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BUSINESS WEEK September 09, 2013 #20

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September 09, 2013, Issue 20

GEORGIA BORJOMI REGISTRATION IS COMPLETED IN THE US

akpatent, Georgian Center for Intellectual Property, reported that process of origin name registration of Georgian mineral water Borjomi in the US was completed. Pg. 2

caucasian1

BE INFORMED, DO BUSINESS

GEORGIA IMPROVES POSITION IN GLOBAL COMPETITIVENESS INDEX 2013–2104

Devi Khechinashvili: For Ten Months We’ve been warning the Government about Serious Problems in Insurance Sector

IFC ALLOCATES 1.5 MILLION USD FOR WHITE HAT

I T

nternational Finance Corporation (IFC) has allocated long-term loan of $1.5 million for Georgian mushroom producer White Hat. Pg. 3

GENETICALLY MODIFIED PRODUCTS TO HAVE LABEL OF CONTENT

rade outlets will sell genetically modified products with due description, a chairman for the parliament’s agrary committee told the parliament’s plenary session Pg. 7

OSMP OPPOSES TO BANK OF GEORGIA

nother quick payment company opposes to Bank of Georgia. OSMP joins the accusations of NOVA Technology, addressed to Bank of Georgia. Pg. 8

AZERBAIJAN AZERBAIJAN STILL INTERESTED IN NABUCCO IMPLEMENTATION

zerbaijan says that the Nabucco West pipeline designed to transport Caspian natural gas to Europe has not lost its sigPg. 11 nificance.

ARMENIA ARMENIA OCCUPIES 79TH POSITION IN WORLD ECONOMIC FORUM’S REPORT

he World Economic Forum issued the World Competitiveness Report for 20132014, where the Republic of Armenia occupies the 79th position. Pg. 12

eorgia has improved the position in global competitiveness rating by 5 scores. The country ranks 72nd among 148 countries. The information was published by the World Economic Forum (WEF) as part of the Global Competitiveness Index 2013-2014. According to the previous 2012-2013 report, Georgia ranked 77th among 144th countries, while the position was 88th in the 2011 to 2012 report. Global Competitiveness Index is published every year and it consists of three blocks - basis data (75th place), efficiency (86th place) and innovative development (122nd place). These three blocks are divided in 12 parts - institutes (64th), infrastructure (56th), macroeconomic environment (61st), healthcare and primary

lyGeorgia remains without airplane after the company failed to pay debts. Leasing company has seized the airplane. The Airbus airplane stays seized at Brussels airport for several days, BPI reports. FlyGeorgia failed to pay debts to Aileps leasing company and the airplane was seized. FlyGeorgia refuses the fact, but affirms one airplane has been genuinely arrested. The FlyGeorgia management has been changed for the last 6 months and the new management has started revising treaties concluded by the previous management. Pg. 3

WORLD NEWS BACK TO BUSINESS: OPTIMISM AMID UNCERTAINTY t seems like a lifetime ago, yet it was only 2007 when the global economy and foreign direct investment (FDI) soared to all-time highs. Pg. 14

OSCARS: GEORGIA NOMINATES ‘IN BLOOM’ FOR FOREIGN-LANGUAGE CATEGORY

ana Ekvtimishvili and Simon Gross’ coming-of-age drama set during Georgia’s civil war has been scooping up awards worldwide. LONDON – In Bloom, a coming-of-age drama set in 1992 during a post-Soviet civil war was

Pg. 3

FlyGeorgia Airline Remains without Airplane

he looming wind down of the Fed’s multibillion dollar monetary stimulus package could have a profound impact on the global economy. Pg. 13

education (70th, basis), higher and vocational education (92nd), market efficiency (67th), labor market efficiency (40th), financial market development (75th), technological achievements (68th), market size (103rd, effective indicators), business competitiveness (120th), innovations (126th, innovative development). In whole, the competitiveness index of a country is calculated due to over 100 parameters. The highest score is 7. The 2013 to 2014 report values Georgia by 4.2 score. Georgia has got the best index in the business inauguration segment (2nd), number of state regulations (10th), tax burden on business (10th), protection of investors (19th), affect of various diseases on business activities (1st).

“I BELIEVE I CAN FLY”

CIS RUSSIA AND CHINA WARN OF ‘SPILLOVER EFFECT’ ON GLOBAL ECONOMY FROM US STIMULUS TAPERING

nominated Wednesday as Georgia’s Oscar submission in the foreign-language category. The story of two teenage girls coping with puberty and war has touched the hearts of festival juries worldwide, with a dozen awards since the film premiered in Berlin. Apart from kudos for directors Nana Ekvtimishvili andSimon Gross, the film’s young stars Lika Babluani andMariam Bokeria have jointly won best actress more than once, most recently at last month’s Sarajevo Film Festival and July’s Odessa IFF. A Georgia-Germany co-production supported by the Georgian National Film Center, the movie is backed by German and French TV channels ARTE and ZDF. The Georgian premiere is scheduled in Tbilisi on Sept. 19. hollywoodreporter.com

Ambassador Yalowitz: Georgia is moving in the right direction Pg. 4

Pg. 6

JTI Caucasus Increases Cigarette Price by 0.20 to 0.30 GEL Pg. 6

Levan Davitashvili: ,,Our aim is to establish market relations, so the state will not interfere rigidly’’ Irakli Lekvinadze: Despite Problems It is Due Time to Invest in Georgia’s Agribusinesss Sector Pg. 5

Pg. 6

MAIN EVENTS caucasian business week

September 09, 2013 #20

PRESIDENT INTRODUCES 3 CANDIDATES ON VACANT POSITION IN COMMUNICATIONS COMMISSION

resident of Georgia Mikheil Saakashvil nominated 3 candidacies on the vacancy of National Communication Commission member. Pirveli Radio reports about in, based on president administration. Pirveli Radio informs that candidacies of George

Choladze, Temur Gogoberidze and David Tutberidze are nominated on the commission member position. Parliament should vote for new members of Communication Commission in 30 days. Parliament will approve one of 3 candidacies with majority of votes on the commission member position.

BORJOMI REGISTRATION IS COMPLETED IN THE US

GEORGIAN PM VISITS LATVIA, ESTONIA

eorgia’s PM Bidzina Ivanishvili starts a two-day visit to Latvia on September 6 before traveling to Estonia on September 8-9. In Riga PM Ivanishvili will meet his Latvian counterpart Valdis Dombrovskis on September 6 “to discuss opportunities for closer bilateral cooperation and recent matters of the EU Eastern Partnership,” according to the Latvian PM’s office. PM Ivanishvili will also meet Latvian President Andris Bērziņš and parliament speaker Solvita Āboltiņa. The Georgian PM will participate in the Riga Conference 2013, an annual high-level foreign and security policy forum. PM Ivanishvili is among speakers at the forum. According to the Georgian PM’s office, Ivanishvili will meet Polish Foreign Minister Radosław Sikorski and Secretary General of OSCE Lamberto Zannier on the sideline of the Riga Conference. In Riga the Georgian PM will also visit Museum of the Occupation of Latvia. The PM is accompanied by Foreign Minister Maia Panjikidze, Economy Minister and Deputy PM Giorgi Kvirikashvili, State Minister for Eu-

ropean and Euro-Atlantic Integration Alexi Petriashvili and head of the Georgian National Investment Agency Giorgi Pertaia. After Latvia, the Georgian delegation will head to Estonia for a two-day visit where the Georgian PM will meet President Toomas Hendrik Ilves, speaker of parliament Ene Ergma, PM Andrus Ansip, Foreign Minister Urmas Paet and Minister of Economic Affairs and Communications Juhan Parts. “Topics that will be discussed include bilateral relations, conditions in both countries’ neighbourhoods, Euro-Atlantic integration of Georgia, and the latest developments in Syria, Egypt, and the Middle East,” the Estonian Foreign Ministry said on Friday. In Estonia the Georgian delegation will visit ICT Demo Center, a facility showcasing Estonia’s information and communications technology solutions. The delegation will also visit the port of Muuga, just outside Tallinn. Signing of a bilateral cooperation agreement in the field of tourism is also planned by the Georgian and Estonian economy ministers. PM’s visit to Latvia and Estonia comes after his trip to Lithuania and Polandin July. Civil.ge

IVANISHVILI NAMES EURO-ATLANTIC INTEGRATION A CORNERSTONE OF GEORGIA’S FOREIGN POLICY, NOT EXCLUDING OPTION OF EURASIAN UNION AT THAT

eorgia’s Prime Minister Bidzina Ivanishvili declared that main strategy of the country is integration with EU and Euro-Atlantic structures, naming it “a cornerstone of Georgian foreign policy”. On the other hand, Ivanishvili pointed that “If Eurasian Union will have any coincidence with the interests of our country, not contradicting main strategy of Georgia, we will discuss this is-

sue also”. The Premier said this in the statement, released today, explaining own recent statements on Russia-driven Eurasian Union. Georgia needs to regulate relations with both strategic partners and neighboring countries, “the obligation of which we have as a country”, Ivanishvili points. To note, today Prime Minister departed with 2-day official visit to Latvia.

ENERGY EFFICIENCY ISSUES ARE DISCUSSED IN TBILISI

n September 5-6, Tbilisi hosts forum on energy efficiency issues. Experts from South Caucasus, Ukraine, Moldova and Kazakhstan take part in the event, being held within EU-funded Covenant of Mayors (re-

duction of CO2 emission). The EU delegation reported that the forum focuses on efficiency of role, which authorities of all levels play within Covenant of Mayors in terms of climate change. Organizers of the event are EU-funded grant projects COMO East, CIUDAD and EECU COM.

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

akpatent, Georgian Center for Intellectual Property, reported that process of origin name registration of Georgian mineral water Borjomi in the US was completed in late August, being confirmed by issuing of appropriate certificate. The registration gives Georgian state an exclusive right to determine persons, entitled to use the origin name of mineral water on the US territory, and prohibit its illegal use, Sakpatent said.

As bottler of Borjomi, IDS Borjomi Georgia, told Sarke, it has been presented on the US market for around 10 years. The company refrained to specify volume of export in this country and other details. The US Patent and Trademark Office has already issued registration certificates to Georgia, which refer to origin names of 12 Georgian wines, including Khvanchkara, Kindzmarauli, Tsinandali, Akhasheni, etc.

PUTIN: SYRIA CHEMICAL ATTACK IS ‘REBELS’ PROVOCATION IN HOPE OF INTERVENTION’

e alleged chemical weapons use in Syria is a provocation carried out by the rebels to attract a foreign-led strike, Russian President Vladimir Putin said at the G20 summit.There was no 50/50 split of opinion on the notion of a military strike against the Syrian President Bashar Assad, Putin stressed refuting earlier assumptions. Only Turkey, Canada, Saudi Arabia and France joined the US push for intervention, he said, adding that the UK Prime Minister’s position was not supported by his citizens. Russia, China, India, Indonesia, Argentina, Brazil, South Africa and Italy were among the major world’s economies clearly opposed to military intervention. President Putin said the G20 nations spent the “entire” Thursday evening discussing the Syrian crisis, which was followed by Putin’s bilateral meeting with UK Prime Minister David Cameron that lasted till 3am Moscow time. Russia “will help Syria” in the event of a military strike, Putin stressed as he responded to a reporter’s question at the summit. “Will we help Syria? We will. And we are already helping, we send arms, we cooperate in the economics sphere, we hope to expand our cooperation in the humanitarian sphere, which includes sending humanitarian aid to support those people – the civilians – who have found themselves in a very dire situation in this country,” Putin said. Putin said he sat down with US President Barack Obama on the sidelines of the G20 summit and talked for about half an hour in “a friendly atmosphere”. Although the Russian and the American leaders maintained different positions regarding the Syrian issue, Putin said they “hear” and understand each other. Russian Foreign Minister Sergey Lavrov and US Secretary of State John Kerry will continue discussing the situation in Syria “in the short run,” Putin said. Meanwhile, President Obama reiterated in his summit speech that the US government believes Syrian President Bashar Assad’s forces were behind the chemical weapons use. Obama pledged to make a good case on the issue for both the international community and the American people, saying many nations are already “comfortable” with the US’ opinion. While admitting “a number of countries” at the summit stressed any military action plan should go through the UN Security Council, Obama said the US is in a different “camp” that questioned the UNSC effectiveness. “Given the Security Council’s paralysis on this issue, if we are serious about upholding a ban on chemical weapons use, then an international re-

sponse is required and that will not come through the Security Council action,” Obama said.

