Caucasian Business Week #23 by Caucasian Business Week

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BUSINESS WEEK September 30, 2013 #23

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September 30, 2013, Issue 23

GEORGIA

PRIME MINISTER ACCELERATES THE PROCESS OF LEASING AGRICULTURAL LAND

hat changes will be included on Moratorium on the Alienation of Agricultural Lands to Foreigners? Chairman of the Agricultural Committee makes explanations.

caucasian1

BE INFORMED, DO BUSINESS

TBC BANK AGAINST GEORGIAN COMPANIES

NDI : GD’S MARGVELASHVILI LEADS, FOLLOWED BY UNM’S BAKRADZE

sked two months before the elections whom they would like to see as the next president, 39% of likely voters named GD’s candidate Giorgi Margvelashvili. Pg. 2

Pg. 4

GEORGIA’S MACROECONOMY AT A GLANCE, SEPTEMBER 2013

he most recent data on Georgia’s growth performance in the second quarter of 2013 are quite encouraging. Pg. 3

eorgia increased trade turnover with Ukraine. Geostat informs that in the 8 month 2013 of the current year trade turnover of Georgia-Ukraine equaled to $488,1 million. Pg. 5

HOUSING SECTOR’S RATIO IN GDP SLIPS

ccording to preliminary data of Sakstat, share of construction in GDP made up 4.7% in the 2nd quarter (or 267.3 million lari). Year-on-year decline makes up 14.5%. Pg. 5

8 MONTHS NET PROFIT OF THE BANKING SECTOR REACHED TO 214 MILLION

eorgian Banking sector completed 8 months 2013 with 213,6 million GEL profit. The profit increased by 31,3 million GEL in August. Pg. 7

AZERBAIJAN ADB PREPARES TOLL ROAD STUDIES IN AZERBAIJAN

sian Development Bank outspread a knowledge report on toll road study, conducted as a part of ADB loan to Azerbaijan government in transport sector. Pg. 10

ARMENIA GRANT THORNTON STUDY FINDS THE DEMAND FOR EQUITY INVESTMENT IN ARMENIA IN NEXT FIVE YEARS MAY RANGE FROM $7.5 TO $9 BILLION

Grant Thornton study has found that the demand for equity investment in Armenia in the next five years may range from $7.5 to $9 billion. Pg. 11

CIS EUROPEAN UNION TO OPEN FULLY ITS MARKET TO MOLDOVAN WINES

he European Commission proposes to fully open the European Union’s market to wine imports from the Republic of Moldova, in advance of the envisaged provisional application of the EU. Pg. 12

WORLD NEWS JAPANESE CAR PARTS FIRMS FINED BY US REGULATORS

Pg. 2

Case on Ported Cell Numbers will Be Forwarded to Prosecutor’s Office

Pg. 2

GEORGIA’S WINES EXPORTS TO UKRAINE GROW, ALCOHOLIC VEBERAGES EXPORTS DECLINE

Georgian President’s Speech at UN

Bank Purchases Berta’s Property

BC Bank keeps purchasing various Georgian companies. In this case, the bank has purchased a part of Berta property by auction. In previous years the bank took over the property of Magnat fueling network and ElitElectronics. Moreover, TBC Bank is also trying to appropriate properties of Goodwill and Marshe in exchange for liabilities. Specialists urge the society to make focus on predatory policy of TBC Bank that follows very strict policy in relation to various domestic companies and tries to appropriate them in exchange for liabilities. TBC Bank owners have created Georgian companies Chateau Mukhrani and Gurieli. The bank does not show the same strict policy to these companies. Berta stopped operation a year ago and the company is not able to serve credit li-

abilities before TBC Bank. Consequently, the Bank has applied to the court. The court has appointed an auction and a part of the company was put up to the auction. No proposal was registered for the auction and TBC Bank had to purchase the property itself. The National Bureau of Enforcement (NBE) put up the property owned by the family of Chocheli to auction. Tsezar Chocheli has told TV3 Berta was illegally sold. The Finance Ministry investigation department has carried out audit in Berta for four months and various documents were seized. Finally, the company was imposed a 21 000 GEL fine. Berta became unable to pay bank credits and it was put up to auction. The initial price of the company was 3.120 million GEL. As reported, the enterprise suspended operation after the 2012 parliamentary elections.

JAMIE OLIVER UNVEILS HAMBURGER’S SECRET - HAZARDOUS TO HEALTH

hief cook and anchor Jamie Oliver has published an article describing how genuinely a hamburger is made at McDonalds. After that article the company has unveiled plans to revising the recipe. According to the statement of Oliver the beef is saturated by ammonium hydroxide and after that the beef is placed in a hamburger. Without this procedure the product is

not usable for eating. The beef is low quality and ammonium hydroxide is hazardous for human health. The anchor who fights against fast food assets asserts that the restaurants use the beef that is useable for dogs and then McDonalds transforms it for people. “Why should a normal man feed children by beef with ammonia? “, the anchor asks and demonstrates how the minced meat is made of wastes of beef by use of ammonium.

Co-investment fund to Draw 6 billion USD GEORGE BACHIASHVILI Executive director of the fund Pg. 5

Tsezar Chocheli: The investing environment is seriously damaged by the positionn of the ministry of finance and General procurator

Pg. 3

David Mirtskhulava: Khudon HPP Project doesn’t Have Environmental Problems, its Main Problem is the Population Pg. 4

“Techno Boom” to Enter Azerbaijani Market in October Anzor Kokoladze Plans to Return “Elit Electronics”by the end of next year Pg. 5

Gebrüder Weiss - New premium class logistics terminal started to operate Pg. 6

MAIN EVENTS caucasian business week

GEORGIAN PRESIDENT’S SPEECH AT UN

PRIME MINISTER ACCELERATES THE PROCESS OF LEASING AGRICULTURAL LAND

W I

n his address to the UN General Assembly on September 25, Georgia’s outgoing President Mikheil Saakashvili lashed out at Russia for mounting “constant pressures and threats” on neighbors and said that “the last authoritarian empire in the world” will fail and its leader Vladimir Putin will vanish from the Russian politics in “few years from now.” In his speech Saakashvili, whose second and final presidential term nears its end, also mentioned his tenure saying that “many good things” have been done under his leadership, but also added that “some of these things were done at a very high cost.” “It makes me sick when KGB officer Vladimir Putin lectures the world about freedom, values and democracy,” Saakashvili said. “But this new project [the Eurasian Union] is much more dangerous than his lectures.” “The Eurasian Union has been shaped as an alternative to the European Union and unveiled by Vladimir Putin as the main project of his new presidency – the new Russian empire,” Saakashvili said in his 30-minute speech. Russian representatives were listening to Saakashvili’s address for first twenty minutes and then walked out of the General Assembly hall. Russia’s UN envoy, Vitaly Churkin, slammed Saakashvili’s speech as “Russophobic” and said, according to the Russian state-run English-language channel Russia Today: “Luckily for Georgian people, this man – whose mental state needs a professional expertise – is in the twilight of his political career.” Russia was of the main topics in Saakashvili’s all of the previous nine UN speeches since becoming the Georgian President in 2004. But while in his first two addresses to the UN General Assembly in 2004 and 2005 he was speaking mainly on the need of cooperation, rhetoric was toning up in following years as relations between the two countries were getting worse. “I was never a great fan of what the French call la langue de bois [wooden language], but as my second term nears its end, I feel more than before the urge to speak my mind,” he said in the address on September 25, which was his lengthiest one than any of his previous UN speeches. When speaking about the Eurasian Union, he also made an apparent reference to recent remarks by PM Ivanishvili, who said that EU and NATO integration is “cornerstone” of Georgia’s foreign policy and also added that the government was watching and “studying” the Eurasian Union initiative. “If in perspective we see that it is interesting for the strategy of our country, then why not,” Ivanishvili said. Saakashvili said: Because European and EuroAtlantic integration take a lot of time and… because there are moments when you might think you are pursuing a mirage… some people in our region might fall victim to fatigue and ask them-

Photo by GOGA KHACHIDZE selves: why not?” He said that Kremlin’s “mouthpieces”, which he also described as “conscious or unconscious 5th column” identify the EU with “the destruction of family values, the erosion of national traditions and the promotion of gays and lesbians.” “Strangely, in recent years and even more in recent months, we hear in Tbilisi, Kiev, or Chisinau the same ugly music that was first orchestrated in Moscow that our traditions are collapsing under the influence of the West, that Christian holidays will be replaced by gay pride events, and Churches by multicultural Disney Lands,” Saakashvili said. Saakashvili also said that “the Russian project is doomed to fail.” “Few years from now – you will recall my words – Vladimir Putin will have left the Kremlin and vanished from the Russian politics, even if he says that he will be there for another twenty years,” he said. “Russian citizens will remember him as a ghost from the old times – the times of corruption and oppression.” Saakashvili said that the “hostility” of Putin towards his government “was not based on personal hatreds.” “Do you think the Kremlin would agree to discuss the de-occupation of our regions of Abkhazia and South Ossetia, now that the government has changed in Tbilisi? Far from it,” he said. “Despite the friendly statements made by the new Georgian government in the recent weeks and months, the Russian military keep advancing positions, dividing communities with new barbwires.”

‘Cut Corners, Radical Methods and Mistakes’

In his speech, Saakashvili also spoke briefly about his presidential tenure and said that he takes pride in “many accomplishments” that Georgia achieved since 2004. “We did many good things. When I became the President at that moment I was the youngest president in the world,” he said. “I realize that some of these things were done at a very high cost. In our rush to impose a new reality, against the background of internal and external threats, we have cut comers and certainly made mistakes.” “We went sometimes too far and other times not far enough. I acknowledge fully my responsibility in all these shortcomings and I sincerely care for all those who have felt that they did not benefit enough from our work or even that they were victims of our radical methods.” “I want to tell to all Georgian citizens – to those who supported our project, our policies and our party and to those who rejected them – I want to tell them how proud I am of their maturity and their bravery, how humble I feel looking at the sacrifices and the efforts they have made,” he said.

BUSINESS WEEK

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September 30, 2013 #23

hat changes will be included on Moratorium on the Alienation of Agricultural Lands to Foreigners? Chairman of the Agricultural Committee makes explanations in a conversation with “Commersant”. Recall that Prime Minister Bidzina Ivanishvili said at yesterday’s meeting with experts that he had a meeting with the economic team in this regard. “There are many reasons for a Moratorium. In order a Moratorium not to be extended, we made a decision and you will know it in the near future that we should immediately start issuing lands on lease ... The more restrictions and Moratoriums there will be in the economy, the less free the market will be, as well as the investment flow and any restrictions prevent theoretically the market development but the state needs various types of defense and in this case it was justified, “- said the Prime Minister. Note: A Moratorium on the alienation of land to foreigners is declared until December 31, 2014 and during this period a clear national strategy should be developed. Some experts and NGOs protested against the law, because saw the threat for the investing process.

Chairman of Parliament’s Agriculture Committee Gigla Agulashvili explains to сommersant. ge that Prime Minister referred to a different legal standard - the leasing procedure which enactment needs the government’s decree, and he meant the acceleration of the preparation of this resolution. In particular, Agulashvili says the lease will be valid for 10, 20 and 30 year and the terms of the land use will depend, for example, on what kind of agricultural crop an investor will develop. Agulashvili explains that the government understands that a Moratorium should not be prolonged, so that investors not to move in waiting mode and have the ability to take land on lease or purchase it. Agulashvili notes that the government’s economic team has been working on this issue for a long time and the changes to the resolution will be made in the near future. Chairman of the Committee of Sector Economy Zurab Tkemaladze claims that the changes regarding leasing lands have been already planned, Prime Minister just asked to reduce time limits. “The government was given 6 months and the issue will be resolved earlier than planned,” - says Tkemaladze.

