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BUSINESS WEEK May 7, 2013 #03

caucasian business week

May 7, 2013, Issue 03,

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GEORGIA REAL GDP GROWTH MADE UP 1.7% IN Q1

he estimated real Gross Domestic Product (GDP) increased by 0.2 percent y-o-y in March 2013. The estimated real GDP growth in Q1 2013 equaled 1.7 percent.

ONLY BORJOMI AMD NABEGHLAVI TO PAY HIGHER RATES ON USE OF NATURAL RESOURCE

Pg. 7

Deputy PM Slams Labor Code Amendments

Pg. 3

Ministry of Finance Collects Data on the Soviet Deposits

GEORGIA’S FRUITS HARVEST DECLINES IN 2012

Pg. 3

Pg. 5

GOODWILL NAMED AS ACTIVE PROMOTER OF GEORGIAN PRODUCTS, CARREFOUR AND SMART OCCUPY LAST POSITIONS

ADJARA IS LEADING REGION IN TERMS OF CREDITS

ccording to crediting amount, by the end of the first quarter 2013, Adjara is a leader among the regions with 26,4% (2012 -26,5%, 2011 - 28,3%). Pg. 8

CIS THE ECONOMY IN UKRAINE TO GROW 3.4 % IN 2012

he Ukrainian government expects the country’s GDP to grow 2.5%-3.4% in 2013 and 3.4% in 2014 to US government after Russia, the Ukrainian republic was the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Pg. 9

AZERBAIJAN SOCAR’S OIL PRODUCTS EXPORTS EQUAL 402.671 TONS IN JANUARY TO APRIL 2013

lack oil left in April the statistics of export of petroleum products of the Marketing & Economic Operations Department of the State Oil Company of Azerbaijan (SOCAR). Pg. 10

ARMENIA TOP TEN ARMENIAN BANKS BY DEPOSITS

eposits in Armenia’s top ten banks singled out for the largest amount of deposits totaled AMD 1137.5 billion in 2012 after growing 20.4%, compared with 2011. Pg. 11

WORLD NEWS YEAR OF THE YUAN - CHINA’S EXPLOSIVE CURRENCY GOES GLOBAL

he ‘people’s currency’ of China is redefining the global economic monetary system. The closed-capital pariah is blossoming into a reserve standard and is hedging appeal against the indebted dollar and the untested euro, piquing foreign interest. Pg. 13

nly Borjomi and Nabeghlavi mineral water bottling companies may pay higher rates on use of the natural resource. Giorgi Kvirikashvili, the Minister of Economy and Sustainable Development says the rate will not increase to other manufacturers for a use of mineral resources because they represent small-sized bodies on the market. The commission of economy profile ministries has revised tariffs in the law on use of natural resources and trippled it. The bill has been approved by the government and it has been forwarded to the Parliament. IDS Borjomi Georgia will pay a 30 GEL due instead of 10 GEL for use of 1 000 liters of Borjomi mineral water, while Tskali Margebeli will pay 18 GEL instead of 6 GEL. A 3 GEL due is added to the tariff for a use of a cubic meter of mineral water, that, under the initial bill was to be 9 GEL. Under the bill, Sairme is to pay 18 GEL instead of 6 GEL and Racha Waters is to pay 12 GEL instead of 4 GEL. Avto Svimonishvili, one of the founders of Tskali Margebeli company says negotiations are underway with the government so as the tariffs grow at lower rates. A 200% growth in liabilites will considerably lower the company revenues and put an end to making investments in the agribusiness sector, Svimonishvili noted. Marneuli Agro is one of the subsidiaries of Margebeli Holding. The company manufactures many agricultural products. The company has paid 33 million GEL to the state budget in 2006 to 2012, Svimonishvili noted. “The upturn in taxes is related to revision of the license conditions and this will make negative affect on the business, first on all, on exports, because changes in long-term contract agreements with foreign partners may generate many obstacles. The decision will also frusrate the search of new wells to determine potential reserves and maintain quality