‘A dangerous precedent’ Both presidents stressed that the situation in Syria could create a dangerous precedent, but supported their points with contrasting arguments. Obama stressed his “goal” and US “responsibility” was to maintain international norms on banning chemical weapon use, saying he wanted the enforcement to be “real.” “When there is a breach this brazen of a norm this important, and the international community is paralyzed and frozen and doesn’t act, then that norm begins to unravel. And if that norm unravels, then other norms and prohibitions start unraveling, and that makes for a more dangerous world,” Obama said. Putin, on the contrary, stressed that setting precedents of military action outside a UN Security Council resolution would mean the world’s smaller countries can no longer feel safe against the interests of the more powerful ones. “Small countries in the modern world feel increasingly vulnerable and insecure. One starts getting the impression that a more powerful country can at any time and at its own discretion use force against them,” Putin said, citing the earlier statement made by the South African President. Such practice would also make it much harder to convince North Korea to give up its nuclear program, Putin pointed out. The meeting of the leaders of the major world economies - G20 - took place in St. Petersburgh, Russia. The participants of the summit focused on economic issues during round-table talks, including unemployment, the lack of global investment, and better international financial regulation. While on the sidelines the conversation shifted to the issue of the alleged chemical weapons attack in Syria and the possibility of military action in the war-torn country. Rt.com

BUSINESS & ECONOMY September 09, 2013 #20

caucasian business week

FLYGEORGIA AIRLINE REMAINS WITHOUT AIRPLANE

KAZAKH COMPANY TO BUILD 250 ROOM HOTEL IN TBILISI

eorgian – Kazakh Investment Group ‘’Tiflis Development” plans to invest 10 million USD in Tbilisi. Asthe company’s CEO states “Commersant’’ radio, it comes to the construction of a 250-room hotel, where of the international hotel brand Park Inn by “Radisson’’ will be placed. According to George Zakaidze, the agreement

has been signed with the hotel management and “Tiflis Development’’ is waiting for the approval of the construction projects. Zakaidze notes, the repair worksshould be carried out, and the hotel is scheduled to open in November 2014. ‘’Tiflis Development” is adevelopment company, a member of the GeorgianKazakh investment group which was established in May 2007.

IFC ALLOCATES 1.5 MILLION USD FOR WHITE HAT

T From Pg. 1

he new management has found the leasing agreement unacceptable and the company has taken decision to terminate the ageement. Therefore, the airplane will remain in Brussels until the details have been clarified, the management says. Despite the company is not able to use the airplane, FlyGeorgia says no problem will arise concerning passengers transportation, because the company has concluded other leasing agreements too and the company is not expected to meet any problems. Giorgi Kodua, a chairman for the association of civil aviation professionals, noted he has got detailed information on the current situation, but abstains to make comments. Guram Jalaghonia, a head for the civil aviation, says he knows the situation with FlyGeorgia and the problem will be resolved. The company will pay the debts in the near future, he added. “Indeed, the situation with FlyGeorgia is not easy, but the management keeps working and the company will pay debts and the situation will be

settled”, Jalaghonia noted. It should be noted several other scandals were also reported around FlyGeorgia. In July 2013 FlyGeorgia airplane with passengers was halted in Dusseldorf, Germany, reportedly, because of debts to the Dusseldort airport and the airline could not perform refuelling. At the same time, FlyGeorgia has got problems with the Georgian government too. The influential Wall Street Journal has accused three Iranian businessmen, who own FlyGeorgia airline, Investbank and other businesses, of tight cooperation with official Teheran. The Wall Street Journal has published an article saying that despite economic sanctions Iranian investments were growing in Georgia. According to the article, over 150 small and medium enterprises were set up by Iranian Capital in Georgia to avoid international sanctions. The Georgian Justice Minister had to respond to the article. Tea Tsulukiani noted the Georgian Government was carrying out strict control over the UN sanctions against Iran. The Georgian government seized bank accounts of about 150 legal and physical bodies from Iran.

nternational Finance Corporation (IFC) has allocated long-term loan of $1.5 million for Georgian mushroom producer White Hat. As IFC regional manager for the South Caucasus Thomas Lubeck has declared at the credit agreement signing ceremony today, this is the IFC’s first investment in mushroom industry and the corporation will continue to support Georgian agribusiness in the future. Lubeck said that 5 years ago, 90% of Georgian mushroom market was occupied by imported products, while now its 80% comes on local production, and added that White Hat has made a great contribution in it. At that, IFC regional manager said that the mushroom’s price has significantly reduced and White Hat meets the necessary environmental standards. In his turn, White Hat’s director general Ivane Ioseliani said that the loan will be used for modernization of equipment and expanding of production. By the end of 2012, White Hat reached volume of production of 1,350 t, while forecast for 2013 makes up 1,500 t, Ioseliani told Sarke.

White Hat was established 2 years ago by Armenian investment, and now its 45% belongs to Armenian LLC Aroghj Sunk. Georgia became IFC’s member in 1995 and since then, the corporation has issued loans of $656 million for 51 projects in different sectors of the country. Company White Hat has registered on June 15, 2012. 45% of the company belongs to Armenian-registered LTD Aronguj Sukn, 5% - Alex Beridze, 50% - Armenian citizen Areg Azoian.

GEORGIA IMPROVES POSITION IN GLOBAL COMPETITIVENESS INDEX 2013–2104 From Pg. 1

The worst indicators were recorded in the following segments: efficiency of antitrust policy (138st), number of exporters (136st), cooperation between universities and business (132nd), participation of local capital in financial market (126st), protection of interests of small stakeholders (125st), copyrights (124th), and ownership rights (120th). Georgia has improved 5 parameters of 12 ones (macroeconomic environment, higher and vocational education, market efficiency, financial market development, technologies). Six parameters have worsened (quality of institutes, infrastructure, healthcare and primary education, labor market efficiency, market size, business efficiency). The component of innovations has remained the same. Business leaders have named the following factors as the most problematic challenges for Georgia’s business environment: attainability of finances (19%), unqualified workforce (14.2%), labor ethics and potential (12.2%), political unrest (10%), access to innovations (7.8%), inappropriate infrastructure (7%), frequent government reshuffles (6,.8%), state bureaucracy (5.3%), tax rates (5.3%), tax regulations (4.7%), work restriction factors (3.5%), healtchare of population (1.4%), corruption (1.3%), inflation (0.8%), crime level (0.5%), currency rate (0.3%). Georgia ranks fifth among neighboring countries (Armenia, Azerbaijan, Turkey, Russia, Kazakhstan, Ukraine). The highest figure is recorded for Azerbaijan - 39th place (+7). Turkey is 44th (-1), Kazakhstan is 50th (+1), Russia is 64th (+3) and Ukraine is 84th (-9).

INTERVIEW September 09, 2013 #20

caucasian business week

AMBASSADOR YALOWITZ: GEORGIA IS MOVING IN THE RIGHT DIRECTION

KENNETH S. YALOWITZ is former US Ambassador to Georgia. - Almost eleven months have passed after Georgia’s parliamentary election of October 2012 when the Georgian Dream coalition defeated United National Movement and the entire politics changed. It led to a mixed response from the US. Now almost a year after the elections, whatis your opinion about the consequences of this election, was it a step forward or step backward? - Kenneth Yalowitz: I don’t think that there is any question that this was a step forward. The fact that the elections were free and fair last October and the opposition coalition Georgian Dream won it and President Saakashvili agreed with the results of the election and basically stepped aside in terms of government. Of course, he is still the president. That’s a remarkable achievement and I think it was very well received not only in the US, but in Western Europe and everywhere where there are really true friends of Georgia. It also brought in a new period. President Saakashvili had been in an office for more than 8 years, I believe, and people were accustomed to him. The new prime minister was not well-known. We had not really had a lot of contact with him. People were very impressed with the openness and fairness of the elections, but we did not know Mr Ivanishvili. We knew many people in the Georgian Dream coalition, but it was a time of uncertainty. After the elections there was concern when some arrests and indictments were made of members of the former government. There was concern expressed including by myself and others that this not turn into what we call political justice, that the new government would not simply begin jailing members of the old government without cause.

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MR IVANISHVILI MADE IT QUITE CLEAR THAT THE PEOPLE BEING INDICTED WERE NOT BEING INDICTED FOR POLITICAL REASONS, THEY WERE INDICTED FOR ALLEGED CRIMES COMMITTED WHILE THEY WERE IN OFFICE.

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But still it was an uncertain period and knowing the history of Georgian politics as many of us do, we were concerned that there might be a political elements in some of these judicial trials. The cohabitation has not obviously been easy, it’s been very difficult. This morning I was reading about the differences between the president and the prime minister on board a US vessel in Batumi. We have these things in our government as well. These were pretty serious charges that were leveled back and forth, but the key point that I wanted to make is that the cohabitation has not resulted in violence, it has not resulted in a breakdown of the government. Defense Minister Alasania was in the US and I heard him speak and he was talking about how difficult the cohabitation is. It has actually worked pretty well in terms of military reforms; working to update and modernize the military, and that was reassuring because we’ve all seen that the cohabitation can be very difficult, sometimes it works very well but this is new for you and you’ve made it work reasonably well. What is a concern now, you’ve mentioned the

presidential elections coming up and after that, the stated intention of the prime minister to leave politics. This creates two new uncertainties. I know it’s having an impact already on foreign investment in Georgia. There are people concerned about what is the political situation going to be in the months ahead. So I think the first thing of importance is your presidential election. I don’t have great concerns about it being free and fair and open. But the more important thing is that there have been good quality debate during the presidential elections about Georgian foreign policy, about the relationship with Russia and about economic reforms. It is an opportunity for the public to be engaged and for the president to have a strong vote of confidence in terms of moving towards the West, towards NATO. I think these are all good things. And secondly, the possibility that Mr Ivanishvili would leave the office. So those are two of the uncertainties, but given what Georgia has done I see no reason why you cannot successfully deal with both of these issues. - There is uncertainty about whether Ivanishvili will visit the US. you mentioned in your opinion published on DFWatch last year just after the elections that Ivanishvilis statement that he would visit US first was a good signal, but almost a year passed and no visit has happened yet. What do you think are the reasons? - K.Y: I’m no longer in government, so I can speak my mind. I would very much like to see him come to the US. We’ve had series of very successful visits. In the last few months, your justice minister has been here, your foreign minister has been here twice, the economics minister has been here, the prosecutor general was here with the speaker of parliament and now of course the defense minister. I think all these visits have been very useful.

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MANY OF THESE ARE PEOPLE WHO ARE WELL KNOWN IN THE US BEFORE – MR ALASANIA AND MR USUPASHVILI. I THINK ALL THESE ARE SETTING THE GROUNDWORK AND I HOPE THAT THERE WILL BE A VISIT, BUT ONE OF THE PROBLEMS I WOULD IMAGINE IF MR IVANISHVILI IS TALKING ABOUT LEAVING GOVERNMENT RATHER SOON IT MIGHT BE MORE DIFFICULT IN THE US TO ARRANGE A VISIT IF HE IS GOING TO BE LEAVING THE OFFICE IN SIX OR EIGHT MONTHS, SO THAT COULD BE A PROBLEM.

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But I do hope, I know that there’ve been opportunities before when he was a candidate in the opposition when Secretary Clinton was in Georgia, he declined the opportunity to meet with her, because it was part of a group and he wanted to meet her alone. I myself think that that was a mistakee. I think it was important for him to meet her and I wish he had done so, and I wish also that there had been another way of him coming to the US, but he has his criteria and we have ours and so far we’ve not been able to bring them together. But as I say I think the relationship between our countries and our governments is quite good, we have excellent communications all across the board thanks to the visits of these ministers. - Taking into count the changes in the constitution which drastically reduces the power of the president and at the expense of the power of the prime minister, is this elections interesting in the US? - K.Y: Definitely. In light of the successful and free and fair elections that you had almost one year ago, the presidential elections should be equally free and fair. I’m concerned that they be that way. All I’m saying is I don’t want to see Georgia go backwards. You have already succeeded, and I’m taking it as an assumption that these elections will be that way. I have concerns, but I do think that it should happen this way. Yes, the powers will flow from the president to the prime minister, but I still think it is important symbolically that there be free and fair election. If the UNM candidate should win then there is a question of the cohabitation, whether how that will succeed. If the Georgian Dream candidate wins than you will have the united government

and that will present the opportunities to show a united policy and really a a further step forward. So either way the election goes, it is going to be watched. One – if the cohabitation continues how they will work or two, if there is a unified president and prime minister in the same party, whether that’s going to be bold steps forward for Georgia in terms of economic reform and moving forward in security issues in a way that [Defense] Minister Alasania lined out. He lined out in his speech and also in meetings that I was in, a very progressive and a very important series of steps with Georgia in terms of its military, in terms of reforming, in terms of trading, in terms of organization, and as I say, I think people are going to be watching whoever way the presidential election goes, to see how those programs work. So it is going to be a challenge either way: a), if cohabitation is going to continue, how the government will function; b) if it is a unified government, is it going to move very quickly and directly and comprehensively in terms of economic and military reform. - Saakashvili’s second and last term expires this October and there are no clear indication about his political future. How do you envisage his political future after October? - K.Y: That’s a very good question, which of course only he can answer. My hope knowing how talented and active he is, is that he would take a time once he leaves an office and perhaps write his memoirs, which are going to be very important in terms of the recent history of Georgia. But I would love to see him start working with young people; I would love to see him at a university, where he could perhaps do his memoirs, and teach and mentor young people. He’s a very charismatic, very intelligent man whether you agree with him or not, he has a lot of to say and lot of important insights and information, and I really think it would be good, both for Georgia and for him, to take a breather, as we say in the US, to take some time and get his thoughts together. To think about what he wants to do over the long term. And the best way to do that, cause I have done it myself, is to go to a university and write and mentor young people. You can still write opeds, you can still make speeches, but it’s an opportunity for the leadership in Georgia to get accustomed to new faces and new people. So I think a breathing space is good for the president and it is also good for Georgia to have a new president, prime minister, whether or not Mr Ivanishvili continues, as I say it is his decision to make. But all of us want to see a stable situation in Georgia with a new generation, new leaders, new young people coming up. You are an extremely talented country, you are blessed with some exceptional young people, new people and I would like to see them have the opportunity, new people on the political stage. - Some People here are afraid of if the Syrian conflict goes through Russia. Perhaps it seems illogical, but they think that if Russian interests are hit in Syria it might somehow vent its anger towards its weaker neighbor. - K.Y: I don’t think that is very likely. It’s five years since the war with Russia when they obviously won a tactical military victory, but diplomatically, I think, were defeated.

