% while compared with the first quarter of the current year – by 8.2%. Past -due loans make 2.8% of the total loans, this figure was 2.3% in the previous year’s corresponding period. During the reporting period, the non-performing loans amounted to 855.34 million GEL that is 0.4% higher than in the corresponding period of the previous year and 2.3% higher compared with the previous quarter. The share of non-performing loans was 9.3% of the total loans in the second quarter of the current year instead of 7.9% of the previous year’s corresponding period. Commercial banks’ loan loss reserves make 669.96 million GEL that is 19.7% higher than in thecorresponding period of the previous year and compared with the previous quarter – by 4.7%. In June, the loans issued by commercial banks amounted to 9.21 billion GEL that is 10.4% more compared with the corresponding period of the previous year and compared to the first quarter this figure has increased by 5%.

AZERBAIJAN July 29, 2013 #15

caucasian business week

AZERBAIJAN TO SET UP 50 MORE PRIVATE GRAIN FARMS

VOLUME OF CONSTRUCTION WORK INCREASES BY OVER 12 PERCENT IN AZERBAIJAN PER YEAR

T S

ome 40-50 private grain farms will be established in Azerbaijan, the Ministry of Economic Development said on July 23. “In accordance with the instructions of the head of state, measures are being taken to establish 40-50 more grain farms, which is of great importance to fully provide food security in the country,” the ministry said. Wheat harvesting in the first privately owned pilot grain farms has been completed in the Aghjabadi and Beylagan regions. 1,875 hectares yielded more than 10,000 tons of high-quality wheat, which means a record high yield of 55 centners of grain per hectare. Most of the collected product will be handed over to the State Grain Fund, while the rest will remain at the disposal of the farms. Growth was reported in agricultural production in the first six months of 2013. Agricultural production in real prices amounted to 2.123 million manats (over $2.7 million) in January-June, increasing by 4.9 percent as compared to the same period of 2012, the State Statistics Committee said. Crop production grew by 4.5 percent, while livestock output increased 5.1 percent.

Spring field works in Azerbaijan almost finished in June, and by June 24 sowing of spring crops in an area of 363,100 hectares had been carried out, which is 2.9 percent less than in the same period of 2012. Potatoes were planted in an area of 65,300 hectares, while vegetables in 77,200 hectares, grain and leguminous crops in 71,800 hectares, melons and gourds in 28,500 hectares, cotton in 23,400 hectares, sunflowers for animal feed in 9,300 hectares, sugar beets in 5,500 hectares, and perennial herbs in 73,500 hectares. Grain and leguminous crops, including corn, held 19.8 percent of the total sown area, while technical plants occupied 10.9 percent, potatoes, vegetables and melons and gourds 47.1 percent and fodder plants 21.1 percent. Some 343,000 tons of vegetables, 274,900 tons of potatoes, 80,300 tons of fruits and berries were produced in enterprises. The country produced 221,500 tons of meat in live weight, 913,000 tons of milk, 685.4 million eggs, and 15 tons of wool. In the first half of 2013 meat production rose by 3.2 percent, while that of milk by 6.6 percent, eggs by 14.2 percent, and wool 2.6 percent.

AGRICULTURAL PRODUCTION GROWTH REACHES 5 PERCENT IN AZERBAIJAN

he volume of agricultural production in the real prices amounted to 2.123 million manats in JanuaryJuly, 2013, increasing by 4.9 percent as compared to the same period of 2012, the State Statistics Committee of Azerbaijan said. “The crop production grew by 4.5 percent, and the livestock production by 5.1 percent,” the report said. Spring field works in Azerbaijan has almost been finished in June, and by June 24 sowing of spring crops in an area of 363,100 hectares was carried out, which is 2.9 percent less than the same period in 2012. According to the report, potatoes were planted in an area of 65,300 hectares, vegetables in 77,200 hectares, grain and leguminous crops in 71,800 hectares, melons and gourds in 28,500 hectares,

cotton in 23,400 hectares, sunflower for animal feed in 9,300 hectares, sugar beet in 5,500 hectares, perennial herbs in 73,500 hectares. Grain and leguminous crops, including corn, amounted to 19.8 percent, technical plants to 10.9 percent, potatoes, vegetables and melons and gourds to 47.1 percent and fodder plants to 21.1 percent. Some 343,000 tons of vegetables, 274,900 tons of potatoes, 80,300 tons of fruits and berries were produced in the enterprises. In this period, the country produced 221,500 tons of meat in live weight, 913,000 tons of milk, 685.4 million units of eggs, and 15 tons of wool. In the first six months of 2013 meat production rose by 3.2 percent, milk by 6.6 percent, eggs by 14.2 percent, and wool by 2.6 percent. The official exchange rate for July 23 is 0.7844 AZN / USD.