NDI : GD’S MARGVELASHVILI LEADS, FOLLOWED BY UNM’S BAKRADZE

sked two months before the elections whom they would like to see as the next president, 39% of likely voters named GD’s candidate Giorgi Margvelashvili, a tenpercentage point increase since June, according to a recent poll commissioned by U.S. National Democratic Institute (NDI) and released on Thursday. UNM’s presidential candidate, MP Davit Bakradze, follows with 18%; in the previous similar poll in June, 10% named UNM’s candidate, who at the time was not specified, as President Saakashvili’s party was still in the process of selecting the candidate. 7% of likely voters named Nino Burjanadze, former speaker of the parliament; the figure stood at 5% in June – the change is within the margin of error. 16% are undecided, 6% refused to answer and 4% answered “no candidate”, according to the recent poll. There were combined of 38% of those who answered “don’t know,” “refuse to answer” or “no candidate” in the June poll. The survey was fielded by the Caucasus Resource Research Centers (CRRC) from August 18 through September 3 and it was conducted through nationwide face-to-face interview with 3,838 respondents; it has margin of error of plus, minus 2%. Christian-Democratic Movement leader, Giorgi Targamadze, and Labor Party leader Shalva Natelashvili, were named as preferred next presidents by 4% of likely voters each. Total of 23 presidential candidates have been registered to run in the elections - the largest number of candidates since Georgia held its first presidential election in 1990. Second round of election will be required if no candidate receives more than half of the votes cast. NDI, which has commissioned the poll, said the

combined 26% of those who answered “don’t know,” “refuse to answer” or “no candidate” is large enough to determine both the final results of the first round and whether there will be a second round election. 50% of respondents identify the Georgian Dream ruling coalition as the “party closest” to them, followed by UNM with 12% - the figures in both of the cases are statistically the same compared to the June poll. 31% of respondents think there will be a second round; another 31% of respondents disagree and 19% say they do not know whether there will be a runoff or not. According to the poll, in case of a runoff between Margvelashvili and Bakradze, the GD’s candidate was favored 49% to 24% for the UNM candidate; Margvelashvili had 33-point lead (50% to 17%) over Burjanadze in case of runoff between these two, according to the poll. PM Ivanishvili remains the most popular political leader in Georgia with a 69% approval rating – no change since June. 71% respondents disapprove his intention about pre-term resignation, but 62% say that PM this intention will have no affect on how they will vote in the upcoming presidential election. Parliament speaker Davit Usupashvili is the second most popular politician with 61% of favorability rating (question asked to respondents was ‘do you like or dislike’) – unchanged since June. Margvelashvili is ‘liked’ by 56%, an eleven percentage point increase since June. Bakradze is the most popular among opposition politicians, with a favorable rating of 49%, same as in June, followed by CDM leader Giorgi Targamadze with 36%, up from 32% in June; Shalva Natelashvili – 34%. Nino Burjanadze’s favorable rating saw a twelve percentage point increase since June to 33%.

KUTAISI AIRPORT SERVES ABOUT 700 PASSENGERS DAILY

utaisi International Airport reported that on average, 44 flights are implemented weekly, so about 700 passengers are served daily. Since opening of the Airport, 1 year has passed, during which, number of served passengers reached 107,468. The Airport pointed that its main priority is at-

traction of low-budget airlines and reported that negotiations on appointment of new destinations are currently underway. As of today, flights from Kutaisi International Airport are implemented to Donetsk, Katowice, Kharkov, Kiev, Minsk, Moscow, Tel Aviv and Warsaw by Belavia, Georgian Airways, S7, Ural Airlines and WizzAir Ukraine.

BUSINESS & ECONOMY September 30, 2013 #23

caucasian business week

TSEZAR CHOCHELI: THE INVESTING ENVIRONMENT IS SERIOUSLY DAMAGED BY THE POSITION OF THE MINISTRY OF FINANCE AND GENERAL PROCURATOR THE INTERVIEW WITH TSEZAR CHOCHELI, THE FORMER GOVERNOR FOR THE MTSKHETA-MTIANETI REGION -Several days ago the court obliged you to pay a 50 000 GEL fine. The issue is of appropriation of state property in a particularly large amount and laundering illegal revenues. Do you have appealed against the decision and do you think the trial was just? -First of all, I would say that the investigation department sets absolutely ungrounded and absurd accusations and obliges unjust bails. They entirely seized the property as part of the previous trial, as well bank accounts and everything we owned. This trial is not against only Tsezar Chocheli. This is a large-scale attack against the business. -Who is interested in staging pressure on your business? - This is really true. Let’s start with Baramo. The company property was seized and the company was banned to take part in any tender. Berta has been bankrupt. Today over 700 individuals are unemployed. Consequently, the state budget lacks for money. The struggle is underway for concrete sleepers plant, as well as for Zedazeni. All businesses that were founded by our group are one of the successful ones in Georgia (they make considerable transfers to the state budget). Thus, I am sure there are people who have decided to annihilate this business.

- You say the seizure frustrates the operation of these companies? Investigation structures assert the seizure does not frustrate the operation of the enterprises. - First of all this is public misinformation. Barambo property was seized under abrsurd accusations. The reason for seizure is not logical. Barambo has got many foreign partners who see the government attitude to the company. Foreign suppliers have suspend consignments. The relations with banks have been deteriorated and we face difficulties to draw financial resources. Barambo was to launch two new projects, but these developments have frustrated our plans. - You say the government stages deliberate pressure on the business. Your opponents assert the previous government was creating hothouse conditions for you and that’s why you have managed to launch business from nothing. How would you respond to this position? - I would like to tell the society despite the current difficulties concretely Zedazeni company has got a 40% growth compared to the last year and this is an unprecedented fact in the Georgian reality. If we had hothouse conditions under the previous government, what happens today? Why does a major part of the companies face downturn and how does Zedazeni manage to grow? All these

GEORGIA’S MACROECONOMY AT A GLANCE, SEPTEMBER 2013

he most recent data on Georgia’s growth performance in the second quarter of 2013 (released on 18th September by GeoStat) are quite encouraging. The aggregate growth figure of 1.5% appears to be low for one main reason – a major slump in construction (-14.5%, y-o-y). And if we consider what was being constructed 12 months ago (in the run up to the elections), and who paid for it, this slump is a blessing in disguise. Last year, construction was a leading sector in the Georgian economy, registering 21% growth in Q2. Much of this growth was driven by publically financed infrastructure projects. What we see in Q2 of 2013 is a massive 45% decrease in infrastructure projects, and a modest 10% increase in residential housing. Very importantly for Georgia, sectors that are key for job creation (e.g. manufacturing and agriculture) have grown in Q2 2013 at a very fast pace (almost 7%). The electricity/gas/water figures – which generally are a great indicator of the level of economic activity – are also up by 6.6%. ISET Policy Institute’s growth forecasts for the 3rd and 4th quarters are 1.4% and 3.6%, respectively; certainly not a doomsday scenario. The GDP data are reflective of the Georgian government’s fiscal policy, which remains quite conservative. Government expenditures in the first 7 months of 2013 declined by 2.1% y/y. Most importantly, expenditures on the purchase of goods and service were slashed by 38.6%,

whereas labor and social expenditures increased by 15.7 and 17.7%, respectfully. There has been very little change as far as total revenues are concerned. Revenues from income and excise taxes increased quite significantly, compensating for declining revenues from all other taxes: VAT, income tax, profit tax and real estate tax. The situation with prices is best described by one word: stability. The GEL/USD exchange rate remains stable since the beginning of the year. Consumer price inflation, as measured by CPI, came to a complete standstill: 0% in August, and -0.2% (deflation) in July 2013. Interestingly, the deflationary trend in prices continues despite monetary policy interventions by NBG. From June to August, the NBG monetary policy rate decreased by 0.25 percentage points to reach a historical minimum of 3.75%, and yet, it had little impact on prices and interest rates. The weighted average of market interest rates decreased by a tiny 0.1 percentage points, reaching 17.7%. Prices remain stable (and, in some cases, decline) also because of global market conditions. In July 2013, prices for imported consumer goods decreased by 2.0%. In particular, prices decreased significantly for petrol (-4.1%), diesel (-3.5%) and oil (-2.9%). A piece of good news is that producer prices are also on decline: The Producer Price Index for July 2013 is 3% lower in y/y terms (compared to July 2012). This effect is most pronounced for the processing industry (-4.8%). For the most part, this is the result of lower commodity prices (food and base metals). Aggregate domestic demand in Georgia remains sluggish but we do see some improvement in July and August, especially as far as imports are concerned. The volume of imports was below the 2012 level in the first half of 2013, however in July and August, we see modest growth (y/y) of 3.2 and 1.2% respectively. External demand, on the other hand, is fast improving. Since the beginning of 2013, exports grew by a solid 13.5% y/y. August 2013 saw a huge increase (y/y) of 41%, primarily affected by the partial opening of the Russian market for Georgian wine and mineral water. Exports to Russia “skyrocketed” in July 2013, increasing 400% y/y (of course, from a very low base) and apparently continued increasing in August (precise data are yet to be released). ISET

considerations are artificial to cheat the society. - Your companies have applied to the Business Ombudsman. There were certain hopes he would give some reaction over your cases. Was there any reaction? - According to my information, the business ombudsman had real intention to settle the situation, but in vain. - Do you hope the business ombudsman will reach any results? - Several days ago I told a news conference I hope Mr. Prime Minister does not have full information on the situation around our business group and we hope he will receive full information and all issues will be decided positively. If my hopes are false, the affairs are more complicated.

- You have mentioned certain losses the companies were inflicted in this period. Do you plan to make resply statement or bring action for remunerating the losses? - Sure. All of our companies are examined and the most famous international auditors are carrying out the audit. We will definitely claim for remunerating the losses.

FUEL PRICE RETURNED TO LAST YEAR’S MARK IN GEORGIA Petrol price has increased only in brandednetworks while small filling stations continue tosell it for 1.90 GEL

he government’s promise to regulate fuel prices in the local market has not justified. “Business Rezonansi”writes and notes that in September 2012 the wholesaleprice of 1 ton of petrol was 1 050 USD, while in the retail network a price of this product made 2.12GEL. Now, when the wholesale price of gasoline ranges within 930-960 USD, its retail value is 2,052,07 GEL.This happens in the background when the oil companies are no longer under the new government’s pressure and have the opportunity to set fair rates. Ahead of elections the fuel prices have increased at the filling stations and caught up with last year’smark - “Business Rezonansi” writes and draws attention to the fact that petrol price hiked only inbranded networks while small stations are selling it for 1.90 GEL. At this point the fuel price hiked by 0.0 5-0.10 GEL. However, this time a price change was inadequate to the current processes on the market. As of September 23, 2013, the international price of gasolineamounted to 926 USD per ton. Georgian companies have begun to increase price since September 20. An exception, as we’ve already noted, are small stations that are keeping the same time. From September 24 all products became expensive by 0.02-0.05 GEL in “Lukoil” retail network. As for “SOCAR”, petrol price rose by 0.05 GEL here while the diesel price has dropped by 0.15 GEL. Last week, the company “Gulf” increased a fuel price by 0.07-0.10 GEL, and “Wissol”- only by 0.05 GEL. Based on what did fuel prices hike in Georgia when relatively small players are still keeping the same prices on the market? “Wissol Petroleum Georgia” explains to commersant.ge that they import a particular product with an average interval of 20 days. “Petrol price reached a maximum of 6 months on the international market on August 27 and totaled 1072.50 U.USD per1 ton and we have to purchase fuel at a higher price.