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I THINK THEIR RECOGNITION OF SOUTH OSSETIA AND ABKHAZIA HAS PUT THEM INTO A DIPLOMATIC “MANHOLE”, A VERY DIFFICULT CORNER FROM WHICH THEY CAN’T GET OUT. ONLY A FEW SMALL COUNTRIES HAVE RECOGNIZED THE TWO, AND NONE OF THE FORMER SOVIET COUNTRIES HAVE RECOGNIZED ABKHAZIA AND SOUTH OSSETIA.

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To me, the Russians won a military victory, but it incurred a diplomatic defeat. I don’t think at this point in view of what they have done they would be looking to do something militarily. I may be wrong. I don’t think that is a great risk, that they are going to attack Georgia again. Maybe I think they will look at other ways to respond to a limited military strike.

Particularly if it’s been demonstrated that Syrians used the chemical weapons against their own people, it would be very hard for Russia to stand up and support Assad. It’s possible that they might put some more troops in Abkhazia and South Ossetia, but they’ve already done that. They’ve already put a lot there and I think they recognize that whatever the US does in Syria it will be limited. We’re not going to put a large force on the ground, at least I don’t believe so. So I don’t think that the escalation is one that they would feel that they would have to respond to, and besides, their military is not in a terrific shape as far as I know. They are still in the process of reform; they are fighting a lot of corruption. I’m just not sure that they would be anxious to do anything as well. That’s not to say that we should not keep our guard up, that we should not keep watching very, very carefully, but I do think what the US will do will not be something that will set off a succession of military steps and countersteps. I think that’s why President Obama is going so carefully. But again with Russia we never know. I will be the first to admit that. Mr Putin is moving in some very bad directions domestically in Russia and we have to keep a very very close eye on that. - This situation when relationships between the Russian Federations and the West is escalating and it had began long before this stage of Syrian escalation. In this regard how do you think Georgia’s NATO membership odds are increasing or decreasing? - K.Y: Alliance has said that Georgia will become a member. The question is more of timing.

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WHEN [DEFENSE] MINISTER [IRAKLI ALASANIA] WAS HERE HE OUTLINED THE VARIETY OF STEPS AND HE KNEW THE IMPORTANCE OF THE ELECTIONS COMING UP AND OF ECONOMIC REFORMS IN GEORGIA AND THE IMPORTANCE OF GEORGIA CONTINUING TO TAKE THE MILITARY REFORM STEPS. HE GAVE OUT A VERY INTERESTING PUBLICATION IN ENGLISH OF THE MILITARY REFORM PROJECT AND IT’S VERY COMPREHENSIVE AND VERY THOROUGH.

“

What he said was I think that he recognize that this is going to take time, but what he was looking forward at the NATO summit next year, was some sort of specific, some tangible indication, response from NATO about the all the things that Georgia is doing. The tremendous support that you are giving to the US and allies in Afghanistan, the fact that you’ve lost troops there, these were recognized and very very highly evaluated. But his point was that Georgia would very much likes to see some type response from alliance indicating that there is either type of timetable or that this is specifically what needs to be done. But I think that the key point is that he recognizes and your leadership recognizes that you’re still a ways off from meeting all the criteria of membership. The economy still needs to be reformed, there is problem, of course not that youR making, but Russian military bases in Abkhazia and South Ossetia, which are Georgian territories, and what will this mean in terms of NATO membership. You’ve got a whole series of military reforms that’s going to be done. He was also talking about the need for training specialists to deal with equipment, so that Georgia’s forces will be more interoperable with NATO forces. There is still a distance to go. My best advice is for you to continue to do what you are doing. It’s noticed, it’s appreciated, and I think if you can get through the elections as I said on a free and fair basis, if the question of whether Mr Ivanishvili stays or whether he goes, if he is replaced by someone who is respected. I think these are all building blocks leading towards a more positive relationship with NATO. It is not going to happen overnight. I think everyone acknowledges that. But I think you’re moving in the right direction and I think it is within your power to take more steps that will improve the situation. dfwatch.net

INTERVIEW September 09, 2013 #20

caucasian business week

IRAKLI LEKVINADZE: DESPITE PROBLEMS IT IS DUE TIME TO INVEST IN GEORGIA’S AGRIBUSINESS SECTOR The Sales Management Company offers sales management, marketing, advertising, consulting services to farmers and domestic agribusiness companies. The company has developed a trademark of Choose Georgian! At this stage, the company portfolio unites three products - Machakhela Datunia honey (Achara), Elite tea (Achara) and citrus and fruits natural juice of Livo (Batumi).

IRAKLI LEKVINADZE Economist Partner to Sales Management Company -Mr. Irakli, what would you say about the current situation in the agriculture sector? How would you appraise this situation? - The agriculture sector remains one of the most undeveloped fields in the Georgian economy despite official statistics that a major part of our population is employed in this sector. In 2005 to 2011 the agriculture sector output has declined, while other sectors have recorded upturn. Today, the agriculture sector’s output in total economy is 16%, in GDP 8% (2 billion GEL), while in the developed countries the agriculture sector’s ratio in the economy is small (2% to 4%), the ratio of employees is also small, but the efficiency and technological development of these countries are higher several times. Georgia considerably retards the Post-Soviet countries - Armenia, Moldova, Azerbaijan, Kazakhstan and Ukraine from the standpoint of sector development. As to the whole picture, since1988, when Georgia harvested major crops, the figure has declined three times on average and this is very bad indicator and the domestic food production satisfies only 8% to 12% of total demand in Georgia. The ratio of grain imports in Georgia’s total demand makes up nealry 90%, meat - 55% to 60%. The country also imports vegetables and fruits, eggs, honey ans other products. -And what is the main problem? -Tradition and technologies that are less oriented on development, physical capital and infrastructure, high prices and lack of capital, small land plots, education of farmers, lack of information on global market trends and standards, expensive energy carriers (electricity, water, gas), absence of insurance system, qualified consulting and brokerage companies, less access to regional markets (Armenia, Russia, Ukraine, Turkey, Kazakhstan, Azerbaijan), while the Georgian market is liberal for them, besides the European market. The role

of branch associations is unimportant, but they are able to be succes as a result of merger of resources on both domestic and foreign markets. Shortcomings in the tax code are also relevant, for example, it is unclear whether honey, cheese, tea, packed fruit are primary products and whether they should be taxed by VAT. I think more clearness is required in this respect. There are some problems with laboratories too that would issue international certificates for various products. - Which concrete directions of the agriculture sector do you consider to be the most vulnerable? - Problems are recorded in all directions and the main problem is related to the education factor, lack of skilfull and zealous people in this sector. Today many persons think it is upon the Agriculture Ministry to care for the farmers and agriculture products should be bought or sold by the state, that the Ministry should issue subsidies and finances. In reality, the Ministry should only arrange infrastructure, create liberal environment, enhance access to markets, provide consulting services to farmers, share international experience and ensure involvement of Georgian agribusiness companies in international exhibitions. In all other issues the private sector should show initiatives itself. -How developed these directions of the agriculture sector are and what are the perspectives? - Despite many problems, there are successful sectors and examples in Georgia. Wines, mineral waters and filbert are among ten top exports items. We can name these sectors as the most successful. As to other sectors, Georgia also exports lemonade, natural juices, tinned products, tea raw materials, but in small volumes and the exports are carried out by only several companies. The country has got real potential and Georgian land, climate and other resources enable to develop many directions, including cattle-breeding and poultry farming, vegetables and fruits production, to create domestic small processing eterprises, huge resources are in the production of fruits concentrates. I think initially we should gain the domestic market. Why is cheaper potato produced in Turkey and not in Georgia? Why is Chinese garlic cheaper than Georgian one and so on? The reasons are related to technologies and effeciency of production scales. Therefore, companies and farmers, first of all, should realize this moment and take the experience. If the domestic infrastructure or legislation create problems, then the state resources should be involved. It is important that the state control over low-quality imported products increase and we welcome customs offices have been actively carrying out this control. -How important are cheap credits for farmers, the so-called agro loans? Who use these credits and, in reality, how affordable and preferential

are their terms? - I belive this is a very good project that is able to remove problems with expensive capital in the sector. There were much hopes for that program and certain disappointment was also followed as not every farmer could use agro loans as commercial banks set strict criteria. I think commercial banks play decissive role in this respect to prevent unpurposeful costs and efficiently manage them. According to my information, the program is being carried out and tens of millions of GEL have been already issued. Only experienced farmers are able to take agro loans. To increase startups and to enhance the involvement of less experienced farmers, I think the program shoud become larger-scale. It would be convenient to create consulting and technical groups to help similar farmers in managing capital and sales. This last component is very important, because the loan enabels to re-equip the enterprise, create good products, but the sales component is a main challenge.

“ “ GOOD MANUFACTURER DOES NOT MEAN A GOOD MARKETING SPECIALIST AND TRADER.

Past years have shown when enterprises were created as part of the millennium challnge program and chea loan program, but incorrect marketing and positioning and improper sales scheme failed them on both domestic and foreign markets. I find the fifth component of the agro loan program very important that implies to minimize the vintage subsidies stage by stage. -What are main issues that should be immediately resolved at this stage? - I think the Agriculture Minister provides active job with farmers and he is carrying out many interesting reforms that are related to the cheap credit program, development of legislation on cooperatives, land issues, control over low-quality products, arrangement of infrastructure, irrigation systems, tractors programs in regions, attempts to make agriculture production cheaper and so on. In Addition, I think,

“ “ INVESTMENTS SHOULD BE DIRECTED TO THE EDUCATION SECTOR, RESEARCH INSTITUTES AND DEMONSTRATORY FARMS

development, programs for equipping laboratories that will issue international certificates in Georgia, formation of strong marketing groups that would provide consultations in various sectors for farmers, active promotion of Georgian products on the domestic market, active commercial policy out of the country and involvement in agro exhibitions, working on legislation, the tax code to make it more evident and simple for farmers and the most important is to lower tariffs on energy carriers, lower tariffs on water, gas and electricity to domestic companies. This step would considerably decrease their expenditures and increase their competitiveness (for example, beer, natural juices, bread, dairy products and various products). The highest tariffs are recorded in Georgia for companies and this

factor balances the existing liberal tax burden and hampers to enhance competitive advantage. The halt of glass manufacturing plant is a good sample for that. The company failed to compete with Armenian enterprises because of high costs. As a result, today Georgian companies buy glass bottles in Armenia, Turkey and Ukraine. - Does Georgia import everything from abroad? - There are companies and farms in Georgia that are trying to shift imported products and they have already made succss. For example, Marneuli food manufacturer, Kula, Kampa and so on. But their number is very small and they cannot make influence on the market. This situation can be changed by active steps and with the support of the Agriculture Ministry.

“ “ GEORGIA IS ABLE TO INCREASE THE CURRENT OUTPUT 4 TO 5 TIMES THANKS TO TECHNOLOGIES, EDUCATION AND ACCESS TO MARKETS.

Today the imports ratio is very high, especially in non-season periods. -In this situation what is exports importance and what problems are recorded in Georgia’s exports? - Exports bring revenues to the country and the exporter companies. More people are employed in this sector. The main problem is related to access to markets, lack of due standards and continuous supply chain in most cases. This problem is evident in the vegetables and citrus segment, while these products are croped on season, but they cannot be saved because of lack of technologies and refrigerator complexes. There are no similar problems in Turkey, Armenia and therefore, we fail to compete with them in this respect. Logistics lines and their financial optimization are also very important, as well as minimization of barriers (Azerbaijan, Armenia, Ukraine, Russia, Kazakhstan), free trade agreement with Europe and the USA. - Are foreign investors interested in putting money in Georgia’s agribusiness sector? - I believe today is a due period for making investments in Georgia’s agribusiness sector, as land usage costs are low, production factors are not used, labor force is cheap, the business environment and tax system are liberal. Regional markets record high level of perception of Georgian products. Proper management and strategy will make the sector more profitable, especially winemaking, bio and natural products production, filbert production, use of water resources, production of fruits natural concentrates. Foreign farmers from India, Armenia, China, Russia, Czech Republic, the USA and Arab countries have already appeared in Georgia. They have chosen Georgia because of cheap production and climate conditions to develop farms and agribusiness.

