Caucasian Business Week #17 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK August 12, 2013 #17

caucasian business week

August 12, 2013, Issue 17

caucasian1

BE INFORMED, DO BUSINESS

Saakashvili Speaks about the August War

GD MPS MEET GOVT ECONOMIC TEAM

Pg. 2

The President of SAMSUNG has opened the first official store and Smart School in Georgia

George Kvirikashvili - “Outlook is quite positive” LG INNOVATIVE Pg. 5 awmakers from the Georgian Dream after the meeting that despite of slowdown, ecoPRODUCTS SURPRISE parliamentary majority group met nomic situation was not alarming. THE WORLD AGAIN Pg. 3 “Healthcare government’s economic team be- “Outlook is quite positive,” Economy Minister GEORGIA FT - GEORGIAN WINES: OLDER AND WISER

MARKETING ACTIVITY OF BANK OF GEORGIA AND TBC BANK IN FACEBOOK NETWORK

ilton Worldwide is expected to return to the public ownership after private equity group Blackstone decided to put it on the market. Pg. 4

yond the closed doors on August 7 to discuss economic situation in the country in the view of economic slowdown. Economy Minister and Deputy PM Giorgi Kvirikashvili; Finance Minister Nodar Khaduri and Minister for Regional Development and Infrastructure Davit Narmania briefed GD lawmakers. GD senior lawmakers and cabinet ministers said

bilisi energy distributor JSC TELASI reported loss of 4.8 million lari for the first half of this year. In the same period of previous year, the company had profit of 11.8 million lari, while annual profit for 2012 amounted to 24.96 million lari. The company’s income from electricity realization amounted to 125.9 million lari, declining by 3.1% year-on-year. In the reporting period, the company purchased electricity of 66.4 million lari, by 9.3% less than in the same period of last year. Total assets amounted to 270.14 million lari, declining by 6%, if compared with the end of 2012. Total liabilities amounted to 150.4 million lari, declining by 7.7% during January-June. Of total, current liabilities made up 106.1 million lari, while long-term liabilities – 44.3 million lari. Chartered capital remained the same during the reporting period, amounting to 112.43 million lari.

ARMENIA “EXPENSIVE” ARMENIAN SKY acation season is still in full swing, and many of our citizens plan to spend their holidays abroad. Pg. 10

AZERBAIJAN GREECE OKS SOCAR’S BID FOR DESFA

reek state privatization fund TAIPED’s governing board approved the Azerbijani state energy company’s revised offer for 66 percent of natural gas transmission network operator DESFA. Pg. 11

CIS BELARUS AND RUSSIA IN A ‘CHOCOLATE WAR’ AGAINST UKRAINE

insk has decided to support its customs union ally Moscow and ban the transit of confectionary by the Ukrainian firm Roshen to Russia. Pg. 12

WORLD NEWS HILTON WORLDWIDE TO OPEN ITS DOORS TO INVESTORS

ilton Worldwide is expected to return to the public ownership after private equity group Blackstone decided to put it on the market. Pg. 13

FINCA GEORGIA OBTAINS BANKING LICENSE

Ministry Plans To Introduce Minimal Wage”

Pg. 3

TELASI ENDS FIRST HALF IN LOSSES

GREECE OKS SOCAR’S BID FOR DESFA

Kvirikashvili told journalists. “We should spare no efforts to move this political tension into a healthy debate and to remove this tense background; this is very important. It is also important to refrain from making statements and remarks [proposing] increase of regulations and introduction of restrictions in various spheres.”

ational Bank of Georgia (NBG) reported that banking license was issued to FINCA Bank Georgia. Accordingly, Georgian banking sector is represented now by 21 commercial banks. FINCA is engaged in micro-lending internationally and is represented in 22 countries, while since 1998 it operated on Georgian market as a micro-financial organization FINCA Georgia. NBG pointed that transforming into commercial bank is part of FINCA’s global strategy. According to latest published data (as of 2012), net profit of FINCA Georgia made up 6.73 million lari (year-on-year growth – 14.17%). The company’s loan portfolio amounted to $49.5 million (year-on-year growth 27.7%). Total assets made up 99.44 million lari (growth – 27.75%), while total liabilities – 78.04 million lari (growth – 28.38%).

Pg. 4

Giorgi Sigua: 0.5 billion GEL Investments will Go to Tourism Sector Pg. 4

Giorgi Kodua Returns to Airline Business Pg. 4

Gurieli Plans to Introduce Premium Georgian Tea Brand Pg. 5

Gigla Agulashvili: Agriculture Cooperatives will Unite 15 000 Farmers for a Year Pg. 4

MAIN EVENTS 2 SAAKASHVILI SPEAKS ABOUT THE AUGUST WAR

August 12, 2013 #17

caucasian business week

resident Saakashvili said that he had done everything possible trying to prevent war with Russia five years ago including through offering Moscow significant concessions, among them rejecting NATO aspiration, downscaling cooperation with the U.S. and a plan to carve-up Abkhazia. In a lengthy interview with the Rustavi 2 TV, aired on August 7 on the occasion of the fifth anniversary of the war with Russia, Saakashvili said that all of his efforts were fruitless as Russia was preparing for the war, which aimed at “complete destruction” of Georgia. Commenting on Russian PM Dmitry Medvedev’s remarks in an interview with Rustavi 2 TV, Saakashvili said it was a clear message that Georgia should reconcile with losing of Abkhazia and South Ossetia, reject NATO integration and become a member of Eurasian Union if it wants to normalize relations with Russia. “The Georgian nation… now faces a concrete choice – if the Georgian nation wants to say no to significant part of its territory, if the Georgian na-

the war]; such stance is only increasing threat for Georgia, because unlike 2008 today they [Russia] have a hope that there is a fifth column in Tbilisi… We have political parties which are being openly financed from Russia and they don’t even hide it and parroting their [Russian] propaganda… They gave leader of [Georgian Dream coalition Bidzina Ivanishvili], which won the elections, 2 billion dollars,” Saakashvili said. ‘Georgia was not Ready for War’ Saakashvili said that Georgia was not preparing for the war and August 2008 was the worst possible time for Georgia to engage in military actions as the country “was not ready for the war”. He said that Georgia’s best military units at the time were stationed in Iraq; he also said that although at the time Georgia had bought air defense systems from Israeli defense company Rafael Advanced Defense Systems, shipment of these systems was only expected by the end of 2008; he said shipments of military equipment was expected from Bulgaria as well and military field hospital was “on its way from Germany, which was then taken back by Germans”; he also said that at the time Georgia was in “final stage” of talks with the U.S. “to provide us with large number of Stinger” surface-to-air missiles. “We lacked so many things; the worst time for Georgia to engage in [military actions] was summer of 2008 and Russians knew it very well,” Saakashvili said. tion wants to say no to future development – that is saying no to Euro-Atlantic space… if Georgia is ready to say no to [freedom] of choice in internal [affairs], because Eurasian Union means imposing their rules, then of course there are certain possibilities with Russia,” he said. He said that the only right option for Georgia is to continue “dignified, fast-track development without bowing a head” to Russia. “The solution is to run – that implies fast development,” he said. Saakashvili said that if “we continue deluding ourselves” and hoping that trying to appease Russia would yield result, “it will lead us to losing the Georgian statehood.”

‘Fifth Column’

Saakashvili said that putting blame for the August war on both Russia and Georgia, which was the stance of the current government of PM Ivanishvili, was part of “Russia’s propaganda”. “Because today there are many people, including in [Georgia’s current] government, who are parroting it [that both sides are to be blamed for

POLL: RUSSIAN ATTITUDES TOWARDS GEORGIA

lightly less than half the respondents in Russia say they have positive attitude towards Georgia and 49% say recognition of Abkhazia and South Ossetia brought neither benefit nor harm to Russia, according to a survey by Russian polling agency Levada Center. The survey of 1,601 respondents in 45 regions of Russia, which was released on Wednesday on the occasion of the fifth anniversary of the August war, was fielded on July 18-22 and has a margin of error plus, minus 3.4%. On a question what’s your attitude towards Georgia, 48% responded either very positive or mainly positive – a slight increase from last July’s similar poll by the same pollster and a 32 percentage point increase from a similar poll carried out in September, 2008. The figure stood at 42% two years before the August 2008 war. On the same question 40% responded their attitude towards Georgia was either very negative or mainly negative – statistically the same to July, 2012 poll; the figure stood at 51% in September 2008.

20% of respondents think Russia benefited from recognizing Abkhazia and South Ossetia, down from 28% and 40% in July 2012 and September 2008, respectively. 11% think it did harm to Russia – the figure stood at 15% in September 2008. 49% think the move brought neither benefit nor any harm to Russia – the same as in last July’s poll; the figure stood at 28% in September 2008 and at 40% in July 2009. 9% of respondents said Abkhazia should be part of Georgia; 30% - part of Russia and 42% said it should be an independent state. Figures were statistically similar on the same question in respect of South Ossetia. In a public opinion survey carried out in Georgia in June by CRRC for the U.S. National Democratic Institute (NDI), 37% of respondents believe that Russia is “a real and existing threat to Georgia” – an increase from 26% in a similar poll in March 2013. Number of those, who believe that this threat is “exaggerated”, decreased from 42% in March to 34% in June. 20% of respondents said Russia “is no threat to Georgia at all.”

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; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

‘Concessions’

Saakashvili said that in an attempt to defuse tensions with Russia and to find solution to conflicts in Abkhazia and South Ossetia, he offered Moscow in early 2008 number of serious concessions. He said that in February, 2008 when he met President Putin in Moscow on the sideline of CIS summit, he told his Russian counterpart that Georgia was ready to reject NATO integration and to downscale ties with the U.S. in exchange for resolving conflicts in Abkhazia and South Ossetia. “We told him we were ready to say no to NATO… ready to say no to enhanced ties with the United States and [to reaffirm] it by a treaty, if you help us with [achieving] progress in respect of [breakaway] territories. Putin did not even think for a minute, he looked at us, smiled and said: ‘guys we are not trading off your territories on your geopolitical orientation’,” Saakashvili said. He said that in June 2008 he even offered Russia a controversial plan involving dividing Abkhazia, with Gali and Ochamchire districts under Tbilisi control and areas to the north of Ocham-

chire, including the capital Sokhumi, under de facto Russian control. When this proposal was first reported in the Russian press both Tbilisi and Moscow denied it, but President Saakashvili first confirmedoffering such plan to Moscow in late August, 2008. Saakashvili said in an interview with Rustavi 2 TV, that he was ready to make all the possible concessions before Russia just to avoid the war.

‘Condoleezza Rice was Saying Russians will not Do it’

President Saakashvili suggested that lack of reaction from the West to Russia’s military build-up and provocations in lead up to the war was encouraging Russia. Asked about warnings from then U.S. secretary of state Condoleezza to do everything in order not to be dragged into military conflict, Saakashvili responded: “Condoleezza Rice did not believe that it [war] was coming. When now they say that they were warning us, it is in fact an attempt – everyone wants to be remembered in history in a good light; records exist; we were warning them that [war] would start and they were telling us: ‘there is no chance’. Her [Rice] favorite phrase was: ‘I know the Russians, they will not do it’.” Saakashvili said that then German foreign minister Frank-Walter Steinmeier, who in July 2008 led the diplomatic efforts to defuse tensions by offering a plan for Abkhaz conflict settlement, was the first Western senior official who openly told the Georgian leadership about real threat of war from Russia. “Steinmeier, who probably was less well-disposed towards us and was more pro-Russian, honestly told us what was going to happen; he knew Russians better,” Saakashvili said. He said that Georgian troops’ resistance delayed Russian forces advance and it helped to buy time for diplomatic maneuvering and reaction from the West, particularly from the United States. He said that the U.S. decision to send its warship, loaded with humanitarian aid, to Georgia was an important signal for Russia. “Eventually it was diplomacy and the U.S. sixth fleet that stopped Russia; do you really believe that [Russia] did not want to take over Tbilisi? Of course they wanted. They told Condoleezza Rice that their goal was complete destruction of Georgia,” Saakashvili said.