indicators. At the same time, our young brand will have to pay higher rates compared to mineral water brands with over 100-year history in the world and our region”, Tskali Margebeli says. IDS Borjomi Georgia says the growth in tariffs will make negative affect on competitive capacity of the product. “The increased tariffs will negatively affect competitive capacity of IDS Borjomi Georgia products, especially, Borjomi mineral waters on Georgian, Russian, Ukrainian and other exports markets. Under the current norms, our company payes the highest due on the natural resource - 5.9 EUR per cubic meter, while the tariff makes up 4.1 EUR. The rate ranges from 0.1 to 5.7 EUR in Europe. France is the only country with higher tariffs compared to Georgia. It is also worth noting mineral water manufacturers pay VAT in preferential regime in France - 7% instead of 19%. We can say our tariff is the highest in Europe and the CIS. Borjomi is represented in 40 countries. For many years IDS Borjomi Georgia has carried out much job to develop the brand on the exports markets and the company has invested tens of millions of USD. Unfortunately, the decision may frustrate the further development of the company”, says the company management and abstains to provide further comments before the adoption of legislative amendments. The state commission for natural resources says the companies have enough resources to maintain prices through optimization of expenditures. “The growth in tariffs on the natural resource will not affect product prices, but this is their prerogative. We are confined with only state regulations and legal leverages”, Giorgi Kvirikashvili, who chairs the commission, said. At the same time, Kvirikashvili responds to the French example and advises the manufacturers to remember that the profits tax in France makes up 33.3%.

AGRICULTURE MINISTER QUITS AFTER ARRESTS

griculture Minister, Davit Kirvalidze, said he had asked to suspend him from office pending investigation into arrests of several officials from the ministry and its affiliated entities in connection to alleged case of misspending GEL 2.5 million of public funds. “I have requested to suspend me from office, so I will resign before the truth is established,” Kirvalidze said on May 2. The Interior Ministry said late on May 1 that public funds were misspend while procuring tractors and other agriculture equipment as part of the state-funded program to help farmers to cultivate their agriculture lands. Head of one of the units within the Agriculture Ministry; director of a state research center Agriculture Mechanization Institute; director of the state-owned Mechanizator company, which was in charge of procuring tractors, and two of his deputies were among those arrested, according to the Interior Ministry. The Interior Ministry also accused several of arrested persons of “pressuring” members of a group of experts, which was in charge of verifying procurement matters, in an attempt to cover up misspending of funds.

Vano Mtvralashvili: “Regular” Fuel is Imported from Europe Pg. 3 Commersant.ge

Giorgi Vashadze: The Opening of the Russian Market will not Bring Economic Growth to Georgia Commersant.ge

Pg. 4

Zurab Japaridze: Economic Indicators have been Constantly Deteriorating during 7 Months Pg. 5

Tsezar Chocheli: “In no case we should stop. We will fight to the end for our truth” Pg. 6 B&F

BPI: VTB Bank Georgia Director General Named as Georgia’s most successful Banker Pg. 8

TOP NEWS

caucasian business week

May 7, 2013 #03

GEORGIA’S FINANCE MINISTER LEAVES FOR INDIA ON WORKING VISIT

inister of Finance Nodar Khaduri began today, May 1, a working visit to the Republic of India, where he will participate in the 46th Annual Meeting of Board of Governors of the Asian Development Bank (ADB). Nodar Khaduri, as Vice - Chairman of the Board of Governors of the ADB, will preside over one of the plenary sessions. He is scheduled to deliver a speech in the session. In the framework of the visit, bilateral meetings at the highest level will be held. Minister of Finance will return to Georgia on May 6.

LAW ON COMPETITION – THE GOVERNMENT IS IN A HURRY, THE BUSINESSMEN ARE CAUTIOUS

raft bill “On Competition” will be submitted to the Parliament until end of May, while enforcement of the bill is planned in summer. In fact, enforcement of current bill on trade and competition is impossible, the newspaper says. According to the amendments, independent competition agency should be established, which chairman will be appointed and dismissed by the Prime Minister in agreement with the Parliament. The agency will be funded from the budget, but

will have also its own revenues as legal entity of public law. According to current legislation, the agency is authorized to react to situation only in those spheres, which are recognized as priority by the government. According to the amendments, the agency determines priority areas independently. According to the draft, a company, which market share riches 40%, will be considered as a monopolist, while a fine (not more than 10% of annual turnover) will be imposed on a businessman, who violates the legislation.