“ “ OUR COMPANY ACTIVELY EXPLORES AGRO SECTOR BUSINESS POTENTIAL AND PROVIDES POPULARIZATION OF GEORGIAN PRODUCTS ON GEORGIAN AND FOREIGN MARKETS.

Tea Dvalishvili

TELIANI VALLEY WILL EXPORT WINE TO RUSSIA UNTIL THE END OF 2013

SC Teliani Valley told Sarke that it is going to export own wine to Russia until the end of current year. Currently, the company exports to about 25 countries. For the first half of current year, the company reported net profit of 509,000 lari (year-on-year growth – 9 times). As of June 30, retained earnings amounted to 615,000 lari. At the end of June 2012, the company had accumulated losses of 805,000 lari.

In the reporting period, income of Teliani Valley from production’s realization amounted to 15.02 million lari (year-on-year growth – 23.85%), while primary cost of sold production made up 7.7 million lari (growth – 20.19%). As of June 30, total assets made up 33.03 million lari (growth – 23.7%), while total liabilities – 16.09 million lari (growth – 34.2%). Chartered capital of the company has increased by 1.71% year-on-year, amounting by the end of the reporting period to 771,000 lari.

INTERVIEW

DEVI KHECHINASHVILI: FOR TEN MONTHS WE’VE BEEN WARNING THE GOVERNMENT ABOUT SERIOUS PROBLEMS IN INSURANCE SECTOR When since coming to power the new government says that it doesn’t like insurance companies, “it aggravates a situation “ For 9 months various insurance companies and Insurance Association President have been telling the authorities about the problems that could be easily solved, but to no avail - the newspaper “Versia” writes and notes that in the end, they addressed the Premier Bidzina Ivanishvili and inter-agency commission. The publication reports that “Alfa’’ has already left the program and ‘’Archimedes Global Georgia” faces a serious problem, the Head of the State Insurance Supervision Service appointed a temporary manager in the company. It was decided to establish a working group which will be composed of the representatives of the Commission and the insurance industry. The working group will develop the problemsolving method, which will revive the insurance sector and will enable the companies to pay off accumulated debts to the clinics. President of the Insurance Association, a member of the working group DEVI KHECHINASHVILI spoke with “Versia” daily.

-Why did the insurance companies fail to fulfill their obligations? - “Alfa’’ and ‘’Archimedes” had a common problem - none of them had enough premium paid by thegovernment. The premium includes the cost of health care services. The government paid much less amount to the companies than a cost price. In my opinion, “Alfa’’ has left the state program because ofthe fact that insurance was not the main business for its founder- “AVERSI ‘’. The other companies arethe insurers. “Aversi” would not participate in the disadvantageous program. For months, ‘’Alfa and“Archimedes” informed the government that money paid for the health care services in Tbilisi was not enough. - Is health services cost higher than paid to the companies by the state? - It’s true. The company received a 340 000 list of citizens who were to be insured (I mean Tbilisians), in fact, only 290 000 citizens were insured. “Archimedes” tariff was difficult because the company insured three different risk groups: pensioners, children and students. In total, 50 000 students had to be insured. In fact, less than 30 000 have been insured. “Archimedes” has been unsuccessfully fighting for 9 months to explain it all to the government . - During this period, hadn’t the government discussed this problem? - No one listened. This is not only Archimedes’ problem. We have been telling the government for 10 months that the insurance sector faces a serious problem. The situation is especially difficult in Tbilisi because the use of health services and prices are quite high here. Unfortunately, in Tbilisi insurance companies do not have the hospitals which would be able to control prices. The hospital owned by insurer is the main anchor which does not allow increasing prices, but theprices in Tbilisi are three times higher than in the regions. The second issue is that after a tender thegovernment violated all the conditions, reduced the number of insured by 20%, the insurance of 1 000050 people was put out to tender, but in reality, only 800 000 people were insured. With respect to “Archimedes” I can directly tell you - if ,conditionally, 100 GEL are received

September 09, 2013 #20

caucasian business week

from the state prize, the company’s expenditures for health services reach 120 GEL. What profits are we talking about? Because this issue has not been considered until now, we had to address the Prime Minister and the Interagency Commission. Finally, the government has paid attention to us - the working group will be created. For the first time in 9 months, we had communication with the Health Minister on this theme. Of course, the government says that first of all, the insurance companies must pay the existing indebtedness to clinics. But if the other issues are not resolved, it will be difficult to repay a debt. - What should the government do in order insurance companies to be able to repay the debt? - It requires a serious analysis. The premium should be increased, or medical services should be decreased. Debt restructuring is also necessary. The working group will start work soon. Hopefully, the process will be carried out in a constructive way, because the payment of the debt and the construction of the new hospital is the government’s priority. The insurance companies’ owners knowthat within the state program they have commitment of the new hospitals construction but when since coming to power the new government says that it doesn’t like insurance companies, it creates a difficultsituation. Moreover, in this situation , the government amended the resolution , which allows to let the insurance company go from the program in a case of warning three months ahead. Then, why do these companies have a long-term commitment ? Just this unstable environment affected insurance companies. After the Prime Minister’s press conference, Ivanishvili is misinformed regarding insurance. He understands that there is a problem, but a situation was described in such a way that insurance companies arbitrarily decide to cancel services. Unfortunately, his speech showed that he is not informed and minister is his main source of information... - Does minister block the real information? - I do not know, but Sergeenko should be aware of this problem. - It turns out that the government’s attempt is to intervene roughly in the insurance market and deliberately bankrupt the company? - Sergeenko, whom I respect due to “his previous life ‘’ said at our meeting that bankruptcy of any insurance company or removal of any company from the program was not in his interest. He also said that conventionally , 2 000 000 people are insured within the universal health insurance program, and it doesn’t matter who will provide medical services to the citizens - a private company or the state. The Minister said that he was ready to meet and discuss all the problems together. My claim is why until now they have not resolved these issues and the situation was aggravated? We do not ask for additional money from the state. It’s necessary to get the insurance companies rid of extra costs, and I assure you, gradually they will be able to repay a debt.

JTI CAUCASUS INCREASES CIGARETTE PRICE BY 0.20 TO 0.30 GEL

ikoloz Mchedlishvili, Corporate affairs and communications director, JTI Caucasus declared that the company has increased cigarette price by 0.20-0.30 lari since September 1. To note, according to already effective amendments to Tax Code, the excise rate for filter cigarettes (domestic and imported) has increased from 0.60 lari to 0.75 lari, while for non-filter cigarettes – from 0.15 lari to 0.20 lari. The government declares that excise growth is part of its healthcare strategy, though I consider that it has another aim as well – to increase the budget revenues, Mchedlishvili told Sarke and pointed that price increase will not significantly reduce the number of smokers. To note, JTI (Japan Tobacco International) produces about 90 brands of cigarettes (Winston, Camel, Mild Seven, LD, Sobranie, Glamour, etc.)

LEVAN DAVITASHVILI - ,,OUR AIM IS TO ESTABLISH MARKET RELATIONS, SO THE STATE WILL NOT INTERFERE RIGIDLY’’

evan Davitashvili, head of National Wine Agency, declares that within frames of this year’s vintage, farmers will receive money right during the selling of grape or the sum will be transferred to their bank account. The vouchers, which have been introduced in previous years, are canceled and the farmers will not have to stand in a queue twice for cashing the vouchers, Davitashvili notes. “Our aim is to establish market relations, so the state will not interfere rigidly – it will not beat down the price and will not compete with the private companies”, the head of the Agency assures. According to the Agency, grape harvest will amount to 150,000 t in Kakheti (main winegrowing region) and 6,000 t – in the rest of Georgia. In 2014, National Wine Agency will start a program, which envisages planting of vineyards in traditional zones, where unique varieties of grapes have been harvested, Davitashvili declares.

INTERNATIONAL BUSINESS IDEA COMPETITIONS TO PROMOTE ENTREPRENEURSHIP

(Koba Kikabidze, David Gachichilade, Mako Jaoshvili, Tinatin Gholadze, George Gigolashvili)

n 30-th of September the local winner of the Creative Business Cup 2013, held by Innovation and Entrepreneurship Development Centre, has been chosen. This International Business Competition is initiated by Denmark Centre for Culture and Experience Economy, Denmark Ministry of Business and Growth, the KAUFFMAN Foundation in the framework of the international project - Global Entrepreneurship Week - ‘’GEW’’. The project local partner is strategic communicative and event management company SEVENT. Mako Jaoshvili, CEO of the strategic partner company and GEW advisory board member, stated that there were submitted more than 30 ideas among which the best of five has been chosen for making the business presentations against the jury of local experts in economic, marketing, strategic development and business management. The national winner became David Gachechi-

ladze whose business concept the jury considered as much more attractive to be presented on international level. Tinatin Gholadze, ‘’ Global Entrepreneurship Week Georgia ’’ Project Director stated that Global Entrepreneurship Week Georgia will host two more international business competitions this year, they are Get in the Ring and Startup Cup. Now we have already opened submissions for Get in the Ring project, which is conducted in partnership with ‘’Erasmus Centre for Entrepreneurship’’. Project aims to bring promising entrepreneurs in contact with investors and to inspire visitors to start their entrepreneurial journey. This competition gives startups the chance to compete on a global level, meet international top investors and secure investments up to € 1,000,000. Interested participants should submit the applications until September 30. Two National winner of Get in The Ring would be announced on October 10 - said she.

BUSINESS September 09, 2013 #20

caucasian business week

THREE ADOLESCENTS DEPRIVED OF PARENTAL CARE BECAME STUDENTS WITH NATAKHTARI’S ASSISTANCE

GENETICALLY MODIFIED PRODUCTS TO HAVE LABEL OF CONTENT

hree beneficiaries of Natakhtari Fund from small family-type homes of Kaspi and Telavi successfully passed the National Exams and became students. Adolescents were getting ready for exams within the framework of Fund programs. The Fund will provide students with financial assistance in the future as well until they are able to live on their own. It is noteworthy that the number of beneficiaries increased up to 144 and adolescents within the program are able to acquire profession, undergo internship by field of interest or get ready for the university. The Fund aims to prepare teenagers deprived of parental care for independent life. Such adolescents from the age of 15 to 18 enjoy the Fund’s services across Georgia. An individual approach is being developed for each beneficiary and the fund continues to take care of them event after they become 18.

TURKEY REDUCES TRANSIT FEE FOR GEORGIAN TRUCKS

urkey has lowered the transit fee for Georgian registered trucks to a quarter after several Georgian trucks failed to pay the amount usually paid by every other country. From September 1, so-called panel vans and minibuses will have to pay 150 or 300 euros, depending on whether they are empty or full. Panel vans are a wagon type of trucks. Turkey earlier introduced new increased transit fees for panel vans; 600 euros for empty trucks and 1 200 euros for loaded trucks. But after a request by Georgia’s Ministry of Economy, a decision was made to go through the rules.

Payment of transit fares was deferred till July 1, 2013, for Georgian trucks. After Georgia was included on the list of countries which had to pay the increased taxes, tens of Georgian trucks driving from Georgia to Europe were stopped on the Turkish border, unable to pay the fee. The Ministry of Economy appealed to Turkey’s Ministry of Transport, Maritime and Communications, asking to change the decision for Georgia. On August 23, the Ministry of Economy stated that Turkey has decreased the fee only for Georgian trucks, a decision which will come into force on September 1. dfwatch.net/

COURTYARD MARRIOTT CEDES BEST HOTEL-GEORGIA TITLE TO RADISSON BLU BATUMI

adisson Blu Batumi was named as the best hotel 2013 in Georgia on the World Travel Awards. Tourism and Resorts Department of Adjara informs that on the most important and prestigious awarding ceremony of the worked, the prize was delivered to the hotel

rade outlets will sell genetically modified products with due description. Gigla Agulashvili, a chairman for the parliament’s agrary committee told the parliament’s plenary session, the government has adopted a resolution on bio production, as well as a resolution on obligation for labelling the products with due description. “We are not motivated to manufacture genetically modified products. On the contrary, we foster processes for production of ecologically clean

bio products. This is our approach, but we do not introduce sharp restriction, we only require that the consumer be informed if products contain any genetically modified components. Similar products must have due description”, Agulashvili noted. Our current technical equipment cannot identify genetically modified products, but the Agriculture Ministry provides active job to create a respective laboratory in the country and identify this category of products, he added.

TBILISI INTERNATIONAL FESTIVAL OF THEATRE International Program

general manage Torbjorn Bodin. Torbjor Bodin devoted this victory to National administration of the Tourism and Resorts Department of Adjara. It’s noteworthy that Courtear Marriotte, located in Tbilisi, used to have this awards since 2010.