AZERBAIJAN CONTINUES STATE SUPPORT TO AGRICULTURAL SECTOR

bout 587.2 million manat was allocated in the form of subsidies in Azerbaijan within the state support to agricultural producers in 2003-2013, Minister of Agricul-

ture Ismet Abbasov said during the meeting of the Cabinet of Ministers chaired by the Azerbaijani President. The meeting was dedicated to the results of the social-economic development in the first half of 2013 and upcoming tasks. He said the funds were directed for fuel and motor oil purchase, wheat and rice sowing, as well as, providing agricultural producers with fertilizers, seeds and seedlings. Some 427.1 million manat of and other types of state support were allocated during the indicated period through the allocation of funds to conduct the activity and to improve the material-technical base of “Agroleasing” company. The cost of the total volume of agricultural products in the country in 2012 exceeded 4.84 billion manat, the minister said.

he volume of construction work increased by 12.2 percent to 3.38 billion manat in Azerbaijan in JanuaryJune 2013 compared to the same period of 2012, the State Statistics Committee reported on July 20. According to the report, around 68 percent of the total volume of construction work accounted for the primary construction, reconstruction and expansion, 17.7 percent - for overhaul, 2.4 percent - for current repair and 11.9 percent - for other construction work. Around 78 percent of the construction work was carried out by non-state construction companies. Around 95,700 people with nominal wages of 597.2 manat, which is 6.3 percent more than in the same period of last year, were involved in the Azerbaijani construction sector during this period or by 14.5 percent more than in the same period of 2012. Alongside, the average salary in state-owned companies amounted to 486.4 manat (a 10.1 per-

cent increase), private companies - 651.4 manat (with an increase of 1 percent). The level of wages in the construction of buildings grew by 1.5 percent - to 561.5 manat in average, specialized construction (increased by 7.1 percent) - to 746.4 manat. In the field of civil construction, wages increased by 29.1 percent to 513.5 manat. The official exchange rate is 0,7844 AZN/USD on July 20.

SOCAR COMPLETES NEXT STAGE OF GASIFICATION IN GEORGIA

eorgian Energy and Natural Resources Minister Kakha Kaladze and Director General of Azerbaijani company SOCAR Energy Mahir Mammadov reviewed the completed gasification work in Tianeti settlement and symbolically lit a torch in the center of the settlement. SOCAR Georgia Gas carries out the gasification of Tianeti in two stages, Georgian Energy and Natural Resources Minister told Trend on Wednesday. Currently the work under the first stage is complete. This stage provides the construction of an 11-kilometer gas pipeline in the direction of Tianeti. This will allow 301 potential subscribers to connect to the common network.

To date, a network of 496.4 kilometers has been built in the regions of Shida Kartli and Mtskheta-Mtianeti and 16,500 subscribers were provided with gas. The company plans to build a 625-kilometer long gas pipeline in these regions by the end of this year. After the completion of construction some 20,872 subscribers will connect to the network. By late 2014 over 86,000 families throughout Georgia will be provided with gas in accordance with the plan that was developed by the Ministry of Energy and Natural Resources and gas distribution companies. After the implementation of the plan additional 52 villages will be supplied with gas and tens of millions of lari will be invested in the construction of new infrastructure.

TAP TO ALLOW DIRECT SALES OF AZERBAIJANI GAS TO EUROPE: SOCAR OFFICIAL

rans Adriatic Pipeline will allow direct sales of Azerbaijani gas to Europe, Gulmirza Javadov, head of the representative office of Azerbaijan’s state energy company SOCAR in Austria, toldTrend news agency on July 23. According to Javadov, TAP will ensure gas sales in South and South-Eastern Europe, which will expand the relations between the countries of the region in the energy sector. “Along with commercial interests, this will allow ensuring the security of gas supply, as well as achieving global diversification,” Javadov said. According to him, the development of new fields in the future will increase the volume of gas supplies to Europe. In late June, the consortium developing Azerbaijan’s Shah Deniz gas field officially announced the selection of TAP as the route to transport its gas to Europe. Another pipeline which was vying

for Azerbaijani gas transportation to European markets was Nabucco West. The TAP project is designed to transport gas from the resource-rich Caspian region via Greece and Albania and across the Adriatic Sea to the south of Italy and further to Western Europe. Gas which will be produced during the second stage of Shah Deniz field development is considered as the main source for the project. The TAP route will be approximately 870 kilometers long (Greece 550 km; Albania 210 km; offshore Adriatic Sea 15km; Italy 5 km). The construction of TAP is expected to start in 2015. First gas is expected in 2019. TAP pipeline’s initial capacity will be 10 billion cubic meters per year, but it will be easily expandable to 20 billion cubic meters. TAP’s shareholders are AXPO of Switzerland (42.5 per cent), Norway’s Statoil (42.5 per cent) and E.ON Ruhrgas of Germany (15 per cent).

10 SOUTH CAUCASUS RAILWAY GETTING PREPARED FOR DAY OF RAILROADER

eneral director of the South Caucasus Railway (SCR) Victor Rebets met with the governor of Shirak Marz where, in Giumri city, the day of railroader will be observed by the company, SCR press office reported. In the scope of railroader day festivities, the first railway museum will be opened in Armenia on August 4. The governor of Shirak Felix Tsolakyan appreciated the complex efforts of the company aimed at development of railroad junction in Giumry, including the recent opening of locomotive and wagon repair depots in the city. The head of SCR Rebets, in his turn, appreciated the local authorities’ support to the company. South Caucasus Railway cjsc is a 100% subsidiary of Russian Railways open joint stock company that is operating Armenian railways under a 30-year concession contract signed in 2008. The contract can be extended for another 10 years. ARKA