100 EMPLOYEES DISMISSED FROM ZESTAPONI FERRO

he employee of Georgian Manganese (which includes Zestaponi Ferro) claims that dismissal of 80-100 employees is planned in near future, while up to 500 employees are under the threat overall. He links these processes to planned amendments to Labor Code, which impose addi-

tional social responsibilities on employers. Lasha Akhaladze, committee chairman in Business Association, denies massive dismissals from companies. “There are merely a few facts of dismissal yet, but if the Code enters in force as envisaged by the draft, massive dismissal from companies is not excluded”, Akhaladze declares.

GIORGI KUNADZE – GEORGIA IS ALSO RESPONSIBLE FOR CONFLICTS IN ABKHAZIA AND SOUTH OSSETIA at the 83rd Rose-Roth seminar at the NATO Par-

bkhazian and south Ossetian conflict is not only Russian, but Georgian responsibility too, the former deputy Minister of Foreign Affairs of Russia Giorgi Kunadze stated

liamentary Assembly taking place at courtyard Marriot. He said that whatever happens in the world, somehow everyone considers Russia guilty, though Kunadze said that others also made mistakes and they must also be held responsible. “Not everything is in black and white. For instance, when we speak about the Transdniestria conflict, the government of Moldova has to take responsibility for building antagonism. In the case of Abkhazia and South Ossetian, the attempt to remove autonomy is the responsibility of Georgia, which started during the first government of Georgia and it was a shock for the South Ossetian and Abkhazian population”, Kunadze said. He states that both Georgia and Moldova need a more realistic vision and apart from accusing Russia, they have to think of how to win over the population residing in the conflict regions. IPN

BUSINESS WEEK

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KERRY MEETS SAAKASHVILI IN WASHINGTON

.S. Secretary of State John Kerry met President Saakashvili in Washington on May 1 and reiterated U.S. support to Georgia’s NATO integration and welcomed “the democratic transition that has been taking place” in Georgia. “We are very grateful in the United States for the assistance that Georgia has given us with respect to Afghanistan. Georgia is the largest contributor of troops of a non-NATO country. And they have also made significant commitments with respect to post-2014,” Kerry said in remarks for the press before meeting President Saakashvili in the Department of State. “Just as importantly, we are very supportive of Georgia’s aspirations with respect to NATO and Europe,” he said. “We applaud the democratic transition that has been taking place. The President engaged in the first peaceful election transfer of power, and I know is committed to continue the work for the democratic aspirations of the Rose Revolution,” Kerry said of Saakashvili, whom he describe as a good friend. “I know his [Saakashvili’s presidential] term is

up this fall. I’ll be anxious to talk to him about the future,” Kerry said. “The democratic transition in Georgia is vital, it’s important, and we’re grateful to everybody’s efforts to keep that on track.” President Saakashvili said in his remarks before the meeting: “Of course we are here to talk about NATO.” “We want American support for NATO. We want America’s support of further Euro-Atlantic integration at this very difficult and crucial moment for Georgia’s democracy and Georgia’s survival,” said Saakashvili. “And certainly we want to see America strong. And I think instrumental in that is having you in this office as well, with your experience, with your international renome, contacts, because we have admired you for all these years as a senator, a great friend, as a really knowledgeable person,” said Saakashvili, who thanked Kerry for visiting and supporting Georgia after the August, 2008 war with Russia when he was the Senator. Secretary of State’s meeting with Saakashvili came one week after John Kerry met Georgia’s foreign minister, Maia Panjikidze, in Brussels on April 24. Civil.ge