MANGANESE USAGE FEE MAY BE INCREASED BY 20,8 TIMES

anganese usage fee may be increased. Parliament of Georgia was submitted legal initiative of MP Malkhaz Tsereteli, which considers changes in the law on Fees for Natural Resources Usage. According to changes, fee for manganese ore increases by 20,8 times. According to existing law, amount of the tax on 1-ton 1% manganese ore is -, 012 GEL; if the parliament votes for draft law, tax will be increased to 0,25 GEL. Validation of these amendments is planned from January 1, 2014. “Through this change, fee is determined according to the amount which is just and adequate to manganese value and

demand. For comparison, in the case of reduced rate of the fee, according to 2008 data, local budget had 354 395 GEL income in terms of the fee, in 2009 - 154 113 GEL, in 2010 - 225 643 GEL, in 2011 - 257 379 GEL, in 2012 - 262 485 GEL, which is inadequate in comparison with issued products value, damage caused to environment and population health. Besides, fee increase will not significantly influence financial expenses of the producer company taking into account industrial capacity and market price”, - says the statement, explaining draft law. The explanatory card also indicates that till December 29, 2006 fee for manganese usage was 0,12GEL, after which the law was changed and the fee reduced 10 times.

KAZBEGI PLANS TO ENTER THE RUSSIAN MARKET

onitorInfo can exclusively reveal that the company Kazbegi will begin manufacturing products on the Russian market, once it obtains the necessary permit from the Chief Sanitary Inspector of Russia Gennadiy Onishchenko. According to the company President Gogi Topadze, several companies have expressed their interest in manufacturing lemonade under the Kazbegi license, though the businessman will choose the appropriate company only after he receives the permit from the Chief Sanitary Inspector.

“It is very difficult to start manufacturing in Russia. We are waiting on the permit from Mr. Onishchenko, and expect this issue to be resolved soon. Afterwards, we will choose the company,” Mr. Topadze says. He adds that lemonade is already being manufactured under the Kazbegi license in Belarus and Ukraine, and that the company will be entering the Kazakhstani market very soon. Kazbegi also plans to manufacture its products in Iran, though according to Mr. Topadze, the process is much more complicated in this regard, and negotiations are taking place at this stage.

20,21 SEPTEMBER, 2013

LEPAGE HAPPY TO STAY ON EARTH WHILE HE TAKES AUDIENCES TO THE MOON… Ex Machina, CANADA

mark in a more obvious way the deviations towards fiction, towards the imagination of the two. Towards the hallucinating oscillation between essence and appearances.”

THE FAR SIDE WAITING FOR OF THE MOON GODOT Samuel Beckett

Author and Director – Robert Lepage Web-site: www.lacaserne.net

23 SEPTEMBER, 2013

…It is even a more cynical world than the one in Shakespeare’s play… …There is no use looking for a God here, an extrasensory world, the forces of nature… William Shakespeare

MACBETH

Directed by Maja Kleczewska Web-site: http://teatropole.pl/en/macbeth/

24 SEPTEMBER, 2013

”Always on the edge between the real dialogue and the sliding into the surreal, the irrational, the virtual. In dreams. Beckett’s play includes in the performance a sort of cinematographic editing. A pathway of short, spasmodic moments which

Directed by Silviu Purcărete Web-site: www.tnrs.ro

25,26 SEPTEMBER, 2013 ‘Dark, strange and fantastical.... ‘An exquisite spectacle .... Jonathan Swift

GULLIVER’S TRAVELS

(Acting exercises inspired by the work of Jonathan Swift) Directed by Silviu Purcărete Web-site: www.tnrs.ro www.tbilisiinternational.com www.facebook.com/TbilisiInternational

BANKING NEWS caucasian business week

OSMP OPPOSES TO BANK OF GEORGIA

nother quick payment company opposes to Bank of Georgia. OSMP joins the accusations of NOVA Technology, addressed to Bank of Georgia. “Bank of Georgia created a really monopoly scheme on the tax market through carter deals and corrupt activities. Through various machinations they could seize payments of Tbilisi public transport (metro, bus and minibuses) and exclusively gets millions of GEL from Tbilisi Metro and Transport company for quick payment service”, - company management states and mentions that purposefully established Bank of Georgia subsidiary companies won the tender announced in 2006 by Tbilisi city hall. According to NOVA Technology evaluation, Bank of Georgia illegally uses millions of GEL paid by taxpayers against its competitors. They report that establishment of zero fee was preceded by numerous attempts to appropriate Nova Technology, expressed by acquiring stocks in dubious conditions, winning over of company director

General and other managers, also establishment of enslaving terms for banking service. “We already addressed to Prime Minister, Vice Premier - Minister of Economy and sustainable Development, Tax ombudsman, Tbilisi Sakrebulo, respective committees of the parliament, but unfortunately situation has not changed yet on the market. If this situation is maintained on the market and nothing is improved, over 3 thousand people will loose jobs in the near period. We consider that competition rules are violated. Concrete episodes contain criminal signs, provided by criminal code. The case deals to violations of state procurement and property management rules”, - Akaki Chargeishvili, representative of quick payment companies states. Ministry of Economy responded to the statements of Nova Technology. They said that Free Competition and Procurements Agency had to get interested in this issue. The Agency names absence of legislation for solution this problem. Another Addressee Bank of Georgia maintains silence till now.

BANK OF GEORGIA ENLARGES PLASTIC CARD PAYMENT NETWORK

ank of Georgia announced about joint project with pharmaceutical network PSP. Bank informs that from September 2, it’s possible to pay with all Bank of Georgia plastic cards in PSP pharmaceutical network, among them with American Express cards, exclusively offered by Bank of Georgia to the customers. Those who will pay with American Express Card in about 160 PSP pharmacies and pharmacy-

markets, will get 2 MR points instead of 1,5 and 1,5% cash back, instead of 1% Bank of Georgia exclusively issues American Express cards in Georgia and makes involvement of trade objects in the American Express network. The customers can use wide range of American Express cards and choose the product suitable for their demands: American Express Card, American Express Gold Card, American Express Blue Card, American Express Rewards Card and American Express business cards.

VTB BANK GEORGIA OFFERS LOANS TO BUYERS OF APARTMENTS OF BALAVARI

TB Bank Georgia announced that starting from today, buyers of apartments of development company Balavari might apply for loans, which interest rates are starting from 3.93%. The factual rate depends on volume and term of the particular loan, the bank said. For instance, loan of $200,000, issued for maximal duration (10 years), will have interest

rate of 10.33%. The bank said that the loan will be available upon presenting of ID card only, but borrower’s participation should be at least 35%. The matter concerns 13-storey building in Gldani, which construction is planned to complete by October 2014. According to VTB Bank Georgia, 1 square m of the building’s residential area costs $600, while of commercial area – $900.

LONDON STOCK EXCHANGE GROUP WELCOMES POSSIBLE PARTNERSHIP WITH GEORGIA

eorgian Ministry of Economy and Sustainable Development declared that London Stock Exchange Group welcomes possible cooperation with Georgia as strategic partner. Sharing the experience and receiving expert advice of British group is essential for development of the capital market infrastructure in Georgia, the Ministry pointed. Partnership prospects were discussed today at the meeting of Giorgi Kvirikashvili, Georgia’s Minister of Economy and Sustainable Development, and Antonella Amadei, head of international relations at London Stock Exchange Group. As Kvirikashvili declared, development of financial market is one of the main priorities of Georgian government.

CO-INVESTMENT FUND TO BE REGISTERED IN A FEW DAYS

eorgia’s Prime Minister Bidzina Ivanishvili declared today that the Co-Investment Fund will be registered in a few days. In its turn, the existing Partnership Fund will be will be converted into Sovereign Fund. To remind, the Prime Minister did not rule out in July that capital of Co-Investment Fund would reach 10 billion lari, and it will contain his own funds as well. At this time, Ivanishvili said nothing about the fund’s capital and own participation.

September 09, 2013 #20

PRO CREDIT BANK INTRODUCED NEW PRODUCT – ONLINE ACCOUNT – ON THE MARKET

ro Credit Bank stated that they have inculcated completely distinguished and innovative service in Georgian banking sphere. “Online account represents combination of distance services and channels and enables you to get perfect banking service without visiting branches” – says the statement released by bank. It also indicates that through innovation the client will save considerable time, will make various banking operations independently form any place, 7 days a week, 24-hours and in the meantime will enjoy with preferential fee.

Online account unites the following distance channels and services: Internet banking. Mobile baking/ plastic card; SMS services; phone banking; quick payment machine Pay Box; POS-terminal; ATM. Owners of online account, in addition to above-mentioned services, will be able to use self-service zone in the Pro Credit Bank branches. In the self-service zone the client can deposit money on the desired account, withdraw money from ATM and enjoy with simplified tax assignment during 24 hours. Individuals interested in banking product can buy it in any branch of Pro Credit Bank.

PUBLICITY September 09, 2013 #20

caucasian business week

STATISTICS caucasian business week

September 09, 2013 #20

161 NEW HOTELS OPENED IN GEORGIA LAST YEAR

61 new hotels opened in Georgia in a year. Geostat informs that in 2012 777 hotels and hotel-type facilities were in Georgia, in 2011 - 611. Total number of rooms in 2012 was 14 463 units, in 2011 - 12 901. The agency explains that this data includes legal persons and individual entrepreneurs (including local units and branches), registered as hotel or hotel-type facilities in ac-

IN THE SECOND QUARTER BUSINESS ANNUAL TURNOVER INCREASED, ISSUE DECLINED

n the second quarter 2013, overall turnover of the enterprises equaled to 9,8 billion GEL overall product issue – 5,1 billion GEL. In the second quarter 2012 these data respectively equaled to 9,6 billion and 5,2 billion GEL. Geostat informs that 81,3% of the total turnover comes on the large business. Medium-size business share is 7,4%, small business – 11,3%. Slightly different situation is in the products overall issue. In particular, 78,3% of the total issue comes on the large business, 8% - on the medium-size business, 13,7 – on the small business. In the second quarter of the current year overall procurements of products and services made by

enterprises equaled to 7,6 billion GEL, procurement of the products and services for sale – 5 billion GEL. Meanwhile, overall investments in the fixed actives, made by enterprises equaled to 385,7 million GEL, which is divided in the following way according to enterprise size: large business – 45,4%, medium-size business – 3,4% and small business – 51,2%. In the reporting period, 503,5 persons were employed in the enterprises, which exceeds by 400 persons to 2012 analogous period data. Compared to the first quarter of the current year, number of employees has increased by 17 800 persons. In the second quarter of the current year, 39,4% of the employees is female, 60,6% - male.

SHARE OF TBILISI IN ENTERPRISES’ TOTAL TURNOVER AND OUTPUT INCREASED IN Q2

akstat reported that Tbilisi accounted for 72% of the enterprises’ total turnover (9.8 billion lari) in the 2nd quarter. In the same period of 2012, the capital’s share made up 71.7%. Next come Kvemo Kartli – 6.7% (instead of 6.6% in the 2nd quarter of last year), Ajara – 6.2% (instead of 5%), Imereti – 4.5% (instead of 5.1%), Same-

grelo – Zemo Svaneti – 3.1% (instead of 3.2%). Tbilisi also prevails in total production (5.1 billion lari), accounting in the reporting quarter for 65.4%, instead of 63% a year ago. Next come Kvemo Kartli – 9.8% (instead of 8.3%), Ajara – 6.8% (instead of 9.4%), Imereti – 4.9% (instead of 6%), Samegrelo – Zemo Svaneti – 3.3% (instead of 3.5%).

503,5 THOUSAND PEOPLE WERE EMPLOYED IN BUSINESS IN THE SECOND QUARTER

n the second quarter 2013 average monthly salary in the business sector equaled to 793 GEL, among them - 582,1 GEL for the women. Geostat informs that according to enterprise size, average monthly salary looks like following: large business – 936,7 GEL, medium business – 646,5 GEL, small business – 497,2 GEL. It’s noteworthy that overall number of the employees in the enterprises equaled to 503,5 thousand people, which exceeds by 400 to the 2012 analogic period data. Overall number of the hired persons equaled to 484,0 thousand people. 59,8% of the total employees comes on marge

business, 15,2% - medium-size business, 25% small business. According to official data, overall expenditures of the enterprises on the personnel equaled to 1,159 billion GEL. Besides, in the total number of employees prevail trade; vehicles, household products and personal care items repair and other sectors in the following order: Trade; vehicles, household products and personal care items repair – 21,1%; processing industry – 16,6%. healthcare and social assistance – 11,3%; transport and communication – 10,6%, operations with real estate, leasing and consumer services – 9,9%.