As for the forecast regarding changes in fuel prices in the coming few weeks, I want to tell you that ifthe fuel price reduction trend is maintained on the international market, it will be reflected in fuel price inour network and therefore, it will decrease, “- the company’s representative notes. “Gulf” sales manager Nino Jibladze says in the interview with “Business Rezonansi” that the fuel priceincreased by 0. 05 GEL in their network that was caused by an increase in “platts” price in the previousweek. It should be noted, that a price reported to “platts” is permanently lowering since September 9. “We tried to maintain prices for a couple of weeks, but failed. Decreasing trend was registered in foreign markets 7-8 days ago and could not make immediate impact on the local market. We’ll reduce the price as soon as possible. Any price changes will be reflected on the user’s activity, and none of the companies are interested in increasing price of fuel,”- Nino Jibladze notes. A similar statement was made by Shavleg Mishveladze, “Lukoil” Deputy Director. He says that in Augustfuel was imported at a high price which encouraged the growth of prices. However, the maintenance of the world trend will be an incentive for the company to cheapen fuel in the network. The Head of the Union of Oil Products Importers Vano Mtvralashvili agrees with this opinion and explains that in August the price was set at a high level according to “platts” that caused changes in the local market. The analyst Beka Kemularia explains changes in fuel price by the companies’ arbitrary decision. The reason, in his words, is uncompetitive environment which gives the importers an opportunity of concerted actions while determining a price. He notes that “Georgian Dream’s” promise that they would be able to cheapen fuel did not work. “Elementary, one year passes so that the creation of the Anti-Monopoly Service has failed. It is obvious that there is uncompetitive environment on the Georgian fuel market, which also raises questions to thenew government, “- adds Kemularia. Business Rezonansi

INTERVIEW caucasian business week

September 30, 2013 #23

CASE ON PORTED CELL NUMBERS WILL BE FORWARDED TO PROSECUTOR’S OFFICE AN INTERVIEW WITH THE CHAIRPERSON OF THE TEMPORARILY INVESTIGATIVE COMMISSION OF PARLIAMENT TINA KHIDASHELI

- Mobile operators made an evaluation of the porting system at yesterday’ session. Controversial statements were made, including by “Geocell”, according to which, due to the current situation on the market “Telia Sonera” company founder of “Geocell” might leave the Georgian market and dispose investments. Later, “Geocell” rejected this statement. Did “Geocell” representative announce that “Telia Sonera” could leave Georgia? - It was a very interesting session. We listened to the information provided by the mobile communications companies. In fact, “Geocell” didn’t say what was wrongly interpreted by the media as if “Telia Sonera “ was going to leave Georgia. They just made a statement about the fact that they had to work in very hard conditions. 4 major issues are revealed, which really give the opportunity to the companies to have such thoughts. The law is improperly applied to them, they are victims of discrimination, there is a Regulatory Commission that should be involved in the protection of companies’ interests, in fact, it turned into a punitive body. But once again I confirm

that they have not said this. -Porting issue was discussed at the session. Can it be said that this project was unfairly planned at the time ( in terms of rates ), and the companies have to pay unnecessarily costs during the porting process? - Yes , there were four main topics and porting is one of them. This is an issue that we have studied from the first day. Our mid-term report was devoted to this issue. Yesterday we presented specific numbers, which were confirmed by all companies. In fact, such a thing has happened: In 2010 when the tender was announced, several companies participated in it. Among them was the world leader in this market, which operates in the U.S. market, Latin America and many European countries. The company was refused and the victory was given to the company of which no one knew anything. This was contrary to the law. Georgian legislation states that the experience, reliability and so on are necessary. All this was ignored. The result was as follows: in Georgia, theoretically there are 6.7 million numbers. In theory because it is the sum of all the numbers that have ever been connected to the network, as well as the numbers operating today, and those numbers which are issued by these companies as the so-called reserve, were not used. The company, which won the tender, asked to pay a fee for all these numbers (6.7 million numbers ) when the company which lost the tender demanded to pay a fee only for the really port numbers. Numerically it gives us the following result, the Georgian business companies, which operate in the market instead of being engaged in development of their own business and investing this money in business, pay a tax for serving 4.7 mil-

lion numbers. While they should pay taxes for 124 000 numbers. The difference is clear. This means that mobile operators have paid 7 million GEL. This amount was transferred outside the country. Otherwise, 660 000 would have been paid; it is a very big difference. The previous government ‘s attitude towards the business is very well seen in the scheme selected for porting. Their main task was to extract as much money from business as possible. That is, instead of 600 000, 7 million GEL were extracted. - May the issue be revised and a new tender be carried out? - We will demand the revision of this contract. On the other hand, this case will be sent to theProsecutor’s Office. They should be held responsible, since a specific crime is evident that is calledassignment of benefits. - In the end, do these overpaid amounts go to consumers and are also reflected in the tariffs? -No, it’s not going to any consumer. This money goes abroad on the X company’s accounts, whichfounder is an offshore company. Therefore, legally we have no idea where these 7 million went. Meanwhile, it has a negative impact on the consumer because if a company has to pay additional 7million, it is forced to raise rates because there were no other alternatives and they pay taxes at the expense of the increase in tariffs. That’s why in Georgia mobile companies’ services are inappropriatelyexpensive. This is not the only reason, there is another as well. The second issue, which is arguing, isvery acceptable and correct. This is a regulatory fee. This fee should not exceed 0.5 percent. In fact, the Regulatory Commission has replaced this change single-handedly and increased to

0.75percent. But didn’t stop and changed the calculation procedure. -Did the Commission representatives attend a meeting? For example, what are their response to your opinion, did “Beeline” representative attend yesterday’s meeting and what is theirposition with respect to such statements? - No, “Beeline” representative didn’t attend the meeting. We do not have any plan for their interrogation. If they want, we do not have a problem because it is not “Beeline’s” problem. As for the Commission, its representatives did not attend the meeting despite the fact that they knew about it. When we finish all interrogations, in October all former and current members of the Commission will be interrogated on all of the issues on which they have given voice and that are disputable today. Yesterday, a very interesting fact became known that I have not known until now and that was notknown to the public. In particular, regulation fees are paid taking into account certain factors. As we found out from the testimony given by “Magti” representative, this is a very high rate that was established in 2004 when mobile telecommunications license was purchased from the Prosecutor’s Office fund. This was an artificial process. The license was sold at an artificially high price, the license was returned to the Commission. However, this led to the determination of a high rate. We began our investigation, we addressed the prosecutor’s office to provide any information if theyhave. We requested information from the Commission on the sale of the license. If this fact is confirmed, it is a criminal offense and we’ll demand to bring to justice those people who were involved inthis malicious scheme.

DAVID MIRTSKHULAVA: KHUDON HPP PROJECT DOESN’T HAVE ENVIRONMENTAL PROBLEMS, ITS MAIN PROBLEM IS THE POPULATION AN INTERVIEW WITH “TRANSELECTRICA GEORGIA”REPRESENTATIVE DAVIS MIRTSKHULAVA - The first consideration of “KhudonHPP” project was held in Khaishi quite emotionally. The secondhearing was held in Tbilisi. How would you evaluate this process, how positive is the fact that the public hearings on the project began? - A fact that a meeting in Svaneti was tense and difficult is natural. That’s because it’s the most difficult issue. The country needs this power plant. This requires the development of our economy, the investment climate, energy and future well-being of every person in Tbilisi, Svaneti and Kakheti. - NGOs say that it is not clearly seen in the current document what benefit the country will have if the project is omplemented. Can you explain ? - It was announced that Georgia will receive 5 percent. This is not true. According to the EnergyMinistry’s decision, any investor has a duty and an obligation to leave 20 percent of the produced energy in Georgia. This comes out to about 300 million kilowatt / hours. Today a price of imported energy is rising. The country needs to import, because it’s deficient. The price of energy supplied to Georgia is 0.09,5 USD. Last year, 700 million kilowatt / hours was imported. This is a huge price. Some of these facilities are built in 2 years, “KhudonHPP” will be built in 5-6 years.An investor has set that 0.09 cents for him is the number which he will sell abroad except for 20 percent. If there is a demand on the domestic market, the investor will not sell it for sure. This is realistic because prices for imported

energy become too high. Georgia is a deficient country and we needenergy. Naturally, this is a very painful question, but I think that first of all the country’s interests aboveall. Somehow we must come to some agreement. - Is the reduction in the scale discussed in order less harm to be made to the environment? - Issues on environmental damage were not virtually raised at the discussion. Qualified questions thatwere asked were about the economic benefits of the project. A presentation prepared by the German group and the Georgian organization CENN showed that this project didn’t have environmental problems and all programs could be mitigated and would be reduced to a minimum problems. A major problem of this project is the problem of the population. As for the low dam, it was announced that if it were 170meters, in this case we would not escape flooding. - “The Green Alternative” representative says that the origin of “Transelectric Georgia” raises a lot of suspicion. He says that shareholders are unidentified persons and all their representatives are Georgians that raises doubts. In this regard, what would you say? - Yes , I have read this. The company’s shareholders are known, these are two men living in Britain with very big possibilities. You can enter the site and see the names. One of them has a huge construction company, which built 15 hydro power plants in India and I think in other countries. He is also hydropower engineer in the third genera-

tion. The second person who is the main shareholder is also the richest person. He had the first private radio company in India, and owns huge mines in Africa. He is a British citizen. These people are very well-known in India. I have met them. That is why to speak in such a vein is not serious. - Ie, the company doesn’t have a Georgian protector and a high-ranking official in the Ministry of Energy ? - More than a billion dollars should be invested in the country; you know that this project was initiated by the “World Bank”. The project’s implementation is still going on along with the World Bank [WB] and to call such a project “suspicious” seems a little naive to me. “Khudon HPPP “ project was included in the World Bank’s list of the 100 most interesting projects. Builders and equipment manufacturers

are very well-known companies. - As far as we know, the company has a period for a construction permit until March 1, 2014. Do you think it is possible to reach an agreement in this period? When is it planned to launch the project? - The project should obtain a building permit in March 2014. While the construction will last for 5-6 years.

BUSINESS September 30, 2013 #23

caucasian business week

CO-INVESTMENT FUND TO DRAW 6 BILLION USD

he investment fund presentation was held. At the first stage, over 6 billion USD will be invested in the Georgian economy through the coinvestment fund. Executive director of the fund George Bachiashvili states that all interesting projects with qualified business-plan will be funded. Manager directors George Kikvadze, Irakli Me-

nabde and Tsotne Ebralidze will talk about fund’s aims on September 30 presentation. Speeches of Prime Minister of Georgia Bidzina Ivanishvili, director of National Investment Agency George Pertaia and president of Business Association George Chirakadze are scheduled on the presentation. The fund was created by initiative of Prime Minister and support of Georgian and foreign investor groups. Co-investment Fund of Georgia is private and its investors are Dhabi Group, RAK Investment Authority, State Oil Fund of the Republic of Azerbaijan, representative of Kaztransoil company - Batumi Industrial Holding Limited, Calik Holding A.S, Milestone International Holdings Group Limited, Bidzina Ivanishvili, Alexander Mashkevich, Badri Patarkatsishvili’s family.

LAGIDZE WATERS SUSPENDS EXPORTS TO RUSSIA

ommersant’’ radio reports that ‘’Lagidze waters” temporarily stopped exports of its products to Russia. As the company’s founder says, a reason for the suspension of exports of lemonade syrup was unpaid amount within two months by the Russian side. According to Tornike Lagidze, Russia is the only export market where the company exports approximately 45 tons of syrup a month. “Lagidze waters” will restore the supply of raw materials as soon as the Russian side repays a financial debt. The company also planned to enter the Ukrainian market, but as Lagidze says, any decision is not taken in this regard.

