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BUSINESS WEEK September 16, 2013 #21

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September 16, 2013, Issue 21

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GEORGIA NEGATIVE FDI WAS FIXED FOR 21 COUNTRIES IN Q2

ased on preliminary data, Sakstat reported that negative showing of foreign direct investments (FDI) was fixed for 21 countries in the 2nd quarter. Pg. 8

GEORGIAN VODKA PRODUCERS INTEND TO ENTER THE RUSSIAN MARKET

fter wine making companies, Georgian vodka producers are preparing to enter the Russian market. Pg. 5

LEGAL PROCEEDINGS UNDERWAY AGAINST RAKIA GEORGIA

nvestigation Service of the Finance Ministry announced that criminal proceeding is launched against Gela Mikadze, former director of RAKIA Georgia, due to accusation of large misappropriation. Pg. 6

FLYGEORGIA AIRPLANE REMAINS SEIZED

MFO’S FIRST CREDIT CARDS TO COME OUT IN DECEMBER

AZERBAIJAN INVESTMENTS WORTH ABOUT $4 BILLION MADE IN AZERBAIJAN’S ENERGY SECTOR - MINISTER

urrently, Azerbaijan is not only the country that independently meets domestic demands in all energy resources, particularly in electricity, but also the country that exports electricity. Pg. 10

ARMENIA ARMENIA’S ACCESSION TO CUSTOMS UNION MUST BE PRECEDED BY WORKING OUT ROAD MAP, EXPERT SAYS

rmenia’s accession to the Customs Union must be preceded by drawing up a roadmap that will take into account its political and economic realities. Pg. 11

CIS ABU DHABI TO INVEST RECORD $5BN IN RUSSIAN INFRASTRUCTURE

WORLD NEWS SIX OF WORLD’S TOP 20 UNIVERSITIES ARE IN UK

RAS AL KHAIMAH SHEIKH WILL BE ONE OF THE PARTNERS OF GEORGIAN CO-INVESTMENT FUND

eorgia’s Prime Minister Bidzina Ivanishvili declared that Sheikh of Ras Al Khaimah (United Arab Emirates) Saud Bin Saqr Al Qasim will be one of the partners of Georgian Co-Investment Fund. As the government’s press service reported, Sheikh and his business group have discussed today with Ivanishvili “the problems they faced in their business in Georgia during the previous government”.

“This is a concrete example of the injustice that happened in the country”, Ivanishvili declared, stressing that “From now on, not a single investor should be damaged”. To remind, Finance Ministry’s Investigation Service has declared these days that Gela Mikadze, former director of LLC RAKIA (Ras AL Khaimah Investment Authority) Georgia, misappropriated shares worth 52.4 million lari and cash of $5.7 million, owned by the Arab investors.

GEORGIA RANKS 8TH IN INTERNATIONAL RETAIL MARKETS RATING

eorgia ranks 8th in the 2013 global retail development index with 61.4 scores, down 2 positions compared to the same index in 2012. Georgia’s parameters are as follows: market attractiveness - 36.6 scores, country risks - 63.8, market saturation - 83.4, time pressure - 61.9. “Georgia may not be the first destinations for international retailers, yet the growing pockets of wealth, improving economic stability, and consistent growth have proven attractive to specialty retailers. These market is adopting modern retail formats, providing a window of opportunity for international retailers to establish presence in the region”, the report reads. In the index Georgia is ahead of the neighboring countries - Armenia, Azerbaijan and Russia. Georgia has got much potential on food retail market - especially in the sector of groseries stores. Under the research, only 20% of Tbilisi based groseries infrastructure meet modern standards, while the figure

makes up 8% outside Tbilisi. GRDI names the network of Carrefour as the most successful among international retailers, while Goodwill, Smart, Nikora, Ioli and Populi networks are named from Georgian retailers. The report also mentions success in the textile production sector. According to the research, domestic retailers unveiled a total of 16 new stores in Tbilisi based shopping malls in April 2012, while 5 news stores will open at the end of 2013. The report stresses that a major part of these stores are authorized to produce and sell foreign brand products, including Marks &Spencer, Promod, Topshop, Banana Republic, Aldo, Zara and so on products. Georgia’s only neighbor Turkey is ahead with 1.2 scores. According to the index, Turkey’s competitive advantage is related to high level consumer confidence and demand and high GDP per capita. When consumers are not afraid of making costs, the market is diverse and such sectors as luxury things, clothes and electric equipment grow at high paces. Moreover, the process embraces a larger segment of the market than big cities. South America is recorded to be the most success retail market. Brazil, Chile and Uruguay lead the rating. It should be also noted Kazakhstan, Turkey and Mexico have made major breakthrough year on year, while Azerbaijan, Oman and India have recorded the worst firgures year on year. Pg. 3

Polish FM Meets Georgian PM, Signals Possibility for Speeding Up AA Signing

Pg. 2

Finance Minister: The Country’s Economic Growth Is Hampered By 3 Main Factors Pg. 4

Energy Minister Moves to New Stage of Relations with Investors Pg. 4

David Narmania: We Want to Develop Long-term Communications Pg. 4

Business Ombudsman man Names Customs and Tax Procedures the Main Problem of Business Pg. 4 ICC Georgia’s Statement regarding the Free Trade Agreement and Trade with ith Georgia’s Neighbors New Line Of HP Notebooks To Be Sold In Georgia Pg. 6 Pg. 4 Russian “Kommersant”: Due to New Georgian Law, Niko Pirosmani’s Exhibition in Moscow was Postponed

Pg. 5

MAIN EVENTS caucasian business week

SAAKASHVILI: PM’S EURASIAN UNION REMARKS ‘BREAK MAIN TABOO’ OF GEORGIAN POLITICS

resident Saakashvili said on September 12 that PM Ivanishvili “broke the main taboo” of the Georgian politics by saying that his government is watching and studying the Russianinitiated Eurasian Union. In a televised statement made during a meeting with a group of students in Tbilisi, Saakashvili said that over the past ten years Georgia’s proWestern foreign policy course was not even debated or questioned by any major political force, but now “regrettably”, he said, the issue re-emerged in the political discourse. Saakashvili said that up until recently, the government was “formally” maintaining policy of integration to the EU and NATO. “It has changed recently. Few days ago the Prime Minister has publicly reiterated that the Eurasian Union, which… is a new form of the Soviet Union and which was initiated by Putin to undermine the progress achieved in our region in respect of NATO and EU, is an option that will be explored,” Saakashvili said. “Prime Minister Ivanishvili broke the main taboo of the Georgian politics; as a politician he had the right to do it. But with this taboo already broken and with the issue of whether Georgia should go towards the West or towards the North is a topic of debates… now it is important to realize what does this debate mean for us,” Saakashvili said, adding that it was much more than just about foreign policy choice of the country as choice in

favor of the Russian-led Eurasian Union would amount throwing the country back into the past when Georgia was engulfed by corruption and crimes. He said that the Georgian people should not allow anyone to drag the country into “darkness” and “abyss” by choosing the Eurasian Union instead of Europe. “We will be in Europe, but for this to happen we should speak out,” he added. This issue was also a focus of UNM presidential candidate Davit Bakradze’s campaign speech during an outdoor rally in Zugdidi on September 11. Bakradze told supporters in Zugdidi that the upcoming presidential election is about choosing Georgia’s foreign policy course. “Without any exaggeration, this upcoming election is not only about choosing between the candidates, it will be about our country’s declaration before the world – which path are we choosing; whether we are ready or not to continue struggle for Georgia’s freedom; whether we are ready or not to continue moving towards the civilized world in order to establish our place in the European family. Or are we tired? Did the problems exhausted us so much that we are ready to go back into the past and to again bow our head before a big neighbor [Russia]? What is our choice – to continue progress or to return back?” Bakradze said. “The government is telling us that it is exploring Eurasian Union membership perspective… I want to tell them – there is no need in studying and analyzing possibility for returning back into the fold of occupying power,” he said. “Yes I want to improve relations with Russia, but I declare unambiguously that these relations will not be improved at the expense of Georgia’s national interests,” he continued. “I know what the result-oriented dialogue with Russia should be – constructive, calm, but at the same time extremely principled, with criticism and oriented on country’s interests. Any other form – be it bowing head before Russia, rejecting criticism or appeasement, will be only counter-productive.” In his speech in Zugdidi, Bakradze also attacked two presidential candidates – Giorgi Margvelashvili of the Georgian Dream and ex-speaker of parliament Nino Burjanadze; he said that Margvelashvili would bring the country under Russia’s control “step-by-step” and Burjanadze would do it immediately. Civil.ge

EBRD TO FUND CONSTRUCTION OF FIRST HILTON HOTEL IN GEORGIA

BRD reported that it will allocate loan of $18.7 million for construction of middle-class Hilton Garden Inn in Tbilisi. Concept of the hotel will be developed by Redix Group. Construction of the 14-storey hotel, having 165 rooms and located on Chavchavadze Avenue, is expected to be completed by 2016. Bruno Balvanera, EBRD’s director for Caucasus, Moldova and Belarus, said that Georgia needs to develop market of the middle-class hotels. Lasha Papash-

vili, director general of Redix Group, pointed that EBRD has already funded, together with Georgian partner banks, such projects of the Group as business center Tabidze 1 and multifunctional complex BCV – Business Center on Vazha. Technical analysis of the new project and evaluation of its energy efficiency is implemented by Japanese government within Sustainable Energy Development Initiative of EBRD. Owners of development company Redix Group are brothers Lasha and Sulkhan Papashvili.

BUSINESS WEEK

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September 16, 2013 #21

POLISH FM MEETS GEORGIAN PM, SIGNALS POSSIBILITY FOR SPEEDING UP AA SIGNING

oreign Minister of Poland, Radoslaw Sikorski, said after meeting with Georgian Prime Minister Bidzina Ivanishvili that the EU may sign Association Agreement with Georgia in 2014. The Polish Foreign Minister and the Georgian PM met in Latvia on September 7 on the sideline of the Riga Conference, an annual high-level policy and security forum. Sikorski, who arrived in Riga from Vilnius where EU foreign ministers informal meeting was held, said it was agreed to sign the Association Agreement, which also includes deep and comprehensive free trade agreement, with Georgia before the mandate of current European Commission expires, provided Georgia meets all the criteria. The current European Commission’s term of office runs until October 31, 2014. Georgia expects to initial – a step before the official signature, the Association Agreement at the EU Eastern Partnership summit in Vilnius in late November, 2013. Latvian PM Valdis Dombrovskis said after meeting with his Georgian counterpart in Riga on September 6 that his country supports the initialing of the Association Agreement with Georgia at the upcoming Vilnius summit in order to sign it at the next summit of the Eastern Partnership in 2015 in Riga, when Latvia will hold the EU presidency. But as the Polish Foreign Minister indicated on September 7, there was a readiness within the EU to consider signing of the agreement earlier if Georgia fulfills the conditions. “I am very glad to be able report to you that yesterday in Vilnius we agreed that if conditions are fulfilled and Georgia initials the Association Agreement, the [European] Commission has undertaken to have the papers ready for signature before that expires, which I hope is another argument for the Prime Minister to persuade the Georgian people to make the sacrifices that will be necessary to modernize the Georgian economy and to make it fully compatible with the largest free market on earth – the European Union,” Foreign Minister Sikorski told journalists after meeting the Georgian PM. PM Ivanishvili said it “is a very good news for me.” “The message is that if we work hard, we will be able to sign [the Association Agreement] before the current Commission’s [mandate] expires – that’s a huge achievement and that’s a confirmation of our success,” PM Ivanishvili said, adding it also demonstrates that the EU has acknowledged his government’s “democratic” path. The Eastern Partnership, which involves Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine, was one of the issues discussed by the