EGG PRODUCTION REDUCED

n a year meat production increased in Georgia, diary and egg production declined. According to Geostat data, in the second quarter 2013 meat production equaled to

9,8 thousand tons, which exceeds to 2012 second quarter data by 3 000 tons. In the reporting period, in Georgia 197,1 million liters milk and 125,2 million eggs were produced. In the second quarter 2012 this data equaled to respectively 209,8 million liter and 135,4 million liters. It’s noteworthy that in the second quarter 2013, compared to analogic period 2012, number of cattle increased by 948 thousand, to 1,31 million. Among them number of cows and buffalo-cows equal to 588,3 thousand. Besides, number of poultry declined by 6,7 million, which equaled to 104,769 00 in the second quarter 2013.

cordance to Georgian legislation. It’s noteworthy that number of hotels has doubled compared to 2007. According to official statistics, last year visitors’ number equaled to 1 185 100 persons, which exceeds to 2011 data by 332 100 persons. Among them 665 500 were foreigners, 8561 persons were employed in the hotels and hotel-type facilities.

45 WINE ENTERPRISES SIGNED AGREEMENTS ON STATE SUBSIDIZING OF GRAPE WITH NATIONAL WINE AGENCY

ational Wine Agency told Sarke that as of today, 45 wine enterprises already signed agreements regarding grape purchase with the Agency. Among them are Kakheti Traditional Winemaking, Teliani Valley, Askaneli Brothers, Tbilgvino, Tiflis Wine Cellar, etc. Out of those, 15 enterprises are already started grape purchasing. The Agency expects that number of signed agreements will be doubled in 2-3 days, as more 85 enterprises have submitted applications. To remind, the mentioned agreement envisages receiving direct assistance from the state in case of purchasing 1 kg of Rkatsiteli, Kakhuri Mtsvane (white varieties) and Saperavi (red variety) for 1 lari or more. Namely, wine company will get 0.40 lari per 1 kg of Rkatsiteli and Kakhuri Mtsvane and 0.25 lari – of Saperavi.

LIVING WAGE EQUALS TO 312 LARI AS OF THE NEW CALCULATIONS

iving wage in Georgia makes up 145 lari, but the experts consider that it should be between 250 and 360 lari. To compare, living wage in Azerbaijan corresponds to 328 lari, in Armenia - to 230 lari and 390 lari - in Russia. Experts Shota Chkheidze and Paata Koguashvili point that living wage was recalculated in 2003, when “they decided to set the factual consumptions as a norm”. As a result, physiological norms are violated, namely, consumption of protein foods, the experts note. According to Chkheidze, minimum living wage must

be 360 lari, while as of Koguashvili - 312 lari. Soso Archvadze, former deputy chairman of Sakstat, considers that living wage must be 230250 lari. Calorie content of food in the current basket is estimated at 2,300 kcal, while standard recommended by the World Health Organization is 2,450 kcal, he notes. Since 2006, i.e. after transition to the current methodology, the value of minimum wage is decreased by 30%, Archvadze notes. He sees one of the main problems is ratio of food and non-food expenses (70% and 30%, respectively). According to the expert, the ratio should be changed (50%/50%).

AZERBAIJAN September 09, 2013 #20

caucasian business week

AZERBAIJAN STILL INTERESTED IN NABUCCO IMPLEMENTATION

zerbaijan says that the Nabucco West pipeline designed to transport Caspian natural gas to Europe has not lost its significance as Industry and Energy Minister Natig Aliyev said that the project can still be implemented. “Two projects -- Nabucco West and Trans-Adriatic Pipeline -- have different goals and the choice of TAP does not rule out the implementation of Nabucco,” Aliyev told media on Sept. 2. In late June, the consortium of Azerbaijani Shah Deniz field development officially announced the selection of TAP as the route to transport its gas to Europe. Another pipeline which was vying for Azerbaijani gas transportation to Europe was Nabucco West. The decision marked the launch of the Southern Gas Corridor -- a project which will enable Europe to diversify its supply sources and increase its energy security. Referring to the project realization, Aliyev said that the main issue is the amount of resources.

“The implementation of Nabucco will depend on expansion of the resource base - natural gas volumes, while the implementation of the TAP project should give an impetus not only to gas extraction, but also discovering new reserves. “I am sure that Azerbaijan has great opportunities in gas extraction. The country can extract 40 billion cubic meters of gas per year after 2020. It will be possible if TAP and TANAP launch on time and if partner companies continue working hard,” he said. He said that the choice of the TAP project as an export route for Azerbaijani gas will give a big push to increasing gas production in the country. “This project will push other foreign companies operating in Azerbaijan to speed up gas production in the fields where they work.” Aliyev also noted that no increase is expected in the demand for natural gas for TAP. Turkey also recently announced that the country is still interested in the project and considers its implementation.

Turkish Minister of Energy and Natural Resources Taner Yildiz said that considering the growing demand for natural gas in the European Union, Turkey is confident that the Nabucco project will also be implemented. According to him, Nabucco and TAP are not rival projects, on the contrary, they could complement each other. Earlier, Bulgarian President Rosen Plevneliev said that Bulgaria will work together with its partners for its implementation. “I am sure that the Nabucco West project retains its strategic importance for the European energy policy and has its place on the map of Europe,” he said. However, in late August, Romania rejected the Nabucco gas pipeline project. Romanian President Traian Basescu appealed to the European Union to regain 23 million euros spent by Bucharest on the Nabucco West project to help the country reduce its dependence on Russian giant Gasprom. According to the Romanian president, Bucharest has the right to receive compensation given that his country has never hesitated to make a choice between the Russian gas pipeline project South Stream and Nabucco, firmly expressing support for participation in the latter project as it ‘complies with EU interests’. Nabucco West is a short-cut version of the Nabucco project, which envisages construction of a pipeline from the Turkish-Bulgarian border to Austria. TAP is designed to transport gas from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and then to Western Europe. Initial capacity of the TAP pipeline will be 10 billion cubic meters per year with the possibility of expanding it to 20 billion cubic meters.

TURKEY UPS EXPORT TO AZERBAIJAN

he Turkish Council of Exporters reported that the export of Turkish goods to Azerbaijan amounted to $250.3 million in August 2013 compared to $213.5 million for the same month of 2013. Thus, Azerbaijan’s share in Turkey’s exports amounted to 1.2 percent. The range of goods exported to Azerbaijan ( including the Nakhchivan Autonomous Republic ) consists of wood products (worth $ 33.7 million),

cement ($13.7 million), gems and jewelery ($8.4 million), iron and steel products ($ 5.9 million), non-ferrous metals ( $ 7.2 million), leather goods ($1 million, other products ($410,000), electricity ($ 25.5 million), carpets ($4 million) , chemical products ($ 44.7 million), machinery ($15.6 million), textiles ( $1.5 million). The largest export of Turkish goods fell to Germany - $992 million, Iraq - $866 million and Great Britain - $618 million in August 2013.

AZERBAIJAN-ISRAEL CHAMBER OF COMMERCE DUE TO OPEN SOON

he official opening of the Azerbaijan-Israel chamber of commerce and industry is expected in the near future. The Israeli government considers the activity of the chamber of commerce very important and is ready to provide its utmost support for its operation, head of the economic affairs department at Israel’s Foreign Ministry, Asher Yarden, said at the first meeting of the founders of the Israeli-Azerbaijani chamber held in Tel Aviv.

The meeting was attended by over 85 percent of the founders of the chamber. Representatives of a number of ministries and the international federation of trade chambers attended as well. Alex Kaplun, who is the initiator of establishing the Israel-Azerbaijan chamber of commerce, was elected its president and chairman of the board of directors. During the meeting the board of directors and the executive director of the chamber were also elected. “This is another step towards the development of economic and cultural relations between Israel and Azerbaijan,” Kaplun said, noting that the opening ceremony of the chamber will be held both in Tel Aviv and Baku in the near future. The chamber head termed the establishment of the trade chamber as an important economic development for the two countries and called on the state-run and private bodies of Azerbaijan to join and support the newly established organization. According to Kaplun, a meeting of the board of directors will be held in the coming days and prompt decisions will be made there on launching the organization’s activity. The focus of the chamber’s work will be high

technologies including telecommunication technologies, IT technologies, cyber security, mobile and internet applications. Israel recognized the independence of Azerbaijan on December 25, 1991. Diplomatic relations between the two countries were established on April 6, 1992. In 2012, the trade turnover between the two countries was $4 billion. Azerbaijan plans to sign an agreement on canceling double taxation and cooperation in the agriculture sector, and an agreement on simplification of the visa regime for persons with diplomatic and service passports. Azerbaijan and Israel are focusing on many areas, and the four areas that will be relevant are telecommunications, agriculture, water supply and medical technologies. Israel recently discovered gas fields onshore and intends to use the experience of Azerbaijan in this regard. Israel is also willing to assist Azerbaijan in the diversification of its economy. According to the Foreign Ministry of Azerbaijan, about 42,000 Jews live in the South Caucasus republic.

IRAN EXPORTS 4,920 TONS OF PRODUCTS TO AZERBAIJAN THROUGH PORTFOLIO TRADE

roducts worth $540,000 were exported from Iran to Azerbaijan through portfolio trade in the first five months of this year (year starts on March 21 in Iran), ISNA agency reported. Head of the Astara city border customs Jahangir Bakhshi said that Iran exported 4,920 tons of products to Azerbaijan in the first five months. A portfolio trade is being mainly carried out between Iran and Azerbaijan and the majority of the goods are transported to Azerbaijan by tourists, Bakhshi said. He noted that during this period some 276,890 tourists have used the Astara post. According to Bakhshi, the goods most frequently exported to Azerbaijan include plastic and glass dishes, ceramics, fruits and vegetables. He said that over the past five months some 89,000 tons of non-oil products worth $202 million were transported through Iran to Azerbaijan, Russia, Georgia, Ukraine, Turkey, Iraq and UAE. Electric equipment, motor cars, chemical products, furniture, cotton and other goods were mainly transported through transit to these countries, Bakhshi said.

AZERBAIJANI OIL FUND’S GOLD PURCHASES REACH NEARLY 25 TONS

he state oil fund SOFAZ, an entity that accumulates and manages Azerbaijan’s oil and gas revenues, purchased 24,887 kilograms (800,146 ounces) of gold as of August 26, SOFAZ toldTrend news agency. Some 12,007 kilograms (386,018 ounces) were delivered to Azerbaijan. According to the plans, SOFAZ buys gold in batches, and this process will take place over two years. The fund began buying gold in the first quarter of 2012, and as of July 1 the amount of the purchased gold amounted to 22,399 kilograms (720,146 ounces). The first batch of gold (32,150 troy ounces) was delivered to the country on January 11, while the second batch was brought on February 1 and the third batch on March 1. Earlier SOFAZ head Shahmar Movsumov said the fund plans to bring its gold reserves to 30 tons by late 2013. SOFAZ buys gold on the London Metal Exchange. SOFAZ was established in 1999 with assets of $271 million. The main purposes of the fund are the accumulation of funds and placement of assets abroad to minimise the negative impact on the economy, preventing the ‘Dutch disease’, to ensure savings for future generations, and to maintain the current social and economic standards in the country. According to SOFAZ’s investment strategy, up to five percent of the fund’s total investment portfolio may be invested in stock, up to five percent in real estate, and another five percent in gold. As of July 1, the oil fund’s assets increased by 1.6 percent compared to the beginning of 2013 (over $34.129 billion), and amounted to over $34.678 billion. azernews.az

12 VEGETABLE OIL PRODUCTION INCREASED IN ARMENIA FOR 2.6 TIMES

ARMENIA caucasian business week

ARMENIA OCCUPIES 79TH POSITION IN WORLD ECONOMIC FORUM’S REPORT

he vegetable oilproduction volume increased for 2.6 times in the Republic of Armenia in January-July of 2013 in comparison with the same period of the previous year. The production of animal oil has recorded a growth of 8.1 percents. As reports “Armenpress” in accordance with the data of the National Statistical Service of Republic of Armenia, our country produced 2 thousand 280.4 tons of vegetable oil during the first seven months of the current year, while in 2012 our country produced only 864.8 tons of vegetable oil. As reports “Armenpress”, in January-July of the current year the Republic of Armenia produced 318.2 tons of animal oil, while this number equaled to 294.4 tons in 2012.

CIGARETTE PRODUCTION RECORDS PALPABLE GROWTH IN ARMENIA

he cigarette production volume recorded a growth of 71.9 percent in the Republic of Armenia in JanuaryJuly of 2013 in comparison with the same period of the previous year. 4 billion 69 million 300 thousand pcs (over 203 million boxes) have been produced during this period. As reports “Armenpress” in accordance with the data of the National Statistical Service of Republic of Armenia, our country produced 2 billion 367 million 400 thousand pcs of cigarette during the first seven months of the previous year. At the same time, in accordance with the data of the State Revenue Committee under the Government of the Republic of Armenia, the cigarette export has recorded a growth of 39 percent during the first six months of the current year in comparison with the same period of the previous year thus reaching 2 billion 862 million 300 thousand pcs.