GEORGE KVIRIKASHVILI “OUTLOOK IS QUITE POSITIVE” GD MPs Meet Govt Economic Team

inance Minister Nodar Khaduri said he briefed lawmakers about budgetary targets. “There are no problems in the Georgian budget. The budget will fund all the infrastructure projects and social expenses; you know that the pensions will increase further from September 1,” Khaduri said. Parliament speaker, Davit Usupashvili, said after the meeting: “Situation in overall is satisfactory taking into consideration those difficulties, which the country faced at the beginning of this year. The economic team of the government is working at its full capacity. We have received an absolute guarantee that all the budgetary targets will be met.” Usupashvili Speaks of Govt’s Shortcomings Usupashvili said that one of the issues discussed at the meeting was to make available soft loans for start-up businesses. “The government is working on this issue and relevant mechanism will probably be elaborated by next year,” he said. After the state statistics office released its preliminary data late last month showing real GDP growth at 1.8% year-on-year in the first half of 2013 and 0.8% contraction in June, government came under fire from the UNM parliamentary minority group, accusing GD of pursuing policies contributing to sense of instability. Last week UNM parliamentary minority leader

From Pg. 1

and presidential candidate, Davit Bakradze, offered PM Ivanishvili and government’s economic team a meeting to discuss “how to bring Georgia out of the economic crisis.” Commenting on MP Bakradze’s proposal for a meeting, Economy Minister Giorgi Kvirikashvili said on August 7: “I am ready to meet not only parliamentary, but non-parliamentary opposition as well. But there should be a business-like atmosphere, not a didactical tone… Yes I accept this proposal for a meeting.” Asked about MP Bakradze’s proposal for a meeting, Finance Minister Nodar Khaduri told journalists on August 7: “What should Davit Bakradze teach me? How to terrorize business? How to seize private property?.. No, we don’t need it; we are not going to replicate such things from the National Movement.” MP Bakradze welcomed Economy Minister Kvirikashvili’s remarks and reiterated readiness to engage in “issue-based and business-like dialogue.” “We should put aside our political disagreements and work together for the people,” he said. Meanwhile, PM Ivanishvili met in his private seaside residence in Ureki U.S. Ambassador to Georgia Richard Norland and discussed “the government’s plans to attract foreign investment and promote economic growth in Georgia,” according to the U.S. embassy in Tbilisi.

BUSINESS August 12, 2013 #17

caucasian business week

LG INNOVATIVE PRODUCTS SURPRISE THE WORLD AGAIN

G Electronics, a South Korean Multinational electronics company is actively operating in Georgian Market and provides wide range of products to Georgian customers. LG products are always designed in accordance with customers’ needs and preferences in order to maximize comfort for customers and to fit their expectations. LG Electronics is also famous for its innovative ideas and products all over the world and Georgia is no exception. LG electronics and its official partner, Aray Tomorrow, regularly offer new line up of products to Georgian customers. This year in 25th of June LG Electronics with Aray Tomorrow launched its new Smart TV Cinema 3D for Georgian Market. The 2013 Smart TV line up offers easier content access and sharing along with an updated Magic Remote for a simplified, intuitive user experience. LG’s CINEMA 3D Smart TV has won CES Innovations Awards for its superiority in hardware and software a number of times, including at the 2013 CES Innovations Awards. “LG always strives to provide the most engaging, most convenient user experience to consumers in the region,” said Mr. D.Y. Kim, President of LG Electronics, Gulf FZE. “We have been singularly uncompromising, both in developing and improving the LG Smart TV platform. As a result, we are confident that our 2013 models with an intuitive user control via the Magic Remote will shatter all expectations and demonstrate that LG has moved the medium of Smart TV forward.” Also one of the most important news for Georgian customers regarding 2013 LG Smart TVs is that all TV models can support DVB-T2 (Digital Video Broadcasting-Terrestrial 2) signal and owners of those TVs can continue watching their favorite TV channels without purchasing any additional equipment after when analog broadcasting is changed to digital broadcasting in Georgia in 2015. TV is not the only product regarding to which LG Electronics implements its innovative ideas. Af-

ter the successful foundation of mobile business in Georgia, LG Electronics is ready to encourage Georgian customers with new mobile phone models. The newest flagship device from LG Electronics G2 is the first Smartphone from LG which is launched as part of the company’s new “G” premium brand. Future smartphones in the same series will carry only the G name while the branding of mobile devices that have already been introduced will continue unchanged. LG’s new mobile - G2 has been launched in New York on August 7th and soon Georgian customers will also be able to enjoy the novelty provided by LG. “Our vision is to make LG’s newest G devices synonymous with excellence, raising the bar even further for the ultimate in user experience,” said Dr. Jong-seok Park, president and CEO of the LG Electronics Mobile Communications Company. “The new G2 will build upon the excellent reputation established by previous G Series products.” LG Electronics the world’s leading innovator in home appliances has always believed that technology and innovation should be used to make life better. So in order to bring improvements to consumer’s everyday lives new techniques, 6 Motion™ Technology and Door-In-Door technology were added to LG washing machines and refrigerators. Unlike any other product on the market, LG’s innovative and stylish 6 Motion™ Wash Technology for washing machines uses six powerful but gentle techniques to deliver a customized wash for different types of fabrics, without the harsh treatment that causes damage to clothes. LG’s 6 Motion washer technology is a revolutionary innovation in the way washing machines work. Combining up to six different washing actions, including scrubbing, stepping, swinging and rolling motion, just like a hand wash. 6 Motion’s multiple settings ensure that everything from work jeans to baby clothes

comes out looking and feeling its absolute best. Thanks to the innovative Door-In-Door technology added to LG refrigerators, customers can conveniently find and retrieve their favorite snacks or beverages without having to search the refrigerator. In addition to the quick and easy access to frequently sought-after food items, the Door-In-Door minimizes temperature loss for a more consistent fridge temperature. With more consistent tem-

peratures, food stored within the main body of the fridge is less prone to being contaminated. LG’s new Door-In-Door refrigerators keep food fresher and healthier. LG Electronics, a global leader and technology innovator in consumer electronics, mobile communications and home appliances, promises Georgian customers to continue making surprises and incessantly provide them their innovative products.

INTERVIEW caucasian business week

“HEALTHCARE MINISTRY PLANS TO INTRODUCE MINIMAL WAGE”

inister of Health, Labor and Social Protection David Sergeenko estimates that expanded program of universal healthcare is implemented without gaps. “The state will provide all citizens with basic package of health insurance, while private insurance companies will provide extra options”, the Minister declares in an interview with the newspaper. According to the Minister, “private insurance companies will remain in Georgian healthcare program, however management of state-owned finances will be implemented by the state”. Sergeenko declares also that establishment of the state insurance fund is necessary, which needs 1-1.5 years however, “because it is the state structure, managing huge financial flows”. Regarding title of the article – the Minister says that discussion on necessity of concept of minimal wage is underway.

GIGLA AGULASHVILI: AGRICULTURE COOPERATIVES WILL UNITE 15 000 FARMERS FOR A YEAR

igla Agulashvili, chairman of the Parliament’s Committee on Agriculture, hopes that 15,000 persons will join agricultural cooperatives countrywide during a year, while “we will get results after 1 year”. According to already effective bill “On Agricultural Cooperatives”, minor farmers will have several privileges after joining to the cooperative. Namely, the cooperative will be released from property tax until January 1, 2017, while revenue earned from agricultural activity will not be charged with income tax. Grants, received by the cooperative, will not be taxed as well. However, expert Paata Koguashvili, who is one of the authors of the bill, declares that finally, the Parliament has adopted imperfect bill due to ignorance about existing problems.

“THE MOST WELL-PAID MINISTERS OF THE REGION ARE IN GEORGIA”

he newspaper reports that annual salary of the ministers in Georgia totals to 7,875 lari. To compare, ministers’ salaries in Russia and Azerbaijan equal to 3,100 lari, while to 1,225 lari in Armenia and 2,475 lari in Belorussia. Ukrainian ministers’ salaries equal to 5,600 lari, except one of Finance Minister – 8,000 lari. As the article notes, salaries of Georgian ministers exceed living wage 50 times, while average salary of the nation – 8-10 times (in the US – 6-7 times). In Georgia, 210,000 persons have salaries exceeding 700 lari, while 400,000 persons have less than 700 lari a month.

ACT: 43% OF RESPONDENTS CONSIDER THAT NEW LABOR CODE WILL IMPROVE WORKING CONDITIONS

ccording to survey, conducted by Analysis and Consulting Team (ACT), 43% of respondents think that new Labor Code will improve working conditions. 30% of surveyed persons consider that nothing will change, while 23% – found difficult to answer. Only 5% of respondents consider that the situation will worsen. The survey, which scoped telephone interviews with 407 adult residents of Tbilisi, selected based on representative sampling, was conducted in July. To remind, the Parliament agreed on the content and format of new Labor Code on June 12, while amendments to the Code, signed by the President, became effective on July 4.

August 12, 2013 #17

GIORGI SIGUA: 0.5 BILLION GEL INVESTMENTS WILL GO TO TOURISM SECTOR

iorgi Sigua, head of Tourism Administration, reports that about 500 million lari will be invested in different infrastructure projects. We want to rise tourism share in GDP up to 6.5% (currently, 4.5%) and later – up to 9%, he declares. According to Sigua, serious investment is planned in resort Anaklia. Companies, which want to invest in Anaklia, will be exempted from taxes for 10-15 years, he says. The Administration plans also to build ski slope of 10-12 km in Mestia, which must be completed until March 2014. Besides, the Administration says that rehabilitation of Tskaltubo is conducted with financial support of the World Bank. The article brings comment of expert Nika Kvaratskhelia, who considers that resorts like Tskaltubo are more profitable due to their medical options than Georgian alpine resorts.

GIORGI KODUA RETURNS TO AIRLINE BUSINESS

ir Caucasus airline has held presentation of new regular and charter flights. The airline hosted Georgia’s leading tourism agencies at Pirimze Plaza as part of the presentation. Air Caucasus representatives updated the meeting participants on the timetable and tariffs of the regular and charter flights. The airline also concluded an agreement with Intercontinental on carrying out charter flights to Antalya, Turkey. Air Caucasus is a Georgia-Singapore airline founded on May 1, 2012. Meanwhile, Giorgi Kodua has returned to airline business. The director general for Air Caucasus says the first flight will be performed on August 18 to Antalya, while flights to Astana will be performed on August 23 and August 30. At this stage, Air Caucasus performs charter flights, but starting September regular flights will be performed to Kazakhstan, Ukraine, Turkey and over 8 destinations in the Russian Federation. Four regular flights will be performed a week to Istanbul from Tbilisi Airport and the single ticket price will start from 62 EUR. This price policy will enable Air Caucasus to offer sharr competition to Turkish airlines on the Georgian market, Kodua said. As reported, the previous government banned Sky Georgia owned by Giorgi Kodua to perform cargo transportation services ot NATO member countries under the pretext of outdated airplanes. The decision has led the airline to financial crisis and bankruptcy.

MARKETING ACTIVITY OF BANK OF GEORGIA AND TBC BANK IN FACEBOOK NETWORK

he analytical material notes that Bank of Georgia and TBC Bank share the 1st and 2nd positions in terms of “fan” number in social network (Facebook). They are followed by such companies, as PC distributor Alta, mobile operators Geocell and Magti, bank Constanta, etc. The material is prepared by IliaUni Business Review, after analysis of 1-month data on Bank of Georgia and TBC Bank activity in Facebook.

It has tuned out that number of Bank of Georgia’s “fans” exceeds TBC Bank’s figure by 137,460 (33%). In case of both banks, biggest share of “fans” accounts for Georgia and the US. As for the posts, daily average rate makes up 0.58 for Bank of Georgia, while 0.90 – for TBC Bank. Photos and videos are prevailing in the posts. In its turn, “sharing” has been made 419 times in case of Bank of Georgia, while 217 times – in case of TBC Bank.

OPERATING INCOME OF MOBITEL AMOUNTED TO 36M LARI IN Q2

perating income of LLC Mobitel (mobile communications company, operating under brand of Beeline) amounted in the 2nd quarter to 36 million lari of. This showing has increased by 20%, if compared with the same quarter of 2012. These data were reported by Russian Vimpelcom, which owns controlling share in Mobitel.

Mobitel’s EBITDA (Earning Before Interest, Taxes, Depreciation and Amortization) totaled to 11 million lari, increasing by 37.5% year-on-year. While EBITDA margin made up 31%, instead of 27.1% in the same period of 2012. As of June 30, the company had 1.01 million subscribers, increasing the number by 4.1% quarteron-quarter and by 12.3% year-on-year.