MCKINSEY & COMPANY TO CONDUCT THOROUGH STUDY OF ARMENIA’S AIR TRANSPORTATION SERVICE

cKinsey & Company, a trusted advisor and counsellor to many of the world’s most influential businesses and institutions, will conduct a detailed study of Armenia’s air transportation, the results of which will be used to develop a plan of actions. An agreement to that end was signed on Thursday by the executive director of the National Competitiveness Foundation of Armenia Arman Khachaturyan and McKinsey & Co director-partner in the Munich office Andre Andonian. Khachaturyan said the consulting services of the company will ensure the effectiveness of the government’s plan to liberalize air transport. McKinsey & Co is expected to present in two months its proposals on how to increase the competitiveness of Armenian air transport service, he said. Andonian said the company will search for the best solutions that will allow to improve the quality of services, increase the number of flights both to and from Armenia, and to provide competitive rates. “We will look for solutions that will suit Armenia, being in contact with all the parties concerned in the country and beyond,» he said. McKinsey & Company is an international consulting company founded in 1926 and specializing in solving strategic management problems. McKinsey & Co. employs about 9,000 consultants in 94 offices in 52 countries. Customers include three of the top five corporations in the world, two-thirds of the Fortune’s list of largest U.S. companies, government and other nonprofit organizations. ARKA

ONLINE CARD TRANSACTIONS SLASHED BY 15.4% IN ARMENIA TO AMD 1.7BLN IN MAY

nline transactions via cards issued by the Armenian and foreign banks valued at 1.68 billion drams as of late May, which was by 15.4% less from April, the Central Bank said in its monthly newsletter. Total of 91,862 online transactions was made in May, which was by 7.4% less from April. All card transactions valued at 85.1 billion drams (6.5% downturn) and accounted to 1,548,809 (minus 10.6%). ATM transactions valued at 65.9 billion drams in May and accounted to 1,268,845. POS-terminal and imprinter transactions valued at 17.5 billion drams and accounted to 188,102. ($1 – 409.88 drams). ARKA

ARMENIA July 29, 2013 #15

caucasian business week

ARMENIALEADS INNOVATIVE COUNTRIES RANKING INREGION

he Republic of Armenia is the leader in the Caucasus Region by the Global Innovation Index 2013, occupying the 59th horizontal. As reported by Armenpress, our country is ahead of the neighboring Azerbaijan with its 37.6 innovation indicator. Azerbaijan occupies the 105th place, Georgia –73rd, the Islamic Republic of Iran – 113th, Turkey – 68th and Russia – 62nd place. The GII 2013 looked at 142 economies around the world, using 84 indicators including the quality of top universities, availability of microfinance, venture capital deals - gauging both innovation capabilities and measurable results. Published annually since 2007, the GII has become a chief benchmarking tool for business executives, policy makers and others seeking insight into the state of innovation around the world. This year’s study benefits from the experience of its Knowledge Partners: Booz & Company, the Confederation of Indian Industry, du and Huawei, as well as of an advisory board of 14 international experts. United Nations Secretary-General Ban Ki-moon joined the authors of the report and its Knowledge Partners in presenting the GII 2013 findings at the HighLevel Segment of the United Nation’s Economic and Social Council (ECOSOC). The High Level Segment, held July 1-4 in Geneva, brings together heads of state, ministers and heads of international agencies, this year focusing in particular on the role of science, technology and innovation and the potential of culture in achieving the Millennium Development Goals and promoting sustainable development. The first ten countries having innovative economy are Switzerland (66.6), Sweden (61.4), the United Kingdom (61.2), the Netherlands (61.1), the USA (60.3), Finland (59.5), Hong Kong (China) and Singapore (59.4), Denmark (58.3) and Ireland (57.9). The countries, having the lowest innovative economy indicator, are Yemen, Sudan, Madagascar, Togo, Algeria, Palestine, Cote d’Ivoire, Angola, the Arab Republic of Syria and Uzbekistan. The Global Innovation Index 2013 (GII), in its

6th edition this year, is co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations). The core of the GII Report consists of a ranking of world economies’ innovation capabilities and results. Recognizing the key role of innovation as a driver of economic growth and prosperity, and the need for a broad horizontal vision of innovation applicable to developed and emerging economies, the GII includes indicators that go beyond the traditional measures of innovation such as the level of research and development. In just 6 years, the GII has established itself as the premier reference among innovation indices, and has evolved into a valuable benchmarking tool to facilitate public-private dialogue, whereby policymakers, business leaders and other stakeholders can evaluate progress on a continual basis. To support the global innovation debate, to guide polices and to highlight good practices, metrics are required to assess innovation and related policy performance. The Global Innovation Index (GII) creates an environment in which innovation factors are under continual evaluation, including the following features: 142 country profiles, including data, ranks and strengths and weaknesses on 84 indicators; 84 data tables for indicators from over 30 international public and private sources, of which 60 are hard data, 19 compositeindicators, and 5 survey questions; A transparent and replicable computation methodology including 90% confidence interval for each index ranking (GII, output and input subindices) and an analysis of factors affecting yearon-year changes in rankings. The GII 2013 is calculated as the average of two sub-indices. The Innovation Input Sub-Index gauges elements of the national economy which embody innovative activities grouped in five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. The Innovation Output Sub-Index captures actual evidence of innovation results, divided in two pillars: (6) Knowledge and technology outputs and (7) Creative outputs. ARMENPRESS