GEORGIA’S WINES EXPORTS TO UKRAINE GROW, ALCOHOLIC VEBERAGES EXPORTS DECLINE

eorgia increased trade turnover with Ukraine. Geostat informs that in the 8 month 2013 of the current year trade turnover of GeorgiaUkraine equaled to $488,1 million, which exceeds to the data of 8 months 2012 by 7,9 million. According to official statistic, in the current year export amount in Ukraine equaled to $100,58

million (-6,8 million), import - to 387,5 million (+14,8 million). In January-August wine export has also increased, which equaled to $19,79 million. Wine export was 16,6 million in 8 months 2012. This year wine rates second in the export basket. Mineral and fresh waters rate first with 20,2 million. Ethyl alcohol and alcohol beverages rates third with 18 million. Export of this group has increased by 4 million in comparison with last year. Top-5 list includes ferroalloys (17,6 million) and railway locomotives (6,3 million), amount of which has reduced by 4 times. In 8 months 2013 only 2 units of railway locomotives were exported. In the import cigarettes take leading position with $52,5 million (+8,8 million). So-called armature import follows it - 26,9 million. Coal cox and semi-cox rates third with 22,6 million. Import of carbon steel semi-fabricates has increased significantly - by 3,3 times, total mount of which is $13,1 million.

HOUSING SECTOR’S RATIO IN GDP SLIPS

ccording to preliminary data of Sakstat, share of construction in GDP made up 4.7% in the 2nd quarter (or 267.3 million lari). Year-on-year decline makes up

14.5%. The largest share in GDP (16.7%, or 951 million

lari) has trade (repair of vehicles, personal and household goods). Year-on-year growth makes up 2.9%. Next comes manufacturing with 10.5% (596.7 million lari). Real growth makes up 6.9%. Then come public administration with 10.5% share (595.8 million lari, growth – 2.4%), agriculture, hunting and forestry, fishing – 9.5% (541.3 million lari, growth – 6.7%), transport – 8% (457 million lari, decline – 2.2%), healthcare and social assistance – 6% (345.7 million lari, growth – 0.7%), operations with real estate, lease and customer service – 6% (345.3 million lari, growth – 6.8%). Total GDP in basic prices amounted to 5.69 billion lari, increasing by 1.8% year-on-year. Adjusted data will be published on November 15.

BRITISH RETAILER -NEW LOOK HAS OPENED ITS FLAGSHIP STORE ON AGHMASHENEBELI AVENUE

ritish retailer New Look has opened a new store in Tbilisi. With its unique British style, latest trends and attractive prices - New Look is ready to receive customers. The ground floor of the four floor building located on 116 Aghmashenebeli Avenue is devoted to shoes, next two to clothes and the third one to lingerie and accessories. An evening prior to public opening celebrities and press have been invited to the VIP party. The ribbon was cut by the hostess of the evening popular actress - Eka Amirejibi. Guests have discovered the store, enjoyed good music and fabulous fashion show, participated in luck draw and won gift vouchers from the brand. As for the public opening day - New Look of-

fered special 20% discount to consumers on the whole collection. First visitors of the store received gifts, free nail treatment from beauty salon “Belleecma”, enjoyed delicious cupcakes and soft drinks. The newly opened New look brand store is the biggest one in the region. The first store of the brand was opened in April, 2012 in Tbilisi mall and has become a devoted place to shop for the newest trends. New look was founded in 1969 in Great Britain and operates over thousand stores all over the world for a moment. The brand is targeting young customers; however the variety of trends offers a broad choice to the female customer of every age. New Look is represented by Retail Group Georgia, in the country, member of Alhokair Group.

“TECHNO BOOM” TO ENTER AZERBAIJANI MARKET IN OCTOBER Anzor Kokoladze Plans to Return “Elit Electronics”by the end of next year

echno Boom” products will appear in the Azerbaijaniwholesale market in October of this year. As thecompany’s founder Anzor Kokoladze explains to сommersant.ge, the product positioning in terms of wholesale sales will occur at the first stage, however, the businessman doesn’t exclude the entry into the retail market in the future as well. At this stage the businessman is trying to return Elit Electronics and as Kokoladze notes, the investigation has been completed, but the process

is time-delayed and he predicts the return of his business by the end of next year. “According to my information, the investigation has been completed in the Prosecutor’s Office, theStrasbourg Court took the case, so we expect the completion of the process,” - says Kokoladze. In his words, the main change that occurred in the country after the change of the government is a liberation of business from governmental pressure and the funds that have already been announced by the government.

AGRICULTURE OUTPUT INCREASED BY 11.5%

ccording to preliminary data of Sakstat, agricultural output in the 2nd quarter amounted to 790.5 million lari. This showing is increased by 11.5% year-on-year. In the reporting period, production of grain and other crops made up 159.1 million lari (growth – 13.3%), production of fruits, nuts, spices and crops, necessary for beverage – 112.3 million lari

(growth – 27.9%), vegetables growing, specialized gardening and nursery production – 87.5 million lari (growth – 24.8%), livestock farming – 401 million lari (growth – 4.4%), agricultural service – 30.4 million lari (growth – 13.3%). To note, agribusiness’ output in the 1st quarter totaled to 1.54 billion lari, increasing by 6% yearon-year. To note, Sakstat will publish adjusted data on November 15.

BUSINESS 6 GEBRÜDER WEISS - NEW PREMIUM CLASS LOGISTICS HUB STARTED TO OPERATE caucasian business week

Hub in center of Eurasia

ALEKSANDERKHARLAMOV General Director of Gebrüder Weiss in Georgia

ogistics premium class hub in Caucasus region, which already started to operate, will connect western Europe and middle East markets. After seven months construction process, on 20th September Austrian company Gebrüder Weiss celebrated Grand Opening of the premium class logistics terminal in Georgia. New terminal is thought to be connecting hub between Europe and middle East and in future it will also connect to Central Asia. “ New terminal will give us opportunity to connect to markets of East. More over, we will offer wide range of services as in Georgia, also to Caucasus region in General. We are ready to serve our partners! We are ready to serve Georgia! We are ready to serve Europe and Asia!” said General Director of Gebrüder Weiss in Georgia ALEKSANDERKHARLAMOV. “Austrian company Gebrüder Weiss offers logistic services during 500 years and it has 162 company-owned locations in different countries. It is important to say that, terminal that started to operate in Georgia is international project, as in projecting and building process were involved not only Georgian, but also international experts. As a result we built terminal that has no analogue in South Caucasus. Terminal is equipped with international standards safety systems and modern technologies. Here we can store any type of dry cargo”.

- Mr. Aleksander please tell us the reasons of choosing Georgia as a hub? - I would like to mention that Georgia was chosen because of its positive economic climate and comfortable geographical location. The terminal will become a hub, which will connect Armenia, Azerbaijan and countries of Asia. More over, terminal management and staff training process is controlled by Gebrüder Weiss complete chain and 5 centuries experience, which helps us to provide high level service to our customers. - Please tell us, how important it it to have developed logistics in the country? - In modern countries developed logistics is extremely important for business and economic growth. This approach of European countries we try to introduce in Georgia and we are happy that ministry of Economy and sustainable develop-

September 30, 2013 #23

ment of Georgia agrees with us in this approach and I want to thank them for the support of this project. - Please tell us about the territory of the terminal and if it is strategic choice? - The terminal has 10,500 m² handling and logistics space as well as 600 m² office space. With its 95,000 m², the total area offers a great deal of scope for expansion. The hub is located close to the airport and offers direct links to important through-roads around the Georgian capital. There are also plans for a connection to the rail network.The good transport links make Tbilisi an ideal hub for traffic between East and West. Company offers it’s clients not only overland, air &sea transportation, but also other logistic services. So Georgia is ideal choice for us.

AGRICULTURE MINISTER UNVEILS VINTAGE 2013 IN GOODWILL

eorgian Agriculture Minister Shalva Pipia has unveiled the Vintage 2013 in Goodwill event. The event is organized by Goodwill and Choose Georgian. Levan Davitashvili, a chairman for the National Agency for Wine and other officials attended the event inauguration. GWS winemaking company is partner to the Vintage 2013 in Goodwill event. The company has introduced two brands: Tamada and Old Tbilisi. To promote the vintage, Goodwill has purchased grapes from farmers in the Kakheti Region. The customers are able to purchase eight varieties of grapes at Tbilisi branches of the Goodwill network at lower prices for a week as part of the Vintage 2013 in Goodwill event.

BANKING NEWS September 30, 2013 #23

caucasian business week

NBG LEFT MONETARY POLICY RATE INTACT

ational Bank of Georgia (NBG) reported that Monetary Policy Committee decided not to change the monetary policy rate (refinancing rate) today. Accordingly, the rate makes now 3.75%. NBG explained that forecasts have not changed since the previous meeting of the Committee. Besides, previous declines of the rate have not

reflected fully in real economic yet, causing NBG to continue softened monetary policy. Referring to current forecasts, NBG pointed that low rate of inflation is expected to be maintained until end of the year, while reaching of target level (6%) is expected by end of 2014. Next meeting of Monetary Policy Committee is scheduled for November 6.

BANK SECTOR’S ASSETS GROW BY 1.3 BILLION GEL YEAR ON YEAR

y September 1, 2013 overall actives of the commercial banks equaled to 15,6 billion GEL (01/09/12 - 14,3 billion GEL). National Bank informs that overall actives (in the current prices in the last reporting month have increased by 35% (01/08/13 - 15,1 billion GEL). Share of the 5 banks with largest actives in the actives of the total banking sector equaled to 77,8% (01/08/13 - 79,1%). Own capital of the banking sector (stock cap-

ital) equals to 2,7 billion GEL, which is 17,3% of the commercial banks’ overall actives. Contribution of the foreign capital in the overall cashed authorized capital equaled to 76,4%. In August net profit equaled to 21,3 million GEL (07/13 - 39.3 million GEL). By September 1 2013, Georgian banking sector is represented by 21 commercial banks, among them 17 - with contribution of the foreign capital in the authorized capital, 2 branches of the foreign banks. Former micro-finance organization FINCA entered to banking market in August.

NONBANK DEPOSITS GROW TO 8.8 BILLION GEL

mount of the non-banking deposits in the banking sectors equaled to 8,8 billion GEL by September 1 (01/01/13 -7,6 billion GEL). National Bank informs that in August deposits on demand have increased by 121,3 million GEL (3,1%), fixed-term deposits - by 43,6 million GEL (0,9%). By the end-August deposits dollarization coefficient is 60,75%, 1,2% less than previous month

data. It equaled to 64% at the beginning of the year. Average weighted annual interest rate on the fixed-term deposit equaled to 6% (01/01/13 -8,5%). Among them - deposits in the national currency - 8.5% (01/01/13 -9,4%), in the foreign currency - 5.2% (01/01/13 -8,3%). USD share in the foreign currency deposits equaled to 80,3$, share of Euro - 17,2% (01/01/13 - 80,2%, 17,1%).

LOAN PORTFOLIO EQUALED TO 9,362 BILLION GEL BY THE END-AUGUST

n the total portfolio of the banks share of problem loans defined at 9,2 by September 1 (II quarter 2013 – 9,3). According to National Bank of Georgia’s (NBG) statistic, since the beginning of the year amount of the problem loans (non-standard, dubious, hopeless) increased by 6,6%, to 962

million GEL (growth equaled to 0,6% in the analogic period last year). By September 1, 2013 total portfolio of 21 banks operating on the market is 9,362 billion GEL (01/09/12 -8,446 billion GEL). Annual growth of the overall credit investments is 10,8%; it was 18,2% in the analogic period last year.

8 MONTHS NET PROFIT OF THE BANKING SECTOR REACHED TO 214 MILLION

eorgian Banking sector completed 8 months 2013 with 213,6 million GEL profit (01/08/13 -192,3 million GEL). The profit increased by 31,3 million GEL in August (in July - by 39 million). 14 banks are profitable, other 7 have loss. For the reporting period, own capital of the banking sector (stock capital) is 2,696 billion GEL (01/08/13-2,636 billion GEL).