EU foreign ministers during the informal meeting in Vilnius on September 6-7. “The member states express their solidarity with the countries of the Eastern Partnership programme that have chosen the European path and strongly support them. Russia’s pressure on Ukraine and other Eastern Partnership countries will increase, so it is important to keep this item on the EU agenda. We must consider ways to help the countries withstand such pressure,” said Lithuanian Foreign Minister, Linas Linkevičius, whose country holds EU’s rotating presidency. EU foreign minister’s informal session on September 7 in Vilnius was also attended by the U.S. Secretary of State John Kerry, who said that the Eastern Partnership “is a very important economic plan that will raise the standards of doing business, increase the trade and most importantly increase jobs.” “It’s good for the economic development,” Kerry said after meeting with his Lithuanian counterpart. “And we talked about how that can continue to expand, and we are committed to working with Lithuania in an effort to help and move that forward. And I will have conversations with Foreign Minister Hague in England about ways in which we can all join together to try to do that.” On bilateral Georgian-Polish relations, the Polish Foreign Minister said after the meeting with PM Ivanisvhili: “I am very grateful to the Prime Minister for the opportunity to review once again the very excellent state of Polish-Georgian relations.” “The Prime Minister came to Poland recently [in July] and had very good conversation with [the Polish PM] Donald Tusk and we are executing the agenda that the two Prime Ministers have agreed of sending observers to Georgia’s president elections and of supporting Georgia’s EuroAtlantic aspirations,” Sikorski said. PM Ivanishvili said that he had a “very successful” visit to Poland, where he “befriended Donald Tusk.” On the second day of his visit to Latvia, PM Ivanishvili participated in the Riga Conference. Swedish Foreign Minister, Carl Bildt, who was also in Latvia on September 7 for the Riga Conference, wrote on his Twitter: “Dinner discussion with Georgia PM Bidzina Ivanishvili. We stress concern over rule of law and tendencies to selective justice.” On September 8 the Georgian PM will start a twoday visit to Estonia, where he 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. Civil.ge

FLYGEORGIA AIRPLANE REMAINS SEIZED

hether “Fly Georgia’’ company is facing the threat of suspension of work? The company’s only plane is seized at the airport in Brussels and, as reported, the reason is “Fly Georgia’s” debt. “Commersant” radio was told at the Civil Aviation Agency that by the end of the day they are waiting for news from Brussels to why the plane was seized. According to the Agency’s Deputy Director, neither they nor the company know the reasons of the plane’s arrest. Shalva Kiknadze claims that “Fly Georgia’’ has no debt and any technical problems are not the cause of this.

“Fly Georgia” still does not answer the phone calls. Note: A few months ago, an influential publication “Wall Street Journal” published a scandalous material, and accused “Fly - Georgia” owners - Iranian businessmen of having links with the Iranian government. According to the material, the business branch of Iran’s Islamic Revolutionary Guard Corps has some 150 front companies in Georgia for the purpose of evading sanctions and importing dual-use technology. However, “Fly Georgia” did not consider it necessary to respond to this material. Commersant.ge

BUSINESS September 16, 2013 #21

caucasian business week

GEORGIA RANKS 8TH IN INTERNATIONAL RATING FOR RETAIL SALES ON EMERGING MARKETS From Pg. 1

etailers are taking a step back from rapid expansion strategies as they move into developing markets.

The 2013 GRDI Findings

A.T. Kearney’s Global Retail Development Index™ (GRDI) has guided global retailers with their strategic investments for more than a dozen years, and the 2013 Index reflects some important changes to the retail environment. The GRDI ranks the top 30 developing countries for retail investment based on several macroeconomic and retail-specific variables. This year’s GRDI also includes the fourth Retail Apparel Index; the ECommerce Index, which was unveiled last year, will be published later this year. South America is blossoming as Brazil, Chile, and Uruguay take the top three spots in the Index. Peru, Colombia, Panama, and Mexico also shine, but some other markets, such as Venezuela, Argentina, and Bolivia, have room for improvement.

Central Asia and Eastern Europe

Central Asia and Eastern Europe offer fertile ground for retailers. With economic stalwarts such as Turkey and Russia improving their standing and little “gems” such as Armenia becoming more attractive to global players, these markets have avoided the stagnation of their more developed Western European neighbors. In Turkey and Russia, retail expansion is fueled by strong consumer demand and high levels of disposable income. The modern retail environment is becoming more diverse in these markets, with sectors such as luxury, apparel, and consumer electronics booming and quickly expanding outside of major cities. Smaller countries such as Georgia and Kazakhstan may not be the first destinations for international retailers, yet their growing pockets of wealth, improving economic stability, and consistent growth have proven attractive to specialty retailers. These markets are adopting modern retail formats, providing a window of opportunity for international retailers to establish presence in the region. Meanwhile, Macedonia and Albania remain attractive to some international retailers, particularly from neighboring markets, yet their potential has fallen compared to other developing markets in the GRDI because of their small size and low levels of consumer wealth. Turkey: Growing and attractive. While Western Europe struggles, Turkey continues to grow. It moves up seven spots in the GRDI to take 6th place—its highest ranking since 2003. Based on our “window of opportunity” analysis, Turkey is nearing its peak growth stage (see figure 2 on page 12). Turkey’s market is competitive, with expansion leading to lower profitability. Finding avail-

able spots in attractive retail locations is difficult and has been a major reason for retail acquisitions. In coming years, retailers will likely focus more on improving store operations as the incremental returns from store expansion diminish. The growing economy, favorable consumer demographics, and a relatively fragmented retail landscape make Turkey attractive to international retailers. Disposable income has increased at a CAGR of 3.6 percent since 2005, while the percentage of households earning less than $15,000 dropped from 53 percent to 45 percent. The middle class’s expanding purchasing power is spurring sales growth, while wealthy locals and international tourists are increasing luxury goods sales. Modern formats account for only 40 percent of retail in Turkey, but new malls, e-commerce, and international entries will increase this share. Modern formats now make up 46 percent of a fragmented grocery market, with the top five grocers accounting for roughly one-tenth of the market. Independent convenience stores called bakkals remain popular but are slowly losing share. Modern grocers are aiming for bakkals’ share by opening smaller shops, and hard discounters are making gains with price advantages. While regional grocers have consolidated in recent years, Tesco and Migros have made plans to expand with new store openings. Shopping malls are now expanding to unexploited regions where traditional retail reigns, while e-commerce has grown 25 percent per year since 2007. Many large international players are drawn to Turkey’s growth prospects and low regulatory barriers. Apple is set to open its first retail store in Istanbul in 2013. French furniture company Conforama is expected to open its first store in a Carrefour hypermarket, and German furniture company Porta will open its first branded store outside of Germany. Dubai-based international retailer Landmark Group acquired a majority share in Turkish women’s apparel retailer Park Bravo, and Qatar First Investment Bank purchased 40 percent of domestic furniture brand English Home. French cosmetics firm Yves Rocher bought a majority stake in Turkish beauty products company Flormar. Premium shoemaker Christian Louboutin has partnered with Turkey’s Boyner Group to open two stores. U.S.-based gourmet food retailer Dean & DeLuca opened its first store in Europe through a domestic licensee. Georgia: A good place to do business. A growing economy, rising household incomes, and a focus on reforming the business climate have international retailers seeking to set up shop in Georgia (8th). Georgia ranked 9th in the 2013 Ease of Doing Business rankings from the World Bank and International Finance Corporation. The grocery sector has great potential, as traditional formats still dominate. In Tbilisi, the capital, only 20 percent of grocery retail is in modern formats, the rest dominated by traditional shops and open markets. Outside of Tbilisi, the share of modern grocery is only 8 percent. Carrefour opened its first store in Tbilisi in September 2012 and will open two more before targeting other larger cities, including Batumi, Rustavi, Kutaisi,

and Telavi. French retailer Auchan signed an agreement with local grocer Goodwill to sell private-label products. Local retailers are also driving growth. The Smart chain will open a new distribution center and as many as 28 new supermarkets and convenience stores, and grocer Nikora has plans to invest further. Ioli is expanding its supermarket presence, with plans to increase the number of stores to 30, and Populi plans to add 12 new convenience stores in Tbilisi. Retail Group Georgia has driven much expansion in non-food retail. It opened 16 apparel stores in Tbilisi malls in April 2012 and plans to open five more by the end of 2013, including brand stores for Desigual, Marks & Spencer, Promod, Wallis, Miss Selfridge, Topshop, Topman, Red Equal, Banana Republic, Aldo, and Inditex. Armenia: Accelerated retail growth. Rising incomes and improved living standards in Armenia (10th) have paved the way for retail growth. Armenia’s government officially welcomes foreign investment, and several global indices rank it as a strong place to do business. There are challenges, however, including a small population (about 3 million), geographical isolation due to closed borders with Turkey and Azerbaijan, a relatively low per capita GDP of about $5,600, and corruption in both the official and commercial spheres. Armenia’s retail sector is still dominated by local players, and organized retail comprises only 10 to 12 percent of total sales, so foreign investors have significant room for development as supermarkets and grocery chains gradually replace open-air bazaars and street vendors. Local grocers nearly doubled their number of stores in 2012; this year, they are focusing on expanding in smaller formats. The supermarket segment has grown and consolidated in recent years.

Local retailer Star acquired the Fresh and Yerevan City chains, continuing its expansion into suburban areas and now accounting for half of modern retail sales in Armenia. Carrefour plans to enter the market by the end of 2013, but until then international grocers will have little presence in the market. The Dalma Garden Mall, which opened in 2012, is Armenia’s first Western-style shopping mall and the country’s biggest retail area, with 24 international brands and plans to add 20 more. International retailers that entered the market in Dalma Garden include Gap, Zara, Bershka, Marks & Spencer, Stradivarius, Pull & Bear, Topshop, Accessorize, and New Yorker. Azerbaijan: Challenges remain. Azerbaijan (29th) economy continues to grow, but the country is still struggling to improve economic freedom and attract foreign investment. The average income in Azerbaijan remains modest, with 75 percent of consumer goods spending on food. The retail market has no standout national players. Bazarstore supermarket chain saw a sales increase in 2012 and announced it will triple the number of stores in Azerbaijan. Carrefour is also planning to open a store in Azerbaijan. Baku, the capital, has become an attractive location for luxury retailers, as much of the country’s wealth is concentrated there. Many major luxury and fashion brands are already in Azerbaijan, and more will enter with the opening of the Emporium, to be located in Port Baku Tower. It will house international fashion brands, including Victoria Beckham, Marc Jacobs, DKNY, DSquared2, Azzaro, Alexander McQueen, Amor & Psyche, Fendi, Carlos Miele, Herve Leger, Christopher Kane, Junya Watanabe, Sienna Miller, Andres Sarda, MSGM, Moncler, J Brand, and Paul Smith.

INTERVIEW caucasian business week

FINANCE MINISTER: THE COUNTRY’S ECONOMIC GROWTH IS HAMPERED BY 3 MAIN FACTORS

inance Minister Nodar Khaduri declared that growth of Georgian economic is hampered by 3 main factors. These are low competition, lack of human capital and poor access to financial resources. The Minister announced this at the first public discussion of draft strategy for social and economic development, held today in Tbilisi State University. Terms for final shaping of the draft are not known so far. Minister of Regional Development and Infrastructure David Narmania noted that programs, prepared in pre-election period, were calculated for 1 year. The mentioned strategy covers period of 7 years – until 2020, he said.

ENERGY MINISTER MOVES TO NEW STAGE OF RELATIONS WITH INVESTORS

eorgian Energy Ministry declared about moving to a new stage in relations with investors and offering them new flexible rules, which will promote attraction of additional investments. Minister Kakha Kaladze introduced amendments to the government’s resolution “On Rules of Expression of Interest for Feasibility Study, Con-

struction, Ownership and Operation of Power Plants in Georgia” to the investors today. According to the amendments, the investor must present pre-construction guaranty of $5,000 for first 1 MW of installed capacity, while each additional 1 MW requires guaranty of $100,000. If installed capacity exceeds 100 MW than amount of guaranty per MW makes up $50,000. Until now, the investor had to present guaranty of $170,000 per MW. During expression of interest, the winner will be announced the bidder, offering the lowest price, agreed in advance with Electricity System Commercial Operator (ESCO), and not the one, providing the biggest bank guarantee. Besides, in case of violating terms, set by memorandum for start of power plant construction or putting it in operation, investor will be fined by 0.5% of total volume of construction guarantee for each overdue day. With old regulations, the company was losing total amount of the guarantee. At that, the Ministry explained that volume of the electricity, which has to be sold on local market during winter (3 months), was not regulated so far, while the new rules define that 20% of annual generation should be sold to ESCO in any period of the year (which has to be agreed in the memorandum) during 10 years after putting hydroelectric station in operation.