BUSINESS & INTERVIEW August 12, 2013 #17

caucasian business week

THE PRESIDENT OF SAMSUNG HAS OPENED THE FIRST OFFICIAL STORE AND SMART SCHOOL IN GEORGIA

he President of Samsung Boo-Keun Yoon arrived to Georgia with a special visit on August 9. The visit of the President of technology market leader company is connected to the ceremony of opening Samsung’s first official store and Smart school invested by the company. In the frames of his visit, Boo-Keun Yoon has opened a premium class store with brand new concept. TV sets, mobiles phones, photo cameras and

other technology presented in the shop will be premium models of high-class technology. “In this store the main priority will the quality, rather than quantity. The consumers will be served by Samsung consultants. They will provide the detailed introduction and the instruction of advantages and properties of products. With this shop, we provide the new view on how the shop with top quality and services should be.” –said the President of Samsung Boo-Keun Yoon. After opening the ceremony the President of

Samsung has moved at the Ivane Javakhishvili Tbilisi State University where he has opened Smart School with the Minister of Education and Science of Georgia and the rector of University . As the SAMSUNG management states, this is the first project of SAMSUNG within the scope of social responsibility. Smart Scholl is a studying audience/laboratory equipped with Samsung high tech Touch Screen and tablets connected through a network. In September SAMSUNG is opening the same class at GIPA as well. Arranging the similar classes is planned in the First Public School and Vocational Training Centers. “We welcome Mr. Boo-Keun Yoon’s visit to Georgia and also the project provided by Samsung with its future plans. Private sector engagement in education is strategic part of the ministry of education. I think that company will have great contribution to youth education level.”- said Tamar Sanikidze, the Minister of Education. “We are glad that the first grade of Smart School has opened in the Tbilisi State University with the support of Samsung. This serves as the best example of cooperation between a private company and university and we hope opening of the Smart School will me the beginning of our future collaboration. This novelty will significantly con-

tribute to development of the University”. - said Aleksandre Kvitashvili the acting rector of the University. “I am pleased to be with you today, to welcome you to the opening of the “Samsung e-Board Smart School” here at Tbilisi State University. We believe that technology in the classroom can inspire student-centric learning experiences. And we can do that by combining Samsung’s products and devices with our own portfolio of solutions and embed both in the robust ecosystem of our education partners. With our Smart School, students now can learn in an innovative and an interactive manner. For us at Samsung, this is not about business. This is about creating shared value.” – said Boo-Keun Yoon. Mr. Boo-Keun Yoon is the President and CEO of Costumer Electronics at Samsung Electronics since 2012. Under his leadership, the Visual Display Business has maintained No.1 global market share in TVs, monitors and Blu-ray players and has commercialized numerous market-leading innovations, including Samsung’s LED TV, 3D TV, Smart TV and more. SAMSUNG was founded in 1938 and since then became the leading producer in electronic industry.

GURIELI PLANS TO INTRODUCE PREMIUM GEORGIAN TEA BRAND This year we will offer the first premium Georgian brand that will have equal value to famous foreign brands in Georgia, Mariam Kiasashvili, a Gurieli company representative told BPI.GE news agency. -What is the peculiarity of the company’s main target segment? - At this stage, the company holds a 12% to 14% ratio on the GeoPlant market, but there are entirely different tea drinking traditions in the Bolnisi, Marneuli and Gardabani districts that are mainly populated by ethnic Azerbaijani citizens. The market peculiarity is related to their demand for both - taste and aroma characteristics, the branding also make the difference, as well as the packing volume and design. Georgians annual tea consumption makes up 600 grams on average while the figure constitutes 1.6 to 1.8 kilograms in these three districts. The ratio of teabags in total consumption is 70% in Georgia, while the figure totals 10% in these districts. It should be noted that the whole market consists of brewing tea. The tea consumption in the Marneuli, Bolnisi and Gardabani districts makes up 40% to 45% of Georgia’s total market. Beside these districts, we also control 22% to 23% of the market in Georgia and the population of these districts represents our main target market. - How do you maintain the growing market ratio? - Gurieli Company permanently introduces innovations. We provide everyday work to create and develop new brands and tea product varieties. Initially, we used to offer four ,so called, classic tea lines in the form of Gurieli Exports. In about two years, we will introduce Gurieli Gray Tea. We have also developed the Rcheuli brand. For exports markets we have developed Georgian

Baikhi number 36, as well as Ali Sultani for the above mentioned target market. I would like to stress that our goal was to introduce our company in these three districts as strong and valuable body, to be competitive to imported products on the local market. We have worked on taste, aroma, color issues for two years, to make them acceptable to these Districts. We have provided much work on packing issues too. We have developed a special and particular design in Georgia. The design was created and developed by designer Zviad Tsikolia. Sharavandi Company has ensured adequate placement of the design on the packing. As a result, we have received a highquality product. We have also developed a special logo and name and we have received a new brand - Ali Sultani. -Which brands do you consider to be major competitors on the market? -From 2010 to 2011 only Lipton was providing active competition and this company makes us meet the competition requirements. From 2012 to 2013 other brands also enhanced activities. They have been conducting various campaigns, TV ADs to draw attention and enhance marketing support, obtain consumer support and increase the brand perception. It may be paradox but we welcome their active steps, because this stimulates us to meet the market requirements and develop new products. -What are your plans? Do you plan to penetrate new segments by introducing new products? -The year of 2012 has showed that we have taken

successful steps in the medium segment. We have important positions in the trade network, major network stores. We have penetrated the economy segment and we have provided considerable competition to imported and cheap tea products. We have entered the segments of hotels, cafes and restaurants too. We always follow a threeyear development plan. We have entirely revised our concept and we will offer the first premium Georgian brand to the customer and the brand will have an equal value to the most famous foreign brands in Georgia. The Gurieli family has got a new member Prince Gurieli. Moreover, the development of Gurieli Plant Tea line will be finished soon. This product will be the most tasteful tea, full of healing and endemic grasses from all over Georgia. Indeed, the product will be issued in different and interesting packing. The focus group exploration has showed the demand is mainly registered for camomile, mint and Rhododendron caucasicum tea. Therefore, initially, we will offer tea products of these three plants, but in the future the line will be expanded. In general, the world experience says the demand is growing for fruit and plant tea products, as well as organic tea is becoming popular and we have launched work to this direction. The company’s market ratio is growing year by year and this is related to restrictions on imports of Ceylon tea. Moreover, imports of other tea brand products have also shrunk. Gurieli continues expanding trade space for new segments, but we should note that beside the existing Georgian and foreign brands, new companies are also positioning on the market. It is interesting whether Gurieli manages to maintain the growing position. Gurieli is one of the brands of GeoPlant

founded in 2010. Gurieli produces high-quality exports tea with special aroma, exclusive design and special logotype. The product is made in ecologically clean conditions. The tea leaves are picked up by hand in the best season and are processed without any chemical substances by use of rich experience of tea growing and processing and modern technologies. The company management has developed strategies for penetrating markets, market development and marketing and this fact has promoted the growth in the brand perception, consumer loyalty and products development. The company introduces seasonal promo campaigns for customers and offers many interesting innovations to them. The company has penetrated both Georgian and foreign segments and ensures the company positioning by introducing particularly healthy products.

BUSINESS caucasian business week

GEOCELL INCOMES INCREASED BY 1% IN Q2

eliaSonera reported that revenue of its Georgian subsidiary Geocell amounted in the 2nd quarter to 257 million lari. If compared with the same period of 2012, growth made up by 1%. The company’s sales in the 2nd quarter decreased by 8.3%, amounting to 572 million lari. As TeliaSonera explained, the decrease resulted from suspension of the governmental tender. EBITDA margin increased by 6.3 percentage points, up to 44.9%. According to TeliaSonera, the growth is caused by high income from roaming service and cost savings through new structure of dealers’ commission. Number of Geocell’s customers made up 1.83 million, decreasing by 10.4% year-on year. At that, share of prepay cards made up 89% (1.63 million), decreasing by 4.1%.

TELIANI VALLEY ENTERED BRAZILIAN MARKET

eliani Valley reported that it has exported 45,000 bottles of Saperavi (red wine) to Brazil. After several months of negotiations, the wine was purchased by Race Comercio Importacao e Exportacao Ltda. Koba Chanturia, financial officer of Teliani Valley, told Sarke that the company does not plan more export to Brazil for this year, but additional request is not excluded after 3 months. Interest exists regarding other provenance wines as well, but Saperavi earned greatest one, he said. Currently, Teliani Valley implements export to about 25 countries, including Australia, Austria, Great Britain, Canada, Germany, Sweden, etc.

RUSSIAN COURT REJECTED REQUEST OF SARAJISHVILI REGARDING PAYMENT OF DEBTS

trong drinks producer Sarajishvili reported that Stavropol court of arbitration rejected to satisfy its claim. According to the company’s report for 2012, the claim was submitted against LLC Wine-Brandy Combine, demanding payment of accounts receivable. The debt totaled to $533,836. As Sarajishvili explained, the reason of the court’s refusal was bankruptcy of the defendant.

WINE EXPORTS ANNUAL GROWTH HITS 43%

ational Wine Agency reports that in July 3 554 174 (4 438 898 bottles of 0,75 liter) alcohol drinks are exported. In sum, by July it’s 12 094 075 liters, which is increased by 43% in comparison with analogic period last year. Georgian wine is exported in 23 countries. Top-5 list includes: Ukraine, Russia, Kazakhstan, Belorussia and Poland. Ukraine is a leader with 38% share. China and Latvia rate 6th and 7th. 42 exporters have received production and compliance certificate.

FIRST HALF RECORDS 6.4% DOWNTURN IN FUEL IMPORTS

nion of Oil-Products Importers reported that 354 million kg of oil-products (petrol and diesel fuel) were imported in the first half of the year. If compared with the same period of 2012, the volume of fuel import decreased by 6.4%. At that, import of diesel fuel amounted to 196.2 million kg (55.4%), while the rest 157.8 million kg was petrol import. In the reporting period, the biggest volume of petrol was imported from Romania. Next were Bulgaria, Azerbaijan, Italy, Turkmenistan and Greece. The biggest volume of diesel fuel was imported from Azerbaijan. Next were Russia, Romania and Bulgaria.

August 12, 2013 #17

EBRD ALLOCATED $1.32M FOR CONSTRUCTION OF DAIRY COMPLEX IN KAKHETI

he European Bank for Reconstruction and Development (EBRD) declared that it has allocated $1.32 million for construction of an industrial-sized dairy complex Kvareli Baga in Kakheti region of Georgia. Kvareli Baga produces fodder for its cows on own area of 134 ha, which will greatly reduce costs and improve feeding quality, EBRD pointed. Livestock includes imported cows of Holstein and Brown Swiss strains, which are the highest milk-yielding ones (about 25 l per cow daily). Kvareli Baga was established by Lasha Papashvili, who was founder of bank Republic and development company Redix. The EBRD believes that industrial-sized dairy complexes, such as of Kvareli Baga, have the potential to replace imported milk powder with fresh, locally produced milk. The bank pointed that about 80% of milk, which is used in local dairy production, is made with imported powder.

COMPANY NATAKHTARI PLANS TO EXPORT BEER TO RUSSIA

arketing director of Natakhtari Tornike Nikolaishvili declared that company’s beer will appear on Russian market in near future. He refrained to name exact term and volume at that. “Packaging is being prepared at this stage and working on other details is in progress”, Nikolaishvili noted. He pointed that lemonade, produced by the company, has been represented on Russian market since September 2011. “While mastering a new market, the company brings lemonade first and comes later with beer”, Nikolaishvili told Sarke. Our lemonade is already

represented in 20 countries (Azerbaijan, Cyprus, Germany, Greece, the US, etc.), he said, noting that a beer is exported to just a few countries (not specified).

GOVERNMENT WILL NOT USE TOBACCO INDUSTRY’S MONEY TO FUND TOBACCO CONTROL ACTIVITIES

overnment is not going to cooperate with tobacco industry in terms of tobacco control activities funding. Tobacco Control State Strategy, approved by Prime Minister Bidzina Ivanishvili indicates that sustainable finding of tobacco control program will be provided, considering all possible funding source, among them funding from international donor agencies. Besides, to implement tobacco control activities, partnership and finding of tobacco industry will not be accepted. “Whatever funding source was chosen by the government, the money will be spent only for the agreed specific activities related to tobacco control. There will be attempt to increase accessible budget annually, in order to fund health promotion programs, smoking prevention and tobacco quit activities”, - states Tobacco Control State Strategy.