FREEDOM HOUSE: DESPITE PROGRESS, MEDIA REMAINS ‘PARTLY FREE’ IN GEORGIA

eorgia’s ranking in an annual survey of global press freedom by Freedom House has improved for the fourth consecutive year, but the country still remains in the category of “partly free.” Freedom of the Press 2013, which covers developments of last year and assesses press freedom in 197 countries, ranks Georgia 96th, sharing position with Albania; Bosnia and Herzegovina; Comoros; Haiti; Indonesia; Kosovo; Lesotho and Sierra Leone. In the new survey Georgia has the rating of 49. Georgia’s ranking in previous similar survey,

covering 2011, was 111th with rating of 52. Each of the 197 countries and territories examined in the survey are assigned a rating between 0 and 100 with countries scoring from 0 to 30 are given status of having “free” media; from 31 to 60 – “partly free” and 61 to 100 – “not free”. “The most significant numerical improvements in the region [Central and Eastern Europe/Eurasia] occurred in the Caucasus. Georgia, whose score moved from 52 to 49, benefited from increased political diversity in the television market, including through the return of Imedi TV to its previous private owners” after the October 1, 2012 parliamentary elections, the report says.

GEOSTAT DISCUSSES GENERAL CENSUS WITH DONORS

akstat and Georgian office of the UN Population Fund (UNFPA) held donors’ conference today, dedicated to general census in Georgia. The census is scheduled for November 2014. The event was attended by representatives of diplomatic corps, World Bank’s and IMF country offices, representations of UN and other international organizations. Georgian Minister of Regional Development and

Infrastructure David Narmania declared that aim of the conference was acquainting of donor organizations with preparatory works and directions. There is readiness to fund part of these works, which will diminish respective budgetary allocations, he noted, avoiding to name exact figures. To note, Georgian population made up 4.48 million as of January 1, 2013. At that, 53.2% of the country’s population was urban inhabitants, while 2.1 persons – rural population.

May 7, 2013 #03

ECONOMICS

caucasian business week

DEPUTY PM SLAMS LABOR CODE AMENDMENTS

mendments to the labor code, proposed by the Justice Ministry and passed with its first reading by the Parliament last month, is “Rosa Luxemburg’s dream labor code” and “a nightmare for business,” Education Minister and Deputy PM, Giorgi Margvelashvili, said. Echoing concerns voiced by the business lobby groups in April before the bill was passed by the Parliament with its first reading, Margvelashvili said that the Justice Ministry-proposed amendments would fail to guarantee “balanced” employee-employer relations and would encourage “shadow employment.” Margvelashvili, who became vice-premier after PM Ivanishvili demoted defense minister Irakli Alasania, made the remarks while speaking at a lecture-style meeting with a group of students at the Georgian Institute of Public Affairs (GIPA), where he was a rector before becoming education minister in late October 2012. At the meeting Margvelashvili was speaking broadly about plans and challenges in the edu-

cation sector and his labor code remarks were actually off-topic comments made when he was asked a question from an audience about a scuffle between May Day student demonstrators and police on May 1 in downtown Tbilisi. Responding to this question, Margvelashvili said that he did not understand why this protest was held at all. He said that if the demonstrators did not like the existing labor code, they should know that amendments had already been initiated in the Parliament. “It’s Rosa Luxemburg’s dream labor code,” Margvelashvili said referring to the draft amendments. “That’s a nightmare for the business,” he said and when asked from the audience whether “it’s good or bad”, Margvelashvili responds: “Of course it’s not good, it’s very problematic, especially in the country which needs to develop business and where the authorities have to carry out reforms.” “It was completely wrong to initiate such [amendments to the] labor code,” he said and expressed hope that the draft would be revised before it’s passed with its second and third reading by the Parliament. “These amendments, which have been initiated and which I was really against of, was written conceptually under dictating from the trade unions, which are one of the stakeholders in this process and if you fail to balance trade unions by demands of business and employers… there will be a huge imbalance,” Margvelashvili said, adding that such imbalance would fail to guarantee proper employee-employer relations and would encourage “shadow employment” and “create problems” in tackling unemployment. Responding to Margvelashvili’s remarks, Deputy Justice Minister, Alexander Baramidze, who was actively involved in drafting of the bill, said on May 3: “This is Georgian Dream voters’ dream labor code, which is fully in line with those promises, which the Georgian Dream gave to voters during its pre-election campaign.” “This is the labor code, which guarantees balance in rights and obligations of employers and employees and it is in full compliance with Georgia’s international commitments,” Baramidze added. Civil.ge