SWITZERLAND WILL INVEST 30 MILLION USD IN ARMENIA

witzerland almost doubles investment volumes in South Caucasus according to new strategy. Only in Armenia the European country is going to spend more than 30 million USD during coming four years. About this mentioned during press conference regional director of Swiss cooperation office in South Caucasus Rudolf Shokh. “Based on the experience of previous years the new strategy reflects the wide initiatives of Switzerland directed to mediatory missions and positive developments in the region. During coming four years Switzerland will implement investments in three main fields,” he said. The largest financing will be implemented in “Economic development and employment field. The other two fields are “Management and public services” and “Human security and protection”. Besides these three directions Switzerland will

also finance programs related to jog migration, support the implementation of programs on arts and culture. In South Caucasus preliminary budget for 20132016 is 111 million Swiss franks: the 34 percent of which will be given to Georgia, 27 percent each to Armenia and Azerbaijan and 12 percent to implementation of regional programs. ARMENPRESS

ARMENIAN BANKS’ LIABILITIES GROW 11.17% TO AMD 2213.9 BILLION

rmenian banks aggregate liabilities have grown 11.17% since the beginning of this year reaching AMD 2213.9 billion by late June. ARKA News Agency’s analysis shoes that Ameriabank has more liabilities than other banks in Armenia. They totaled AMD 327.2 billion in late June after growing 57.1%, compared with early January. The bank’s share in the aggregate liabilities of Armenia’s banks is 14.7%. VTB Bank (Armenia), with its liabilities amounting to AMD 226.5 billion and 25.18% growth, came second in ARKA News Agency’s ranking, and ACBA-CREDIT AGRICILE BANK, with its AMD 209.5 billion and 5.53% growth, came third. Ardshininvestbank’s AMD 194.8 billion and 19.79% growth brought it the fourth rank. HSBC Bank Armenia was ranked fifth (about AMD 182.2 billion and 3.54% growth). As many as 21 commercial banks operated in Armenia in late June 2013. ($1 – AMD 409.97).

PROCESSING COMPANIES PROMISE TO BUY ENTIRE TOMATO HARVEST

he processing companies of the Republic of Armenia in 2013 increase the purchase volumes and are ready to buy the entire harvest of the tomatoes produced in the Republic. As Armenpress was reported by the director of the Artfood Artashat Cannery OJSC Vachagan Karapetyan, the company can buy unlimited volumes of tomatoes. “We have all the necessary conditions for the large-scale purchase. We buy the products from all the marzes by the cost of 33-100 drams dependant on the tomato quality”, - said Vachagan Karapetyan. The Head of the Purchase Department of the Borodino Armenian Cannery Sisak Aghayan noted that the company is going to buy 4400 tons of tomatoes this year in comparison with the 2500 tons purchased in 2012. “We are ready to properly organize the processes of storage and processing. Dependant on the quality of the tomatoes, they will be used for the production of tomato paste and canned food”, - said Sisak Aghayan. The canneries of Etchmiadzin, Artashat and other processing companies informed that they can purchase more tomatoes this year than in the previous years. By July 2013 12,977 tons of fruits and 477 tons of vegetables have been stored in the Republic, and the total indicator for the fruits and vegetables export is 34,996 tons.

BEEKEEPER FORECASTS RECORD HONEY HARVEST IN ARMENIA

n 2013 the honey harvest in the Republic of Armenia will exceed the average indicator of the previous years by 5-6 times. This was reported to Armenpress by the president of the National Beekeepers Association of Armenia Telman Nazaryan, adding that in Armenia about 1000 tons of honey is produced annually. “This year we will have about 5-6,000 tons of honey”, - said the president of the National Beekeepers Association of Armenia. The general harvest of the honey is dated to July 15-30. Besides, there is a great demand for the Armenian honey abroad. Telman Nazaryan noted that the Armenian ambassadors to many European countries have contacted him to discuss the export issues of honey from Armenia. The Arab countries as well are not indifferent towards the Armenian honey. The beekeeper reminded that a person should use about 100 grams of honey per day – 36 kilograms annually. “If in Japan they categorically do not eat sugar, we do not eat anything but sugar”, - said the president of the National Beekeepers Association of Armenia Telman Nazaryan. There are about 200,000 bee families in the Republic of Armenia. In 2012 16,8 tons of honey were exported from Armenia and in 2011 – 18,1. The world leading honey producing countries are China and Argentina.

CIS July 29, 2013 #15

NEW ELECTRICAL TRANSMISSION LINE TO BE BUILT FROM GEORGIA TO RUSSIA

new 500-kilovolt power transmission line will be built from Georgia to Russia. Chairman of the Management Board of GSE Sulkhan Zumburidze has told reporters that it has not been decided where the substation will be built. “One of the main tasks of building this line is to establish stronger contacts with Russia,” - Sulkhan Zumburidze said. According to Zumburidze, the power line will presumably enter into operation in 2017. It will require approximately $50 million to implement the project.