ALCOHOLIC BEVERAGES PRODUCTION ACTIVATED IN ARMENIA

he ethyl alcohol and wine production volume recorded a growth of 52.9 and 30.1 percents respectively in the Republic of Armenia in January-July of 2013 in comparison with the same period of the previous year. The beer production volume was increased by 11.3 percents. As reports “Armenpress” in accordance with the data of the National Statistical Service of Republic of Armenia, our country produced 2 million 991 thousand 900 litres of ethyl alcohol during the period of the first 7 months of the current year, while in the first seven months of 2012 the Republic of Armenia produced only 1 million 956 thousand 900 litres. The wine production volume reached 2 million 962 thousand 700 litres, while in the previous year this number equaled to 2 million 277 thousand 400 litres. The beer production volume reached 9 million 385 thousand 800 litres during the period of the first 7 months of the current year. In the first seven months of 2012 the beer production volume was 8 million 282 thousand 300 litres.

ICE CREAM PRODUCTION INCREASED BY 5.3 PERCENT IN ARMENIA

ce production volume in the Republic of Armenia in January-July on 2013 increased by 5.3 percent compared with the same period of the previous year being 3 089 800 liters. According to information of National Statistics Service in the first seven months of 2012 in Armenia were produce 2 933 100 liters of ice cream. “Armenpress” reports that in July of current year has been produced 620 400 liters of ice cream. In Armenia around ten companies produce ice cream.

September 09, 2013 #20

he World Economic Forum issued the World Competitiveness Report for 2013-2014, where the Republic of Armenia occupies the 79th position. As reports “Armenpress” this year’s prospects perspectives turned out to be more positive in comparison with the previous year. For the fifth year in a row, Switzerland ranks as the most competitive country in the world. It is

followed by Singapore, Finland, Germany and the United States, which this year reverses a four-year downward trend. The World Economic Forum’s Global Competitiveness Index finds three sub-Saharan African countries - Burundi, Guinea, and Chad - holding up the bottom of 148 countries surveyed. The study provides grounds for optimism that the global economy may finally be stabilizing following the freefall of recent years. The Global Competitiveness Index notes some of the southern European countries, in particular Greece and Spain, are moving up in the rankings after several years of decline. The World Economic Forum chief economist, Jennifer Blanke, says this might indicate the reform process, which has been under way for the past couple of years, is starting to bear fruit. She says a number of things that were of great concern a year ago have not come to pass. She notes, for example, the predicted breakup of the

eurozone did not happen and the United States did not hit the debt ceiling. “Really, we are seeing signs of life in the global economy. But, at the same time, things are slow. You still see a number of European and other advanced economies struggling,” Blanke said. “You see a slowdown among the developing countries. And so, I think our main message coming out this year is the importance of ‘You know, it is great we have got over the short-term firefighting, but now let us get back to business in terms of the sorts of reforms that are needed.’ So, loosening up labor markets, making them more effective, and things of that nature.” Blanke says prospects for the economy going forward are good if governments get back to the hard work of attacking some of these structural issues. The United States, which has dropped in the WEF’s rankings for the past four years, is finally making a turnaround. This year it has moved up two places into fifth position. The report attributes the U.S. rise in the rankings to a perceived improvement in the country’s financial markets, as well as greater confidence in its public institutions.

RUSSIAN DIRECT INVESTMENTS MAKE UP 39.5% OF FOREIGN DIRECT INVESTMENTS INTO ARMENIA’S ECONOMY

ussia’s direct investments make up 39.5% of foreign direct investments into Armenia’s economy, Evgeny Vinokurov, the head of the Eurasian Bank’s Center for Integration Studies, said in an interview with ARKA News Agency. He said the direct investments of Customs Union member countries in Armenia almost fully con-

sist of Russian investments, which amounted to $1.93 billion in late 2012. Kazakhstan and Belarus’ direct investments in Armenia’s economy total $13 million. “The amount of Russian investments in Armenia is significant especially given that Armenia is the country with ninth largest GDP in the Commonwealth of Independent States plus Georgia and the fifth country for its accumulated Russian in-

vestments in the region. Russia is Armenia’s largest investor,” Vinokurov said in his interview. He said Russian direct investments in Armenia are intended for modernization of backbone sectors of the economy – railways, gas transportation, electric energy, nonferrous metals industry, banking and insurance as well as mobile telecommunication, Internet and data transmission. ARKA

KAZAKHSTAN SUPPORTS ARMENIA’S DECISION TO JOIN CUSTOMS UNION

azakhstan supports the decision of the Republic of Armenia to join the Customs Union. This was reported by the Minister of Economic Integration of Kazakhstan Zhanar Aitzhanova during the press conference held on September 4, as reported by Armenpress, quoting ITAR TASS. “The position of Kazakhstan will be expressed, I think, by the highest political level. But generally, the Customs Union is an open organization for the new participants”, - noted Zhanar Aitzhanova, responding to the journalists’ questions. “If it is the decision of the country’s political authorities, we support it”, - added the Minister of Economic Integration of Kazakhstan. According to Zhanar Aitzhanova, in case of joining the Customs Union, Armenia will have to

pass some process-related procedures, particularly, to harmonize its legislation to the one of the organization. Armenpress was informed from the Department for Mass Media and Public Relations of the Armenian President’s Staff that in the result of the negotiations on September 3, 2013 in Moscow the Presidents Sargsyan and Putin confirmed the aim of the Republic of Armenia and the Russian Federation in the direction of further development of economic integration processes in the Eurasian territory. In that context the President of the Republic of Armenia Serzh Sargsyan announced about the Armenia’s decision to join the Customs Union and the necessity of implementation corresponding steps for that aim and in future about participating in formation of the Eurasian economic union. The President of the Russian Federation Vladimir Putin expressed his support to the abovementioned decision of Armenia and informed about the readiness of the Russian side to support the process. Earlier Armenpress published the speech of the Armenian President Serzh Sargsyan during the press conference on the results of the negotiations with the Russian President Vladimir Putin:“Honorable Mister President, respectable representatives of media, I want to begin with gratitude word directed to Mister Putin for just ended open negotiations, atmosphere of confidence and arrangements directed to further development of Armenian-Russian relations. As it was said in constructive atmosphere together with Russian President we discussed the main issues of strategic partnership of our countries – in political, trade-economic, energy, humanitarian and other fields. Naturally we spoke about regional issues and settlement of Nagorno-Karabakh conflict. I confirmed once more Armenia’s readiness to settle the conflict exclusively peacefully on the base

of principles of self-determination of people, retraining from threat or use of force, territorial integrity of states. I reconfirmed our readiness to continue looking for solutions for the crisis on the base of settlement principles and elements reflected in joint statements of Russian, American and French Presidents. One of main topics of our negotiations was the necessity of infrastructure reforms in Armenia, securing modernization and diversification of economy where Russia is represented with many enterprises. We discussed in details the prospective directions of our cooperation. We also discussed issues relating Eurasian integration and I confirmed Armenia’s wish to join Customs Union and be involved in the process of formation of Eurasian economic union. 20 years ago Armenia together with Russia and other CIS member states formed its military security system in format of Collective security treaty. During these decades the system approved its vitality and efficiency. Today our CSTO partners form new platform of economic cooperation. I have said many times that being in the same system of military security it is impossible to isolate yourself from corresponding geo-economic territory. This is a rational decision and it comes from interests of the Republic of Armenia. This decision is not refusal from dialogue with European organizations. During these years Armenia in support of its European partners held serious institutional reforms. Nowadays Armenia in this sense is much more efficient and competitive country as it was several years ago. Ladies and gentlemen, The results of our negotiations are reflected in our joint statements signed with Vladimir Putin several minutes ago. I am sure that realization of all arrangements will give new impetus to strategic allied partnership. Mister President, I am grateful for warm reception and made arrangements”. ARMENPRESS

CIS September 09, 2013 #20

caucasian business week

INTERNET POLL FOR COMPETITION OF STAND OF INNOVATIONS CONTINUES

he competition-presentation will be held for the fourth time as part of WorldFood Moscow exhibition - the main event of the 2013 fall, where suppliers and manufacturers of food products meet, new relations and contacts are set up between professionals of all sectors. WorldFood Moscow is a prospectous space for introducing new products that will be soon sold at leading stores of the Russian Federation. The competition-presentation the Stand of Innovations is an excellent opportunity for guests to get acquainted with the most intreresting innovations from Russian and foreign participants in the WorldFood Moscow exhibition. The winner of the Stand of Innovations will be determined by visitors on the exhibition webiste. A total of 23 products will take part in the 2014 competition. The following products will be introduced at the competition: Blueberry fast-frozen from Vologodskaya Iagoda company, packed in 300 gram multilayer polymer packs. Wild strawberry fast-frozen from Vologodskaya Iagoda in 300 gram multilayer polymer packs. Drinking yougurt VILOVI from Univita company. The product is made of milk and fresh juicy berries, while the new and attractive packing enables to fully enjoy the natural taste. Frozen confectionaries of Laime from Univita company. Desserts made by modern methods are frozen to save freshness, natural charatcer and richness of taste. Chocolate bonbons of Vodka from Sweeteskim Trade. Bonbods of black chocolate with spirits. Fruits sugar candies of Jake with vitamin C from Bax-Comfott company. Candies without sugar with fruits taste enriched with vitamins and natural propolis. Olive Oil CARBONELL from Carbonell company. The new format of spray enabels to equally share required volume of oil and enjoy the dishes. Mini mozzrella Laime from Univita company. Fresh cheese mozzarella in 8 gram balls without conservantes and citric acid and genetically modified bodies. Crackling and baked Crunchy Bionova from

Nova Product AG company. Crackling and baked Crunchy BIONOVA without sugar - tastful and useful breakfast. A set for home cooking of macaroons from A Damie confectionaries manufacturer. The set enables to cook the famous dessert independently without equipment and additional ingredients. Natural frozen semi-finished chicken products PETELINKA from shopping mall of PETELINO. Natural diet product of 100% chicken fillet and natural spices. White Cottage Salad SPRING MIX from BELAYA DACHA Trading company. The product with vitamins provides a good mood in any season of the year: crackling iceberg, radish and bright carrot. Salad Italian Classics DIMMIDISI from Vegetoria company. Finished salad - fresh salad mix, grown in Italy: salads of frisse, red radish, corn. Salads of Fresh Menu DIMMIDISI from Vegetoria company. Tastful and useful salads, ideal for delicious, convenient and fresh dinner. All ingredients are divided among each other to maintain the freshness of salad as long as possible. Sunflower with taste of Leksiki from Mater of Taste company. Leksiki are calibrated and fried sunflower of sort of confectionaries prepared by patented technologies with tastes and aromas of bacon, cheese, mushroom and so on. Snack white cottage Bracing Radish from White Cottage Trading. The best fresh radish, scrupulously washed, cut and slightly dried. Fresh soups DIMMIDISI from Vegetoria company. Fresh soups with home taste of chosen products. Made in Italy due to traditional Italian recipes. The fused cheese with blue mold MEMEL BLUE from Univita company. The fused cheese of MEMEL BLUE is a refined product with sharp taste made of special cheese with blue mold. Been cut and fast-frozen TASTE LACE from VOLOGODSKAYA BERRY company packed in 400 gram multilayer polymer packs. Halvah takhinny EAST STAR from Siberia Nuts Company. Takhinny halvah is made of inner part of seed of sesame. The very part of the seed contains a major part of biologically active substances. Tea Live Taste B-12 from DinLun company. The tea from CHina highlands of pressed leaves. Potato chips LONG Chips of PERNES L company. Thanks to special recipe and highest European standard quality of the longest potato chips LONG CHIPS posses high potential of growth. Figured chocolate in the form of an apple DLKI GUBOR from SPLAV company. Apple chocolate of milk chocolate - 18 pieces of pleasure for true clients of genuine milk chocolates. The product with major part of votes of the website visitors will be given a competition winner prize. The voting will last up to Septemebr 12. The voting and invitation tickets to see the samples at the exhibition are available on the webiste www.world-food.ru