The strategy aims: to decrease smoking among juveniles by 1%, among adults - by 2%; increase tobacco-free working places by 5% annually; to reduce secondary smoke influence in the public places 1% annually, to reduce secondary smoke reduction at homes by 3% among children and by 1% among adults annually. The strategy also mentions “Tobacco Control State Strategy is ongoing process and represents a renewable document, which should be reviewed regularly and adapted strategically. In this regard, the strategy is based on relevant system of supervision and evaluation.”

SECOND IRAQI AIR COMPANY ENTERS GEORGIAN MARKET

7th air company Iraqi Airways entered on Georgian market, which is 24th foreign air company and second from Iraq on the country’s air market. Al Naser Airlines entered recently, which as 3 directions of Najafi, Basra and Baghdad. Iraqi Airways will have flights 4 times a week (TbilisiBagdad-Suleymania, Batumi-Suleymania) and then will increase number of flights. First air flight will be made on August 8. Iraqi Airways is the largest national air carrier and the oldest company in the Near East. It was founded in 1945. They have head office in Baghdad airport. 100% share of the air company belongs to Iraq state.

7 PROGRESS THROUGH PRAGMATISM IN GEORGIA FOREIGN PRESS

August 12, 2013 #17

caucasian business week

Bidzina Ivanishvili: Our government still needs international support to defy the skeptics and achieve our goals

ive years after a disastrous conflict with Russia in August 2008, a fifth of Georgia’s territory remains occupied, behind barbed wire. As I noted in these pages a year ago, during the campaign for last October’s parliamentary election, my objective in entering politics is to improve the lives of all Georgians, despite the odds. Today we are on the right track, but we need strong international support to defy our skeptics and achieve our goals. The government of my Georgian Dream coalition strives to cooperate with the opposition, carrying out pragmatic policies and concrete reforms on the path to the country’s modernization and full democracy. Georgia is already a key byway for Caspian energy and the resources of the new Silk Road. We intend to make the country an example of a stable democracy and a reliable partner for Europe and the U.S., as well. “Pragmatic” means ending the Cold War rhetoric and avoiding the irresponsible actions that led us into the 2008 conflict. Trade with Russia is being allowed to resume as a confidence-building measure, but we remain firm on the return of Russianoccupied Abkhazia and South Ossetia. This issue should be handled in compliance with the principles of international law, which will require active engagement from international organizations and from our Western partners. Despite our critics’ claims to the contrary, “Georgia has already moved closer to NATO by adopting bold reforms,” in the words of NATO Secretary General Anders Fogh Rasmussen this month. According to Stefan Füle, the EU enlargement commissioner, the “myth” that Georgia is not pursuing the democratic reforms needed for a

European Union Association Agreement in time for the Vilnius summit in November “needs to be dispelled.” “Pragmatic” also means assuming our international responsibilities. Our soldiers still serve in the most dangerous areas in Afghanistan despite tragic losses. And with four key oil pipelines running through Georgia, our government has declared its intent to join the Energy Community. “Concrete” means focusing on democracy, with reforms aimed at following through on what the 2003 Rose Revolution failed to do. We are instituting a genuine rule of law, stronger labor protections, education reform and universal health care, which became available last month. We still need constitutional reform that better distributes power between the branches of government. On justice, the U.S. State Department’s 2012 human-rights report on Georgia echoed the EU’s annual assessment of the country in noting the need to investigate accusations of torture and humanrights violations committed by law-enforcement agencies. That is exactly what we are doing now. We have also taken concrete steps toward liberalizing the criminal justice system. A defendant in Georgia now has the right to see all the evidence against him and will face an independent judge in a courtroom open to the media. President Saakashvili admitted in a recent interview that under his government, “the judiciary was not totally independent.” We have changed this. Since Georgian Dream’s electoral victory last October, citizens have filed some 20,000 complaints against former government officials. Our justice system is carefully investigating these cases, following due process with the help and watchful eyes of EU human-rights envoy Thomas Ham-

marberg, the U.S. Justice and State Departments, the Organization for Security and Cooperation in Europe, and numerous international NGOs. We are also making concrete economic reforms, revitalizing the agricultural sector, creating a fair tax system, and eliminating political pressure on and extortion of private businesses. After some uncertainty following the elections, investment and exports have rebounded, and our reforms will pay large dividends over the next decade. Despite the clear progress, however, our government is under fire from those who should be allies in our quest for trans-Atlantic integration. Vocal minorities in Europe and the United States—many of whom ignored years of official reports of past abuses—have misguidedly attacked the arrests of former government officials as antidemocratic. Pushing Georgia away at such a critical point in our history would be short-sighted and potential-

ly destabilizing for a small country in a very dangerous neighborhood. I ask that our critics look at the facts: We are following internationally supervised due process. We also invite international monitors to oversee the trials of these former officials, and to supervise the upcoming presidential election, in October. I embarked on this political voyage after years of philanthropy and financial support for the Saakashvili government. I discovered that I needed to form a new government to bring real change and to revive hopes of reuniting our divided land. I believe we are on track. But as we head toward the presidential election and November’s EU-Eastern Partnership summit in Vilnius, we need stronger international support so we can continue to realize the aspirations of millions of Georgians, the aspirations that once represented the ideals and hopes of the Rose Revolution. online.wsj.com

GEORGIAN WINES: OLDER AND WISER

In Georgia, winemaking methods that were developed 8,000 years ago have not been abandoned but remain best practice

ou could call it a great unlearning. Sixty years of technical mastery over raw materials have led, in the view of some wine producers, to a loss of the innate differences with which wine was once synonymous. How, though, to beat a retreat? “Natural” wine (made without additives) and “orange” wine (white wine made like red, by lengthy soaking of skins with juice) have been two of the most radical solutions. Classically trained palates often consider the results grotesque; younger drinkers find them fun. They’re now a kind of punk wine – a disconcerting alternative to the mainstream, inspiring two separate London wine shows each spring and even threading their impolite way through the Michelin stars. Much of the running for this movement has been made in Italy, inspired by the contadini (peasant farmers) who never bothered much with additives anyway, nor saw the point of treating white grapes differently from red. The movement’s leaders, though, look further east, to Georgia, which is wine’s Jerusalem; tributes and pilgrimages abound. Georgia’s winemakers regard this as both gratifying and discomfiting. Georgia is a land of multiple wine astonishments. Archaeologists are unsure whether wine’s birthplace was in southern Anatolia or Transcaucasia; what is beyond doubt, though, is that Georgia is the only country in the world where winemaking methods that were developed up to 8,000 years ago have not only never been abandoned but remain in many ways best practice. Georgia’s winemakers are the guardians of wine’s oldest traditions, and they’re happy that this is now both recognised and respected. The discomfort comes because they have learnt their considerable refinement and subtlety through thousands of vintages; much of this refinement is absent in the hit-andmiss natural-wine noise generated elsewhere. There are two compelling reasons to seek out Georgian wine. The first is its repertoire of indig-

enous grape varieties: 525 survive, out of a total thought to have once numbered 1,400 or more. The second is, precisely, those old ways – the chance to taste wines that have been fermented in the buried, wax-lined clay jars the Georgians call qvevri. Both red and white wines can be made in these beautiful, maternally contoured vessels, whose size varies from flask-like to bear-sized. (Human skeletons have been found, in contented repose, within ancient jars.) In essence, red wines made in qvevri don’t differ dramatically from “normal” red wines, which also ferment with their skins and pips, and sometimes their stalks too. Red wines made in qvevri, moreover, are often removed from the jars after fermentation for wood ageing, or for returning to a clean qvevri. This too mimics normal red-wine practice. White wines made in this way, by contrast, are utterly different from conventional white wines. The Georgians call them “golden” rather than “orange”, and they spend a full six months with skins and pips, as well as undergoing their entire

fermentative cycle in contact with those materials and with the copious yeast deposits the cycle produces. The only external addition is, in most cases, a little sulphur after fermentation. The jars are then sealed and earth-covered for the ageing process. The result is a width, a tannic grip and a textural depth that no conventionally made white wine will ever have. The wines’ aromas and flavours are singular too. Their acidity is muted, since they have all been through the acid-softening malolactic fermentation, while contact with the other matter in the jar, especially the yeast deposits, rounds the flavours further. In place of the fresh fruits that so many white wines suggest, these evoke dried fruits, mushrooms, straw, nuts and umami. They have less of an oxidative tang than their colours suggest; indeed, their articulation is often understated and quiet, though orchestral in its allusive range. They are meditative wines, sumptuous and subtle. Not every Georgian wine, of course, is made in buried clay jars; the majority are made conven-

tionally, and it is in these wines that Georgia’s indigenous grape varieties can be appreciated most clearly, at least by palates unused to the thickening intrigue of the qvevri. The country may have a huge patrimony of varieties, but a few stand out for their quality. The red variety Saperavi is the most commanding. It is deeply coloured (the name means “dye”) and no less prodigious in almost every dimension, with astonishing energetic force in the mouth. A great Saperavi is shockingly good: no other words will do. The variety also blends well (with Bordeaux varieties Cabernet and Merlot, for instance) and is ideal for making the semisweet reds so popular in Russia. Other Georgian red varieties of note include the lighter Tavkveri and the fresh-flavoured Shavkapito, but Saperavi is the grandee. There are, by contrast, at least three great indigenous Georgian white varieties. Rkatsiteli is the best known (its planting outside Georgia’s borders, in Ukraine, Moldova and Bulgaria, helps to make it the world’s fifth most planted white grape variety). Like Chardonnay, its style varies considerably with location and producer intent, but fragrance, vinosity, a crisp balance and a complex allusive repertoire are all possible. My own favourite among Georgian white varieties is the subtle, hauntingly aromatic Mtsvane, a kind of Caucasian cousin of Rhône whites such as Marsanne, Roussanne or Viognier. Kisi is the third leading white variety, said to be floral and fresh, though the examples I tried were full-bodied and rich. There are further nuances, as you’d expect from an 8,000-year-old tradition, including regional differences and a series of village “appellations” which imply particular blends of varieties. They all reinforce Georgia’s message to the curious, though, which is that wine, great wine, is still more intriguingly diverse and more strangely beautiful than we thought. ft.com

8 LIBERTY CONTINUES MODERNIZATIONENLARGEMENT OF THE SERVICE NETWORK

iberty continues modernization-enlargement of the service network. Bank’s audit committee chairman Alex Khoroshvili opened a modern service center in Batumi (#23 Mayakovsky street) on Tuesday, which will provide full banking service to individuals and legal entities. All kinds of loans, international and local transfers, opening of various deposits will be available. During 2012-2013 Liberty Bank opened and modernized over 30 new branches and service centers. The bank is represented by the largest banking network in the country, through which it serves to 1.4 million individuals and over 60 000 service centers. By July 2013, Liberty Bank’s market share according to overall actives is 7,7%.

BANKING NEWS RATING OF LEADING BANKS DUE TO ASSETS

y the end of the first half of the year, 78,8% of the total actives of banking sector came on 5 leading banks. Share of the top-5 banks with largest actives has reduced by 2,8% since the begining of the year. Share of Bank of Georgia reduced by 2%, TBC - by 1,7%, Procredit - by 0,7%, share of Liberty Bank - by1,5%, Republic - 0,2%. To-5 lista of leading banks, accoridng actives:

LIBERTY BANK APPLIED TO CONSTITUTIONAL COURT

onstitutional Court reported that its first chamber has started yesterday consideration on merit of constitutional action, initiated by Liberty Bank against Georgian Parliament. The bank objects several norms of Tax Code, which regulate a taxpayer’s possibility to replace 5-year carryforward with 10-year one. These norms refer to loss, collected in 2010 and following years. In 2011, Liberty Bank appealed to tax authority, requesting 10-year carryforward for loss, arisen in 2006 and following years, but got a rejection. The tax authority explained that 10-year carryforward is permitted only for loss, arisen in the year of the application. At that, after the amendments adopted in May 2012, taxpayer’s right of 10-year carryforward in its legal relations, arisen since January 1, 2011, has been canceled for loss, arisen before 2010. The Court said that the bank demands to acknowledge these norms unconstitutional. Senior advisor of Liberty Bank Giorgi Chitidze pointed that after approval of these norms, the condition of the bank as taxpayer has worsened, respectively these norms contradict the Constitution. The matter concerns article of the Constitution, due to which “the law may be granted retroaction only if it mitigates or eliminates responsibility”.