Turkmenistan

JAPANESE SONY IS READY TO EXPAND ITS PRESENCE IN TURKMENISTAN

urkmen president Gurbanguly Berdimuhamedov received Executive Vice-President of Japanese “Sony” company Shoji Nemoto who voiced several business proposals. Sony is ready to expand its presence in the Turkmen market. The further development of media’s material-technical basis, delivery of communication systems, medical equipment are among the possible areas of cooperation. The prospects of business cooperation are planned to be discussed within the Turkmen president’s upcoming visit to Japan. “Sony” company prepares a special expanded presentation of its last innovative products and achievements. President Berdimuhamedov’s official visit to Tokyo in 2009 gave an impetus to the relations between Turkmenistan and Japan. Several intergovernmental documents and contracts were signed with JGC Corporation, ITOCHU Corporation, Kawasaki Plant Systems, Ltd и Sojitz Corporation, Mitsubishi Heavy Industries и Mitsubishi Corporation, Sojitz Corporation, Asahi Kasei Chemicals Corporation.

TURKMENISTAN’S PARLIAMENT TO UPDATE LAW ON FOREIGN INVESTMENTS

uring an expanded government meeting Turkmen President Gurbanguly Berdimuhamedov said that that most of the laws adopted in the country 10-15 years ago, are already out of date. the President indicated to the Majlis (parliament) of Turkmenistan the need to enhance the transition to full-fledged market economy relations. He said that, the package of laws “On foreign investments”, “On Property” and “On Budget System” need to be updated for this purpose. Turkmenistan is reach with natural gas. Cotton and grain export volumes are produced here and the diversification of economy is carried out. The textile industry and oil and gas processing industries have especially developed in Turkmenistan. In recent years Turkmenistan set a course for gradual transition to a market economy, and this is reflected in the updated constitution of the country. At this stage a series of measures, such as, the denomination of the national currency, unification of exchange rates have been carried out. The transition to international standards of accounting is also planned to be conducted in the country.

caucasian business week

Kazakhstan

RUSSIAN COMPANIES LEFT TOP 50 MOST VALUABLE FIRMS

o Russian companies are included in the top fifty of the world’s largest companies in the annual Financial Times Global 500. Russian gas monopoly Gazprom lost 26 positions tumbling to 57th place. Gazprom is now sandwiched between Walt Disney and the America’s McDonald’s. Its market capitalization decreased by 30.4% to $101.4bn, according to the FT. Apple tops the list of the world’s most valuable companies, in spite of a 25% fall in its market value from $559bn to $416bn. ExxonMobil remains second, while Berkshire Hathaway investment holding is third, up from 13th in the 2012 survey, the FT reports. A total of 8 Russian companies made it into the FT Global 500, compared to 10 companies last year. All the Russians firms have lost positions in the rating. Russia’s oil major Rosneft lost two positions falling to 82nd place, despite an increase

in its market capitalization by 6.9% to $80.9 bn. Russia’s largest bank Sberbank has made it to the first hundred, ranking 97th. The financial institution fell by 11 places and its capitalization shrank by 1.8%, to $70bn. The total market capitalization of the Global 500 companies has increased 7.5% from $25,300bn to $27,200bn. The FTSE All World index has risen 8.1% over the same period, the FT reports. Media, pharmaceuticals and real estate investment trusts have performed the best in the FTSE All World sectors in the year to March 2013, while mining and industrial metals have proved the worst performing, according to the FT. Banks and oil companies remain the most valuable sectors in the list, with banks’ market value rising 13.1%, and oil companies’ market value decreasing 6.7% compared with the 2012 survey, according to the FT. rt.com

GAZPROM COULD GET ARCTIC SHELF SITES BY END OF 2013

azprom, the world’s largest extractor of natural gas, may get access to areas of the Arctic shelf as soon as the end of 2013, according to a statement from the Russian Minister of Natural Resources. A government decree awarded Gazprom 17 offshore sites in the Barents and Kara Seas. The company applied for 20 fields. Sergey Donskoy, the Minister of Natural resources and Ecology of Russia confirmed that in the fourth financial quarter, the government plans to transfer licenses to Gazprom. Donskoy added, however, that Gazprom applications are ‘negotiable’. Rosneft has already requested the government give their economy additional Arctic sites, some of which already belong to their rival, Gazprom. Only state-owned companies are certified to hold Arctic explorations licenses. Along with Rosneft, Gazprom was awarded a license to drill in the Arctic by Prime Minister Medvedev, a process that bypassed a competitive auction process. The government approved bids by both companies for offshore fields and handed Gazprom licenses for 17 offshore sites and Rosneft 12. Both Gazprom and Rosneft will provide backdoor opportunities for western companies to gain access to the Arctic shelf, as Russia has much more lax environmental standards and regulations. Gazprom has already teamed up with Total, and Rosneft has been in talks with Norway’s Statoil and Shell.

Russian Prime Minister Dmitry Medvedev (L) and Gazprom chairman Alexei Miller

The Russian government has urged the two energy giants to team up in joint ventures in order to efficiently develop and explore the uncharted waters in the Siberian Sea. Lukoil, Russia’s top oil producer, was not awarded any Arctic permits, but already operates offshore in the Caspian Sea.

Are they ready?