VANO MTVRALASHVILI: “REGULAR” FUEL IS IMPORTED FROM EUROPE An interview with Chairman of the Union of Oil Products Importers Vano Mtvralashvili

- Oil import and this market is traditionally considered as one of the most convenient directions for cartel agreements. Emzar Jgerenaia told us that such facts occurred on this market and more: fuel in all gas stations is of low quality. Do you agree with these charges? - First of all, let’s start from the quality. Regular fuel is the most consumable fuel in the market (60 percent). It is imported from the European countries. Its octane number is somewhere 9394 units and it can be said to be of quite good quality. The market share of premium-type fuel is approximately 30 percent. It should be noted that these categories of fuel are imported only from the European countries such as Romania, Greece, Bulgaria, Italy. This is Euro 4 and Euro 5 standard fuel as well as Super which likewise comes from the same countries. As for the actual situation related to the quality. In Georgia, there is no control in this regard. As for the low-quality fuel-related issues, several components are to be singled out here. The first is whether petrol cor-

responds to this or that quality. Import statistical indicators which are registered by the Ministry of Finance, indicate that premium, super-type fuel sold in Georgia enter into the country from the listed countries and of this category. Accordingly, to ask whether it is of this quality in this case is a little awkward. State organizations consume a large amount of fuel. In this case, they are themselves involved in various types of monitoring. Including fuel quality control. The state is interested to bring a high quality product. Cases of selling a low-quality fuel have not been observed. - If there is a body, which conducts control, how should oil importers prove that fuel is of high quality? - Products sold by branded companies comply with the standard of the category the company offers to consumer. Although, control is not carried out, the state has the relevant mechanisms. The state is one of big buyers, and therefore it conducts monitoring. - Are cartel agreements still actual? - Today is obvious that various companies have different prices in the filling stations. Apart from branded, there are also non-branded filling stations, where the price differs by about 0.10 GEL. Overall, we have quite various prices, and if you look at the pricing adjustments, it always follows international prices. By what logic can we debate about the cartel deals? The social order is that fuel price must be low, but there is no way that companies keep prices artificially, it is impossible. To say that the margin and markup is unfair is baseless.

ECONOMY MINISTRY AGREEMENT WITH TAV GEORGIA NOT TERMINATED YET

inistry of Economy has not yet received a decision to terminate a contract with the Tbilisi airport operator “TAV Georgia”. “TAV” has the right to manage the airport up to 2027.”TAV Georgia” planned to invest 65 million in the construction of a new runway in the airport. In return for this investment, the operational rights of “TAV Georgia” which is the operator company of Batumi and Tbilisi International airports have been extended for 10 years 9 months from February 2027

to November 8, 2037. However, the new government has changed this decision and decided to construct a runway itself. A “TAV” informs “Commersant” that regardless of the economy ministry’s desire to find an investor themselves, a company has not received an official letter of cancellation of the Memorandum. They say Memorandum is being reviewed at the stage. According to “TAV”, they are ready to invest 65 million in a new runway construction. Radio “Commersant

MINISTRY OF FINANCE COLLECTS DATA ON THE SOVIET DEPOSITS

he Ministry of Finance begins collecting information about the Soviet deposits. Minister of Finance states radio “Commersant” that due to the problem of the country’s territorial integrity, the ministry does not have access to the information about the Soviet deposits in South Ossetia and Abkhazia. Therefore, he notes, they are working on the improvement of the information. According to Khaduri, a value of deposits is to be counted that is a very difficult process and it is impossible to solve this problem in one day. Radio “Commersant

10 ENTREPRENEURS ARE DETAINED DUE TO AGRICULTURAL CARDS

nvestigation Department of Georgian Ministry of Finance has detained 10 citizens on charges of misappropriation of the state property through fraud. The matter concerns vouchers (cards), distributed among farmers in order to allow them to procure necessary inventory and agricultural goods. Distribution of the cards, being funded by Agricultural Development Fund, has been implemented by Agricultural Project Management Agency. Despite notion, placed on cards, that their acceptance in exchange for money is prohibited, some trade objects, participants of the program, took the vouchers from the farmers in exchange of money (less sum than their value), the Investigation Department says. Namely, entrepreneurs have forged data, which confirmed that they have sold to the farmers corresponding amounts of goods and inventory, in accordance with card value. After that, they had submitted cards to the banks and took the full