Supervisory capital equals to 2,779 billion GEL (01/08/13-2,716 billion GEL), capital adequacy coefficient - 17,8% (01/08/13-17,7%). For the reporting period, Return on Equity (REO) is 12,4%-, Return on Actives (ROA) - 2,2% (01/01/13- respectively 6,4%, 1,1%). Consolidated data includes results of 21 commercial banks. In August former micro-finance organization FINCA got banking license.

transactions by POS terminals in the trade trade centers have reduced by 1,3 million, to 80,4 million GEL; by POS-terminals located in the banks transactions of 35,1 million were made. By August 1, 2013 4 477 384 units of debit and 1 209 977 units of credit cards are in circulation. Over 90% of the cards is Visa, others - EC/MC and other card systems.

BANK SECTOR’S REVENUES MARKED 1.5 MLN GEL IN JANUARY TO AUGUST, EXPENDITURES TOTALED 1.3 BILLION GEL

n the 8 months 2013 banking sector got 115 million GEL (8%) higher incomes in comparison with analogic period last year and spent 20 million GEL (1,5%) more. By September 1 revenues equal to 1,5 billion GEL, spending - 1,3 billion GEL. According to National Bank of Georgia’s statistic, 64% of the incomes - 983 million GEL is received from the loans for individuals and legal

he Kazakh “Halyk Bank’’ issues the first credit card on the Georgian market. The bank’s marketing departmentexplains to “Commersant’’ that “Halyk Bank’s” clients will be able to use the first credit card at the end of the year. They say the bank plans to intensify both in terms of consumer and corporate products. The bankhas already offered a low interest rate credit card tocorporate clients. It’s about 6.5 and 11 percent credit card, where a commission fee in the first case makes 4 and in the second case1%. According to “Halyk Bank”, they continue to expand and will open the fourth branch in the shopping center “Kidobani” in October.

TBC REDUCED RATES ON CONSUMER LOANS

BC reduced rates on consumer loans. The bank informs that summer promo rate of 13,95% became standard. Unsecured loan term for TBC bank’s wage clients is determined for 48 months. The bank informs that the rate is not differentiated according to aims. Auto loan and household technology purchase loan rate is also 13,95%. Monthly payment amount is respectively from 200 and $50. Maximal amount of the loan is $20 000.

LIBERTY OPENED BRANCH IN AKHALKALAKI

iberty continues network modernization and expansion. Deputy director General of the bank Zurab Tsulaia opened a branch in Akhalkalaki (#62 Tamar Mepe Street). It will provide full banking services to individuals and legal entities. All kinds of loans, usage of international and local money transfer systems, opening of various deposits, payment of communal taxes are available. In 2012-2013 Liberty Bank opened over 30 new branches and service centers throughout Georgia. Liberty Bank is represented by the largest banking network, through which it serves to over 1.4 million individual and 60 000 legal entities.

VTB FUNDED VAZIANI COMPANY IN THE FRAMEWORK OF THE AGRO CREDIT 5TH COMPONENT

PLASTIC CARDS TRANSACTIONS REDUCED IN AUGUST ugust transactions made by plastic cards emitted by resitend bansk equaled to 740 818 GEL. According to National Bank of Georgia’s statistic, the amount is reduced by 37,3 million in comparison with previous month. ATM transactions have reduced by 39 million, to 571 million GEL.

HALYK BANK ISSUES FIRST CREDIT CARD

entities (01/09/12 - 62,5 %, 894 million GEL). 27% of expenditures - 352 million GEL are spent on deposits (01/09/12 -27%, 345,5 million GEL). Banking sector spent 248 million GEL on the maintenance of the administration. In the analogic period of last year this data equaled to 222 million GEL. Currently Georgian banking sector is represented by 21 commercial banks.

TB funded Vaziani Company in the framework of the Agro Credit 5thcomponent. VTB informs that the company got 1,5 million GEL credit. Vaziani Company was founded in July 2012 and the bank approved first loan for factory construction and procurement of the technological line in 5 months. In April 2012 they got agro invest loan of $600 000. In total, $1,4 million is assigned. From the project launching till now VTB Bank Georgia gave issued 24 million GEL loan to over 600 beneficiaries.

BANK OF GEORGIA PROFITS MARKED 71.6 MILLION GEL IN JANUARY TO AUGUST

SC Bank of Georgia completed 8 months 2013 with 71,6 million GEL profit (II quarter 2013 – 59,3 million GEL). By September 1, it rates first among 14 profitable banks; the bank is a leader by almost in all indicators. According actives its market share equals to 34%, (II quarter 2013 – 34,7%). actives amount to 5,3 billion GEL (II quarter 2013 – 5,2 billion GEL).

STATISTICS caucasian business week

September 30, 2013 #23

PUBLICITY September 30, 2013 #23

caucasian business week

AZERBAIJAN caucasian business week

September 30, 2013 #23

ADB PREPARES TOLL ROAD STUDIES IN AZERBAIJAN

AZERBAIJAN CONSIDERS POSSIBILITY OF EXPORT OF AGRICULTURAL PRODUCTS TO UK

zerbaijan has proposed to the UK to sign an agreement on cooperation in the sphere of agriculture. The Ministry of Agriculture informs that Agriculture Minister Ismet Abbasov received newly appointed British ambassador to Baku Irfan Siddig. “At present, British vegetable producer companies operating in Azerbaijan have played the role in the application of modern technologies in our country. To expand this cooperation in other areas of agriculture it would be expedient to sign between the two countries a document on cooperation with the purpose to create long-term legal framework in the field of agricultural cooperation,” Abbasov said during the meeting. In the meeting the sides also discussed the possibilities of export of fruits and vegetables, and fruit juices from Azerbaijan to the UK, the exchange of experience in the production of ecofriendly products, as well as the possibility of cooperation in the field of agricultural research and education. abc.az

VTB PROPOSED “SECOND CREDITING”

TB Bank OJSC (Azerbaijan) offered “second crediting” to its loyal customers. According to the Bank, this offer will enable VTB clients on vehicle crediting with positive credit reputation over the last 12 months to get second crediting for consumption needs. Second crediting doesn’t require any pledge. The interest rates make 28% (25% on cards) and commission – 0% (2% on cards). “The clients interested in this type of crediting can apply to all branches of the Bank or contact us at the phone number 012 4920080”, - the Bank informs. abc.az

AIR TRAFFIC JUMPS IN AZERBAIJAN

he volume of air traffic in passengers saw a 5.1%-growth in Azerbaijan in the first eight months of 2013 against the same period of the previous year, AzerTag state news agency reported. The country`s State Statistical Committee announced that the figures figures showed that 99.4 % of the passengers were carried by public, while 0.6% by private companies. The committee said air cargo traffic surged 1.9-fold to reach 73,800 tons in January-August this year. Azernews

sian Development Bank outspread a knowledge report on toll road study, conducted as a part of ADB loan to Azerbaijan government in transport sector, on September 25, the ADB Baku office reports. According to the report, the necessity of conducting the study evolved from the fact that despite the state’s investment of 4.6 billion manats in roads sub-sector in recent years, the process of road upgrade and subsequently the increasing traffic has warranted the road network development, operation and maintenance at an acceptable level requiring adequate fund allocations. Major donors are looking for the possibilities to gain efficiency for provision of services through involving private sector; and to raise revenues directly or indirectly to feed the funds allocated for road maintenance. “The toll road study was carried out to prioritize road sections suitable for toll implementation and attractiveness to private sector participation, and assess how Azerbaijan’s existing regulatory and legal framework could better facilitate sustainable private sector participation in the road sector,” the report says. The document was circulated among international and national stakeholders. The final report comprising feedbacks and inputs from stakeholders in transport sector and highlighting international experience on publicprivate partnership (PPP), evaluated toll and PPP

options, prioritization of roads for PPP implementation, assessment of legal framework, and regulation, operational procedure for toll roads, risks appraisal and allocation, and recommendations for the implementation of PPP projects will be available with the government for future reference. These studies are carried out in the frame of the first tranche of $200 million allocated by the ADB for reconstruction of the Masalli-Astara highway in late 2007 within multitranche project for road projects.

Currently, ADB has seven active projects in Azerbaijan. Its current portfolio hits $990 million. Around 46 percent of the portfolio falls to the transport sector. According to the bank’s updated business plan on operations in Azerbaijan for 2012-2014, the total amount of funding for the ADB approved projects in Azerbaijan in this period will hit $575 million. Azerbaijan is a member of the ADB since 1999. The country’s share in the bank’s capital is 0.5 percent. Azernews

WORLD BANK TO DISBURSE EXTRA FUNDS FOR AZERBAIJAN RAILWAY PROJECT

he World Bank will allocate additional funds for the implementation of a project aimed at improving railway services in Azerbaijan, boosting trade and attracting transit cargo between Europe and Central Asia, the WB Baku office told Trend news agency. An agreement on granting additional funds for the implementation of the Rail Trade and Trans-

port Facilitation Project worth $220 million was signed on September 20 by the Azerbaijani government and the bank. The loan agreement was signed by Azerbaijani Finance Minister Samir Sharifov and WB Country Manager for Azerbaijan Larisa Leshchenko, and the project agreement was signed by Azerbaijani Transport Minister Ziya Mammadov and Larisa Leshchenko. The WB Board of Executive Directors approved the allocation of additional financing in June 2013. The project supports implementation of Azerbaijan’s national railway development program. Rail transport and transit services are important elements of Azerbaijan’s economic diversification strategy with railway services producing revenues accounting for 5 percent of non-oil exports

of the country in 2012. Income in this sector was equal to five percent of non-oil exports in 2012. By investing in railway infrastructure and operations, Azerbaijan intends to attract an increasing volume of transit in the Central Asia and Black Sea region, thus benefiting from its geographical location as the shortest route between Central Asia and Europe. The initial amount of the project’s funding from the WB amounted to $450 million. Additional funding will be disbursed for the modernization of the railway signaling system for the East-West corridor from Baku to the Georgian border. The WB investment portfolio in Azerbaijan includes 17 projects. Since Azerbaijan’s joining the WB, 54 projects worth more than $3 billion have been financed by the bank. Azernews

SOCAR UPGRADES SYSTEM OF MAIN GAS PIPELINES

he Gas Export Department of the Azerbaijani state oil company SOCAR will carry out major repairs and update of over 27-km section of the Kazimagomed-Gazakh pipeline (west direction) in 2013, Department Head Gagamali Seyfullayev said in an interview with Caspian Energy journal. In particular the major repairs of the 3.5- km section (270-273.5 km) of the 1020-millimeter Kazimagomed gas pipeline are planned, he said adding that the 24-kilometer stretch between the 114th and 138th kilometres will be replaced too.