In June, energy giant Gazprom said it was giving up on a project in the Barents Sea until it got better and newer technology to make the project ‘viable’. As of now, the company is ‘not ready,’ to begin operations. “We are waiting for the emergence of more efficient technology, less costly or that market conditions change,” spokesman Sergei Kuprianov told Echo radio. Another area in the East Siberian Sea is likely to be split equally between the two companies, Donskoy said in May. Gazprom and Rosneft are officially the only companies with the right to explore the Russian Arctic shelf, as they both received exclusive extraction licenses in return for large cash payments. The new fields will help Gazprom reach its annual production target of 100 million tonnes of oil by 2020, but skeptics have raised the question whether increasing supply will solve its major demand issues, as their biggest customer is Europe, which has slashed demand for natural gas. rt.com

AKTAU SEAPORT SEZ TO FOCUS ON OIL AND GAS

azakhstan Ministry of Industry and New Technologies has suggested to expand Aktau Seaport Special Economic Zone (SEZ) and focus it on oil and gas, reported first Vice-Minister of Industry and New Technologies Albert Rau. “The SEZ has produced positive results, but we believe that it is still not being used to its full capacity. It should specialize in oil and gas sector and focus on offering it as wide array of services as possible. The seaport should be used to transport goods produced in the SEZ to foreign markets via the Caspian Sea. We believe that we need to re-launch the SEZ, i.e. we need to move it away from general seaport functions and make it a zone specialised in oil and gas sector, including in export to the pre-Caspian countries,” Rau said at the conference call in the Kazakhstan government. In general, he stressed, there are positive trends in development of Aktau Seaport SEZ. The private investments to state budget funds ratio is 1:2.5. Its production is totally worth 118 billion tenge ($786.7 million). Aktau Sea Port SEZ was established in April 2002 at the area of 2.27 square km and was later enlarged to 20 square km. The SEZ offers zero income, property and land taxes, zero import duties and taxes and zero rent. The port mostly handles oil-bulk cargo, metal products and grain. Since the beginning of 2013 Aktau international sea commercial port has handled over 4.2 million tons of dry and oil-bulk cargoes. The shipment of oil and oil products has reached almost 3 million tons, dry cargoes -- 1.1 million tons (with 299.3 thousand tons represented by metal products), grain – 193 thousand tons and other cargoes – 255.2 thousand tons. Ferry transportations have come up to 441 thousand tons.

Uzbekistan

INTERNATIONAL CARGO TRANSIT LICENSES RENEWED IN UZBEKISTAN

he Association of International Road Carries of Uzbekistan (AIRCUZ) renewed its Carnet TIR transit license with the Republican Road Carriers. “A disagreement between Uzbekistan and the Geneva based International Road Carriers Union (IRU) held up the reissuiance of the canceled license. But the license was finally renewed by the Uzbek Road Carriers Association”, a representative of the association said. According to a source close to the association, an IRU ban on the issuance of licenses to Uzbek companies, took effect on April 1 of this year. The source said that TIRs allow the transit of goods across international borders with simplified customs processes. Without the license, cross border hauling becomes very costly and difficult. The source did not specify what exactly caused the disagreement between Uzbekistan and the Union. As was previously reported, since August of 2012, Uzbekistan has placed many restrictions on cross border haulers. In particular, foreign shippers must receive preliminary permission to enter the country. Up until then, shippers could get such permission at the border. Also, transit fees were increased for foreign shippers. Uzbekistan is one of two double landlocked countries in the world. 90 percent of all cargo in Uzbekistan is transported by truck.

WORLD NEWS caucasian business week

WORLD’S BIGGEST ECONOMIES TEAM UP IN WTO FIGHT AGAINST RUSSIAN CAR LEVY

apan has filed a trade dispute against Russia over the fee it levies on car imports, following a similar move by the EU. China, the US, Turkey, and Ukraine have also reportedly joined the WTO consultations over the Russian tax. The countries claim the new charge, the so-called “recycling fee”, that Russia imposes on motor vehicles applies only to imported vehicles and thereby increases their costs. Japan claims the Russian recycling fee flouts international trade rules, according to the FT. “Therefore, the measure at issue discriminates between imported vehicles and the ones produced domestically,” Reuters quotes Japan’s letter to the WTO. Moscow introduced the fee on cars last September which can be as high as $3,600 per new vehicle, DW reports. The levy aimed at offsetting the costs of recycling cars is effectively applied

only to imports of new and used cars, as local manufacturers do not pay it if they can provide the authorities with a guarantee of safe disposal of the vehicle in the future. The United States is also joining the challenge to Russia, and told the WTO that between September 2012 and May 2013, the fee was levied on $1.25 billion of US exports, more than 10 percent of total US exports to Russia, Reuters reports. The EU says $13.2 billion of its exports are affected annually, according to the news agency. Russia now has 60 days to deal with the complaint. If it doesn’t succeed the complainants could ask the WTO to adjudicate, with an end goal of forcing Moscow to change its rules or face trade sanctions, Reuters reports. Russia’s objections to opening up its car market, Europe’s second biggest, were already a major sticking point in its 18 year negotiation to join the WTO, according to the agency.