amount of money, fixed in the card, the Investigation Department explains (neither volume of misappropriated funds nor names of the detained persons are disclosed). The Investigation Department notes also that investigation is underway in respect of those officials of Agriculture Ministry, who were in charge for control over proper spending of the project funds. In its turn, Agriculture Project Management Agency released a statement, saying that they are cooperating with the Investigation Department in order to prevent possible fraud from persons, involved in the project. According to the Agency, 810 trade objects are participating in the project in total. Contracts were signed with the companies, which strictly define responsibilities and functions of the parties. At that, monitoring group is working in the Agency, the statement of the Agency says, noting that 27 entrepreneurs, participating in the project, were fined for various violations. sarke

INTERVIEW caucasian business week

GIORGI VASHADZE: THE OPENING OF THE RUSSIAN MARKET WILL NOT BRING ECONOMIC GROWTH TO GEORGIA “The previous government has not hidden the information about the Russian capital inflows”

AN INTERVIEW WITH ONE OF THE MINORITY LEADERS GIORGI VASHADZE - The issue of the investigation of the August war has become topical in the recent period. Last week President Saakashvili said that a new government started to investigate the August war in return for the opening of the Russian market. He said that a few days ago the Minister Sergei Lavrov told the government “to investigate who started the war, in which your leader is responsible and in return we will sell your wine in Russia.” How can this information be consistent with reality? Is the President’s statement simply a wordplay and exaggeration or it is reasonable? - A particular reason for this is that the new government takes wrong steps from foreign policy point of view. The fact that they are going to investigate the 2008 war is nothing but a direct performance of Russian interests in Georgia. In whose interests is to investigate? Of course, Vladimir Putin was and is interested in us to begin an investigation in Georgia and blame ourselves in the August war. The issue is very simple and I’m very sorry that the government takes this step. This is a betrayal of national interests and nothing more. - However, what has this fact in common with the Russian market? - Russia used to have for nothing what is in its interests. Just this “nothing” is the opening of the Russian market, and for this “nothing” they want Georgia to plead guilty to the August war. - How unserious is the Russian market opening for Georgian business? - It is unfortunate, but the fact is that the opening of the Russian market will not bring economic growth and it will not be a huge prospect of employment. I must say that our main aim should be to strengthen the country’s economy. I don’t oppose the opening of the Russian market, it’s very good. It is the obligation taken by the Russian Federation when it affiliated the World Trade Organization and it cannot retreat in this direction. Russian should fulfill the obligation. This is good if the market is opened, but we do not have to live in illusions. We should not wait for the prospect of the illusive economic growth by the opening of the Russian market. The most important is to take care of economic development inside the country. Gennady Onischenko’s attitude is ironic, in a few months he can say that another 5 companies do not meet the requirements of the Russian market? The counterfeit Georgian wine is bottled in Russia and is bought in the Russian market, and nobody in the world can say that wine produced in Georgia is not of the highest quality. However, Gennady Onischenko tells us that several dozen companies have not passed their needless tests.

- How do you look at the prospect of Russian capital inflows in Georgia? Recently, this topic is quite relevant. It seems that Russian businessmen are interested in Georgia ... - The Russian capital has come to Georgia before January 1, 2012. A number of projects were carried out by Russian businessmen. On the contrary, it should be the interest of the country to create a good environment to attract investments not only from Russia, but throughout the civilized world. There are many people in the parliamentary majority today who criticized our government that it sold various companies to the Russian business. - They also rebuke you for hiding the information about the selling of “Georgian Water & Power” (GWP). - Nothing was concealed. This information is very clear and accessible. We know very well that the Russian company made investments in “Telasi”. I think we should go to the point when stupid arguments that “TELASI” is a strategic asset are not made and there should not be a Russian investor in it. In 2008, Georgia was in the war, Russia was the aggressor, but “Telasi” has failed and will never dare to make a politically motivated decision. For example, to turn off the electricity in the entire Tbilisi. This is incredible. All investors are equally important for us and it would be great if in the future the interest from Russian investors with respect to Georgia will further increase. - Under the circumstances, when 20 percent of the country’s territory is occupied, whether it was appropriate even under your government to cooperate with the Russian state companies and bring them? - We should not be afraid either Russian or any other country’s capital, which is flowing in Georgia. I remember very well and this rhetoric continues regarding Chinese investment companies. The whole America and Europe are trying to attract Chinese investments in developed economies. And what are they talking about in our country? - that it would cause the settlement of the Chinese and so on. This is the absurd. - Prime Minister announced about a possible settlement of 127 000 Chinese. - This is fairy tale. This is nonsense and untrue. We have to get used that if we talk about economic freedom which is the most important in order to create jobs and attract investments, we must reject such senseless statements. We need to think differently if we want to overcome this hardship. Otherwise, if we close boundaries, we will say “NO” to investments for which the developed world is fighting. Commersant.ge