NBG: GEORGIA’S ECONOMIC DEVELOPMENT DOES NOT DEPEND ON MONETIZATION LEVEL

ational Bank of Georgia (NBG) denied today the opinion, being spread recently in the press and social networks, according to which monetization of Georgian economy is low and that is definite factor, undermining achievement of rapid economic growth. The country’s economic development does not depend uniquely on monetization level, NBG declared. Monetization is high in those countries, where GDP per capita is high, but it is impossible and incorrect to say that high monetization results in high income, NBG pointed. Thus, achievement of economic growth by increasing monetization is completely wrong, NBG said, noting that it can be used as one of parameters, together with other ones, to estimate dynamics of the economy.

Current ratio of M2 monetary aggregate to Georgia’s GDP makes up 16%, while of M3 – 30%, NBG said, pointing that due to high dollarization rate in the country, evaluation of level of the economy’s monetization and its comparison it with other countries is reasonable to conduct with ratio of M3 monetary aggregate to GDP (usually, monetization is measured as M2/GDP). NBG referred to the World Bank statistics, according to which average rate of monetization in the world made up 75% in 2012 (the database includes 148 countries). In countries with economic development similar to Georgia, monetization rate is below 60%, NBG pointed. According to latest data, monetization in Georgia makes up 30.2%. To compare, this showing makes up 55% in Ukraine, 51% – in Russia, 33.8% – in Armenia and 31.8% – in Azerbaijan.

September 16, 2013 #21

GEORGIAN PRESIDENT GRANTS GEORGIAN CITIZENSHIP TO 936 TURKISH CITIZENS

resident Mikheil Saakashvili granted 936 Turkish citizens with Georgian citizenship, though he made the above-mentioned decision by ignoring the State Services Development

Agency. The Justice Ministry confirmed the mentioned

information. According to the press service of the agency, they found out about the President’s decision only after they got an official letter from the President’s Chancellery yesterday. InterpressNews is now trying to get a comment on the topic from the President’s Administration.

DAVID NARMANIA: WE WANT TO DEVELOP LONG-TERM COMMUNICATIONS

egional Development and Infrastructure Minister David Narmania declared: “We want to keep abreast of the time and create long-term oriented communications”. Roads and underground communications are an important part of modern infrastructure, he pointed. “If we managed to pass 2013 with one-year operative plan, soon we will have action plan for 2014-2017 and new road map”, the Minister declared, noting that unified system is created for better management of projects of municipalities and the Ministry. Currently, the Ministry implements more than 200 projects, while local municipalities – 5 times more, he specified. “We have no luxury to make short-term projects by the funds, attracted from international donors. May be, we will need to use more resources, but the result will be much more effective”, Narmania pointed.

The Minister spoke about this at the 3rd international conference “Roads and Underground Communications”. The event, which was opened today, will last for 3 days.

BUSINESS OMBUDSMAN NAMES CUSTOMS AND TAX PROCEDURES THE MAIN PROBLEM OF BUSINESS

usiness ombudsman names customs and tax procedures the main problem of Georgian business. George Gakharia states “Commersant” radio that appealability of business was moderately active during the summer: in June a total of 30 statements were submitted, in July- 16 and in August – 14 ones. According to Gakharia, the statements relate to difficulties in the realization of the rights of ownership and licensing activities. According to business ombudsman, the Ombudsman’s Office responds to the statements, analyzes the gaps in legislation and monitors the practice of the tax authorities.

RUSSIAN “KOMMERSANT”: DUE TO NEW GEORGIAN LAW, NIKO PIROSMANI’S EXHIBITION IN MOSCOW WAS POSTPONED

iko Pirosmani’s exhibition in Moscow was postponed because of the new Georgian law” – this is a title of the article published in the Russian “Kommersant”. Chairman of the Kandinsky Prize Board of Trustees Shalva Breus says in a conversation with the edition that Georgia has recently adopted a law accordign to which, artistic value cannot enter a country with which there are no diplomatic relations. Earlier, Breus told journalists that he planned to bring those works to Russia which had never been exhibited in this country before. Recall that Georgia has severed diplomatic relations with Russia since 2008. Note: Shalva Breus is a Russian citizen. In the late 90’s of the last century he was the Deputy governor of Krasnoyarsk Krai, currently he is a member of the Board of Governors in several Russian companies , also has companies in Ukraine and the Baltic States.

A few weeks ago, Georgian media reported that Breus was mentioned among those willing to buy “Channel 9”.

BUSINESS September 16, 2013 #21

caucasian business week

POTI TERMINAL HOLDING ADOPS US STANDARDS

ccording to order of Poti Terminal Holding director Agamali Gurbanov, the US standard of NFPA30 is adopted as internal standard for the enterprise. NFPA-30 represents constituent part of Administrative Code of the Texas State. Poti Terminal Holding does not explain the reason of the decision, noting only

T that in 2000, Georgia joined the World Trade Organization’s Agreement on Technical Barriers to Trade, which member is the US as well. According to latest data of Public Registry, 51% of Poti Terminal Holding belongs to Otora Trading (Virgin Islands), 32.67% – to Channel Energy Limited (Poti), 16.33% – Danedo Management Corporation (Virgin Islands).

UKRAINE INTRODUCES ODESSA’S ECONOMIC POTENTIAL IN GEORGIA

eorgia-Ukraine business-forum was held in Tbilisi today, where entrepreneurs of the two countries discussed prospects of cooperation. According to Ukrainian embassy to Georgia, Ukrainians introduced economic potential of Odessa district to Georgian businessmen and presented commercial offers of

ICC GEORGIA’S STATEMENT REGARDING THE FREE TRADE AGREEMENT AND TRADE WITH GEORGIA’S NEIGHBORS

enterprises located there. Forum, which was held in the Ukrainian embassy, was attended also by deputy chairman of Odessa district administration. According to Sakstat, Ukraine was the third largest trade partner of Georgia in 2012. Last year’s trade with Ukraine amounted to $764.1 million (decrease by 9.8%), accounting for 7.5% of Georgia’s total foreign trade turnover.

he International Chamber of Commerce (ICC-Georgia) expresses its full support for the process of entering into a Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union. The DCFTA will ensure Georgia’s access to a stable and reliable market of over 500 million consumers and, more importantly, it will open the door to Georgia’s future integration in the European Community. In addition, the DCFTA with the European Union will boost investors’ confidence in Georgia and will ensure a steady flow of foreign direct investment to the country. It is also important to note the serious challenges which continue to be faced by Georgian exporters and business people, despite a harmonized Customs Regime with the Commonwealth of Independent States. When exporting to the Commonwealth of Independent States, Georgian exporters and business people face illegal customs fees, protectionism and artificial barriers, which act to restrict the free movement of goods and which hamper Georgia’s potential as a regional transport and logistics hub. ICC Georgia, which is the most inclusive business association in the country that includes more than one hundred major companies and business associations, believes that the DCFTA with the EU will have a very positive impact on the Georgian economy and on the future of the country. The DCFTA will

also act as a catalyst that will help neighboring countries to move towards a more transparent and open trade policy with Georgia focused on the free flow of goods throughout the region. The International Chamber of Commerce is the largest business organization in the world. It unites hundreds of thousands of companies and organizations from over 120 countries into a representative body which speaks with authority on behalf of businesses worldwide. ICC works closely with the G8, G20, WB, UN, WTO and WCO.

AT THIS STAGE, GRAPE PRICE IS WITHIN 1.00-1.26 LARI GEORGIAN VODKA PRODUCERS INTEND TO ENTER THE RUSSIAN MARKET

fter wine making companies, Georgian vodka producers are preparing to enter the Russian market. According to “Gomi” company, the company meets allinternational standards and is waiting for the visit ofRussian inspectors in the near future. After obtaining permission, the company intends to export chacha to Russia at the first stage and then the vodka.

“Gomi” is holding talks with several Russian companies. Currently, “Gomi” exports vodka to 6 countries. “Ushba” company representative Dmitry Abesadze notes that negotiations with a major Russiandistribution company are almost completed. “We are waiting for the inspectors from Moscow in the coming days, and in a case of obtaining an export permit, we will begin the export of vodka to Russia” - he says. Currently, “Ushba” exports its products to Turkey and Ukraine.

34 COMPANIES SIGNED AGREEMENTS WITH NATIONAL WINE AGENCY REGARDING PURCHASE OF GRAPE

griculture Minister Shalva Pipia reported that 34 companies have signed agreements with National Wine Agency on subsidizing of grape purchase. In Kakheti, main winegrowing region of the country, 32 companies have processed grapes as of September 8. Applications regarding purchase of grapes are submitted by more 85 companies.

To remind, while purchasing grapes for 1 lari per 1 kg or higher price, wine companies may apply for 15-month preferential loans with interest rate of 12-15%, of which the state covers 9%. Pipia noted that in total, since January until the beginning of September 2013, export of Georgian wine was implemented to 42 countries. Its volume reached 22.2 million bottles, including 7 million bottles delivered to Russia.

BALLIS WILL ISSUE FRESH WATER AND LEMONADE

ompany Ballis plans to start production of fresh water and lemonade. The company informs that development of new directions will start soon. Beer factory Ballis, located in Akhalkalaki, was opened in 2011 and currently produces 3 kinds of beer – Ballis, Javakheti and Georgian. The company informs that the factory is equipped

with modern technologies, which provides high producing standards. “On this stage distribution of Ballis productions is going in Javakheti region, Adjara and Tbilisi. We plan to expand distribution area, among them export products in the neighboring countries”, company founder and director George Lisikiani states.

grarian Issues Committee of the Parliament reported that average price of Saperavi (red grape) makes up 1.06 lari per 1 kg, while of Rkatsiteli (white grape) – 1 lari. The highest price, fixed until September 10, makes up 1.26 lari. According to the Committee, 40 companies processed all together 17,327 t of grapes in Kakheti region as of September 10. The biggest volume (5,745 t, i.e. 33.3% of total vol-

ume) accounts for Signagi district. Next come Kvareli (19.3%, i.e. 3,342 t), Gurjaani (17.8%, i.e. 3,082 t), Dedoplistskaro (15%, i.e. 2,598 t), Telavi (13.6%, i.e. 2,349 t). The remaining 211 t (i.e. 1.2%) account for Akhmeta, Lagodekhi and Sagarejo districts. The Committee said that besides private companies, state-owned Gruzvinprom also purchases grape. With the latest data, Gruzvinprom has processed 700 t of grape.

BASISBANK ISSUES ABOUT 10 MILLION GEL LOANS AS PART OF AGRO LOAN PROGRAM

n the framework of Preferential Agro Credit program, Basis bank has issued loans up to 10 million GEL, 90% of the amount comes on winery. Bank management informs that in the wine business basis bank’s clients are largest and leading wine-producer companies in Georgia, which have developed many-years partnership relations with the bank. Basis Bank is involved in the second, third and 5th components of Preferential Agro Credit program. It’s noteworthy that in the framework of the 5th component, wine producer companies get cred-

its for 15 months, interest rate is 12-15%, among them 9% covered by the state. Reminding that Basis Bank operates on Georgian banking market since 1993. European Bank for Reconstruction and Development (EBRD) is its stockholder since 2008. Large Chinese company Xinjiang Hualing Industry & Trade (Group) Co ltd became owner of 90% of its stocks in 2012. It’s noteworthy that by September 11, in the framework of Preferential Agro Credit Project, credits of 94 103 126 GEL are issued. 5 343 beneficiaries received loans.

GEORGIAN GROWS SHARE IN EBRD CAPITAL

eorgia filled share in the capital of European Bank for Reconstruction and Development (EBRD). Share filling transaction was made on September 3. Ministry of Finance explains that from the joining of Georgia to ENRD (1992), according to decision of Bank’s manager council authorized capital increased several times, due to which by August 30 2013, remaining redemption paid-in capital of Georgia equaled to $2 675 044. Currently Georgia owns 3 001 EBRD stocks, among them 2 375 stocks - in “callable” capital and 626 stocks in “paid-in” capital. Nominal of each stock is 10 000 Euro.