July 29, 2013 #15

DOLCE&GABBANA TO BITE THE DUST IF FORCED TO PAY €400MN FINE

talian fashion duo Domenico Dolce and Stefano Gabbana say their world-famous Dolce & Gabbana business won’t survive if a tax fraud conviction is upheld and they have to pay a €400mn ($527mn) fine. In June an Italian court sentenced Dolce and Gabbana to 1 year and 8 months in prison for tax evasion of almost a billion euros. Prosecutors argued that the pair had evaded taxes on income of €416m each and €200m through a Luxembourgbased company, the Guardian reports. A court has agreed to give them suspended 20-month sentences if they pay a €400 million fine. The designers who have always denied the charges are due to appeal the ruling. “We will close. What do you think we could do? We will close. We would not be able to resist.

Impossible,”said the designers, when the Corriere della Sera newspaper asked what they would do if the multimillion-dollar fine is confirmed. “We’re the good guys that have been creating clothes. We live in Italy and pay taxes here. We are not going to move abroad,” the newspaper quotes the designers. On Friday Dolce & Gabbana closed their Milan stores for three days to protest comments by a municipal trade councillor calling them ‘’notorious tax evaders’’. The words “Closed for Indignation” were emblazoned in the windows of the shops, Reuters reports. The case is one of the few high-profile tax evasion cases to come to light in Italy, where corporate tax rates are among the highest in the world, according to Reuters.

MCDONALDS SALES FALL IN EUROPE AND ASIA AS ECONOMIC CRISIS BITES

cDonalds warns global weakness means its clients have started saving on burgers. The fast-food chain posted disappointing results after years of double digit increase in profits each quarter. The fast food giant delivered second quarter profits of $1.4bn on Monday – a 4% increase on the same period last year. It fell short of analysts’ forecasts marking a dramatic slowdown in growth. Revenues rose 2% to $7.1bn. That’s below the $7.9bn revenue expected by analysts polled by Thomson Reuters. Although the company’s shares gained more than 13 per cent in the year to date, it has lagged behind the market and some of its competitors. Burger King shares have risen nearly 20%, while Wendy’s shares are up almost 22%, according to the FT. The company’s shares lost 3.5% on the back of the news. McDonald’s chief executive Don Thompson says the economic crisis was biting into sales. “The informal eating out market remains challenging and economic uncertainty is pressur-

ing consumer spending,” the Telegraph quotes Thompson. “Based on recent sales trends, our results for the remainder of the year are expected to remain challenged.”

McDonald’s global sales increased by 1% for the 1st quarter, primarily due to the U.S. that accounts for a third of total sales. U.S. sales increased by 1%, Europe saw 0.1% fall, Asian sales decreased by 0.3%.

Growth is also slowing down in Russia, where the fast-food giant still posts double digit results business daily Vedomosti reports. Last year sales of its two Russian subsidiaries, LLC McDonald’s and CJSC Moscow-McDonald’s increased by 19.6% to 55.4 billion rubles, while the year before - they were up 24.8% (year on year), according to SPARK data. Mcdonalds is well ahead of its fast-food competitors in Russia with the market share of 19.3% Vedomosti quotes Euromonitor International. However the competition is increasing : Burger King market share has risen to 3.1% in 2012 from 1.5% in 2011. Subway takes up to 2,7%. Euromonitor estimates the Russian fast-food market at $9.4bn last year, Vedomosti reports. This year McDonald’s will open fewer restaurants than planned and reduce capital expenditure, Vedomosti quotes Thompson. Responding to the “headwinds of the world economy” McDonald’s has tries to attract customers through cheaper deals on the menu and promoting combined dinners in Europe, the FT reports.

EU DEBT REACHES ALL-TIME HIGH OF $11.4 TRILLION

overnment debt in the euro zone reached an all-time high of 92.2 percent of GDP in the first financial quarter, despite large-scale efforts by leaders to dig their countries out of recession through austerity measures. Eurozone debt, in total, has swelled to $11.4 trillion (8.75 trillion euro), jumping from 8.6 trillion euro from the previous quarter and 8.34 trillion euro in 2012. Official Eurostat data shows the debt of the 17nation block rose 1.6 percent since the previous quarter, and 4.0 percent year-on-year. Hit hard by an 18-month recession, a continentwide banking crisis, and sluggish trade demand, 5 countries in the eurozone have debt over 100 percent of their GDP. Greece has 160.5 percent debt, and Italy, the block’s fourth largest economy, is burdened by 130.3 percent in debt. Portugal has 127.2 percent and Belgium’s debt climbed to 104.5 percent of GDP. ‘Bail-out’ states, those which have, or are currently receiving financial aid from the European Commission and International Monetary Fund to

rebuild their economies, have some of the highest debt. Greece, the first country to enter crisis and seek an EU bail out in 2009, has a debt of 160.5 percent of GDP, the highest in the EU, a 24 percent increase over the last year. Cyprus, the most recent euro zone member to receive EU aid, has government debt 86.9 percent relative to GDP. Debt in Ireland is 125.1 percent of GDP, a 18.3 percent jump year-on-year. Ireland has officially re-entered recession as economic growth shrank for a third consecutive quarter, as the country continues to be weighed down by their 64 billion euro bailout cost. Germany, the EU’s largest economy, and Estonia, one of the smallest, were the only two countries who managed to reduce their debt. Germany managed to trim debt to 81.2 percent relative to GDP, and Estonia has the lowest debt in the eurozone- 10.0 percent. Low debt ratio’s were also recorded in Bulgaria (18.0 percent) and Luxembourg (22.4 percent). Austria and Germany were the only economies that didn’t shrink in the first quarter. Europe’s

second largest economy, France, contracted by 0.2 percent. Germany’s Bundesbank forecasts the leading EU economy will show robust Q2 growth, according to a monthly report released on Monday. Across the 27-country block, including non-euro currency states such as Britain and Poland, the collective debt stood at 85.9 percent relative to