CARTU BANK LOWERS DEPOSITS INTEREST RATES

artu reduced deposit rates. The rates declined for average 1%. Annual rate for 1-year deposit in GEL and foreign currency was defined respectively for 8% and 6%, deposit on demand - 3% and 2%. By July 1, there are 47,9 million GEL fixed-term and 9,7 million GEL deposits on demand in the bank (currency accounts: 52,3 million GEL). Experts estimate maintenance of this trend on the deposit market, although they mention that lending rates decline does not catch up to this process, the rate is slower.

BANK OF GEORGIA INTRODUCES JOINT CAMPAIGN WITH HYUNDAI AUTO SALOON

ank of Georgia announce about joint offer with HYUNDAI auto saloon. The consumer gets opportunity to purchase new HYUNDAI i40 or HYUNDAI VELOSTER vehicles with the best conditions. The Buyer can fill application in the saloon and use auto loan from $255 in a month, only with ID card. Bank of Georgia informs that auto loan has special condition, on Hyundai i40 savings is $4 050, in the case of Hyundai Veloster purchase the buyer saves $2500. In the framework of the offer, the consumer can also exchange a new car into the old one. Also they can make a free test drive, for which they should register in advance (telephone number: 2 51 77 99). Bank informs that models’ price is the lowest one during last year on the market, Hyundai i40- $29 500, Hyundai Veloster-$21 500.

BANK OF GEORGIA OFFERS E-MAIL BANKING SERVICE

B JULY RECORDS 62 MILLION USD GROWTH IN CURRENCY RESERVES

nternational reserve actives are $3,049 billion by August 1, 2013(1/08/12 - $2,807 billion). According to National Bank of Georgia’s (NBG) statistics, annual growth is 8,6% (01/08/2012 -0,7%, 01/08/2011 -42,9%). By August 1, foreign currency reserves equal

to $2,827 billion. By the end of June currency reserves were $2,765 billion. In July reserves increased by $62 million. Actives, not including foreign currency reserves, includes special drawing rights (SDR) and data bout the reserve position in IMF.

TBILISI RATIO IN TOTAL LOANS PORTFOLIO ACCOUNTS FOR 76%

ational Bank of Georgia reported that Tbilisi accounts for 76% (i.e. for 6.8 billion lari, year-on-year growth – 6.7%) of total loans, issued as of June. Lending will increase in other regions as well. At that 6% of the total loans was issued in Ajara (541.4 million lari, growth – 8.1%), in Imereti – 5.1% (459 million lari, growth – 16.2%), in Kvemo Kartli – 3%

(265 million lari, growth – 39.5%), in Samegrelo – Zemo Svaneti – 2.9% (263 million lari, growth – 17.5%), in Kakheti region – 2.7% (239 million lari, growth – 39%), in Shida Kartli – 2.4% (215 million lari, growth – 30.3%). In the reporting period, Georgian banks issued loans totaling to 8.9 billion lari (except overdue loans). This volume exceeds by 9.7% the showing of the same period of 2012.

HALYK BANK ENDS 1H13 IN 85 248 GEL Profits

BTA BANK LOSSES GROW

TA Bank reported loss of 1.8 million lari for the 2nd quarter. The loss has increased by 20% quarter-on-quarter and 2.4 times – year-on-year. As of June 30, total assets amounted to 127 million lari, being increased by 1.45% year-on-year. At that, net loans made up 64.4 million lari, decreasing by 13.8%. Ratio of liquid assets to total assets made up 26.45% against of 15.81% in the same period of last year. Ratio of idle loans to total loans made up 18.86% against of 12.81%. Total liabilities amounted to 102.4 million lari, increasing by 8.9% year-on-year. At that, demand deposits totaled to 6.67 million lari (decline – 6.9%), while fixed deposits – 22.9 million lari (growth – 10.3%). The list of shareholders is not changed: Silk Road Group still owns 50.99%, while Kazakh BTA Bank – 49%.

August 12, 2013 #17

caucasian business week

alyk Bank reported net profit of 85,248 lari for the first half of the year. In the same period of 2012 and in the 1st quarter of the current year, the bank had loss (amounting, respectively, to 578,342 lari and 16,283 lari). As of June 30, the bank’s total assets amounted to 103.67 million lari, increasing by 91.9% yearon-year. Net loans made up 57.63 million lari (growth – 2.5 times), while loan loss reserve – 1.54 million

lari (growth – 96.8%). Ratio of idle loans to total credits made up 0.53%, against of 2.12% in the same period of 2012. Return to assets (ROA) made up 0.2% (instead of negative 2.3% in the same period of 2012), return on equity (ROE) – 0.6% (instead of negative 4.97%). Ratio of liquid assets to total assets made up 34.05% for the first half of the year. It totaled 24.51% in the same period of the previous year. As of June 30, total liabilities of Halyk Bank amounted to 63.68 million lari, increasing 2.05 times year-on-year. At that, sum on client’s current accounts made up 6.8 million lari (year-on-year growth – 3 times), fixed deposits – 2.72 million lari (decline – 41.5%), while demand deposits – 1.04 million lari (growth – 25.5%). Ratio of sum on clients’ current accounts and demand deposits to total assets made up 7.56% (instead of 5.78% in the same period of 2012). Single owner of the bank is Kazakhstan’s Halyk Bank.

ank of Georgia declared that its list of remote banking services includes now e-mail banking service as well. Monthly fee for this service makes up 2 lari. The service provides customers with possibility to manage their finances via e-mails: to transfer money between their own accounts, to transfer money on other accounts in Georgia or abroad, to pay credit, etc. It is available for any client, who holds credit or debit card of the bank. Besides the new offer, Bank of Georgia remote services include internet banking, mobile banking, SMS banking. The bank also runs 759 instant payment terminals Express Pay and 479 ATMs countrywide.

CAUCASUS DEVELOPMENT BANK – GEORGIA REPORTED PROFIT

aucasus Development Bank – Georgia reported net profit of 42,063 lari for the 2nd quarter. In the same period of 2012 (being operating as Tbilisi branch of Azerbaijan’s Caucasus Development Bank), the bank had loss of 423,770 lari. The loss for the 1st quarter of the current year amounted to 169,748 lari. As of June 30, the bank’s total assets amounted to 15.7 million lari, increasing by 11.2% yearon-year. Ratio of liquid assets to total assets made up 28.73% (41.84% in the same period of the previous year). Net loans made up 4.1 million lari (growth – 71.5%), while loan loss reserve – 1.2 million lari (growth – 17%). In the reporting period, total liabilities amounted to 870,883 lari (growth – 7.8%). Sum on clients’ current accounts made up 206,371 lari (decline – 33.2%), while fixed deposits – 222,268 lari (growth 2.1 times). No demand deposits were reported now, neither the bank had them in the same period of the previous year. Ratio of sum on clients’ current accounts and demand deposits to total assets made up 1.31% against of 2.18% in the same period of the previous year. Ratio of idle loans to total credits made up 25.7% (instead of 33.37%). Return on assets (ROA) was 0.51% instead of 5.99%, while return on equity (ROE) – 0.56% (6.35%). Single owner of the bank is Azerbaijan’s Caucasus Development Bank. In the early June, NBG issued a banking license for Tbilisi branch of Caucasus Development Bank, which operates as Caucasus Development Bank – Georgia since that.

PUBLICITY August 12, 2013 #17

caucasian business week

TBILISI INTERNATIONAL FESTIVAL OF THEATRE International Program 20,21 SEPTEMBER, 2013 LEPAGE HAPPY TO STAY ON EARTH WHILE HE TAKES AUDIENCES TO THE MOON… Ex Machina, CANADA

THE FAR SIDE OF THE MOON Author and Director – ROBERT LEPAGE About performance: “Before Galileo turned his telescope towards its surface, people believed the moon was a polished mirror, its dark scars and mysterious contours reflections of our own mountains and seas. Much later in the 20th century the Soviets launched a probe to circle the moon. When it returned images of the hidden face of the moon, the one we can never see from earth, we were shocked to learn that there existed a pounded and scored face of the moon, wounded by countless meteors and storms of celestial debris. For many years American scientists called this the disfigured side of the moon. Perhaps this was because the features that comprise the far-side of the moon bear the names of Soviet cosmonauts, poets, and inventors.” So begins the epic story of Philippe, a man coping with the recent loss of his mother, the estrangement of his only sibling, his younger brother André; and the mysterious teachings the universe holds for those brave enough to look up to the stars and ponder. Time and place are secondary to Philippe’s search for meaning in the universe and his place in it. The competition between the Soviets and Americans during the Space race, the SETI programme (Search for Extra-Terrestrial Intelligence), and memories from childhood and adolescence act as touchstones for this one man show dealing with the fundamental question, “Are we alone?”. Punctuated by Laurie Anderson’s other worldly score, The Far Side of the Moon is a show which takes the audience to other worlds on the steady wings of Lepage’s theatrical magic. Duration: 135 minutes (without intermission) Without Intermission Web-site: www.lacaserne.net www.tbilisiinternational.com www.facebook.com/TbilisiInternational

10 TOBACCO INDUSTRY’S OUTPUT IN ARMENIA GROWS 74.3% TO AMD 16.7 BILLION IN JANJUNE 2013

ARMENIA caucasian business week

August 12, 2013 #17

“EXPENSIVE” ARMENIAN SKY

obacco industry’s output in Armenia amounted to AMD 16.7 billion in comparable prices in Jan-June 2013 - 74.3% year-on-year growth, the National Statistical Service reports. Some 3546.8 million cigarettes were produced in the country in Jan-June 2013 – 87.8% year-on-year growth. According to Armenian Customs Service, cigarettes, cigars and cigarillos worth $32.8 million have been exported from the country for the first six months of this year – 2.6 times more that in Jan-June 2012. ($1 – AMD 409.62).

ARMENIA LEADS BY NUMBER OF TOURISTS VISITING GEORGIA IN JULY

ccording to the lates data, released by Georgian interior ministry, some 162,529 Armenian citizens visited Georgia in July, more than any other country. Turkey was second with 139,002 visits. It was followed by Russia (115,871), Azerbaijan (109,704), Ukraine (14,113 ) and Iran (9,248). Overall, the number of visitors to Georgia in January-July 2013 increased by 26% from the year before to 799,910.

TOTAL DEPOSITS IN ARMENIAN BANKS ROSE BY 4.82% TO AMD 1 340.9 BLN IN Q2

otal number of deposits of legal entities and individuals in Armenia’s banks surged 4.82% to 1 340.9 billion drams in the second quarter of 2013. “Banks of Armenia” Q2 2013 bulletin made by ARKA shows the top five banks in terms of deposits are Ameriabank, HSBC Bank Armenia, Ardshininvestbank, Bank VTB (Armenia) and Unibank. These banks account for more than half of all deposits in Armenia’s banks. In Q2 Ameriabank remained the leader with its deposits having grown by 34.27% to about 250.2 billion drams. HSBC Bank Armenia ranked the second with total deposits of 143.4 billion drams (0.14% increase). The third is Ardshininvestbank with around 123.6 billion drams in deposits (1.5% increase). Bank VTB (Armenia) has its deposits increased by 3.28% to about 120 billion drams. Unibank’s deposits amounted to a total of 98.3 billion drams, a reduction of 10.65% in the reporting period. As of the end of June 2013, there were 21 commercial banks with 478 branches in Armenia. ( $1-409.49 drams).

NO ARMENIAN BANK INCLUDED IN ONE HUNDRED LARGEST CIS BANKS

one of 21 Armenia-based banks was included in the list of one hundred largest banks in the CIS, prepared by RIA Ranking. To be placed in the list a bank should have at least $2.57 billion worth assets. The threshold was up by 21% from 2011, when it was $2.12 billion). ACBA-CREDIT AGRICOLE BANK, the largest Armenian bank by size of assets in 2012 had only $613 million worth assets which made 10.3% of total banking assets in the reporting period, which stood at about $6 billion. According to RIA Ranking, Armenia’s banking sector is characterized by relatively low consolidation, the main reason why no Armenian bank appeared in the list. No banks from Kyrgyzstan, Moldova and Tajikistan were included in the rating either. The largest banks are in seven CIS countries: Azerbaijan, Belarus, Georgia, Kazakhstan, Russia, Ukraine and Uzbekistan. Georgian banks were included in the list despite the fact that Georgia withdrew from CIS in 2009, because of their close links with CIS banks. By the way, 69 of 100 largest banks are in Russia. According to RIA Rating, the total assets of the banking systems in the CIS increased in 2012 by 23.1% to $1.96 trillion. At that the net assets of the one hundred largest banks grew to 1.52 trillion rubles. They accounted for around 81 percent of all assets in the CIS banks at the beginning of 2013. According to RIA Ranking experts, the growth in CIS banks assets will slow down to about 10-15% in 2013 denominated in USD .

acation season is still in full swing, and many of our citizens plan to spend their holidays abroad. Apart from Armenia and Nagorno-Karabakh, as well as Georgian Black Sea resorts that have become popular recently, many Armenians prefer spending their summer vacations in more remote countries. One can reach Batumi and Kobuleti by car or the special “Armenia” train operated by the South Caucasus Railway, whereas the only transport to other countries is airplane due to Turkey’s and Azerbaijan’s blockade of Armenia. Many experts and even ambassadors believe high air ticket prices and few direct flights hinder development of tourism in Armenia.