BUSINESS caucasian business week

September 16, 2013 #21

NEW LINE OF HP NOTEBOOKS TO BE SOLD IN GEORGIA

anagement of Hewlett-Packard (HP), being in Georgia with working visit, announced today about start of selling new line of HP Envy and HP Pavilion on local market. The mentioned notebooks are envisaged mainly for individual consumers. Achim Kuttler, HP vice-president and general manager, said that Envy will cost about 3,000 lari, while Pavilion will be relatively cheap. In general, prices of HP notebooks vary within 6003,000 lari, Kuttler noted. HP is optimistic toward Georgian IT market, Kuttler told Sarke, but found difficulty in naming Georgia’s share in total sales of the company. In his turn, regional manager of HP Sergey Plaskin said that HP is represented on Georgian market for more than 15 years. At this stage, company has 24 authorized partners in the country, while total number of stores, trading with HP products, exceeds 70, he pointed.

CLINIC ADDRESS: #40 DAVID AGMASHENEBELI STREET, KUTAISI

LEGAL PROCEEDINGS UNDERWAY AGAINST RAKIA GEORGIA

nvestigation Service of the Finance Ministry announced that criminal proceeding is launched against Gela Mikadze, former director of RAKIA Georgia (Georgian subsidiary of Arabian Rakeen Development), due to accusation of large misappropriation. According to Investigation Service, Mikadze handed over 8.47% of RAKIA Georgia to Bestford Development, non-resident entity, being founded by him, without consent of Arabian owners of the company. At that, the share with value of 16.94 million lari was handed over for 1 lari only. Besides, the Service said that Mikadze also handed over 15% of RAKIA Georgia (value of 30 million lari) and 15% of the company’s free industrial zone (value of $3.3 million) to Manline Projects, another non-resident entity, established by him. Both shares were also handed over for 1 lari. The Service reported also that Rakeen Development and LLC Mtatsminda Park had signed in June 2008 an agreement on handing over of

Tbilisi’s Mtatsminda Park in management. “Following the agreement, the company implemented large investments in 2008-2011 in Tbilisi’s Mtatsminda Park”, the Service said. In May 2012, Mtatsminda Park was passed in management to LLC Tbilisi Park, which had to pay $12 million for this right. However, according to the Service, due to Mikadze’s request, $5.7 million out of $6 million payment of Tbilisi Park was transferred to the mentioned Bestford Development and Mikadze’s another non-resident company, Labey Development, instead of being paid to Rakeen Development. Thus, the Service said, Mikadze has misappropriated shares of 52.4 million lari and cash of $5.7 million, which belong to Arabian investors. To remind, Arabian Rakeen Development owns in Georgia such assets as Tbilisi Mall, Sheraton Metechi Palace, free industrial zone in Poti, etc. As the Finance Ministry’s Investigation Service noted, article of Criminal Code, according to which proceeding against Mikadze was launched, envisages imprisonment for 7-11 years.

The clinic has therapeutic, surgery and orthopedic departments with certified and highqualified doctors

The clinic is equipped with modern sterilization and X-ray rooms

The clinic has a laboratory with equipped with modern technology

TBILISI INTERNATIONAL FESTIVAL OF THEATRE International Program 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

3,4 OCTOBER, 2013 ... In this grey space where I’m creating my new play I see a place of physical detention, prison, isolation, and at the same time a mental space, a shutting of the mind, the inability to find freedom or clarity. Evermore imprisoned in the schizophrenia of body and soul; torn between an idea of rulers, of kings, of a God imposing his presence,

and an idea of man condemned to submit and lower himself everyday a little more. A schizophrenia tearing man apart, between displays of false joy and the real pain underneath; between the unavoidable responsibility that we feel towards the events that we suffer as victims, and a religious, fanatical, castrating feeling of guilt. A constant schizophrenia, with the fear of others on one side and the need to welcome and accept them on the other. A schizophrenia between our need for truth and our persistent lies. I see sick, ailing thoughts, in and outside my head, or anyone’s head, closed thoughts, dark, suffocating thoughts. But sometimes, in this enclosed, grey, oppressing, claustrophobic space, I also see some incredible bursts of light. Dopo La Battaglia was probably conceived in a need to flee, to return, to howl, cry, laugh and play again like children, a need to lose ourselves again, to find again some kind of center, to retrieve a sense of revolt, of faith, of clarity of mind, to speak once again of love, speaking through our bodies, through sounds and dance... Extract from Dopo La Battaglia – poetical/political writings, by Pippo Delbono, ed. Barbes, 2011

AFTER THE BATTLE

EMILIA ROMAGNA TEATRO – Compagnia Delbono, ITALY

27,28 SEPTEMBER, 2013

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

MISSING

Physical theatre Directed and created by Amit Lahav

5,6 OCTOBER , 2013

Think Alexander Rodchenko meets Tim Burton, Charles Dickens meets Fritz Lang, and the early 20thcenturysilent movie meets the 21st-century graphic novel, and you have something of the flavour of this jawdroppingly clever and gloriously subversive par-

able of social mobility, revolution and its suppression… 1927 conjure a world so complete it feels as if you’ve fallen down a rabbit hole’ (The Guardian)

THE ANIMALS AND CHILDREN TOOK TO THE STREETS

Company “1927” , UK Directed & Written by Suzanne Andrade www.tbilisiinternational.com www.facebook.com/TbilisiInternational

BANKING NEWS September 16, 2013 #21

GEORGIAN LEGAL COMPANY OWNS 70% SHARES OF INVESTBANK

ccording to Investbank’s report, owner of 70% shares is legal company Dimitri Aleksidze and Vladimer Gabrielashvili, while remaining 30% belongs to Trendfor Holding Ltd. Indirect shares are distributed as follows: Dimitri Aleksidze – 35%, Vladimer Gabrielashvili – 35%, Brenda Patricia Cocksedge – 30%. To note, according to the 1st quarter’s report, owner of 70% of the bank’s shares was KSN Foundation. As of Investbank’s financial performance in the first half of the year, the bank had loss of 854,233 lari (instead of net profit of 3.9 million lari in the same period of 2012). As of July 1, total assets amounted to 31.85 million lari (yearon-year decline – 13.8%). At that, net loans made up 7.88 million lari (growth – 2.1%), while loan loss reserve – 336,393 lari (growth – 33.5%). Total liabilities amounted to 17.8 million lari (year-on-year decline – 15.6%). At that, sum on clients’ current accounts made up 9.1 million lari (decline – 27%), fixed deposits – 1.3 million lari (growth – 8.07%), while demand deposits – 521,324 lari (decline – 48.2%).

BANK OF GEORGIA AND PARTNERSHIP FUND CREDITED KALANDA WITH $2,25 MILLION

ank of Georgia stated that with Partnership Fund they credited company Kalanda with $5,25 million. According to bank’s press release, out of the total credit, loan issued by Bank of Georgia equals to $4 400 000, Partnership Fund’s funding - $1 250 000. As a result of funding, completely new, closed type of pig breeding complex was created. Loan portfolio, which is one of the largest funder of business, issued for clients in the first held 2013, reached 1,65 billion GEL and has increased by 4,8% in the second quarter 2013. Partnership Fund stated that the fund aims to support private investments and financial investments in the spheres, which are priority for the state. One of the priority directions is development of agriculture. The project implemented by Partnership Fund in Agriculture is unique with its content, as it represents successful example of cooperation of the banking sector, state and entrepreneurs. Completely new, closed type pig breeding complex of the company Kalanda is arranged according new modern standards and is equipped with modern technologies. Kalanda cooperates with 2 western company: German company Big Dutchman and British company ACMC, which provided projection, technological equipment of the new farm and production of high-productive, quickly growing and highly healthy status breeding pigs.

LOANS ISSUED TO 49 NEW ENTERPRISES WITHIN THE 3RD COMPONENT OF PREFERENTIAL AGROLENDING PROGRAM

griculture Minister Shalva Pipia said that 200 beneficiaries were funded in total within the 3rd component of preferential agrolending program, including 49 newly established enterprises. Total allocation within the 3rd component (funding of agricultural enterprises) amounted to $25.6 million. As of September 10, 5,343 loans with total volume of 94.1 million lari are issued within first three components of the program. At that, 2,685 beneficiaries were funded within the 1st component (commodity credit) through commodity installment worth of 1.1 million lari, while 2,439 beneficiaries got loans of 48.4 million lari within the 2nd component (funding of fixed and current assets).

caucasian business week

COMMERCIAL BANKS TO PAY 147 MILLION USD DEBTS IN 3Q13

68.6M National Bank of Georgia (NBG) reported that commercial banks have to pay in the 3rd quarter debts of $147.1 million, which is 17% of the country’s total debt to be paid in JulySeptember. NBG itself has to pay $68.6 million, which is 8%. The country’s total debt, subject to payment in the 3rd quarter, amounts to $863.3 million. Of

which, 77.9% (i.e. $672 million) is principal sum, while remaining $191.3 million is charged interest. The largest share of total debt, subjected to payment in the 3rd quarter ($211.2 million, or 24.45%), comes on intercompany loans (direct investments). Public debt accounts for $85.5 million (10%). Remaining 40% (i.e. $350.9 million) comes on non-financial and non-banking corporations.

LIBERTY BANK ISSUED A NEW CREDIT CARD FOR TEACHERS

irector of Liberty Bank Armen Matevosyan declared that the bank has issued contactless credit card Teacher’s Card, designed specifically for teachers. He said that interest rate for the card makes up 28%, while fee for cash withdrawal – 1%. Regular rates for other credit cards of Liberty Bank make up 36% and 3%, respectively. Initial volume of loan is equal to doubled amount of salary, but may be increased then, Matevosyan said.

During promo action on Teacher’s Card (to be last until January 1, 2014), each 1000th payment will be returned to the cardholder, while fees for credit limit approval and annual service of the card will be voided. “We think that 4 months is enough period to master the whole segment. After January 1, we do not exclude to cancel the action and impose the commission fee”, Matevosyan said. Liberty Bank is going to delivered Teacher’s Card to 60,000 teachers countrywide.

BANK REPUBLIC AND SMILE INTRODUCE UNPRECEDENTED INSTALLMENT SCHEME

ank Republic stated that they offer customers new installment with trade network Smile. The bank informs that from September the consumers can benefit from 0% installment with special conditions. In

particular, they can buy any household technology so that they did not have to pay extra money. Conditions are simple: installment – 0%, bank’s fee – 0, pre-payment - 0. This promo is unprecedented on the market and will be exclusively carried out only in Smile network on any SAMSUNG products. “We always try to be innovators and spoil consumers with various interesting products. A year ago Smile introduced 18-monthe 0% installments on the market first time, later we offered 2 and 3-year 0% installment with Bank Republic to the customers. This time we offer that innovation product to the market. Persons with any income can by desirable items, among them expensive technology which had been only dream for them. Item value will be equally divided for desired period, so that they will not have to pay even a Tetri extra money. Smile will cover all the payments (fee, pre-payment, bank %) which had to be paid by customer,” – states Khatuna Nozadze, marketing representative of Smile.

MFO’S FIRST CREDIT CARDS TO COME OUT IN DECEMBER

FO’s will release credit cards on the market in December of this year. According to Malkhaz Dzadzua, Chief Executive Officer of MFO “Crystal JSC”, at the stage the terms of card issuance are being specified and unlike the products offered by banking sector, customers will be able toquickly get them. Dzadzua doesn’t talk about otherdetails and adds that the organization is working on them right now. Another MFO “Georgian Credit” also plans to issue credit cards although the company does not

speakabout the date and terms until the product is released. According to Chairman of the Association of Georgia Microfinance Organizations, the terms of theproduct that will be provided to customers by microfinance institutions will not be different from the products offered by banks and the cards will be issued in accordance with the regulations of the National Bank. Bakuradze notes that the only difference will be an easy delivery of the cards by themicrofinance institutions.Note: The microfinance organizations have got the right to issue credit cards about two months ago.

VTB BANK GEORGIA ISSUES 3.35 MILLION GEL LOAN TO KAKHETI TRADITIONAL WINEMAKING

TB Bank Georgia reported that within the 5th component of preferential agrolending program, loan of 3.35 million lari was issued to Kakheti Traditional Winery. To remind, the 5th component of the mentioned program envisages funding of purchase of grape by wine companies. Vladimir Robakidze, VTB Bank Georgia director of corporate business, declared that the bank has 3-year experience of partnership with Kakheti Traditional Winery. Since start of VTB Bank Georgia’s participation in preferential agrolending program, it has issued loans of more than 16 million lari to over 600 entrepreneurs and farmers.