GDP, at 11.11 trillion euros, up from 10.67 in 2012. Collectively, EU leaders decided to tighten the grips on austerity to keep economic growth under control, but the kickback has been painful- most euro countries have remained, or re-entered recession. rt.com

PUBLICITY July 29, 2013 #15

caucasian business week

GEORGIAN COMPANIES TO ATTEND MOSCOW INTERNATIONAL EXHIBITION WORLD FOOD 2013

ales Management Agency offers Georgian companies to take part in Moscow International Exhibition World Food 2013 (http://www.iteexpo.ru/). The exhibition will be held at Moscow Expo Center on September 16 to September 19. The World Food 2013 is organized by ITE international company that conducts various thematic exhibitions in European and Asian countries (London, Hamburg, Moscow, Istanbul, Beijing). Over 1600 companies from 69 countries have taken part in the World Food 2012. The Sales Management Agency, a developer of the trademark of Choose Georgian, is a Georgian partner for ITE. Our company is able to organize Georgia’s regional section on 106 square meters so as Georgian companies be represented there. Sales Management Agency offers Georgian companies to take part in the event and introduce their products at one of the major exhibitions in the Russian Federation, set up contacts with Russian

retailers and interested sides and companies from various countries. We believe the exhibition will foster the growth in sales of Georgian products on international markets and help Georgian companies penetrate the Russian market. The participation terms are as follows: The companies wishing to take part in the exhibition must pass registration at the Sales Management Company. The admitted cmpanies will receive an at least 6 square meter space at the exhibition with a stand, a table and corresponding accessories, AD space in the catalogue, AD or image article in the Caucasian Business Week and the Коммерсант Грузия newspapers. The participation fee makes up 4500 EUR, VAT including. The fee for independent attendance is 5500 EUR, plus an 18% VAT of the Russian Federation. The companies wishing to have a stand of over 6 square meters should pay 300 EUR for every additional square meter. Georgia’s regional section offers preferential terms to Georgian companies

for participation and will give room to culture programs (Georgian songs, dances and hosts in Georgian national clothes). The Georgian Agriculture Ministry provides the event support. Media partners are as follows: the Englishlanguage Caucasian Business Week, the Russianlanguage Коммерсант Грузия, BPI.GE business portal, the Commersant radio station www.Commersant.ge. Technical information and additional costs: Participation Fee: the companies must pay at least 70% of the fee until August 15, 2013. Participation in competitions: various award ceremonies and competitions will be held as part of the exhibition and the companies wishing to take part in the event should pass registration and join various thematical competitions. Additional fee makes up 250 EUR. Hotel: representatives of the participant companies may be accommodated at partner hotels at

preferential rates (www.scontinental.com). Sales Management Company is also able to organize accommodation issues. Logistics: participant companies may unite on products transportation issues. Their cargo may be carried by one transport. Visas: the list of representatives of the participant companies must be submitted timely to forward it to the event organizers and the Russian Foreign Ministry. The Georgian Agriculture Ministry will provide support in visa reception process. Available Unexpected Circumstances: If a company fails to take part in the exhibition because of visa problems, the participation fee will be refunded. Contact information: Irakli Lekvinadze: 577965577; ilekvinadze@gmail.com Romeo Saria: 599653009 romeosaria@gmail.com www.cartuli.ge

EXHABITION caucasian business week

July 29, 2013 #15

TBILISI GUIDE July 29, 2013 #15

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 Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

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

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

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

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

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

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

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

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

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

PUBLICITY July 29, 2013 #15

caucasian business week

CHEAP MORTGAGE LOANS FROM LIBERTY BANK

From 8.99% News! Cheap mortgage loans from Liberty Bank in Gel at a lowest annual interest rate of- 8.99%! While using low-cost mortgage loans, the borrowers not only get the lowest percentages but also receive bonus products for free

Cheap mortgage loans available for: For purchasing Residential and Commercial Real Estate / repair / building Land plot purchasing, personal car purchase Purposes of consumer financing Loan consolidation-re consolidation of one or more loans from commercial banks

Cheap mortgage loan principal terms: Currency – Gel Term – minimum 6 months – maximum 15 years The annual interest rate – from 8.99% . Loan Amount - Minimum - 5 000 Gel / Maximum - 300 000 Gel The borrower’s minimum monthly income - 800 Gel

Bonus Products: Special Liberty basic package for free, which includes: Multi currency account Bank Card – Visa Gold or MasterCard Gold Premium Smartivi Card Internet Bank SMS Bank All borrowers who take advantage of cheap mortgage loans will accrue an annual interest rate of 7.00% - which will be deposited into their liberty account 3 If desired by the borrower, at the time of receiving the low-cost mortgage loan (the borrower) will receive the credit card - Magic card, with double amount of credit limit of the borrower’s monthly net income For more information regarding cheap mortgage loans please call: The Banks 24-hour call center +955 32 255 55 00 or *55 00 (from mobile phones)