Heading to Tbilisi

Recently many Armenian citizens prefer flying abroad not from Armenian “Zvartnots” but from Tbilisi airport, as air tickets from Georgia cost considerably less than from Armenia. Even several hours’ driving distance to Tbilisi and need for going through customs at the border do not withhold people. If you take a minute to look at prices in air ticket offices and tour agencies, you will understand why. For instance, one of the most popular destinations for Armenians this summer, Barcelona will cost (including return) 468 euros from Yerevan and only 350 euros from Tbilisi, with both flights operated by Polish LOT via Warsaw. The LOT has set different prices also for direct flights – Yerevan-Warsaw-Yerevan costs 420 euros whereas Tbilisi-Warsaw-Tbilisi costs 310 euros only.

And LOT is not the only one… Charter flight to Antalya and back in summer time will cost 300-350 dollars if traveling from Tbilisi and 350 euros from Yerevan (the prices do not include travel package, which may bring the ticket price down). Charter flights to Sharm El Sheikh cost 450 dollars from Yerevan and 300-350 dollars from Tbilisi. It is cheaper from Yerevan only when flying to Moscow, but that is probably due to complicated relations between Russia and Georgia. SibAvia ticket for Yerevan-Moscow-Yerevan is 344 euros, whereas Tbilisi-Moscow-Tbilisi operated by the same air company costs 374 euros. Flying to Dubai is also cheaper from Yerevan – 220 dollars as compare to 320 dollars from Tbilisi.

10,000 drams included in the air ticket price) and a number of other services beyond the airport’s competence. Prices for jet fuel that has considerable contribution to high air ticket costs are regulated by the State Commission for Economic Competition and depend on a number of factors, Shkhyan said. The margin is from 100 to 150 dollars per ton, he added. General manager of Armenia – International Airports cjsc Marselo Vende, in his turn, said number of flights to Armenia should be increased and Armenian air market should be liberalized in order to get the air ticket prices reduced.

“Zvartnots” say they are not to blame

In late May Armenian premier Tigran Sargsyan said at the parliament one of the options for aviation development in Armenia is transferring Zvartnots into a transit airport. But these plans may fail, like some of the other government projects, under the current circumstances, when even Armenian residents prefer flying not from their home Zvartnots, but from Tbilisi. And if the air ticket prices are high in Armenia due to high service costs at Zvartnots then it is time for the government to think over development of Giumri airport (about 120 kilometers from Yerevan). Development of Giumri airport may be important also in terms of development in Armenia’s regions which is said to be of high importance to the government. arka.am

Earlier representatives of bankrupted national air company Armavia said air ticket prices were high due to expensive airport service. Yet, the management of the airport says service prices at Zvartnots are not higher than in any other airport in the region. “In general, if only airport tariffs are considered, we are competitive and provide even cheaper services than the neighboring states do. Our services, for instance, are twice as cheap as in Azerbaijan”, deputy general manager of Armenia – International Airports closed joint stock company Andranik Shkhyan said. According to Shkhyan, the weaknesses of Zvartnots are high jet fuel costs, air “tax” (state duty of

Zvartnots may turn into a transit airport?

FOREIGN PORTION IN TOTAL CAPITAL OF ARMENIAN BANKS HIT 73.20% IN MAY

he portion of foreign capital in the authorized capital of Armenian commercial banks inched down by 0.2 p.p. in May from earlier this year to 73.20%. According to the Central Bank of Armenia, the portion of non-residents’ capital in the total capital of the banks sharply grew from 58% in 2007 to record high 78.90% in 2010. However, since 2010 we have witnessed some tumbles in foreign capital, and this figure fell to 73.10% in 2012 against 75.10% in 2011 ( minus 2 p.p.). The foreign capital will be furthermore growing in Armenia as Basel 3 norms are to be introduced in the republic in 2014. Basel 3 doesn’t imply any changes in capital amount requirements, but it tightens the requirements to the structure and quality of the capital –the ratio of basic and supplementary capitals changes. It also introduced short-term and long-term requirements to liquid-

ity minimal level and creation of two capital buffers: conservation buffer (2.5%) and countercyclical buffer ( from 0 to 2.5%). The 1Q 2013 interim financial reports of the Armenian banks say the credit organizations have no problems with capital adequacy H1, it stands at 12%. It exceeds 15% at 12 banks though, hits 13.02%-14.44% at 5 banks, and 12.02% – 12.70%- at 4 banks. Despite this, some of them will have to seek for supplementary funding either at the domestic market or by attracting foreign investors. The experts say the presence of the foreign capital in Armenia proves the Armenian banks are attractive for foreign investors. Ashot Osipyan, Executive director-Chairman of the Board of Araratbank, said it showed the banking system of the republic was transparent and open. He doesn’t see any potential threats in such great

portion of the foreign capital for the stability of the Armenian banking system. According to him, the same risks exist with the domestic capital. In 2012, the highest portion of the foreign capital was owned by the European Union member states – 31.6%, Russia-15.3% and Switzerland -4.2% ( in 2011: EU-29%, Russia-16.8% and Switzerland-4.4%). The authorized capital of Armenian banks in 2012 was 244.1 million drams, which was by 4.3% higher from 2011. Three banks added 10.2 billion drams to the total capital last year; of them 9 billion drams came from foreign sources. The authorized capital of the banks stood at 251.6 billion drams in May 2013. As of May 2012 there were 21 banks in Armenia. Some 1,644 individuals and legal entities are the members of the banking system, of them 86 are non-residents. -($1-410.33 drams).

ARMENIAN GOVERNMENT TO CONVENE FOR SPECIAL MEETING TO DISCUSS GDP GROWTH DYNAMICS

he Armenian government will convene for a special meeting to discuss the dynamics of GDP growth in 2013, and will take also stock of economic growth over the past few months at a subsequent meeting, Prime Minister Tigran Sargsyan said at a today’s cabinet session. “We are collecting now GDP data and will summarize the results of economic growth over the past few months and unveil our forecasts about

the annual growth,” he said. Tigran Sargsyan noted that all the data will be presented to the State Revenue Committee that will be assigned to identify the potential for collecting additional taxes. According to the “CIS Macromonitor,” published by the Research Department of the Eurasian Development Bank (EDB), in the first quarter of 2013 Armenia’s GDP growth accelerated to 7.5%, but it is projected to slow down to 5% by the yearend.

According to the report, the strong dynamics of economic activity in Armenia is due to the high rate of output growth in agriculture and mining sectors backed by relatively strong domestic demand, stimulated by money remittances from abroad made by labor migrants. According to official statistical data, Armenia’s economic activity index, in January-June 2013 increased by 4.4% compared to the same period in 2012. The government GDP projection for this year is 6.2%. ($ 1 - 409.49 drams).

AZERBAIJAN August 12, 2013 #17

caucasian business week

GREECE OKS SOCAR’S BID FOR DESFA

reek state privatization fund TAIPED’s governing board approved the Azerbijani state energy company’s revised offer for 66 percent of natural gas transmission network operator DESFA. TAIPED will collect 188 million euros for its 31% share, while Hellenic Petroleum (ELPE) will receive 212 million euros for its 35% share. ELPE’s board of directors will convent tomorrow to discuss SOCAR’s offer. The state will hold on to the other 34 percent to retain its status as a minority stakeholder.

The contract will be transferred to the State Audit Council after ELPE has also approved of the 400million-euro bid. The State Audit Council can be expected to issue its own approval in about a month. The DESFA revenues will bring TAIPED’s takings this year to more than 1 billion euros, including the OPAP and state lotteries projects. DESFA is a division of the Greek state gas company DEPA, whose privatization failed in June due to the lack of formal bids including from Russian giant Gazprom, which had been considered the most likely buyer of DEPA.

Purchase of equity interest in DESFA will allow SOCAR to participate in various investment projects in the Balkan countries and, in particular, to be involved in the process of gas supply in Albania, which is currently at a very low level. SOCAR is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan. Three production divisions, two oil refineries and one gas refinery, an oil tanker fleet, a deep water platform fabrication yard, two trusts, one institution, and 22 subdivisions are operating as corporate entities under SOCAR. The company owns gas stations in Azerbaijan, Switzerland, Georgia and Ukraine. It has representative offices in Georgia, Turkey, Romania, Austria, Switzerland, Kazakhstan, Britain, Iran, Germany and Ukraine and trading companies in Switzerland, Singapore, Vietnam, Nigeria and other countries.

TURNOVER OF REAL ESTATE MARKET IN AZERBAIJAN GREW BY 35% AND EXCEEDED AZN 1.838 BN IN 2013

he Central Bank of Azerbaijan reports that turnover of country’s residential property market for the first 6 months of 2013 increased by 34.96% against the same term of 2012. In 2012 the index grew by 24.86% against 2011. According to the CBA, turnover of residential property (the cash flow of notary’s offices) reached AZN 1.838 bn by 1 July 2013 versus AZN 1.36 bn a year earlier. At the same time transfers to notary’s offices ac-

counts for purchase/sale of residential real estate by individuals totaled AZN 802.278 million for Jan-Jun 2013 versus AZN 579.59 million a year earlier (+38.42%), and the withdrawals from these accounts AZN 1.035 bn versus AZN 782.4 million (+32.41%). At that, the CBA reports of a rise in revenues of mediators (banks, notary’s offices and realtors) for residential real estate transactions by 15.2% for Jan-Jun of 2013. As of 1 July 2013 mediators’ earnings were AZN 233.7 million versus AZN

202.8 million a year earlier. Last year’s turnover of residential property totaled AZN 2.828 bn versus AZN 2.265 bn in 2011. At that, transfers to notary’s offices accounts for purchase/sale of residential real estate by individuals totaled AZN 1.599 bn versus AZN 1.2 bn a year earlier (+31.81%), and the withdrawals from these accounts AZN 1.228 bn versus AZN 1.05 bn (+16.84%). Last year mediators’ earnings grew 2.29-fold up to AZN 371.307 million versus AZN 162.3 million a year earlier.

AZERBAIJANI INDUSTRIAL PARK EYES INVESTMENT PROJECTS

he Sumgayit Chemical Industrial Park near Azerbaijan’s capital Baku, which is one of the largest ongoing regional projects in the chemical industry, is considering about 20 investment projects. The Economic Development Ministry, which manages the Sumgayit Chemical Industrial Park, said that the projects relate mainly to the production of packaging materials, construction, medical products and other types of chemical products, including polymers. The initial draft of the “Rules of the evaluation of investment projects, businesses and individuals based on the required criteria” and a number of regulations have already been prepared. According to the regulations, project evaluation will be carried out based on ten criteria, taking into account investment projects of regional significance, use of modern technologies in the production of goods and provision of services for export-oriented production, their cost effective-

ness and improvement of the competitive environment. Moreover, the park, with an area of 167.66 hectares, ongoing construction and infrastructure development, 7-yearlong tax exemption and many other benefits, continues to attract investors, hold meetings with local and foreign companies and conduct presentations both domestically and abroad. The Sumgayit Chemical Industrial Park was established by the presidential decree in 2011 to become a territory which has the necessary infrastructure, logistics, and management structures for the development of new and high technologies, research on energy efficiency, space and

telecommunications, information technologies and communications. The Economic Development Ministry was entrusted the creation and development of the facility as part of a larger effort to enhance the potential of the domestic chemical industry, establish private businesses in the field and obtain competitive goods from local raw materials.

AZAL UPS NUMBER OF FLIGHTS TO ST. PETERSBURG

zerbaijan Airlines (AZAL) announced that it will perform additional Baku-Saint PetersburgBaku flights in connection with the summer season. AZAL aircraft will make additional Baku- Saint Petersburg -Baku flights on August 17, 24 and 31 in connection with the summer season. According to the report, J2 019/020 Baku- Saint Petersburg -Baku flights will be made on Saturdays by comfortable aircraft A320.