KSB BANK ENDS JANUARY TO JULY PERIOD IN 4.243 MILLION GEL PROFITS

SB Bank completed 7 months with 4,243 million GEL profit. KSB informs that only in July bank’s profit equaled to 708 thousand GEL. By July 31, 2013 nonbanking deposit portfolio of the bank equals to 248 million GEL (II Q 2013 - 260 million GEL), loan portfolio - 235 million GEL (II Q 2013 - 230 million GEL). For the same period, overall obligations of the bank equals to 336 million GEL (II Q 2013 - 326 million GEL), bank’s actives - 426b million GEL (II Q 2013 - 416 million). It’s noteworthy hat KSB Bank completed 2012 with 4,927 million GEL profit. 2011 profit equaled to 2,6 million GEL. The bank operates since 2008, after Arabian Dhabi Group purchased 100% of the Standard bank from its owner, Standard Capital Georgia. UAE sheikhs are bank’s stockholders.

HIGHEST AMOUNT OF AGRO LOANS WERE ISSUED IN KAHKETI, LOWEST AMOUNT - IN RACHA-LECHKHUMI

n the framework of Preferential Agro Credits Project, highest amount of loans are issued in Kakheti. 969 beneficiaries benefited from project. Minister of agriculture Shalva pipia presented statistics of the loans issued in the framework of Preferencial Agro Credit Project, on the wednesday meeting with journalists. According to Ministry’s statistics, 461 loans are issued in Shida Kartli; 408 projects were funded in Kvemo Kartli; 270 credits were issued in the framework of Preferencial Agro Credit Project in Imereti region; 109 projects are funded in Samtkhe-Javakheti; 86 loans are issued in Samegrelo region; 58 beneficiaries got loan in MtkhetaMtianeti; 40 loans were funded in Tbilisi (loans issued in Tbilisi includes loans for the farmers in the villages which belong to Tbilisi territorial borders). 22 benefitiaries received loan in Adjara region; 18 loans were issued in Guria region; 6 credits were issued in Racha-Lechkhumi region. It’s noteworthy that in the framework of Preferencial Agro Credit Project to date credits of 94 103 126 GEL are issued. In sun 5 343 beneficiars received loans.

STATISTICS September 16, 2013 #21

caucasian business week

EARLY REPORT: LUXEMBOURG ACCOUNTS FOR OVER 50% IN GEORGIA’S Q2 FDI

akstat published preliminary data for the first half of the year, according to which Luxembourg accounts for 52% (of total foreign investments (FDI), implemented in Georgia in the 2nd quarter ($232 million). Volume of investments from this country ($121.1 million) has jumped 20.5 times year-on-year.

China is on the second place with 34% of total FDI (i.e. $79.4 million, yearon-year growth – 79 times). Next come Netherlands – 28% ($65 million, year-on-year decline – 5.8%), Turkey – 16.4% ($38.1 million, growth – 2.4%), Azerbaijan – 9.5% ($22.1, decline – 15.4%), the US – 8.2% ($19 million, instead of negative $1.8 million in the same period of 2012), Kazakhstan – 6% ($13.6 million, growth

– 2.3 times), Switzerland – 3.9% ($9 million, growth – 2.3 times), Virgin Islands – 2% ($5.3 million, instead of negative $0.9 million in the 2nd quarter of 2012). Sakstat explains that such percentage distribution of total FDI is caused by decrease of liabilities toward investors in case of several other countries – total negative showing made up $140.2 million.

NEGATIVE FDI WAS FIXED FOR 21 COUNTRIES IN Q2

ased on preliminary data, Sakstat reported that negative showing of foreign direct investments (FDI) was fixed for 21 countries in the 2nd quarter. Total negative FDI amounted to $184.8 million. The mentioned showing increased 8 times, if compared with preliminary data of the 2nd quarter of previous year, and 9.3 times, if compared with preliminary data of the 1st quarter of

this year. Out of total negative FDI, Cyprus accounts for 59.4% (i.e. for $109.8 million). At that, investments from Cyprus were positive in the 2nd quarter of 2012 and in the 1st quarter of ongoing year, amounting to $6.1 million and $5.3 million, respectively. Next come the UK – 12.1% ($22.4 million, instead of positive investment of $13.5 million in the same period of 2012), Japan – 9.7% ($17.9 million, instead of positive investment of $11.9

million in the 2nd quarter of 2012), Saudi Arabia – 3.7% ($6.9 million, growth – 7 times). Share of international organizations in total negative FDI volume makes up 4.2%, i.e. $8.1 million (in the same period of previous year, positive investments of $125,700 were fixed). Sakstat specified that decline of liabilities towards investors include dividends’ payment, repayment of trade credit and payments of loans’ principal and charged interest.

FISCAL SURPLUS IN 8 MONTHS MADE UP 146M LARI

inance Minister Nodar Khaduri reported that fiscal surplus during JanuaryAugust amounted to 146 million lari. He stressed that there was fiscal deficit of 348 million lari in the same period of 2012. Khaduri declared about this at today’s press conference, noting that this fact means that the state has really imple-

mented “policy of belts tightening” and funds are not directed on administrative and reckless expenses. The mentioned surplus will be totally spent for social and other liabilities’ fulfillment, he said. The Minister declared that currently, there are 755 million lari on account of the State Treasury, increasing by 8.8% since the beginning of the year.

TAX REFUNDS TOTAL IN 8 MONTHS TO 37M LARI

inance Minister Nodar Khaduri reported that total refunds of taxpayers’ overpaid taxes amounted in 8 months of the year to 37 million lari. The biggest volume (11.9 million lari) was fixed in August, he noted. The Minister declared that tax revenues, collected in 7 months, amount to 3.79 million lari (year-on-year growth – 1%). Volume of export amounted to $1.1 billion (year-on-year growth – 6.5%).

ENERGY ACCOUNTED FOR ALMOST ONETHIRD OF TOTAL FDI IN Q2

ased on preliminary data, Sakstat reported that energy accounted for 29% of total foreign direct investments (FDI), implemented in the 2nd quarter ($232 million). FDI, made in energy ($66.3 million), exceed by 11.9% the same showing of the 2nd quarter of 2012. Manufacturing is on the second place with share of 25.4% (i.e. $59.1 mil-

lion, year-on-year growth – 73.5%). Next come transport and communications – 19.8% ($46 million, decline – 4.2%), construction – 16.8% ($38.6 million, growth – 9.75 times), financial sector – 5.6% ($13.1 million, decline – 13.3%), mining – 4.3% ($9.7 million, instead of negative $14.4 million in the same period of 2012), real estate – 2.2% ($4.6 million, decline – 2.1 times).

OIL IMPORTERS UNION: OIL CONSUMPTION REMAINS HIGH

nion of Oil Importers declared that despite serious competition between petrol and car gas, “generally, oil-products’ import and consumption still stands on high level”. According to the Union, import of oilproducts (petrol and diesel fuel) to Georgia totaled in August to 80,800 t, exceed-

ing by 12.8% the showing of July. At that, import of petrol amounted to 36,800 t, while import of diesel – to 44,000 t. The Union said that activity within the state agriculture and infrastructure projects, as well as further growth of economy in general, provides ground for forecast that consumption of oil-products and, consequently, their import will be maintained at high level in next months.

PUBLICITY September 16, 2013 #21

caucasian business week

10 INVESTMENTS WORTH ABOUT $4 BILLION MADE IN AZERBAIJAN’S ENERGY SECTOR MINISTER

AZERBAIJAN caucasian business week

September 16, 2013 #21

FOREIGN FIRMS CONTRIBUTE TO UPGRADE OF AZERBAIJANI RAILWAYS

CIS market. “Currently we are working on the proposals for a city transport project in Ganja,” Desterakt said. Desterakt also said Azerbaijan is an economically developed country with its own demands and the company is working on what exactly it can offer to the country. The Alstom Transport official said he plans to visit Azerbaijan by the end of September. Alstom Transport develops and markets a complete range of systems, equipment and service in the railway industry, combining the most comprehensive range of products and services available in the rail industry. Alstom Transport controls entire transport systems, including rolling stock, signalling and infrastructure, as well as offers “turnkey” solutions. Meanwhile, Canada’s Bombardier signed an agreement with Azerbaijan Railways on modernization of signalling systems at the Baku-Boyuk Kesik railway line, the official website of the company said. According to the company, the total value of the transaction amounts to $288 million. The length of the Baku-Boyuk Kesik line where a new signaling equipment will be provided is 503 kilometers. President of Bombardier’s Rail Control Solutions Peter Cedervall commented that the company is

proud of its first contract in Azerbaijan, which is the largest signalling contract ever awarded in the CIS countries. “This major signalling upgrade reflects our commitment to provide our state-of-the art technology to Azerbaijan and to continue to deliver our signalling solutions to the region through our well-established engineering and manufacturing joint ventures in Moscow,” he said. The bulk of work covers designing, manufacturing, supply, installation, testing and commissioning of Interflo 200 signaling system. The commissioning of the system is planned in four stages and the entire process will be completed in 2017. A major overhaul of 317 kilometers of the Baku-Boyuk Kesik railway is being carried out on account of a $215 million loan allocated by the Czech Exim Bank. The work was launched on June 10, 2011. To date, over 250 kilometers of the railway have been repaired. Bombardier is the world’s only manufacturer of both planes and trains. Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. The Montreal-based company’s shares are traded on the Toronto Stock Exchange (BBD) and listed on the Dow Jones Sustainability World and North America Indexes.

urrently, Azerbaijan is not only the country that independently meets domestic demands in all energy resources, particularly in electricity, but also the country that exports electricity, Azerbaijani Minister of Finance Samir Sharifov told local media. According to him, this is the reflection of the state care of energy sector which is always in the center of special attention and control. “In total, around 3.1 billion manat was attracted to the energy sector in last ten years from domestic and foreign sources. As a result, around 14 power stations were constructed and commissioned and three sets of high-voltage power transmission lines were laid,” Sharifov said. Azerbaijan’s state-owned energy producer Azerenergy generated about 7.8 billion kilowatt hours of electricity in January-April 2013. The total capacity of the power plants owned by Azerenergy exceeds 6,000MW. There are more than 200 substations with a capacity of 500, 330, 220 and 110 kilovolt amperes, as well as six hydropower plants and 13 thermal power plants on its balance sheet.

Moscow. “We have permanent contacts with Azerbaijan Railways CJSC and we have great plans for Azerbaijan concerning locomotives,” he said. According to Desterakt, Azerbaijan is one of the priority countries for cooperation in the

AZERBAIJAN`S FOREIGN TRADE TURNOVER HIT $ 25.4 BLN

EBRD TO FINANCE MINERAL WATER PRODUCTION IN AZERBAIJAN

zerbaijan`s foreign trade turnover made up $25.4 bln in JanuaryJuly 2013,AzerTag state news agency reported. The State Statistical Committee reported that export made $19.2 bln of the total amount, while import was $6.2 bln. During the reported period, the trade operations with 141 countries have been carried out. Some 27 countries are American, while 49 are European and 38 are Asian countries. Export of the non-oil goods increased by 9.9 % in comparison with the same period of 2012. Azerbaijan’s foreign commodity turnover increased by 8.8 times, export - by 11 times, and non-oil export - by 6.5 times, in last ten years. If the number of market partners of the republic amounted to 80 countries ten years ago, this figure has increased to 155 today.