Also, it is planned to carry out major repairs on the Altiagaj-Aghsu pipeline, 12.1-km bend of the gas pipeline with a diameter of 720 millimetres to Mingachevir power plant, and at Zagatala-Balakan, Azadkend-Imishli, Yevlakh-Nakhchivan gas pipelines and others. “In general, the implementation of these works will lead to the renewal of the gas transportation system and meet the growing gas demand, as well as a high level fulfilment of contractual conditions in the sphere of gas export,” he said. SOCAR is involved in exploring oil and gas fields, producing, processing, and transport-

ing oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan. The company owns gas stations in Azerbaijan, Switzerland, Georgia and Ukraine. It has representative offices in Georgia, Turkey, Romania, Austria, Switzerland, Kazakhstan, Great Britain, Iran, Germany and Ukraine and trading companies in Switzerland, Singapore, Vietnam, Nigeria, and other countries. Azernews

CASPIAN COAST WINERY & VINEYARDS PRESENTED NEW BRAND OF COGNAC

aspian Coast Winery & Vineyards LLC presented a new brand of cognac - “City of Winds”. According to Synergy Group, relevant works concerning the creation of this brand were commenced already in February of 2010. This brand is produced on the basis of the grape spirits received by wine distillation in 2008. “City of Winds”, aged for over 5 years is inherent in a strong, at the same time balanced and delicate flavor with the aroma of hazelnuts due to the staff wood it is kept inside (based on the scale of quality this brand is recognized as V.S.O.P - Very Superior Old Pale; Reserve - aged more than 4 years). In the mouth, this drink grants the effect

of balance and freshness, with short clear red berry and vanilla aftertastes that is most likely to be appreciated by wine fans. The elegance of this brand is created by French bottle brand “Saverglass”, Moldavian brand of label and box-”Papfin”, and the Hungarian company producing cork “Naturokork”. The first supply of the product was delivered to the market in September of this year. This product is available at the wine boutiques and restaurants of Baku. First export of the brand is scheduled to early 2014 primarily to such countries as China and Russia. Caspian Coast Winery & Vineyards LLC is Synergy Group OJSC subsidiary. In 2010 Synergy Group made large investments onto the revival

of the country’s winemaking traditions by carrying out reconstruction of the old Siyazan Winery. It should be noted that, Caspian Coast Winery & Vineyards LLC is specialized in production of 21 wine and already 4 cognac varieties. Production capacity of the plant equipped by advanced European technologies is 8000 tons of grapes. The Group organized production process that entirely meets international standards. Restoration of the vineyards belonging to the plant has made remarkable contribution into the development and modernization of agricultural production that is one of priority areas of Synergy Group OJSC investment strategy. abc.az

ARMENIA September 30, 2013 #23

caucasian business week

SEVEN ARMENIANS AMONG TOP 1000 RUSSIAN MANAGERS IN 2013 RANKING

even top executives of Armenian descent who run Russia’s companies have found themselves among top 1000 Russian managers in Kommersant newspaper and the Russian Managers Association’s 2013 ranking. Armenian top managers run commercial banks, machine-building plants, insurance, transport, financial and chemical companies. Rosgosstrakh President Daniil Khachaturov is topping the subgroup Insurance. He is the only Armenian-descent manager placed atop. Sergey Sarkisov, chairman of the RESO-Garantia directorial board came second in the same category. Mikhail Poghosyan, the president of the United Aircraft Corporation, ranked second in the Machine Engineering category.

Other Armenians, ranked third in different categories – Artyom Kostandyan, the chairman of Promsvyazbank, in the Commercial Banks category, UTair CEO Andrey Martirosov in the Transport category, Russian Venture Company CEO Igor Agamirzyan in the Finance category and Patrik Aganyan, the head of Sanofi Eurasian Region the CEO of Sanofi Russia, in the Chemical Industry. Besides, Ruben Vardanyan, co-chairman of Sberbank CIB, is included in the list of 25 business leaders along with Sberbank President German Gref, RUSAL CEO Oleg Deripaska, VTB24 President Mikhail Zadornov, Kaspersky Labs CEO Eugene Kaspersky, Gazprom Board Chairman Alexey Miller, Rosneft President Igor Sechin and Russian Railway Vladimir Yakunin. In composing this rating, Kommersant newspaper and the Russian Managers Association were guided by the principle The Best Chose the Best – top managers and executives rate each other. The rating has 16 categories – information technologies, commercial banks, forestry and wood processing industry, machine building, media business, multi-field holdings, professional services, communications and telecommunications, service and production of consumer goods, insurance, construction, trade, transport, finance, chemical industry, energy and fuel complex. ARKA

GRANT THORNTON STUDY FINDS THE DEMAND FOR EQUITY INVESTMENT IN ARMENIA IN NEXT FIVE YEARS MAY RANGE FROM $7.5 TO $9 BILLION

Grant Thornton study has found that the demand for equity investment in Armenia in the next five years may range from $7.5 to $9 billion. These numbers were announced by David Manukian, a senior consultant from Grant Thornton Company in Armenia, when presenting the study’s findings at a conference on facilitating access to capital for competitive businesses. “Equity investment is not an alternative to traditional sources of funding, but it is able to supplement them,» he said. According to him, the annual demand for equity investments in the Armenian market is $1.5-$1.8 billion. “The amount of available resources for investment in private equity, according to our estimates, is $50 million, 95% of which is provided by international financial institutions,” he said, , adding that according to Grant Thornton, the total capital and credit investments of international financial institutions in Armenia in 2012 amounted to $150 million. Manukian pointed out pension funds, global equity funds, insurance companies and local and international organizations as potential sources of equity investment. He unveiled also figures which were obtained

as a result of creating a model investment fund with a capital investment of $20 million and a 10 year operation. According to him, under the baseline scenario, 50 % of the investment would be successfully implemented bringing income, 20% would be returned without income and the remaining 30 % will be unprofitable. “As a result of the study we concluded that creation of investment funds in Armenia will have a tangible effect on the economy and contribute to the development of its capital market “, he concluded. Grant Thornton, a member of Grant Thornton International, was founded in Armenia in the early 90’s. The company provides its customers with a wide range of auditing, consulting services, as well as advice to enterprises, commercial banks, financial institutions, government, local and international organizations. Among its clients are more than 20 banks, dozens of credit institutions and insurance companies and foundations in Armenia, Georgia, Tajikistan and Kyrgyzstan. The conference on facilitating access to capital for competitive business was organized by the U.S. Agency for International Development with the support of Small Enterprise Assistance Fund. ARKA

ARMENIA WILL BE REPRESENTED AT TOP RESA INTERNATIONAL FRENCH TRAVEL MARKET IN PARIS

n September 24-27, 2013 the National Competitiveness Foundation of Armenia (NCFA), along with local travel agencies, will represent Armenia in Top Resa International French Travel Market in Paris. This year, an estimated number of 1,200 exhibitors and 28,000 industry professionals of around 164 tourist destinations are expected to take part in the exhibition, NCFA said in a press release. Armenia’s rich cultural, historical and Christian heritage will be presented in travel guides and maps in French during the exhibition. NCFA’s participation in this major exhibition

aims to promote the tourism of Armenia in European market, increase Armenia’s visibility as an attractive travel destination and contribute to the growth of tourist inflows.

ARMENIA INCREASED EXPORT OF COPPER SCRAP TO BELIZE

he volumes of the copper waste and scrap exported from the Republic of Armenia to Belize (Honduras) during the first six months of 2013 have increased by more than 15% in comparison with the same period of the previous year and made 1149,9 tons. According to the data provided by the State Revenue Committee of the Government of the Republic of Armenia, during the first half of 2012 998,3 tons of copper scrap and waste were exported from our Republic to Belize. The total customs value of the export to Belize from Armenia during the first six months of 2013 made more than $4,2 million. As reported by Armenpress, in 2012 3,067 tons of copper waste and scrap were exported to Belize from the Republic of Armenia in comparison with the 2,763 tons of 2011. Belize lies on the eastern or Caribbean coast of Central America, bounded on the north and part of the west by Mexico, and on the south and the remainder of the west by Guatemala. The area of Belize is about 23,000 square kilometers. The population is 312,000 and the GDP – about $3 billion.

Belize is home to a number of growing enterprises which include, but not limited to, the manufacture of metal doors and windows, furniture, concrete blocks, bricks, clothing, boat building, soft drink bottling, brewing, cigarette manufacture, tire recapping, the production of flour and animal feed, wire and paper products, an agricultural fertilizer plant, matches, plywood and other wood products, a meat packing plant, food processing operations and the manufacture of rolled steel bars for the construction industry and a host of other manufacturing activities. ARMENPRESS

GABON PURCHASES ALUMINUM FOIL FROM ARMENIA

he volumes of the aluminum foil exported from the Republic of Armenia to the African Gabon in the first six months of the year of 2013 made 112,6 tons in comparison with the indicator of the same period of the previous year of 112,8 tons. According to the data provided by the State Revenue Committee of the Government of the Republic of Armenia, during the first six months of 2013 the total customs value of the aluminum foil exported from Armenia to Gabon made $341,100. As reported by Armenpress, during the entire year of 2012 169,8 tons of aluminum foil were exported from Armenia to Gabon with the total customs value of $538,000. Gabon is a sovereign state on the west coast of Central Africa. It has an area of nearly 270,000 square kilometers (100,000 sq mi) and its population is estimated at 1,5 million people. Its capital and largest city is Libreville.

Gabon is one of the richest countries of Africa with the GDP indicator of about $16,000 per capita. Gabon’s economy is dominated by oil. Oil revenues comprise roughly 46% of the government’s budget, 43% of gross domestic product (GDP), and 81% of exports. Gabon’s oil revenues have given it a strong per capita GDP of $8,600, extremely high for the region. ARMENPRESS

TURNOVER OF COMPANIES OFFERING ARMENIA CHANGES CHINESE INVESTMENT SERVICES AMOUNTED NATURAL FURS WITH TURKISH 47.1BLN DRAMS IN AUGUST ARTIFICIAL FUR urnover of companies offering in-

vestment services amounted to 47.1bln drams in August, a reduction of 37% compared to July, the Central Bank of Armenia reported. According to the report, REPO agreements of companies providing investment services dropped 4.8% to 443.4 billion drams in August. There are eight companies and 21 banks providing investment services in Armenia. ($1=405.75drams). armbanks.am

he import volume of natural furs to the Republic of Armenia decreased for 41 times at the course of the first six months of the current year in comparison with the same period of 2012, thus reaching only 184 pcs. In accordance with the data of the State Revenue Committee adjunct to the Government of the Republic of Armenia, the Republic of Armenia imported 7 thousand 544 pcs. of natural fur products at the course of the first six months of the pre-

vious year. As reports “Armenpress” the import volume of artificial furs was increased by about 17 times at the course of the first six months of the current year in comparison with the same period of the previous year, thus reaching 4 thousand 704,3 kg. During the first six months of 2013, the majority of the natural fur products was imported from China (162 pcs.) and artificial furs – from Turkey (3117 kg) and Iran (1300 kg). ARMENPRESS

12 EUROPEAN UNION TO OPEN FULLY ITS MARKET TO MOLDOVAN WINES

he European Commission proposes to fully open the European Union’s market to wine imports from the Republic of Moldova, in advance of the envisaged provisional application of the EU - Republic of Moldova Association Agreement and the related Deep and Comprehensive Free Trade Area (DCFTA), as a measure to ease some of the difficulties the Republic of Moldova is experiencing with its wine exports to some of its traditional markets. “The European Union’s market is a sustainable alternative and a viable pole of stability for the Moldovan wine sector. A fully opened EU market for Moldovan wines in a time when Moldovan farmers are in difficulty, reflects that, beyond being a very successful economic integration project, the EU is also a space of solidarity”, stated Dacian Cioloş, Commissioner for Agriculture and Rural Development. In June 2013, the European Union (EU) and the Republic of Moldova finalised the negotiations of a historic Association Agreement, which foresees the creation of a Deep and Comprehensive Free Trade Area (DCFTA), thus fostering the economic integration of the Republic of Moldova into the EU. The Association Agreement is expected to be initialled at the Eastern Partnership Summit, to be held in Vilnius, Lithuania in November 2013, and some of its main elements, including the DCFTA, to be provisionally applied soon after the signing of the Agreement. The DCFTA foresees the full liberalisation, with no restriction of the EU market, for the imports of Moldovan wine, revoking the current regime of Autonomous Trade Preferences (which provide for a quota of 240.000 hl of wine per year). The European Commission will propose to the Council and the European Parliament to modify the Autonomous Trade Preferences so that the EU imports of Moldovan wines becomes completely liberalised without waiting for the provisional application of the Association Agreement, including its DCFTA. The European Commission will ask the Council and Parliament to do their utmost for a speedy adoption of this modification europa.eu

US ENERGY FIRM ENTERS KAZAKHSTAN OIL AND GAS MARKET

alifornia-based energy firm Pacific Energy Development has announced an agreement to acquire a 34 percent interest in an area located in the largest oil and gas producing basin in Kazakhstan, marking the company’s entry into the country, according to an official statement from the company. The 380,000-acre (153,780-hectare) zone in the North Block of Kazakhstan’s pre-Caspian basin is under contract to Almaty-based Aral Petroleum Capital, which currently holds a 100 percent interest in the area, the statement said. Pacific Energy announced Monday that it in order to acquire a 34 percent stake in Aral it agreed to take a 51 percent controlling interest in Asia Sixth Energy Resources which holds a controlling interest in Aral. Pacific Energy has paid an initial deposit of $8 million, and plans to secure funds to complete the deal by September 2014, subject to meeting closing conditions and gaining approval from the Kazakh government the statement said.