May 7, 2013 #03

ISET: LEADING GDP INDICATOR FOR GEORGIA Georgia Starting to Recover

SET PI has updated the forecasts for Georgia’s real GDP growth rates using the February 2013 releases of predictor indices. The first quarter estimate of GDP growth was revised upward from 2.8% to 4.9%. Importantly, the updated (second) forecast for the 2nd quarter of 2013 rose from 0.2% up to 1.9%. As noted in the previous publication, the sizeable drops in the forecasts were largely induced by the dramatic drop of the growth rate in the last quarter of 2012, and the downward pressure it created through lag-dependence. Now the recovery of the predictor indices is slowly starting to overcome the downward pressure, and the forecasts accordingly rise up. While the growth prospects still remain weak, the recent improvements in the forecasts give hope that the Georgian economy is slowly recovering from the post-electoral sharp drop. In part this may be due to the accommodative monetary policy stance of the National Bank. Since November 2012 the monetary policy rate (i.e. the rate at which the commercial banks can borrow shortterm from the NBG) has been slashed four times. Most recently by 50 basis points in February and 25 basis points in March 2013. Accordingly, the NBG monetary policy rate dropped from 5.75% to 4.5%, while the inter-bank lending rates have followed closely, decreasing from 5.8% In November 2012 to 4.53% in April 2013. And yet, according to the Asian Development Bank report on Georgia the high levels of dollarization in the banking system are likely to limit the effect of policy rates on the market lending rates, thus limiting the overall impact of the lower interest rates on the economy. The monetary aggregates in February continued to increase at almost the same pace as in January, with M3 and M2 growing respectively 14.4% and 8.2% on y-on-y terms (for comparison, the

rates in January were 14.1% and 7.8%). In addition, money inflows (remittances) grew by 7.5% and exports rose by 9.2% (both y-on-y). Some economic indicators, however, are still dropping, creating a downward pressure on the forecast. Imports and electricity consumption in particular can provide some early clues on the business activity and the demand conditions in the economy. Both of these indicators continued to decline in February, with imports falling by 9.0% (y-on-y), and the electricity consumption decreasing by 9.7% compared to February of the previous year. The latter, however, is also strongly influenced by the weather patterns. Therefore, the drop in electricity consumption may be in part attributed to the significantly warmer February 2013 temperatures - 11.4’c as compared to 4.5’c in February 2012 in Tbilisi. (source: Tbilisi Weather) The drops were observed also in the indices not used in our forecasts. The y-on-y growth rates for VAT dropped from 3.5% in January down to 0.6% in February and, in addition, the Consumer Confidence Index, after growing in January (up to -7.2%) and February (up to -4.4%), once again turned downward in March (down to -7.6%). Although this value is still higher than in any month of 2012, excluding the euphoric October and November of 2012. Despite the obvious challenges, the overall improvement in the forecasts is encouraging, and gives reason to hope that the Georgian economy is starting to slowly emerge from the slump, and may in 2013 actually reach the levels of annual growth forecasted by the United Nations’ Development Policy and Analysis Division’s “World Economic Situations and Prospects” (5.0%), IMF (6.0%) and the Asian Development Bank (5.5%). iset-pi.ge

FOREIGN INVESTORS NOT TO ENTER GEORGIA WITHOUT ARBITRATION DEVELOPMENT

asha Nodia, chairman of Arbitration Association, declares in an interview with the newspaper that arbitration is necessary in order to improve business environment and to attract foreign investors. For that end, Arbitration Association was established on April 22, uniting more than 40 persons for now. Nodia says that working on legal amendments will be the first working direction of the Association. Namely, arbiter’s activity should not be charged with VAT, he notes. Besides, the Association will work on arbiters’ accreditation standards. We wish that besides local disputes, international disputes would be considered also in Tbilisi, Nodia declares.