TURKEY INTENDS TO UP GAS IMPORT FROM AZERBAIJAN

urkey will be able to deliver gas from Azerbaijan and Iran with the launch of the new gas compressor station in Chayirli in Turkish Province of Erzincan, Turkish Minister of Energy and Natural Resources Taner Yildiz said. He said that one third of the gas consumed in Turkey will be pumped through the new gas compressor station in Chayirli, local media reported. Currently, Turkey imports gas from Azerbaijani gas condensate field of Shah Deniz through South Caucasus Pipeline (Baku-Tbilisi-Erzurum). According to the contract, within first stage of the field development Turkey must deliver 6.6 billion cubic meters of gas. From the second stage, Turkey will deliver another 6 billion cubic meters of gas. Shah Deniz reserves are estimated at 1.2 trillion cubic meters of gas. The contract to develop the offshore Shah Deniz field was signed on June 4, 1996. Participants to the agreement are: BP (operator) - 25.5 per cent, Statoil - 25.5 per cent, NICO - 10 per cent, Total - 10 per cent, Lukoil - 10 per cent, TPAO - nine per cent and SOCAR - 10 per cent. In 1996, Iran and Turkey concluded an agreement to supply 10 billion cubic meters of gas to Turkey annually (30 million cubic meters per day).

rench company Alstom Transport is ready to meet the demand of Azerbaijan Railways, its Senior VicePresident on Russia and CIS, Thibault Desterakt, has said at an event in

he European Bank for Reconstruction and Development (EBRD) and one of Azerbaijan’s leading bottled water producers Gedebey Mineral Sulari signed a €4.6 million loan

agreement. The bank reported that the funds will be used to purchase new equipment to increase the company’s production capacity, in order to respond to fast-growing product demand and to strengthen its distribution, as well as for the acquisition of modern bottle filling equipment to sustain Gedebey’s ambitious growth targets, and to improve its packaging and labelling to international standards. Head of the EBRD’s Resident Office in Azerbaijan Neil McKain said that the bank is pleased to support entrepreneurial businesses outside of Baku, such as Gedebey, and to contribute to this company’s success story “This investment demonstrates our commitment to invest in the regions of Azerbaijan and support local businesses,” he said. Established in 2010 as a privately owned company, Gedebey produces premium local water under the brands Slavyanka and Gedebey. From a start-up phase in 2010, the company has evolved to become one of the leading bottled water com-

panies in the country, owing to the popularity of its quality water. The company is based in the Lower Caucasian Mountains, a region of Gedebey famous for its water, which is claimed by locals to have remedial and medicinal qualities. Gedebey capitalised on the popularity of its water and gained a significant market share of the bottled water market in Azerbaijan in the three years of its existence. The EBRD’s Early Transition Countries (ETC) Fund has provided financing for the company to conduct market research and strategic analysis, as well as consulting on legal and marketing issues. This technical cooperation project has been an important factor enabling Gedebey to secure EBRD financing and to make fur-

ther progress towards a successful future. To date, the EBRD has signed 134 investments worth more than €1.5 billion in various sectors of the Azerbaijani economy. The developing agribusiness sector offers opportunities to reduce the country’s dependence on oil and gas revenues by strengthening economic diversification - one of the EBRD’s priorities in Azerbaijan.

OPEC FORECASTS INCREASE OF AZERBAIJAN’S OIL OUTPUT

he Organization of the Petroleum Exporting Countries (OPEC) predicts Azerbaijan’s oil production to increase by 20,000 barrels per day (bpd) and reach 0.9 million bpd in

2014. In its Monthly Oil-Market Report for September published on Sept.10, OPEC said that the highest level of Azerbaijan’s oil production in 2014 will be observed in the fourth quarter and amount to

0.93 million bpd. The country’s oil production will amount to 0.9 million bpd in the first quarter of the next year, 0.89 million bpd in the second quarter, and 0.9 million bpd in the third quarter. OPEC predicts Azerbaijan’s oil production to stand at 0.88 million bpd in 2013, which is 20,000 bpd less than in 2012. This is an upward revision of 10,000 bpd compared to the previous OPEC’s Oil Market Report. OPEC’s estimations shows that during the first half of 2013, Azerbaijan’s oil supply averaged 0.87 million bpd, a decline of 70,000 bpd compared to the same period a year earlier. Production is expected to remain relatively steady in the second half of 2013 compared to the first half. On a quarterly basis, Azerbaijan’s oil supply in 2013 is seen to average 0.87 million bpd, 0.87 million bpd, 0.88 million bpd and 0.88 million bpd, respectively. According to BP, the proven oil reserves of Azerbaijan amounted to 7 billion barrels as of early 2012. Oil production in the country amounted to

0.931 million bpd in 2011. The main volume of oil produced in Azerbaijan falls on the ACG offshore field. This area produces Azeri Light oil with a sulfur content of 0.15 percent (35 degrees API). The giant ACG block of oil fields has been producing since 1997. The production started from the Chirag section of the field and it still continues successfully, this was followed by Azeri Project - Central Azeri production started in February 2005, West Azeri started in December 2005, and East Azeri came on stream in October 2006 with the Deepwater Gunashli section starting production in April 2008. The next step of ACG development - Chirag Oil Project (COP) is expected to begin production later this year. To date the field has produced about 2.2 bn barrels of oil. Equity participation in the contract on ACG is distributed as follows: BP (operator) - 35.78 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 11.65 percent, Statoil - 8.56 percent, Exxon - 8 percent, TPAO - 6.75 percent, Itochu - 4.3 percent, and ONGC - 2.72 percent. azernews.az

ARMENIA September 16, 2013 #21

caucasian business week

EXPERT: $7.9 BILLION INVESTED IN ARMENIA’S ECONOMY FOR TWO DECADES

n Thursday, Vazgen Safaryan, chairman of the Union of Domestic Commodity Producers, answering ARKA News Agency’s question at a news conference, said that $7.9 billion had been invested in Armenian economy’s real sector from the outside for two decades. Of this amount, $5.9 billion has been invested directly. Russia has invested about $3.2 billion, of which $2.4 billion directly. Russia’s investments constitute 41.5% of total foreign investments in Armenia’s economy, Safaryan said. The second largest investor was France with its $761.8 million (12.1%) invested in Armenia’s economy, of which $715.9 million has been invested directly. The third biggest investor in the Armenian economy is Greece with $478.8 million (6%) and $307.7 million respectively. “Germany’s investments in Armenia’s economy for 20 years total $393.6 million, of which $367.7 million has been invested directly, and the United States’ $390.1 million, including $244 million direct investments. This makes up 4.9% of total foreign investments.” According to the National Statistical Service of Armenia, foreign investments in Armenian economy’s real sector for the first six months of

this year total $293 million – 34.7% year-on-year decline. Safaryan found it natural that foreign investments in Armenia shrank recently. He said this happened because Armenia is torn between the Customs Union and the EU Association Agreement – both sides refrained from investment pending Armenia’s decision. “And now, when Armenia unveiled its intention to join the Customs Union, the flow of Russian investments into Armenia’s economy will intensify,” he said adding that the bulk of these investments will target Armenian Nuclear Power Plant and the country’s railway. Armenian and Russian presidents, Serzh Sargsyan and Vladimir Putin, made a joint statement after they met in Moscow one week ago. It has become known from the statement that Armenia has decided to join the Customs Union and it intends to take part in formation of Eurasian Economic Union in the future. The announcement came as Armenia was poised to sign the Association Agreement with the European Union. President Putin said that Russian Railroads can invest 15 billion rubles in Armenia’s railroad and that Rosatom will work with Armenian experts to prolong the life of the Armenian Nuclear Power Plant for ten years. Arka

CHINA WANTS TO SEE ARMENIAN BRANDY IN ITS MARKET

hina is the second biggest trade partner of Armenia after the Russian Federation. Armenia imports computer techniques, domestic utensils, cell phones, clothes, shoes, construction materials, and medical equipment from China. Armenia mainly exports copper ore to China. As reports “Armenpress” the Republic of Armenia-People’s Republic of China trade circulation rates equal to 7.1 percent (USD 198 million 685 thousand) of general foreign trade volume for the first six months of the current year (export – USD 27 million 574 thousand, import – USD 171 million 111 thousand). Within the framework of the visit to the People’s Republic of China, the Prime Minister of the Republic of Armenia Tigran Sargsyan had a meeting with the Premier of the People’s Republic of China Li Keqiang on September 10 in the Chinese city of Dalian. The Information and Public Relations Department of the Government of the Republic of Armenia informed “Armenpress” that Li Keqiang welcomed the guest and expressed his gratitude for the participation in the World Economic Forum in Dalian. In addition the Chinese Premier noted: “Last time we met within the framework of Shanghai Expo and I am glad to see You in China again.” Among other things the Premier of the People’s Republic of China Li Keqiang underscored: “As

a sign of friendly relations between our countries we have decided to grant additional free financial assistance of about USD 16 million to the Government of the Republic of Armenia for the implementation of joint programs.” In addition Li Keqiang emphasized that along with making investments in Armenia, they also want to see Armenian brandy, jewelry, and precious stones in the Chinese market. The delegation led by the Prime Minister of the Republic of Armenia Tigran Sargsyan paid a working visit to the People’s Republic of China on September 9. The Armenian delegation participates in the World Economic Forum. Among other things it is considered to sign bilateral documents; in particular an agreement on economic cooperation and a memorandum of mutual understanding in the sphere of emergency situations administration. Also, there will be a number of meetings with the representatives of various IT companies. The Head of Staff of the Government of the Republic of Armenia-Minister Vache Gabrielyan, the Minister of the Emergency Situations of the Republic of Armenia Armen Yeritsyan, the Deputy Minister of Foreign Affairs of the Republic of Armenia Sergey Manaseryan have been included in the delegation led by the Prime Minister of the Republic of Armenia Tigran Sargsyan. The Prime Minister’s working visit to the People’s Republic of China will be over on September 12. ARMENPRESS

ARMENIA OPENS PERMANENT PAVILION IN CHINESE TRADING CENTER

rmenia opened yesterday its permanent pavilion at Global Purchasing Centre in Tayzhou in the Chinese province of Jionsun, the press service of the armenian government said. It said Russia, France, Britain, the U.S., Switzerland, Italy, Germany and several other European and Asian countries have opened their pavilions too. The opening ceremony of the Armenian pavilion which is showcasing brandies, wines and juices,

was attended by head of government staff Vache Gabrielyan and Armenian businessmen. “Having a permanent pavilion in Jionsun with a population of 80 million will allow Armenian producers to discover the potential of the Chinese market and create profitable business relationships”, the Armenian government said. According to the National Statistical Service of Armenia, Armenia’s trade with China in 2012 amounted to $431.7 million, up 2.7% from the previous year. Arka

ARMENIAN ECONOMY ON BRINK OF COLLAPSE

rmenia’s economy is indeed on the edge of a crisis and collapse. Social life, welfare of the ordinary people have become too unbearable due to the arbitrariness and lack of governance of the Armenian authorities. Even foreign investment in Armenia is on the decrease, armenianreport.com said on Sept.3. The annual level of EU investment in Armenia decreased by 60.4 percent, while the Russian investment went down 4.6 percent in the first six months of the year. According to the Armenian National Statistical Service, European foreign direct investment (FDI) reduced by 78.6 percent to $48.2 million, while Russia’s FDI by 14.3 percent to $32.8 million, with more than half -- $16 million -- accounting for the telecommunications industry. Nearly $11 million was invested in transportation, $4.6 million in the energy sector, $3.5 million in the production of base metals and about $1 million in wholesale and retail trade. In the breakdown of EU states direct investment from France dropped by 86 percent to $28.9 million, Belgium 6.6 percent to $102,500, and Luxembourg 63 percent to $4.2 million. The total UK investment fell by 41.9 percent, while FDI increased, reaching, however, a small amount of $5.1 million that was invested in the mining industry. However, investments were nulled in the

beverage industry, metallurgy and air transport. Furthermore, Austria, the Netherlands, Denmark, Italy and Hungary nulled their investment in Armenia over 5 years. In the annual dynamics of the foreign trade turnover, the level of the Armenian-Russian turnover decreased 2.4 percent to $597 million. Foreign trade with EU countries has seen annual decline of 0.9 percent to $779.2 million. The Armenian Finance Ministry said that only 442 (46.6 percent) out of a total of 948 companies received unqualified audit feedback on Sept.5. 204 companies did not acquire audit reports and 295 did not even undergo audits. Companies with revenues or assets of more than 1 billion drams are considered to be large companies that are required to undergo audits in Armenia. They should submit the annual independent auditor’s report by July 1 of the following year or otherwise would lose the right to participate in public purchases. The Armenian Finance Ministry is itself “developing” through grants, which forms the basis of the Armenian economy. U.S. Agency for International Development (USAID) has provided the ministry with a grant of $500,000 for the development of human and institutional capacities. The amount is to be spent on audits and accounting. azernews.az