AZAL also expands direct flights to the foreign countries. Thus, recently it is reported that Azerbaijan Airlines (AZAL) will launch the Baku-Beijing and Beijing-Baku direct flights on August, with an aim to further expand its flight geography. AZAL also intends to launch flights to the United States with the ability to refuel in one of the European countries. According to AZAL, opening the flight from Baku to New York will be possible this fall.

AZAL, the biggest Azerbaijani airline and national flag carrier, offers passenger flights to countries in Europe, the CIS, Middle East and Asia. After purchasing new Boeing aircraft for long-haul flights in 2014, the airline plans to open regular flights to destinations in North America and South-East Asia. The company is a regional and CIS leader for the number of new aircraft. Its fleet currently consists of modern aircraft meeting all safety requirements, including Boeing 757-200, Airbus А319, ATR 42, ATR 72, Airbus А320 and Boeing 767-300. It cooperates with about 60 airlines to provide its passengers with the opportunity to travel freely around the world. AZAL was certified by IATA Operational Safety Audit, a program that is an internationally recognized evaluation system designed to assess the operational management and control systems of an airline.

BTC TRANSPORTS OVER 17MLN TONS OF OIL

ome 17.74 million tons of oil were transported through the Baku-Tbilisi-Ceyhan (BTC) oil pipeline in January-July 2013 compared to 17.9 million tons in January-July 2012, SOCAR reported. In 2012, the BTC transported 29.67 million tons of Azerbaijani oil compared to over 32.2 million tons in 2011. As of August 1, 2013, some 223.2 million tons of oil were transported since the start of the pipeline’s operation. In January-July, around 17.45 million tons of oil were supplied to the world markets from the Turkish port of Ceyhan, compared to 17.7 million tons in January-July 2012. As of August 1, 2013, some 221.12 million tons of Azerbaijani oil were supplied from Ceyhan to the world markets since the start of the Baku-Tbilisi-Ceyhan pipeline’s operation. In 2012, some 29.3 million tons of oil were supplied from the Turkish port of Ceyhan to the world market, compared to over 32.08 million tons in 2011. BТС’s total length is 1768 kilometers including a 443-kilometre section running via Azerbaijan, a 249-kilometre section traversing Georgia and a 1076-kilometre section passing through Turkey. The pipeline’s construction began in April 2003. First oil was marketed on May 18, 2005. BTC Co. shareholders include: BP (30.1 per cent); AzBTC (25 per cent); Chevron (8.90 per cent); Statoil Hydro (8.71 per cent); ТРАО (6.53 per cent); Eni (5 per cent); Total (5 per cent); Itochu (3.40 per cent); Inpex (2.50 per cent); ConocoPhillips (2.50 per cent) and ONGC (2.36 per cent).

AZERBAIJANI INVESTORS TO BID FOR INT’L TENDER IN CROATIA

zerbaijani investors are invited to participate in an international tender to build Kupari tourist complex near Dubrovnik, Croatia, Azerbaijan Export and Investment Promotion Foundation (AZPROMO) said on August 6. AZPROMO said the tourism project will be put up for a tender over the following 10 days. The main purpose of the tender is to promote the development of quality tourism in the Dubrovnik-Neretva county through the completion of the Kupari-Srebreno state project. The designated area is one of the most beautiful places in the region. The project involves three sites: Kupari I, which will cover an area of 14 hectares, providing for the construction or reconstruction of accommodation facilities for 1,500 seats; Kupari IV, which is an undeveloped 12 hectare area and is designed for the construction of facilities for 800 seats; Srebreno II, a land plot occupying 6.1 hectares that is designed for the construction of a convention center for 2,000 people; a 100-bed hotel. Kupari tourist complex is a former military sanatorium located in the village of Kupari near the Old City of Dubrovnik and Dubrovnik International Airport. Currently, part of the sanatorium (Kupari I) consists of five non-performing hotels and the Kupari auto camp rented until the end of 2012. The total number of beds in the five hotels located close to a water channel amounts to 1,626, while the auto camp can accommodate about 4,500 people. All the facilities are said to be in need of renovation. The international tender will be held in 2013. In order to become acquainted with the tender terms, Azerbaijani organizations and businessmen may contact the Croatian embassy in Azerbaijan. AZPROMO is a joint public-private initiative launched by Azerbaijan’s Ministry of Economic Development in 2003 with the aim to contribute to economic development through attracting foreign investments in the non-oil sectors of the economy and stimulating expansion of the country’s exports of non-oil goods to overseas markets. AZPROMO is a unique body in Azerbaijan that operates as a “one-stop-shop” for assisting and advising foreign-based companies interested in exploring and capitalizing on investment opportunities in Azerbaijan.

12 RUSSIA’S TELECOM OPERATOR VIMPELCOM TO SHARE FLOOR WITH FACEBOOK ON NASDAQ

he supervisory board at Vimpelcom has decided to shift the Russian telecom operator’s trading floor from the New York Stock Exchange to the NASDAQ. Vimpelcom is expected to start trading in its American Deposit Shares on the NASDAQ on September 10. The shift will allow Vimpelcom to obtain listing efficient in terms of costs and additional services, the company said. Shareholders are set to confirm charter amendments on September 25.

TURKMENISTAN AIRLINES SEEKS TO JOIN IATA

urkmenistan’s national carrier Turkmenistan Airlines is currently operating to join the International Air Transport Association (IATA). The Turkmen Dovlet Khabarlary reported that all taken measures, as well as new scheduled flights are designed not only to meet the growing demand for passenger and cargo transportation, but also to make an important contribution to the successful implementation of the “open doors” state policy and broad international cooperation. This also opens up opportunities for businessmen interested in participating in Turkmenistan’s investment projects, the country’s further integration into the global economic system. IATA acts as a coordinator and represents the interests of the aviation industry in such areas as flight safety, tariff policy, maintenance, aviation security, development of international standards. Turkmenistan is a full member of the International Civil Aviation Organization (ICAO) - a specialized agency of the UN. Currently, the national air fleet has mainly Boeing-757, Boeing-737 and Boeing-717 aircraft. During the period of implementation of the National Programme for the Development of Civil Aviation of Turkmenistan, the number of such aircraft will amount to 39. Turkmenistan Airlines also performs regular flights to Abu Dhabi, Amritsar, Almaty, Bangkok, Birmingham, Delhi, Dubai, Kiev, London, Moscow, Minsk, Beijing, Istanbul, St Petersburg, Frankfurt and other cities.

FITCH UPDATES KAZAKH COMPANY’S CREDIT RATINGS

itch Ratings has assigned JSC National Company Kazakhstan Engineering (KE) Long-term foreign currency and local currency Issuer Default Ratings (IDRs) of ‘BBB-’ and ‘BBB’, respectively. Fitch has also assigned foreign and local currency senior unsecured ratings of ‘BBB-’ and ‘BBB’ respectively and a Short-term foreign currency IDR at ‘F3’. The Outlooks on the Long-term IDRs are Stable. Fitch deems the linkage moderate to strong due to the state control, strategic importance of the company to the government’s ambition to expand the country’s industrial base and diversify the national economy as well as the tangible financial support from the state already exhibited and pledged. The two notch differential reflects the lack of debt guarantees provided by the state and the slightly lower priority KE would likely receive compared to key natural resources, utilities or infrastructure companies, whose ratings are notched down by one notch from the sovereign. Fitch believes that on a standalone basis, KE’s rating would likely be at the high end of the ‘B’ category, reflecting its weak business profile, negative free cash flow (FCF), moderately high leverage and adequate liquidity. KE’s business profile is characterised by its very small size, limited product range, lack of long-term high-tech development achievement and little customer diversification, all of which place a cap on the company’s standalone rating in the ‘B’ category. Nevertheless, we acknowledge the growth that the group is likely to experience in the coming years stemming from the Kazakhstan government’s ambitious plans for the entity as the focal point of the nation’s modernisation, industrialisation and export drive. Coupled with the technological know-how the company is acquiring from various joint venture partners, the business profile is likely to see a visible improvement within the rating horizon. As KE’s IDRs and Outlook are driven by those of the Republic of Kazakhstan, any change to the sovereign could prompt a review of the company’s IDRs, National Ratings and Outlook. Any strengthening of this support, such as a provision of written guarantees of KE’s debt from the Kazakhstan Ministry of Finance, would be likely to lead to closer rating linkage. A weakening of support, such as a reduction in the state’s shareholding in KE, a waning commitment to and support for the company’s programmes, or a change in the treatment by the state that KE receives relative to other state-owned companies, could lead to a widening of the rating gap between Kazakhstan and KE. azernews.az

CIS & IRAN August 12, 2013 #17

caucasian business week

BELARUS AND RUSSIA IN A ‘CHOCOLATE WAR’ AGAINST UKRAINE

insk has decided to support its customs union ally Moscow and ban the transit of confectionary by the Ukrainian firm Roshen to Russia. The socalled ‘chocolate war’ with Russia could cost Roshen an estimated $200mn. Belarus will not allow confectionery manufactured by Roshen to cross its territory, the Belarusian Ministry of Health said in a statement on Friday. That’s after the Russian sanitary services banned the confectioners products after the toxic hydrocarbon benzopyrene was found in Roshen milk chocolate. While Roshen products are still being tested by the country’s sanitary controls department, “the Belarusian Ministry of Health has taken measures to prevent export of Roshen confectionery to Russia via border checkpoints at the Belarusian section of the Customs Union customs border,” the document says. “In case the Ukrainian-made confectionery is found to violate safety requirements, exhaustive measures will be taken in line with the current laws of Belarus and the Customs Union,” the ministry stressed. Roshen could stand to lose $200mn from the ‘chocolate war’ with Russia according to Oleksandr Sokolov, director of analytics at Pro-Consulting talking to Ukrinform. “Based on the company’s turnover figures of the previous year at $1.2bn, as well as data on the quantity of products supplied to the Russian market, we can talk about possible losses of one sixth of the annual turnover of the corporation, provided there is a long ban,” Sokolov said. Kazakhstan, the third party to the Customs Union with Russia and Belarus, has so far not found any signs of benzopyrene in Roshen products, according to Zhandarbek Bekshin, the chairman of the Committee for State Sanitary and Epidemiological Supervision at the Health Ministry. The committe has investigated 7 Roshen products, with tests still being conducted in Astana and Almaty. At the moment Roshen has about 20% of the country’s confectionary market, Bekshin added. On Saturday Tajikistan said it had found no impurity in Roshen confectionary products imported into the country. At the weekend tests were ongoing in Kazakhstan, Belarus and Moldavia. Roshen operates confectionery factories in Kyiv, Vinnytsia, Mariupol and Kremenchuk, the Bershadmoloko dairy producer, a stud farm in Ukraine and also confectionary facilities in Klaipeda, Lithuania and Lipetsk, Russia.

A dose of bitter politics in a confectionary conflict?

Russia has long been in trade wars with Ukraine, where gas issues dominated the scene. The recent ban on Roshen imports by Russia marks another and traditional stage of the economic relations becoming sharper, according to Valery Gladky, director of the analytical Bureau for Economic and Social Technologies, talking to Ukrainian radio. “Traditionally such a sharpening happens after certain movements at a political level – after Russia’s President Vladimir Putin visit to Ukraine to celebrate the 1025th anniversary of Christianization of Kievan Rus’,” Gladky said. “From this point of view sharpening of the economic relations is considered to be a reply by Russia to the failure to reach certain progress in political relations between the two countries. That’ the method to press, to stimulate the Ukranian political authorities to consider the country’s entrance into the Customs Union,”Valery Gladky concluded. Russia does seek to have Ukraine within its Customs Union, as “without Ukraine Russia’s Renaissance as an economic powerhouse is very complicated,” Eduard Popov, Director of the Black Sea - Caspian Region Centre for Information and Analysis of the Russian Institute of Startegic Studies (RISS), told Mignews.com. However, Onishenko denied any allegation that the ban imposed by his agency was politically motivated. “Previously, cheese was a sensitive issue. It is not forgotten. Now there is a new issue. They won’t find any political component, no matter how much they yell and look. We are talking about quality, which is below the stated standards,” Onishchenko said. Official talks between Russia and Ukraine are scheduled to kick start on Monday, according to Ukrainian Minister of Agrarian Policy and Food Nikolai Prisyazhnyuk.