ARMENIA CHOOSES RUSSIAN TRADE DEAL OVER EU

rmenia has decided to hang its hat with its former Soviet ally Russia instead of joining a European free-trade agreement, President Serzh Sarksyan announced after meeting with Vladimir Putin. Armenia said it would join Russia in the Customs Union, as well as engage in the Eurasian integration process instead of negotiating a free trade agreement with the EU. The move is seen as a political victory for Putin, who has been rounding up former Soviet states to rival the EU, promising lower gas prices and other trade perks. “Russia supports the decision by Armenia to enter the customs union ... We will fully work for this to happen,” Putin said at the bilateral talk at his countryside house outside of Moscow . Russia is Armenia’s largest trading partner and the largest foreign investor in the small, landlocked Caucasus country. Trade in 2012 reached $1.2 billion and Russian capital investment was over $3 billion, or nearly half of Armenia’s foreign investment, Putin said. In July Armenia engaged in technical talks on a ‘deep and comprehensive free-trade agreement’ (DCFTA) with the EU, and observers largely expected the country to initiate a free trade agreement with the EU at the Vilnius summit in late November. The EU has stated both publicly and privately membership of the Russia’s Eurasian Customs Union is “incompatible” with DCFTA. The three-member customs union of Russia, Kazakhstan and Belarus was founded in 2010 as a

counterweight to the EU. Putin hopes to expand it into a ‘Eurasian Union’- a political and economic union of post-Soviet states like Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. While President Putin said earlier the Eurasian Union would be built upon the ‘best values of the Soviet Union’, critics claim that the drive towards integration aims to restore the ‘Soviet Empire’. It has been suggested the Eurasian Union could also include other countries that have been historically or culturally close, such as Finland, Hungary, the Czech Republic, Bulgaria, Vietnam, Mongolia, Cuba and Venezuela. This is expected to incorporate the countries into a common body where Russian would be the common language of communication and economic cooperation. Russia has so far failed to lure Ukraine away from an EU trading alliance and relations with Belarus have soured after they detained and jailed the CEO of Russia’s largest potash producer, Uralkali. Rt.com

Kazakhstan

otal SA (FP) expects Kashagan, a Caspian Sea oilfield in Kazakhstan waters, will start output imminently, according to Chief Executive Officer Christophe de Margerie. “We are very close,” de Margerie said in an interview at an employers’ group meeting. “We had hoped it would happen already but we had a few little lastminute problems.” Kashagan, slated to produce as much as 370,000 barrels of oil a day, was due to start output by June, about eight years later than

first planned and with costs nearing $46 billion, almost double early estimates. Exxon Mobil Corp., Royal Dutch Shell Plc, Eni SpA, Inpex Corp. and KazMunaiGaz also own stakes. Total is counting on the field to help meet production targets. The high-pressure reservoir with lethal levels of hydrogen sulfide 70 kilometers (44 miles) from shore, is one of the world’s biggest finds of the past four decades. “We are optimistic now” about the startup of Kashagan, de Margerie said outside Paris. “It’s happening imminently.”

RUSSIA AND CHINA WARN OF ‘SPILLOVER EFFECT’ ON GLOBAL ECONOMY FROM US STIMULUS TAPERING

he looming wind down of the Fed’s multi-billion dollar monetary stimulus package could have a profound impact on the global economy, trade partners Russia and China told the G20 summit in St. Petersburg. China has urged the United States to be “mindful of the spill over effects” of the planned tapering of the country’s monetary stimulus, as Zhu Guangyao, China’s vice finance minister said during a meeting with Russian President Vladimir Putin at the G20 summit. The US should “work to contribute to the stability of the global financial markets, and the steady recovery of the global economy,” Zhu added. The vice finance minister also played down the possibility of a bailout for any country in financial difficulty. Talking exclusively to RT, Russia’s former finance minister Aleksey Kudrin said the end of “easy money” in the US “is going to fundamentally influence the global economy”. However, though the tapering could be extremely painful right now, countries around the world need to reconcile the thought that such money injections could be just temporary, Kudrin added. “Now we are witnessing an attempt to win time to reform the economy, to consolidate budgets, to cut expenses, to increase taxes, to overhaul social welfare, to stimulate some of the industries. … At a certain point this additional stimulus will have to be gone and the economy will have to function on its own,” he said. “Will it [the global economy] be able to? Which countries won’t cope with the situation? We still don’t know. So, we’ll have to adapt to this new

kind of situation. This is going to be a challenge”, Kudrin concluded. Emerging markets have been suffering, after Fed Chairman Ben Bernanke raised the possibility of winding down the Federal Reserve’s $85 billion per month bond-buying programme in May. The announcement triggered a selloff in emerging market currencies, stocks and bonds and a flight to the dollar. Since then emerging markets have seen an exodus of cash, with their 20 most-traded currencies falling more than 5 percent. Russia and China’s ally in the BRICS club of emerging economies - India - has been the hardest hit by the expectations of the Fed’s action. International investors have withdrawn nearly $12bn from India’s markets since the beginning of June, sending the Rupee to record lows. Arvind Mayaram, economic affairs secretary at India’s Ministry of Finance also expressed concern about the end of the monetary stimulus programme: “I think there should be a very strong statement on the G20 having a consensus on the concern about the spill over effects.” The Fed is expected to take its first steps to reduce the extraordinary monetary stimulus this month, with potentially huge implications for a global financial system that has come to depend on a cheap and abundant supply of dollars. Rt.com

WORLD NEWS September 09, 2013 #20

caucasian business week

BACK TO BUSINESS: OPTIMISM AMID UNCERTAINTY

The 2013 A.T. Kearney Foreign Direct Investment Confidence Index® Investors are still in a holding pattern amid economic uncertainty, but they are nonetheless upbeat.

Respondents are optimistic about the United States, with 63 percent expecting some growth. Although U.S. growth since 2009 has been less than inspiring, glimmers of hope are appearing. U.S. workers are more competitive, exports are improving thanks to a weaker dollar, the housing market may be finally recovering, and the production of unconventional oil and gas is surging. Yet growth may still be disappointing by historical standards, and fiscal gridlock still poses a major risk. Respondents are pessimistic about Europe, however, with 62 percent anticipating no growth or a return to recession over the next three years. Six years since the global economic crisis began, Europe may indeed face a lost decade similar to Japan’s in the 1990s, particularly in the eurozone’s periphery countries. More than half of respondents say FDI has already returned to pre-crisis levels at their companies or will within the year, and another 20 percent expect FDI recovery by 2014 (see figure 6). However, one-quarter of respondents say that pre-crisis FDI levels are at least two years away. This continued reticence by many investors will likely keep overall FDI levels below full capacity again in 2013.

t seems like a lifetime ago, yet it was only 2007 when the global economy and foreign direct investment (FDI) soared to all-time highs. Then, standstill: a housing market collapse, banking crises, rising unemployment, and falling consumption, leading to two years of stagnant growth and delayed investment. FDI took a major hit in 2008 and 2009, with a miniscule rebound in 2010. At last, investors appear ready to get back to business. Despite fiscal policy gridlock and unresolved debt issues plaguing many developed countries around the world, the executives we surveyed for the 2013 A.T. Kearney Foreign Direct Investment Confidence Index® are surprisingly optimistic about the global economic outlook. The FDI Confidence Index, in its 13th edition since 1998, ranks countries on how political, economic, and regulatory changes will affect FDI (see figure 1). Based on a survey of more than 300 executives from 28 countries, we examine where global investment dollars are likely to be headed. At the top of the 2013 FDI Confidence Index is the United States, which leads for the first time since 2001 as it makes progress toward sustainable, steady growth— even, in the context of serious policy uncertainty, as it works to resolve its debt issues and broader fiscal challenges. Other developed nations in the top 10 this year include Canada (4th) and Australia (6th), popular for their unconventional fossil fuels and minerals, and Germany (7th) and the United Kingdom (8th), which offer investment opportunities that are perceived as safe and reliable despite Europe’s ongoing debt and political issues.

fiscal uncertainty, continued eurozone troubles, and a possible economic slowdown in China. Indeed, optimism seems to have a new meaning today among investors chastened by economic malaise. For example, 73 percent of executives surveyed for the 2010 Index said they expected global economic recovery that year or in 2011; needless to say, those predictions did not fully come to pass. When asked the same question this year, only 34 percent say the economy will recover this year or next (see figure 3). At the same time, half say they are more optimistic than they were a year earlier (see figure 4). Whether this increased optimism proves justified remains to be seen, of course, but this new attitude could play a positive role in the ongoing recovery.

One thing is certain: FDI levels have not remained below pre-recession levels because of a lack of cash. Of the 68 percent of respondents whose companies’ FDI still lags pre-crisis levels, only one-third cite a lack of funds as the reason. Seventy-one percent cite skittishness about the macroeconomic situation as the primary culprit, and 34 percent say they are waiting for discounted prices (see figure 7).2 In the meantime, companies are amassing record holdings. For example, U.S. firms in the S&P 500 held $900 billion in cash at the end of June 2012, up 40 percent from 2008. Canadians’ holdings are up 25 percent, and Japanese liquid assets are up 75 percent since 2007. This surplus could fuel more rapid global growth when the macroeconomic clouds finally dissipate.

Meanwhile, emerging markets continue to charge ahead. They account for 16 of the top 25 countries in the Index, with China (2nd), Brazil (3rd), and India (5th) all in the top five once again. Led by Singapore, Thailand, and Indonesia, Southeast Asia’s more empowered consumers continue to attract investors. Mexico, with strong manufacturing and exports and close links to the United States and Canada, is in the top 10. Chile and Argentina reenter the rankings after a more than decade-long absence, highlighting South America’s increased consumer spending and rich endowment of natural resources.

Most respondents now expect slow, steady growth across most of the world—with the notable exception of Europe—over the next three years (see figure 5). The outlook is rosiest for developing markets, with 78 percent of respondents expecting some growth, in spite of economic malaise in developed countries, which still are the source of most of the investment in developing countries

Recalibrated Expectations

At the onset of the global recession, global FDI dropped from a record $2 trillion in 2007 to $1.8 trillion in 2008 and $1.2 trillion in 2009 as profits fell, credit conditions tightened, and asset values plummeted.1 The next year registered a modest gain, with FDI increasing to $1.4 trillion in 2010, reflecting continued concern about economic prospects. In 2011, global FDI continued to improve to $1.7 trillion. The following year, however, the ongoing effects of the economic and sovereign debt crises and concern over systemic uncertainty took their toll (see figure 2). Global FDI took a major step backward, dropping 18 percent to $1.4 trillion. Our results in this year’s Index suggest that caution will remain a major sentiment among investors over the next three years. The executives surveyed for the 2013 Index report that they are more upbeat today about the world’s prospects than in years past. Yet they are holding back investment amid a range of near-term risks, including U.S.

Upside Opportunities, Downside Risks

For heartened investors, this year’s Index suggests important opportunities in both developed and developing nations. Asia is home to a growing number of economic powerhouses, Latin America’s major economies are gaining ground, Europe has many bright spots despite economic unrest, hubs in the Middle East and Africa thrive despite regional instability, and the United States has become a beacon of raised expectations. More upbeat investor attitudes point to the potential for better prospects in the years ahead, even as a number of near-term risks loom large and could potentially imperil progress. As investors reorient to this rapidly changing economic landscape, they will play a major role in a strengthening recovery. Whether they choose to deploy their cash reserves in the face of continued uncertainty remains to be seen. atkearney.com

CENTRAL AND EASTERN EUROPE IN THE FACE OF CRISIS. ENGINES OF ECONOMIC GROWTH IN THE REGION

nnovativeness, competitiveness, development of SME sector – are the engines of economic growth in Central and Eastern Europe. The above mentioned conclusion was reached by participants in the plenary session „Central and Eastern Europe in the face of crisis”, opening the third day of the debates of the 23rd Economic Forum in

Krynica Zdroj. The discussion moderated by Robert Lane Green, a Berlin correspondent of „The Economist”, was attended, among others, by Jan Krzysztof Bielecki, former prime minister of the Republic Poland and chairman of the Prime Minister’s Economic Council; Gunter Verhuegen from Germany, former President

of the European Commission, currently a lecturer at Viadrina University; Laszlo Andor from Hungary, EU Commissioner for Employment, Social Affairs and Inclusion and Peter Stracar from the Czech Republic, Director General for Central and Eastern Europe at General Electric. According to Verhuegen, Central and Eastern European economies should not be secluded from the West, meanwhile the European Union suffers from the crisis of leadership. - European policy must focus on competitiveness in the global market – convinced Verhuegen. He pointed that Central and Eastern European countries were still making up for civilization delays, caused by communism and often they were tempted to make shortcuts. - It is not possible that Mr. Kaczynski will thump the table and the Polish economy will become innovative overnight – said the regular guest in Krynica’s conferences explaining that innovativeness was a result of many factors and processes, including first of all spending for research and de-

velopment. According to Jan Krzysztof Bielecki the biggest burden of the economies of our region has been the public debt. – Debt has been accumulating dramatically and we have to deal with it somehow – said Bielecki, although be did not give any recipe. The former prime minister said also that Polish economy was under a great influence of the German economy. – Increase of German GDP by one percent leads to a growth of Polish GDP by 150 basis points – he concluded. Peter Stracar informed that General Electric had 20 plants operating in Central and Eastern Europe, with employment of nearly 25 thousand workers. - We rely on innovations and new technologies, we produce airplane engines in our plant in the Czech Republic, which is the only such facility in Europe – he said with pride. Czech mentioned also that the US spending for science and research totalled 2 percent of the GDP and it was also 2 percent of GDP in European countries, but the domestic products were considerably different. Laszlo Andro regretted that young, educated Hungarians searched for jobs at corporations, instead of trying to establish their own businesses. – It is even something out-of-fashion – he said. forum-ekonomiczne.pl

TBILISI GUIDE September 09, 2013 #20

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 caucasian business week

September 09, 2013 #20

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.