ARMENIA’S ACCESSION TO CUSTOMS UNION MUST BE PRECEDED BY WORKING OUT ROAD MAP, EXPERT SAYS

rmenia’s accession to the Customs Union must be preceded by drawing up a roadmap that will take into account its political and economic realities and will give also an answer to a question what it will gain from its membership, Alexander Markarov, director of the Armenian branch of the CIS Institute, said today during a Yerevan-Moscow video conference. “Armenia’s decision to join the Customs Union has caused positive emotions and the need for critical reflection on this issue by taking into account the objective political and economic situation in Armenia,” said Makarov. According to him, one should take into account such factors as lack of common borders between Armenia and a Customs Union member country, energy policies and also the fact that Armenia had sought close integration with EU. Makarov added that the decision to join the Customs Union is political adopted in view of a hierarchy of priorities that include also elements of economic cooperation. This view was shared by the director of the Caucasus Institute, political scientist Alexander Iskandaryan, who said not everything is so simple with the Customs Union as it may seem. “The decisions taken in Moscow are political and I’m afraid they have no alternatives. To ensure that they crystallize into a specific interaction between Armenia and Russia within the framework of the Customs Union there should be a process of harmonization,” Iskandaryan said. He said the Customs Union is a fairly large num-

ber of agreements on tariff regulations, borders, movement of goods, with a pretty large number of different exceptions. The Customs Union, in his opinion, was designed for Belarus, Kazakhstan and Russia, which all are quite different from Armenia : with Russia and Kazakhstan being oil-producing and exporting countries, while Armenia imports energy resources. “The union must develop agreements that would be acceptable for Armenia. It is of course a technical or bureaucratic way, as the political decision was made and announced by presidents, and as I understand it, Armenia will soon be formally invited to join the Customs Union , however, it will take some time and some reconciliation work,” he stressed. Alexander Skalkov from the Institute of Oriental Studies of the Russian Academy of Sciences emphasized that there is no roadmap yet and it is not clear when it may be worked out. He argued that no road map was worked out for Armenia either to sign the association agreement with EU. “I can only express hope that this roadmap will appear after all and that it will take into account the interests of all the members of the Customs Union and Armenia and that in future the focus will shift from politics to economy,” he said. Arka

ARMENIA SATISFIES ITSELF INTERNAL DEMAND OF EGGS

ggs production level this year also will be around 710-720 million eggs. About this informed Ashot Hovhannisyan from Armenian agricultural ministry during press conference on September 9, mentioning that in eggs production volume Armenia is considered self-sufficient country. “Since 2000 up till now eggs production volumes exceeded consumption level. The eggs consumption volume in the Republic annually is around 700 million eggs. Several years ago we produced more eggs than we could consume so egg was sold in shops cheaper than its cost price. Producers tried to solve that issue and now they

keep as much chicken as is necessary,” said Hovhannisyan, report “Armenpress”. In his words eggs produced in Armenia is exported only to Georgia – annually 50-60 million eggs. Although Armenia is self-sufficient country in sense of egg production but the price increase for eggs in continued in the country. In summer usually egg is cheaper but in shops is realized for 69-70 AMD instead of previous 66-68 AMD. The companies of the sphere condition the price increase by rise of electricity price and other factors. There are ten large, medium and small poultry farms in Armenia. ARMENPRESS

CIS caucasian business week

September 16, 2013 #21

ABU DHABI TO INVEST RECORD $5BN IN RUSSIAN INFRASTRUCTURE

T PRESIDENT: ONE SHOULD NOT CONTRADISTINGUISH EUROPEAN INTEGRATION AND COOPERATION WITH OTHER ASSOCIATIONS

ne should not contradistinguish European integration and cooperation with other associations, particularly the Customs Union, according to the Press office of President Viktor Yanukovych. It was stated by the President in the course of his conversation with the staff of Lutsk Overhaul Factory “Motor”. Viktor Yanukovych emphasized that Ukraine had signed the Memorandum on Cooperation with the Customs Union. According to him, study of documents of the given association is in process. “We must consider these provisions at the level of our experts and our Government. If they meet our national interests and do not contradict with our international obligations, we will accede to them, make out respective documents and submit them for consideration. If they are approved, we will go through the given procedures in all 4 countries,” the Head of State said. Speaking of the preparation to the signing of the Association Agreement with the EU, Viktor Yanukovych stressed: “There are no issues that we can’t solve. We are about to finish soon”. According to him, the Agreement had already been initialed by the two parties at the level of experts. “Now, we are talking about the signing and then – the ratification by 28 countries of the EU and by Ukraine in the parliaments. Then the agreement will enter into force,” the Head of State noted. The President reminded that Ukraine had been moving towards European integration for more than 10 years already and it had become much closer to the European standards during that time, particularly in the field of legislation. unian.info

RUSSIA AND UKRAINE ENRICH ARMENIA’S MAIZE MARKET

he maize import volume to the Republic of Armenia has been increased by over 58 percents during the first six months of the current year in comparison with the same period of 2012, thus reaching 38 thousand 964.6 tons. In accordance with the data provided by the State Revenue Committee under the Government of the Republic of Armenia 24 thousand 254.3 tons of maize have been imported to the Republic of Armenia during the first six months of the previous year. As reports “Armenpress” the Republic of Armenia imported the majority of maize from the Russian Federation (21 thousand 939 tons) and Ukraine (15 thousand 855 tons). Also, the Republic of Armenia imported 1078.7 tons of maize from Georgia. ARMENPRESS

Uzbekistan

hina Railway Tunnel to construct tunnel in Uzbekistan for USD 455 million. China Railway Tunnel signed a contract with the state joint stock railway company Uzbekistan Temir Yollari for construction of tunnel through Qamchiq pass with the cost of USD 455 million. Within the contract the Chinese company will construct tunnel with the length of 19 km for movement of railway and adit tunnel, which will be used in case of accident. It is planned to complete construction in July 2016. Uzbekistan Temir Yollari started construction of new electrified railway Angren-Pap with the length of 129 km in July 2013. The railway will pass through Qamchiq pass and link Ferghana Valley (Andijan, Namangan and Ferghana regions) with other part of Uzbekistan. The project with preliminary cost of US$1.9 billion will be financed due to loans of international financial institutions for US$1 billion and own resources of the Uzbek side. It is planned to complete final version of the feasibility study by the end of 2013. The construction works wil take five years.

he UAE will invest up to $5 billion in Russian infrastructure projects in a deal between the Russian Direct Investment Fund (RDIF) and the Abu Dhabi Department of Finance, marking the highest investment to Russia from the Emirates. RDIF head Kirill Dmitriev and Mohamed bin Zayed Al Nahyan, the commander of the UAE’s army, signed a memorandum of cooperation on Thursday. “We are very pleased with your arrangement with the Russian Direct Investment Fund to invest up to $5 billion in Russian projects,” said President Putin. Moscow and Abu-Dhabi agreed on a joint venture investment platform to develop Russian roads, ports and bridges. While RDIF has been cooperating with Arab investors for a long time, the latest deal marks one the world’s biggest infrastructure projects, according to Dmitriev, cited by Vedomosti. The investment, which will span the next 7 years, and will put money into Russian infrastructure on a deal-by-deal basis. It will include an overhaul of the Trans-Siberian railway, a fast-speed train line connecting Moscow and Kazan, and construction on the ring road on Moscow’s city limits. The deal is expected to be official by the end of 2013. Along with the memorandum, Putin and Nahyan discussed the expansion of bilateral trade, economic ties, energy, and humanitarian collaboration.

Hot on the trail

The deal highlights Russia’s drive to attract sovereign wealth money to fund domestic projects. Mubadala, a separate Abu Dhabi-based wealth fund, pledged $1 billion for Russian businesses with the RDIF last June. Russia and Japan launched a joint $1 billion investment vehicle aimed at boosting development of Russia’s Far East and Siberia, which offer highly profitable infrastructure opportunities. In April 2012, Russia and the China Investment Corp created a joint $4 billion investment fund that focuses on agriculture, machinery, and logistics.

The Kuwait Investment Authority invested $500 million in Russia in June 2012. The $10 billion RDIF was launched two years ago by then President Dmitry Medvedev at the St. Petersburg Economic Forum to pump foreign money into Russia’s economy. Krill Dmitriev a former Goldman Sachs banker, was selected to spearhead the fund and tap into the deep pockets of interested foreign parties. Dmitriev is a strong advocate of infrastructure, which he sees as a key element in bolstering world growth. Rt.com

ROSNEFT TO BECOME ‘SPECIAL OIL IMPORTER’ TO BELARUS

osneft president Igor Sechin has pledged to fully supply Belarus with oil, despite Russian government threats to reduce supplies over the so-called ‘potash war’ between Russia and Belarus. After Uralkali Vladislav Baumgertner CEO was arrested in Minsk, rapport with Moscow and its old soviet republic quickly soured. Following the arrest, Russian state pipeline group Transneft said it would reduce oil supplies to Belarus by 25 percent in September while fixing the Druzba pipeline. However, during Sechin’s trip to Minsk on Wednesday, the Rosneft head confirmed the company would fulfill its obligations to supply oil to Belarus refineries. “Cooperation with Belarus is a priority, and Rosneft will not alter its oil supplies”, Sechin said. Rosneft is likely to end up being the exclusive oil supplier to Belarus, says Kommersant, citing inside sources confirming Sechin wants to be the ‘special importer’ to Belarus. One source said starting next year, Rosneft could be the country’s single exporter and deliver 23 million tons of crude oil. President Alexander Lukashenko said he would

instruct government officials to work out an exclusive oil deal between Rosneft and Belarus. Rosneft is one of 8 Russian companies that supplies energy to Belarus, but Rosneft is by far the largest, and Sechin has publicly said his company would ‘suffer the most’ if Transneft cut off supplies to Belarus. Crude oil was cut off in January 2011 over a price dispute, and in 2007 after Moscow accused Belarus of siphoning off oil without permission. Transneft vice-president Mikhail Barkov told Interfax the reasons for curtailed supplies were routine maintenance, and the need to upgrade a section of the Druzhba pipeline. Vladislav Baumgertner was arrested on August 26 at Minsk airport shortly after talks with Belarus Prime Minister Mikhail Myasnikovich, who had invited him to the country. The Uralkali CEO was charged with“abusive exercise of power and abuse of office” and causing grave damage to the public interests of Belarus, as well as damage to the Belarusian Potash Company, and is being held in a KGB jail in Minsk. Under Belarusian law, Baumgertner could face up to 10 years behind bars and his assets and property could be confiscated.