IRANIAN CAPITAL MARKET VALUE HITS $89.17 BLN

ran’s capital market value surpassed 2,764 trillion rials (about $89.17 billion based on the USD rate at the free market) on August 8. The main index of Tehran Stock Exchange (TSE) also reached 57,674, the IRNA News Agency reported. TSE’s main index (TEPIX) faced a 258-unit rise on Tuesday. TSE’s industry index also increased by 235 units, stopping at 48,648.5 units. TSE’s main index (TEPIX) had hit 39,000 units in the second working day of the current Iranian calendar year (Which started on March 21). Founded in 1967, the Tehran Stock Exchange has been one of the world’s best performing stock markets in recent years and has ranked as the best bourse index in Europe, Africa and Middle East in 2010 in terms of performance of the main index. The TSE’s annual growth rate of main indices was also ranked as the second best among all members of the World Federation of Exchanges (WFE). The WFE is the association of 52 regulated exchanges around the world which aims to develop and promote standards in markets.

JAPANESE COMPANY LICENSED FOR URANIUM EXPLORATION IN UZBEKISTAN

apan will carry out uranium exploration in Uzbekistan. The Japan Oil, Gas and Metals National Corporation (JOGMEC) has received a five-year license for uranium exploration at two prospective areas in the country’s Navoi region, a source in the Uzbek government told Azerbaijan’s Trendnews agency. As reported, JOGMEC and Uzbekistan’s Navoi Mining and Metallurgical Combinat (NMMC) signed an agreement on the conduct of uranium exploration in the prospective areas in July. According to the document, JOGMEC will implement geological exploration work in the Juzkuduk and Tamdiykuduk-Tulyantash prospective fields upon the terms of business risk for five years. The minimum amount of funding for the first year of operations is $3 million. According to the agreement, if the plan for the first year is not fulfilled, the investor is to pay the cost of the unfulfilled operations to Uzbekistan. According to the source, if deposits are revealed in the contract area, the Japanese company will have the exclusive right to conduct direct negotiations and conclude a production sharing agreement with the Central Asian state.

AVTOVAZ SELLS LOW-COST LADA CARS TO EUROPE TO TEST DEMAND

ussia’s flagship automaker AvtoVAZ has exported the first batch of Lada Granta model to the Czech Republic and Germany. The country’s most popular Lada car costs less than $10,000 at home, but its low price may not be enough to win European customers. The Lada maker may export up to 5,000 cars to Europe annually, the business daily Vedomosti quotes the director of Auto-dealer.ru Oleg Datskiv. The main competitors to the Lada Granta in the European market are used Renault/Dacia Logan and Skoda Fabia models, worth about 13,000 euros, he says. AvtoVAZ is Russia’s only exporter of light vehicle cars to Europe. Foreign automakers located in Russia export cars to the CIS countries. Exports to Europe are needed primarily to support the image of the car at home, Vedomosti quotes the managing director of Meiller Vostok Vladimir Vidulov. The move is more political than economic, the newspaper quotes analysts. AvtoVAZ may only compete in price, but production of low-cost cars in Europe is already developed and the local market is shrinking. European car sales have been declining for almost two years due to the recession in the Eurozone. New car sales

in Europe suffered their worst June since 1996 with demand falling to 1.134 million vehicles, down 5.6% from the same month last year, according to the BBC. Meanwhile, AvtoVAZ sales in Russia were down 9% in the first 7 months of this year, compared to the same period last year. The company plans to revitalize its product lineup starting in 2016 with new models developed with Renault-Nissan, which is taking a controlling stake in the automaker, autonews.com reports. The company hired former Volvo styling chief Steve Mattin in 2011 to transform the LADAs notorious dull designs. “We wanted to create something that is robust looking, especially considering some of the rough road conditions in Russia. There should be simplicity to the design language, but we also want to emotionalize the brand without overcomplicated lines in all different directions like some other brands,” Mattin told autonews.com. “We are designing for the Russian market, but I think they will be very appealing outside of this country because of the modernity, because of the change in proportions, and because of the general product improvements”, the designer believes. rt.com

It was reported that Uzbek President Islam Karimov has issued a decree which allows JOGMEC to conduct geological exploration work. According to the presidential decree, the Japanese investor has been provided with significant benefits, such as exemption from taxes and customs duties on imported equipment for five years. JOGMEC is the first foreign investor in Uzbekistan which has the right to explore and develop sandstone uranium deposits. There are two types of deposits -- of sandstone and black shale type -- in the mineral resource base of the country. The sandstone deposits are developed by NMMC. Uzbekistan is not a consumer of uranium products, and all of the produced uranium is exported. NMMC is the monopoly operator on mining and uranium export in Uzbekistan. In the last five years Uzbekistan intends to attract foreign investors to the exploration and development of black shale uranium fields, which are not currently being developed in the country and require significant investments. According to the estimates of the Uzbek State Committee on Geology and Mineral Resources, the prospective reserves of uranium amount to 185,800 tons, some 138,800 tons of which are of sandstone type; the remaining 47,000 tons are of black shale type. Japan is interested in secure supply of fuel as it starts to revive the nuclear energy two years after the catastrophe at the Fukushima nuclear power station. Therefore, Japan intends to cooperate not only with Uzbekistan, but also with Kazakhstan and Mongolia. Japanese corporations import uranium from Kazakhstan. Sumitomo and Toshiba have established joint ventures in the country with Kazatomprom, Kazakhstan’s state-owned nuclear holding company. azernews.az

WORLD NEWS August 12, 2013 #17

caucasian business week

WALMART EYES HONG KONG $4BN SUPERMARKET CHAIN

he world’s largest retailer Walmart is considering making a bid for the Hong Kong supermarket business of Asia’s richest man Li Ka-shing. Walmart may use Hong Kong’s second biggest ParknShop chain as a platform to expand in the country. Walmart is working with a bank weighing its options for a $4bn takeover of

ParknShop ahead of the bid deadline on August 16, Reuters quotes sources. Private equity firms such as KKR, TPG Capital, and Blackstone are also invited to bid. Japan’s Aeon, China Resources Enterprise Ltd, Sun Art Retail, and Australian retailers Wesfarmers and Woolworths Ltd are also among possible bidders, Reuters previously reported. ParknShop operates 345 stores in Hong

Kong, mainland China and Macau, and earned $2.8bn in revenue last year, according to Reuters. Its purchase will offer an opportunity to operate in a market dominated by two large players Li’s ParknShop (33.1 percent share) and Singapore’s Dairy Farm International (39.8 percent), Euromonitor data says. A Walmart purchase would help put its roots further down into Chinese soil. It opened the first China store in 1996 and now operates over 380 stores, including Supercenters, Sam’s Clubs and Neighborhood Markets. Last year the company announced plans to open 100 new stores in China over the next three years and create 18,000 jobs. It is also in line with the retail giant’s strategy to expand its presence in rapidly developing emerging markets. Last year Walmart was reportedly in talks to buy an 80% stake in Turkish retailer Migros Ticaret, according to Reuters. Walmart spent more than five years in Russia with a team of 30 plotting an entry strategy. However its first attempt to enter the Russian market failed: its Moscow office was closed in February 2011 after the failed purchase of one of the leading hypermarkets Lenta and discounter Pyaterochka, business daily Kommersant reports.

1.38 MILLION JOBLESS: GREECE SETS ANOTHER RECORD IN MAY

reece’s jobless rate hit a new record high of 27.6 percent in May. Youth unemployment neared 65 percent as austerity measures continue to stall economic growth. Unemployment in May jumped nearly a percentage point compared to April’s 26.9 percent, according to the state statistics agency ELSTAT. The young have been hit the hardest, with unemployment rising to 64.9 percent among 15-24 year olds. The number of unemployed people in the country is now 1.38 million, an increase of 30,558 compared with April, the highest since ELSTAT began publishing jobless data in 2006. Since the start of the crisis in 2009, unemployment in Greece has more than tripled and is more than twice the average 12.1 percent rate of the euro zone. Eurostat data showed 26.9 percent unemployment for Greece and a 26.3 percent rate for Spain.

The central bank of Greece predicts unemployment will peak at 28 percent before it begins to taper in 2015. Greece has received over $315 billion (240 billion euros) since 2010, as the EU seeks to help

pull the troubled member state out of a deep 6-year recession which has spread throughout the continent, but in return, the government has promised its troika of lenders to lay off more than 25,000 civil servants.

HILTON WORLDWIDE TO OPEN ITS DOORS TO INVESTORS

ilton Worldwide is expected to return to the public ownership after private equity group Blackstone decided to put it on the market. Four banks will manage the offering which is seen as Blackstone betting on higher commercial real estate values. Having been taken private 6 years ago by one of the biggest US real estate firms Blackstone Group, Hilton tapped Deutsche Bank, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley as the key underwriters for its Initial Public Offering (IPO), as the WSJ quotes its sources. In 2007 the $26 billion hotel take-over marked the industry’s largest private-equity buyout struck during the credit boom that ended later that year, the New York Times reports. The Hilton offering will reportedly take place in the first half of next year. As part of the IPO preparations, the selected banks are expected to aid Hilton with refinancing roughly $13 billion in debt, according to Bloomberg. Recently Blackstone has been among the more active sellers within the hotel industry, which is now reportedly working on a possible public offering of its La Quinta hotel chain, which operates about 800 moderately priced lodgings. Blackstone also said it planned to sell a stake in its Extended Stay America hotel operator. Some investors view the pick-up in selling by one of the savviest real estate investors as a bet that the commercial property market could be approaching a peak, before historically low interest rates rise and the debt markets turn volatile again, the australian.com reports. Blackstone currently has $60 billion in real estate assets under management, overwhelmingly in office buildings, hotels and shopping centers. rt.com

FOOD PRICES FALL ON BUMPER GRAIN CROP

ood prices have fallen, thanks in part to abundant grain supplies from a hefty harvest. They hit their lowest level in more than a year in July and the United Nations’ food agency has said that trend would continue, thought not so dramatically. It expects global cereal production to be up more than seven percent from last year’s drought hit harvest. Wheat prices are at a one year low, the same for soya beans – which are often used for livestock feed – while corn is down 40 percent from the highs of one year ago. Food prices surged last summer due to a historic drought in the United States. Before that in early 2011 they hit an all-time high, leading to riots in poorer countries and helping fuel the Arab Spring uprisings in the Middle East and North Africa. The UN’s Food and Agriculture Organisation’s food price index, which measures monthly changes cereals, oilseeds, dairy, meat and sugar, fell nearly two percent in July, declining for the third month running. The fall was driven mainly by lower prices for grains, soy and palm oil, but sugar, meat and dairy costs also fell. The FAO believes food prices could face further downward pressure if the US dollar strengthens as commodities like cereals are bought and sold in dollars. euronews.com

EXHABITION caucasian business week

August 12, 2013 #17

TBILISI GUIDE August 12, 2013 #17

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 August 12, 2013 #17

caucasian business week

Location City Batumi, Sarpi Black sea coast, on Silk Road, near Turkey-Georgia border checkpoint. 30 meters from the sea. There are shopping points near complex, Apsaros Castle and other sightseeings.

Hotel description Sarpi Resort Hotel & Restaurant â&#x20AC;&#x201C; at the Sarpi Black sea coast is located 3000 sq. m. modern hotel complex, near Turkey-Georgia border, 30 meters from the sea. Hotel complex is isolated, equipped with surveillance cameras, security and parking system, which provides safe and comfortable environment for guests. There is indoor and outdoor type of restaurant, cafĂŠ in the hotel complex. Our restaurant has Georgian and Turkish cuisine. Bar occupies 370 square meters in the hotel complex, with wide range of drinks. The hotel has fitness and entertainment room for guests (for free). Throughout the territory of the Hotel complex operates a 24-hour high-speed wireless Internet access, which is also free of charge. Sarpi Resort Hotel & Restaurant also offers sailing with boat and scooter in the sea. As well arranges special A la Furshets and banquets.

Cottage Description

WWW.SARPIRESORT.GE; Tel: +995 422 21 25 00 / 01; Mobile Phone: +995 577 43 00 03; FACEBOOK: Sarpi Resort Hotel

Hotel Complex has modern, luxerous 14 units cottage. Cottage is 2 storied, rooms 84 m2, with living room, bathroom, toilet, 3 bedrooms and 6 beds. Cottages has a sea view and balconies. Each room has air conditioning, TV, Phones and Mini-bars. You can order right from cottages from the restaurants and bars as well. Rooms are equipped with high-speed wireless internet access for free. Housekeeping service is provided during the day. Wake up service is provided upon request.