Kazakhstan Xi Jinping proposes Silk Road economic zone. China’s president, Xi Jinping, proposed building a Silk Road economic belt while attending the Shanghai Cooperation Organization summit during his recently concluded trip to four Central Asian countries: Turkmenistan, Kazakhstan, Uzbekistan and Kyrgyzstan. Xi said in a speech at a Kazakhstan university that China had adopted friendly policies to collaborate with Central Asian countries and suggested utilising an innovative model to build a Silk Road economic belt. Since Central Asia has become China’s partner on its north-western border, the building of a Silk Road economic zone would have five strategic qualities. First, Xi said that China and the Central Asian countries should communicate on policies, construct roads to connect the countries to China, encourage currency circulation and implement cultural exchanges. Furthermore, China and Central Asian countries can gradually form a regional alliance. Xi said China needs to strengthen cooperation for trade, energy and economic issues. He signed 38 pacts with the governments and private firms of the four countries during his trip. Second, the purpose of building a Silk Road economic belt is to create a safe and stable environment in Central Asia, which can be established through economic development and social prosperity, Xi said. Third, Xi’s main purpose in participating in the Shanghai Cooperation Organization summit this year is to build symbiotic ties with the organization through cooperation in political, economic and social areas as well as in ensuring mutual security.

CIS caucasian business week

September 30, 2013 #23

BETWEEN TWO STOOLS: UKRAINE SAYS EU TRADE DEAL CERTAIN, RUSSIA–LED UNION ALSO AN OPTION For Russia Ukraine’s new trade alliance won’t have a large impact, the World Bank says, adding though Moscow would need to look elsewhere for nuclear energy – the key import tie. Exports from Ukraine to Russia totaled $18 billion in 2012, accounting for nearly 25 percent of Ukrainian exports. Russia largely buys Ukrainian metals, railway carriages, food products, and nuclear equipment. To compare, exports of Russian goods to Ukraine totaled over $27 billion, or 5 percent of the total volume sold to foreign markets, with energy dominating Russia’s sales to Kiev.

kraine President Viktor Yanukovych said his country will sign a free-trade pact with the EU, adding he wants to keep open an option of joining Russia in the Customs Union. Russia insists Ukraine cannot have both. Speaking at Tuesday’s UN General Assembly in New York, Yanukovych stressed his country’s plan to broaden cooperation with the European Union, a snub to President’s Putin movement to bring all the formerSoviet union nations under a Eurasian customs union. “Ukraine’s European aspirations are the main pillar of the country’s development,” Yanukovych said. The Ukrainian government has already approved the draft resolution agreement with the EU which will be presented, and likely signed, at the EU summit in Lithuania on November 29. “Our relations with the EU will benefit the customs union,” Yanukovych said. “Ukraine is a bridge between Russia and the EU and it’s very important to make sure the bridge is strong and reliable. Dialog between Ukraine, Russia and the EU on trade issues is possible in the near future.” Ukraine would gain tariff-free access to the large European market as well as European goods. On the flip side, the apparent snub to Russia will be met with a great trade backlash that Russia says will be ‘suicidal’ for Ukrainian exports, which Russia forecasts will decline by 25 percent.

Compromise impossible

Russia insists it won’t let Ukraine into its Customs Union, if it seals a trade agreement with the EU. The latest threat came from the country’s Prime Minister Dmitry Medvedev, who said “special trading partnership with Ukraine, which has operated up until now, will end.” “We will remain friends, we will continue exports, but Ukraine will receive no special privilege, and perhaps even restrictions,” Medvedev said at the Council of the Federation meeting Monday. Russia’s PM hinted Ukrainian goods would fail in European markets. “Let them sell their products in Europe, let them try,” Prime Minister Dmitry Medvedev said Tuesday, Interfax reported. Earlier in August Russian First Deputy Prime Minister Igor Shuvalov said any talks on a compromise for Ukraine’s participation in both - a trade alliance with the EU and the customs union of Russia, Kazakhstan and Belarus - were senseless. “We realized that we did not see a compromise after we analyzed absolutely everything”, Shuvalov said. Russia has not only vocalized trade threats, but flexed its border control muscle in mid-August with extra time-consuming import checks of Ukrainian goods.

Soviet reunion at stake

Russia and Ukraine have deep economic and political

connections, many of which are coming to light due to Putin’s effort to force Ukraine into Russia’s customs union. The three-member customs union of Russia, Kazakhstan and Belarus was founded in 2010 as a counterweight to the EU. Putin hopes to expand it into a ‘Eurasian Union’- a political and economic union of post-Soviet states like Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Ukraine’s lack of currency reserves, paired with its huge deficit and Moody’s sovereign debt rating cut to Caa1 from B3 puts them at “very high default risk”. Russia claimed that Ukraine’s choice to team up with Europe will come at a cost of 35 billion euros worth of Ukrainian goods, which will force it to default on its sovereign debt, of which Russia owns a great portion. After years of subdued nationalism under the Soviet Union, Ukraine, which gained independence in 1991, is maybe more disconnected from Russia than it ever has been. Ukraine’s move to join the EU would certainly widen this gap, as Russian lawmakers have consideredblocking Ukraine from trade with any Customs Union members. Kiev is resource rich in both agriculture and minerals, and most importantly is a route for Russian gas supplies to get to Europe. The two countries have bickered over natural gas deliveries, which may have been a catalyst for Ukraine to exit Russia’s orbit and instead hang its hat with Europe. President Yanukovich is hopeful Ukraine, whose growth has contracted to 1.1 percent in Q2 as it recovers from recession, will receive a bailout from the International Monetary Fund of nearly $15 billion. Talks in April failed and didn’t produce a final agreement. Armenia, another former USSR republic, said it would join Russia in the Customs Union, as well as engage in the Eurasian integration process instead of negotiating a free trade agreement with the EU. The move is seen as a political victory for President Putin, who has been rounding up former Soviet states to rival the EU, promising lower gas prices and other trade perks. Rt.com

HUNGRY CHINA WANTS TO ‘BORROW’ LAND FROM ‘BREAD BASKET’ UKRAINE FOR 50 YEARS

he Chinese plan to lease 5 percent of Ukraine’s total land to grow crops may be nothing more than a pipe dream. Ukrainian officials say they know nothing of the deal, reported in a Chinese newspaper over the

weekend. Food demand in China is expected to grow along with industrialization, and China has been land-grabbing across the globe, with 7.4 million acres (3 million hectares) in Ukraine being the most recent prospect. The South China Morning Post reported China’s Xinjiang Production and Construction Corps (XPCC) had a 50-year plan for crop and pig farming, spanning over 9 percent of Ukraine’s arable land. If executed, the deal Kiev-based KSG agro would make Ukraine China’s biggest overseas farming center. However, in Kiev the proposal has caught officials by surprise. Sergey Kasyanov, Chairman of KSG agro, explained the misunderstanding. “We are not going to sell or transfer a lease or sublease to the Chinese. The project pertained to installing a drip irrigation system in those 3 million hectares in the next year,” Kasyanov told Vesti 24 in a TV interview. China’s reported ‘land grab’ would include eastern territories near the Dnieper river, Kherson, and Crimea, well-known for its coastal beaches. Ukraine lifted a ban on foreigners buying land last year. “I don’t have any information on the subject, unfortunately. I know that Chinese companies occasionally show interest,” Igor Livin, the Chairman of the Association of the Ukrainian-Chinese Cooperation told Vesti 24. Ukraine’s Prime Minister Sergey Arbuzov, who is on an official trip to China, confirmed Ukraine is interested in attracting new investment from China, but made no mention of agriculture, instead focused on banks. On Monday, the Ukrainian Minister of Agriculture and Food said

China and Ukraine will become strategic partners. “The expansion of agricultural products delivered to China will help ensure that the total share of trade with China reaches between 20-25 percent,” said Mykola Prysyazhnyuk, Itar-Itass reported. A Chinese-Ukrainian cooperation could help Kiev increase its international trade, while Beijing could reach its goal of becoming 95 percent self-sufficient in food. “China has a lot of agriculture experience and Ukraine has rich resources and is willing to collaborate with China. Our two countries seem to complement each other,” Chen Yuztsin, of the Chinese Embassy in Ukraine, said. Ukraine is home to 45 million people and boasts a gross domestic product of $176 billion. China’s population accounts for about a fifth of the global population, with at 1.4 billion people living in the country. It is also the world’s second largest economy, with over 8 trillion in GDP.

Land Grab

China has upped its overseas farming investments to counter any future food shortages, and in 2013 bought Australia’s biggest cotton farm. The Post reported China has over 2 million hectares of land abroad that it uses

for agriculture. Worldwide 115 million acres are leased to foreign investors. Big foreign land buyers include Britain, the US, China, the UAE, South Korea, South Africa, Israel, India, and Egypt, according to a recent report from the ‘Proceedings of the National Academies of Sciences”. The study found between 0.7 and 1.75 percent of agricultural land is being transferred from local to foreign hands. These countries are seeking greener pastures to grow crops in Congo, Sudan, Indonesia, Tanzania, Mozambique, Ethiopia, and Australia, according to the report. ‘Land grabbing’ can be a mutually beneficial relationship, as foreign investors can ‘get more’ out of the land using newer agriculture technology, and the local ‘host’ can profit. However, forcible relocation of people and soil erosion are risks. Land has made a comeback – from cattle, private ski resorts, hunting and fishing clubs, to the Maine coastline – for American entrepreneurs who prefer to take a stake in natural real estate to diversify and hedge their assets against the risky gold, oil, and stock prices. Rising grain prices also give investors incentive to turn to land. Rt.com

WORLD NEWS September 30, 2013 #23

caucasian business week

RUSSIAN DIAMONDS AND RESTAURANTS TO TRY LUCK IN US AND CHINA the company upwards of $6 million per year, according to Sportmaster business manager Sergey Agibalov, who told Kommersant his company is in the process of negotiating rental space. Esper Group, a Moscow-based fashion consulting group, estimates the clothing market at about $60 billion in 2013, with sales growing by to 16 percent, depending on the product range. Russia’s sporting goods market is expected to near $8 billion by the end of 2013, according to Infoline, a St. Petersburg-base business-tobusiness information consulting agency. China is Russia’s largest trading partner. In 2012 trade between the two countries reached $88 billion. In the first half of 2013, trade amounted to $50 billion, according to data from Russia’s Federal Customs Service data. Sportmaster already has 356 stores under its name and the brand ‘Ostin’, and has already opened shops as far east as Vladivostok. Sportmaster operates in Ukraine, Kazakhstan, Belarus, Azerbaijan, Kyrgyzstan, Georgia, Armenia, Moldova, and Mongolia.

ome of Russia’s biggest retailers will try their hand in foreign markets. Russia’s biggest diamond producer ALROSA, sporting goods retailer Sportmaster, and a popular sushi restaurant will test out their products in Beijing, London, and New York. The market moves come from three separate reports in the Kommersant business daily.

Brilliant!