The Belarus Investigative Committee has also issued an arrest warrant for major Uralkali shareholderSuleyman Kerimov for ‘abusing power’ which led to the break-up of the Belarusian-Russian potash cartel. Rt.com

RUSSIA, UNHAPPY WITH MOLDOVA’S EU DRIVE, BANS ITS WINE AND SPIRITS

ussia on Tuesday announced a ban on imports of Moldovan wines and spirits, saying they contained impurities, a move certain to be seen in the small ex-Soviet republic as retaliation for its drive to expand ties with the European Union. Russia’s public health chief Gennady Onishchenko said the ban on one of Moldova’s main export earners, due to come into force on Wednesday, had been imposed because Moldova had consistently failed to act to improve the quality of its produce. “We don’t intend to act as a nanny for the Moldovan economy,” Onishchenko said in Moscow, according to Interfax news agency. “The ban is a necessary step that we have under-

taken reluctantly, but it is the only possible way of solving the present situation,” he said. “There have been violations in technical preparation, storage and end-production.” In Chisinau, Economy Minister Valerii Lazar said the Moldovan side were unclear about the reasons for the Russian move. “We will have to clarify where technical problems about the quality of Moldovan wine end and where political aspects begin,” he told Reuters. Moscow is unhappy with Moldova’s drive to conclude political association and free trade deals with the European Union in November in preference to expanding ties with Russia. A Kremlin envoy this month warned that Chisinau’s policies could bring retaliation from

Moscow, possibly involving cuts in Russian gas deliveries, on which Moldova relies heavily. Moldova’s neighbour Ukraine, another former Soviet republic, has also come under pressure from the Kremlin to halt its European integration plans. Exports of wines and spirits such as cognac and vodka are a big currency earner for Moldova which has a population of 3.5 million and is one of Europe’s poorest states. Sales to Russia, the main market for its alcoholic drinks, brought in $135 million last year. Despite pressure from Russia, both Moldova and Ukraine are looking to a November summit in Vilnius, Lithuania, to lock in place landmark agreements with the EU. Reuters

WORLD NEWS September 16, 2013 #21

caucasian business week

NEARING BANKING UNION: ECB TO SUPERVISE 6,000 EUROZONE LENDERS

STOCK SHOCKER: DOW JONES DROPS BANK OF AMERICA, HP, ALCOA

ow Jones is removing America’s second largest bank, printer manufacturer Hewlett Packard, and aluminum producer Alcoa from its 30-stock index, marking a shift in US markets. The companies will be replaced by Nike, Visa, and Goldman Sachs. Under-performers will be dropped from the New York Exchange’s benchmark Dow 30 in the index’s first switch-up in a year. Changes will come into effect at the close of trading on September 20. The reshuffle was “prompted by the low stock price of the three companies slated for removal, and the Index Committee’s desire to diversify the sector and industry group representation of the index,” S&P Dow Jones Indices said in a statement. Bank of America, which has been the center of multiple investor fraud investigations, saw its stock drop near $14.00 per share, compared to pre-crisis value of $50.00. Alcoa has been part of the Industrial Average for over 54 years, but a world-wide decline in metals prices has hit the company hard. The stock closed

at $8.08 Monday, with dividends shrinking 29.31 percent over the last five years. Nike, the athletic goods supplier, will replace Alcoa. Though it has posted a strong performance in 2013 –up more than 57 percent- Hewlett-Packard will be replaced. August marked S&P’s worst month since May 2012, however the S&P Dow Jones said the shake up won’t affect the performance of the index, which is up 15% overall. Goldman Sachs’ shares climbed 3.16 percent, Visa added 1.79 percent, and Nike rose 1.70 percent as of 10:00am in New York. Alcoa’s shares dropped 0.12 percent, HP is down 0.85 percent, while Bank of America is up 1.1 percent. The blue-chip index is price-weighted, and the performance is based on a company’s stock price, and not market capitalization. Stocks are selected by editors of the Wall Street Journal, which is owned by New Corp, which owns stakes in the indices. Stocks are chosen for the average by a committee that includes editors of the Wall Street Journal. Rt.com

European lawmakers have established centralized oversight for Europe’s largest banks. This marks creation of the first of 3 pillars of the bloc’s planned banking union - a cornerstone of the policies to turn the tide on the area’s 3-yearold debt crisis. The centralized bank supervision authority, which will be anchored by the European Central bank, is due to be up and running from 2014, following a thorough stress-test of the banks’ balance sheets. “Today marks a real step forward in setting up a banking union,” as Associated Press quotes ECB President Mario Draghi. He added that the new supervisor would “contribute to the restoration of confidence in the banking sector.” With the new watchdog in place, it’ll take up the job of rescuing struggling banks, rather than leaving weaker member states to fend for themselves. In the past failing banks dragged down government finances and forced European Union countries such as Ireland or Cyprus into seeking bailouts. The European banking supervisor authority will

directly oversee some 130 banks representing about 80 percent of all bank assets in the 17country eurozone. Members of the wider 28country EU that do not use the euro currency, like Britain or Poland, can opt to join later. Anyway, the establishment of the banking union’s remaining pillars - setting up a joint deposit guarantee and an authority to restructure or wind down banks complete with a common financial backstop - is still a long way from being agreed upon. Lawmakers appeared content with the solution, saying it guarantees necessary democratic oversight without jeopardizing financial stability. “It’s a supervision of the ECB, without in any way undermining the ECB’s independence” or endangering a level of banking secrecy required “to protect the markets from unnecessary shocks,” European Parliament President Martin Schulz said Tuesday. Lawmakers overwhelmingly approved the ECB as the supervisor, with 559 voting for, 62 against and 18 abstaining. Rt.com

APPLE LOSES $24 BN, AS A MIX OF BUDGET AND “GOLD STANDARD” IPHONES FAIL TO IMPRESS

DELL SHAREHOLDERS APPROVE BUYOUT BY FOUNDER MICHAEL DELL

ccording to a preliminary count, Dell shareholders have approved a $24.9bn (£15.6bn) buyout offer by Michael Dell and Silver Lake Partners. This will end Dell’s 25-year tenure as a public company. “I am pleased with this outcome,” said Michael Dell in a statement. Although Mr Dell had initially met resistance from investors over the purchase price, leading to three delays of the vote, those conflicts were finally resolved this week. “As a private enterprise, with a strong privateequity partner, we’ll serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals,” said Mr Dell. Mr Dell was alluding to the fact that he hopes to be able to restructure and revitalise the struggling computer maker’s business away from the spot-

light of Wall Street investors. Last month, Dell reported a 72% decline in profits for the quarter, as consumers have increasingly turned away from Dell’s core business of personal computers. Mr Dell and his partners have argued that in order to turn around the company, there must be some painful changes that could impact on profits for the next two years, which is why they wanted to take the company private. Some shareholders, such as billionaire activist investor Carl Icahn, had argued that Mr Dell’s purchase price was too low. There were several court cases, and subsequent delays of a shareholder vote. The final offer would pay $13.88 per share to shareholders, as well as an 8 cents per share quarterly dividend. The sale is expected to close by the third quarter of 2014. bbc.co.uk

hares in world’s largest tech company plunged more than 5%, after its cheaper plastic model faced tough criticism from both investors and consumers. Experts say, Apple’s new line isn’t budget enough, as its price is unlikely to attract low-end consumers. A wave of criticism battered Apple after the company publically presented its new iPhone models, with the stripped - down 5C model aimed a less well–off consumers in emerging markets. Apple’s game plan of cheaper and easier to make plastic cases for the new 5C iPhone should boost margins for a company that has been suffering tough competition from cheaper Android devices. Without a carrier contract, the 5C will cost $549 in the U.S. and $733 in China, which, analysts

say, is still expensive for emerging markets. Apple has always been at the forefront of technological updates and has stuck to high standards introduced by Steve Jobs. It will now face difficulty in shifting to lower quality, market observers say. “Anyone expecting Apple to come truly down market with the iPhone 5C was fooling themselves,” said Ovum analyst Tony Cripps. “The day that happens is the day the company signals that it has run out of headroom for expansion.” The 5C will be available in five colors - green, blue, pink, white and gold, with the latter hoped to become a hit in China, where the color is considered to be a sign of good fortune. Rival Nokia was quick to criticize, hinting at Apple’s attempt to copy their smartphones image. Rt.com

POORER COUNTRIES CONTINUE TO GROW FASTER, DRIVE WORLD ECONOMY: U.N.

eveloping and former communist countries such as Brazil and Russia are heading for much faster growth this year than the developed world, the United Nations said on Thursday, meaning they will remain the main drivers of the world economy. The U.N.’s trade and development agency UNCTAD said in its annual survey of the global economy and the prospects for poorer nations that developing countries would grow 4.5 to 5 per cent in 2013 while the sputtering economies of the rich world would manage just one percent growth.

So-called transition economies, formerly communist regimes such as Russia, Ukraine, Kazakhstan, Azerbaijan and most other former Soviet republics in Central Asia and the Caucasus, are forecast to grow by 2.7 per cent, the Trade and Development Report 2013 said. The two groups, which both have their richest members in the BRIC (Brazil, Russia, India andChina) group of emerging economies, recorded similar growth rates in 2012, although the transition countries were starting to grow less quickly. Their overall economic performance, UNCTAD said, means they will continue for the foresee-

able future to be the main drivers of the world economy, contributing about two thirds to total global growth this year. In many of these countries, whose economies have long been dependent on trade, “growth has been driven more by domestic demand than by exports, as external demand from developed economies has remained weak,” the report declared. China, India, Indonesia, the Philippines and Thailand boosted their own consumer demand through income policy measures and this could lift output growth across the region this year to 5.5 per cent,

against 5.3 per cent in 2012, UNCTAD said. Growth in Africa was expected to slow down to around 4 per cent in 2013 against 5.4 per cent last year, mainly because of political turmoil across the north of the region. South of the Sahara, growth was forecast to remain at around 5 per cent. In Latin America and the Caribbean, UNCTAD said, growth - also driven by domestic demand - was expected to remain stable at around 3 per cent, with a slowdown in Mexico likely to be offset by a pickup in Argentina and Brazil. Reuters

WORLD NEWS caucasian business week

SIX OF WORLD’S TOP 20 UNIVERSITIES ARE IN UK

he UK now boasts six of the world’s top 20 universities, according to a new global table. Edinburgh and King’s College London have edged into the top 20 of the QS World University rankings. Cambridge, UCL, Imperial and Oxford all made it into the top 10. But John O’Leary, of QS, warned that unless the UK puts more funding into higher education its leading position could slip. Edinburgh rose to 17th place from 21st last year and King’s College London to 19th from 26th in 2012.

US domination The top UK university was Cambridge in third position, behind Massachusetts Institute of Technology at the top of the table and Harvard in second. University College London (UCL) and Imperial

occupied fourth and fifth places, with Oxford in sixth. Universities in the United States made up the rest of the top 10. There were eight UK universities in the top 50 and 18 in the top 100, with graduates from Oxford and Cambridge rated as the world’s most employable by 27,000 global graduate employers polled for the ranking. “Clearly the prestige of a UK degree is recognised by employers around the world, and the brand-name value of Oxbridge has so far survived any negative publicity following the tuition fee hikes and student protests,” said Ben Sowter, head of research at QS. However the rankings also suggest that UK universities struggle to keep up with the US when it comes to cutting-edge research. Of UK universities, only Cambridge made the top 30 for research citations, with UCL, Oxford and Imperial in the top 50.

‘Not complacent’ The UK invests below the OECD average in higher education, so it is unrealistic to expect its universities to continue to punch above their weight indefinitely,” said John O’Leary, of the QS global academic advisory board. “The current success of leading institutions shows how vital it is that the government matches the investments being made by other countries in order to maintain their world-class status.” UCL’s new president and provost, Professor Michael Arthur, said the university’s high place in the rankings reflected its efforts both in the UK

and overseas. But he said: “As pleasing as it is, rankings success will not divert us from focusing on our core mission of educating and inspiring our students and delivering world class research.” Dr Wendy Piatt of the Russell Group noted that all six UK universities in the top 20 and 17 of the 18 in the top 100 were members of the group. “Their focus on research excellence and highquality teaching means the UK performs formidably well against other nations in spite of its size”, said Dr Piatt. However, she warned: “If our universities are to compete in the future they need the government to provide light-touch regulation and continued investment, and to be welcoming to genuine international students. “It is worth again highlighting that the process of ranking universities is fraught with difficulties and they should not be used alone in judging the quality of an institution.” Universities minister David Willetts said the rankings were “fantastic news for the universities, their academics, and their students, who are some of the most employable in the world - however we are not complacent, and know we must work hard to remain the best”. He added: “Our reforms to undergraduate finance have put universities on a sustainable financial footing and sharpened incentives to deliver a world-class student experience. “We have protected research funding, encouraging universities to invest in cutting-edge research and we are helping our universities make the most of the growing opportunities globally through our international education strategy.” bbc.co.uk

September 16, 2013 #21

TOP 20 UNIVERSITIES 1. Massachusetts Institute of Technology (MIT) 2. Harvard University 3. University of Cambridge 4. University College London (UCL) 5. Imperial College London 6. University of Oxford 7. Stanford University 8. Yale University 9. University of Chicago 10=. California Institute of Technology (Caltech) 10=. Princeton University 12. Eth Zurich (Swiss Federal Institute of Technology) 13. University of Pennsylvania 14. Columbia University 15. Cornell University 16. Johns Hopkins University 17=. University of Edinburgh 17=. University of Toronto 19=. Ecole Polytechnique Fédérale de Lausanne 19=. King’s College London

TBILISI GUIDE September 16, 2013 #21

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 16, 2013 #21

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.