Russia’s diamond mining magnate ALROSA wants to continue its international retail campaign and is close to signing a three-year contract with Signet Jewelers Ltd, the largest mid-price engagement and wedding rings retailer in the US and UK. The London-based subsidiary will purchase $80 million worth of diamonds from ALROSA. In the US, the diamonds will be sold at Kay and Jared jewelers, and in the UK at H. Samuel, Ernest Jones, and Leslie Davis outlets. The US diamond retail market is the world’s largest- accounting for nearly 40 percent of worldwide sales.

ALROSA currently distributes their diamonds to companies like Tiffany & Co., and is expanding its market reach ahead of its expected October privatization, in which the Russian government plans to sell 14 percent of the company, valued at between $14-15 billion. ALROSA has recently launched projects in Angola, Botswana, and Namibia, but mainly operates out of the Russian Yakutsk region. The world’s top producer by carat output, ALROSA accounts for about 25 percent of world diamond production and 97 percent in Russia.

Mastering sport goods

Sportmaster, Russia’s biggest sporting goods retailer, will reportedly expand sales to northern China starting in May 2014. Brands will be tailored especially to the Chinese, and will include Chinese characters on the garments. They will sell big brands that are already available in their Russian branches- Nike, Adidas, FILA, and O’Neill. The sports group will lease 5 stores which could cost

‘Two Sticks’ to pierce Times Square

St. Petersburg-based chain ‘Two Sticks’ restaurant offering Chinese and American food will reportedly try their luck in one of the most heavily-trafficked areas in New York City- Times Square, Kommersant says, citing two sources in the food industry. The chain, owned by Mikhail Tevelev and Evgeny Kadomsky, would open its store in New York after it secures $10 million in investment, half of which would be used to cover rent in the expensive mid-town district. The Ginza Project, which launched Russian restaurants Mari Vanna and Manon in the United States, estimates the investment could exceed $10 million, as the restaurant wouldn’t start seeing profit for at least 3 years. Brasserie Pushkin, which was also located in New York’s Midtown district, closed ‘for renovations’ in late 2012 and promised to reopen in ‘early’, 2013, but still remains closed. Whereas Pushkin was an upscale eatery, ‘Two sticks’ is lower-priced cuisine. Rt.com

ALITALIA SEEKS CAPITAL HIKE, AIR FRANCE-KLM VOTES AGAINST

truggling Italian carrier Alitalia will seek a capital increase of at least 100 million euros ($135 million), it said on Thursday after reporting another heavy loss for its first half. But its top shareholder Air France-KLM (AIRF.PA), which holds a 25 percent stake, voted against the capital hike proposal, a source close to the matter said. The Franco-Dutch group declined to comment. Alitalia, which has struggled to make a profit throughout its life and was bailed out repeatedly by the Italian state before being privatized in 2009, again faces a cash crunch. Its net loss for the first six months was 294 million euros, on top of losses of more than 840 million euros the group had already accumulated since its privatization in 2009. Analysts said it needed a sizeable cash injection and a strong foreign partner. “The shareholders will be called to approve a capital in-

crease of no less than 100 million euros,” the company said. It did not specify the terms of the capital increase, which usually includes a share issue. “With this capital hike they are just buying time, but it doesn’t really solve the problem,” said Andrea Giuricin, a transport analyst at Milan’s Bicocca University. “First they need to find the money to recapitalize.” A shareholder meeting to debate the capital increase was called for October 14, and the board will meet again next Thursday. Shareholders are also asked to underwrite the remaining 55 million euros of a 150 million euro convertible loan Alitalia’s board approved in early 2013 and to approve a mandate to seek bank financing for another 300 million euros. The airline said net debt at the end of June stood at 946 million euros, while liquidity was equal to 128 million euros. DEVELOPING ROME HUB Alitalia’s once ambitious plan to become a strong regional player has failed in the face of tough competition from low-cost carriers, high-speed trains and lower demand for air travel. Recently appointed CEO Gabriele Del Torchio, a turnaround specialist, has already outlined a new plan to focus on the more lucrative long-haul market, but he desperately needs cash to buy the larger aircraft needed for inter-continental flights. The company says the new strategy will help it to break

even in 2015 and return to profit in 2016. Italy was betting on Air France-KLM raising its stake, possibly even taking control of the company, but any such commitment may clash with Italy’s own ambition to make Rome a transport hub for intercontinental flights. Industry Minister Flavio Zanonato on Thursday said Italy was working with banks to find a temporary solution to put the company in a stronger financial position first rather than leaving it at the mercy of an Air France-KLM bid that would ultimately hurt Rome’s own transport priorities. “Alitalia shouldn’t get into a situation where it is weak and has to accept whatever terms are offered because it has no negotiating power,” Zanonato told reporters in Brussels. Air France-KLM already operates two hubs out of Paris and Amsterdam and may want Alitalia to support its own network rather than develop Rome as an additional hub in Europe, analysts say. Italy’s transport minister told his French counterpart at a separate meeting in Paris that Rome was not opposing a stronger Air France-KLM involvement, but only under the condition that it would not affect Alitalia’s new strategy and jobs. In the absence of other bidders, Italy’s bargaining power may be limited. Etihad Airways, mentioned by Italian media as a possible partner, has distanced itself from the struggling carrier for now and is focusing on a deal in India instead. The Alitalia board was told by a bank adviser of possible interest from China, Russia and the United Arab Emirates to acquire a stake, a board member said. However, similar reports have emerged in the past without coming to fruition, and time is running short for Alitalia. Reuters

US GROWTH REACHES 2.5%, BUT MAY BE UNSUSTAINABLE

he US economy grew by 2.5 percent from April through June, the Commerce Department has said. While the second-quarter result was an improvement on the 1.1% growth in the first quarter, how sustainable the growth will be remains a big question. The Q2 GDP figures come at a sensitive time for the US government as it contemplates the future of its massive stimulus program, as well as the debt ceiling. How sustainable growth is now plays a key part in decision-

making. Last week, the Federal Reserve shocked markets at its September meeting, when it decided to keep its monthly stimulus at $85 billion. The Fed said then it wasn’t sure the US economy was strong enough to do with reduced monetary support. Lately, the US has been showing some signs of recovery, with the housing market gaining momentum and unemployment sticking at 7.3 percent – the lowest since 2008. “We think the US economy is on a recovery track, and see it expanding 1.8 percent this year,” Yaro-

slav Lissovolik, chief economist at Deutsche Bank, told RT. However, another market analyst, Igor Nikolaev, director of the strategic analysis department at PKF, told RT that the growth wasn’t sustainable. With inflation still running below the Fed’s 2 percent target, and the national debt skyrocketing to $16.9 trillion, the US needs to come to terms with its reckless spending habits. “The US economy is like a sick patient with a rash, and it’s still unhealthy,” Nikolaev said. rt.com

JAPANESE CAR PARTS FIRMS FINED BY US REGULATORS

ine Japan-based companies and two executives agreed to plead guilty to conspiring to fix the price of car parts sold to US car manufacturers. They will pay a combined $740m (£462m) in criminal fines to US authorities. According to the US Department of Justice, the firms sought to fix the prices of more than 30 different products. More than $5bn worth of parts were then sold to US manufacturers like Chrysler, Ford, and General Motors. Some of the price fixing lasted for more than a decade, and more than 25 million cars purchased by US consumers were affected by the price fixing. It was not just US car manufacturers that were affected. The US subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota and Subaru were all also subject to higher prices for parts. The companies admitting criminal wrongdoing are: Hitachi Automotive Systems, Jtekt Co., Mitsuba Co., Mitsubishi Electric Co., Mitsubishi Heavy Industries, NSK, T.RAd, Valeo Japan Co., and Yamashita Rubber Co. The two executives are Tetsuya Kunida, a Japanese citizen, and Gary Walker, a US citizen. Both will pay $20,000 fines. According to court papers, the participants in the scheme met in remote locations in the US and Japan. They used code names when discussing ways to assure prices for certain car parts like seatbelts and windshield wipers were kept high. “The Department of Justice will continue to crack down on cartel behaviour that causes American consumers and businesses to pay higher prices for the products and services they rely upon in their everyday lives,” said Attorney General Eric Holder in a statement. The fines come as part of a larger investigation by the Department of Justice into price fixing in the car industry. So far, 20 companies and 21 executives have been charged - 17 executives have served prison sentences, and more than $1.6bn in fines has been collected. bbc.co.uk

DRUGS THAT CAUSE MOST HARM Scoring drugs

new study suggests alcohol is more harmful than heroin or crack MOST people would agree that some drugs are worse than others: heroin is probably considered to be more dangerous than marijuana, for instance. Because governments formulate criminal and social policies based upon classifications of harm, a new studypublished by the Lancet on November 1st makes interesting reading. Researchers led by Professor David Nutt, a former chief drugs adviser to the British government, asked drug-harm experts to rank 20 drugs (legal and illegal) on 16 measures of harm to the user and to wider society, such as damage to health, drug dependency, economic costs and crime. Alcohol is the most harmful drug in Britain, scoring 72 out of a possible 100, far more damaging than heroin (55) or crack cocaine (54). It is the most harmful to others by a wide margin, and is ranked fourth behind heroin, crack, and methamphetamine (crystal meth) for harm to the individual. The authors point out that the model’s weightings, though based on judgment, were analysed and found to be stable as large changes would be needed to change the overall rankings. economist.com

PUBLICITY caucasian business week

September 30, 2013 #23

TBILISI INTERNATIONAL FESTIVAL OF THEATRE

with elegant touch of reality… About GEORGIAN SHOWCASE!

he Georgian ShowCase takes place from 5-8 October, as part of the Tbilisi International Festival of Theatre. With its fifth edition, the annual GEORGIAN SHOWCASE PROGRAM continues to provide the best opportunity for Georgian theatre companies to introduce their work to international promoters. At the same time, the ShowCase opens opportunities for international touring, enables other countries to experience the excellent work that is being produced here and giving shows a life beyond their home. Since the first Showcase in 2009, the project has given number of theatres the opportunity to tour internationally, building new relationships and opening up new cooperation possibilities. Many European, American and Asian theater critics, producers, festival managers and theater directors visit the ShowCase from its first days. The growing interest towards Georgian ShowCase is due to high quality of the program very deep, interesting, challenging and diverse Georgian Theatre of today. The program this year is comprised of new work (2012-2013) that represents the very best of

Georgian theatre, reflecting the vitality, innovation and diversity of contemporary Georgian theatre. The Georgian ShowCase this year is organized in collaboration with AICT Georgian Section. So and In brief: /The Georgian ShowCase program creates opportunity to experience best Georgian performances of 2012-2013 of well-known stage directors alongside with new and bright generation of young and talented theater makers; /ShowCase creates a unique meeting platform for international theatre and festival managers, performers, writers; directors and theater critics; /Modern International and Georgian Drama, world classics, state and independent theaters -

the best performances of this year will be new discoveries in your festival future programs /Modern Georgian drama will be also in focus – new writing of young and established Georgian play writers Unique evenings with Georgian music and wine will add flavor to post show-talks and meetings with artists; What is also important - is possibilities of coproductions with Tbilisi International Festival of Theatre - the project will be launched this year for the first time. So, welcome! Georgian ShowCase Program 2013 Georgian ShowCase Program 2013 is organized

by Tbilisi International Festival of Theatre in collaboration with Georgian Section of International Association of Theater Critics. There are 27 new performances in the program from all over Georgia. Almost all productions of 2012-2013 theater season - from capital – Tbilisi- and several other cities from east and west Georgia: Telavi, Zugdidi, Batumi, Akhaltsikhe , Gori and etc. The critics of AICT GEORGIAN SECTION have made several recommendations for performances out of the full list . The Festival introduces the full program together with the short list of highlighted performances. www.tbilisiinternational.com www.facebook.com/TbilisiInternational

TBILISI GUIDE September 30, 2013 #23

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 AND NIKORA

PUBLICITY caucasian business week

September 30, 2013 #23

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.