May 7, 2013 #03

BUSINESS & ECONOMY

caucasian business week

ZURAB JAPARIDZE: ECONOMIC INDICATORS HAVE BEEN CONSTANTLY DETERIORATING DURING 7 MONTHS

ZURAB JAPARIDZE

ll economic indicators show that the country faces serious economic problems. The parliamentary minority member Zurab Japaridze state and calls the majority to summon Finance Minister to Parliament. According to Japaridze, the statistics office has recently published economic indicators, which deals with the first quarter of 2013. As per “Sakstat” official data, economic growth declined in March compared with January - February. In March, gross domestic product increased only by 0.2%, growth rate in January was 2.9% and in February -2.1%. In January- March 2013 economy grew only by 1.7% compared with the same period of 2012. In his words, there is a sharp drop in economic growth and a deterioration of every economic indicator: VAT turnover, foreign trade, both imports and exports declined. In addition, Japaridze adds, there is a decrease in revenues compared with not only this year but also the same period of last year.

“This was the reason why I addressed the majority in order to summon the finance minister to Parliament and ask him about the situation in the economy, his vision and how they plan to improve the country’s economy. As Japaridze says, they often say that the business is in a waiting mode, however, the MP notes, this could be brought as an argument in October, November, December or January, but not in 7 months after the change of the government. He also comments the majority’s initiative to increase an excise tax on alcohol and tobacco and says that the government needs this initiative to replenish the budget. According to Head of “Sakstat” Zaza Chelidze, in March gross domestic product grew by 0.2 percent. In January, the increase was 2.9 percent, in February-2.1 percent. In January- March 2013 economy grew only by 1.7% compared with the same period of 2012. As Chelidze says, this is a preliminary assessment, which will be adjusted twice a year. According to him, economic growth

rate in the same period of last year was 6.7 percent while the annual growth rate - 6.1 percent. Chelidze states that in January -March export increased while import reduced. In particular, compared with the same period of last year, export rate in Georgia increased by 5 percent while import decreased by 8 percent. The turnover data was reduced. As per “Sakstat” data, in March of the current year, turnover of VAT taxpayers made 3,396 billion USD. Turnover rate reduced by 3.2% compared with March of last year. Chelidze comments on population census issue and says that it will be held on November 5-19, 2014. He notes that the government has already approved the plan and the budget for the census. The census will be held with the support of the “United Nations Population Fund” [UNFPA] with a budget of 13 million GEL. Zaza Chelidze adds that preparatory works will start in June this year. Commersant.ge

THE REZONANSI: INDIRECT SIGNS OF RECESSION HAVE APPEARED IN THE BUDGET

NBG TO EXPLORE ISSUE WITH PAYMENT OF BILLS BY MOBILE PHONES

xpert Soso Archvadze declares that on the background of deflation, slight decline of revenue is noticeable in the country. “The mentioned processes have bearing indirect signs of recession”, he says. Certain arrangements should be implemented in order to stimulate the production, expert says. “There is a chance of economy improvement, but the correct steps must be made”, he says. “When the Premier expressed his discontent toward one of the ministers, public doubt has immediately appeared that the matter concerns the Minister of Economy”, Archvadze declares and points: “it indicates to a lot, but I repeat that here is a chance of improvement”.

resident of National Bank of Georgia (NBG) Giorgi Kadagidze declared that NBG will study complaints towards mobile operators and instant payment companies. Conclusion on the issue will be published in several days, he said. According to Kadagidze, subject of investigation will be simultaneous decision of all 3 mobile communications companies to change their policies, offering identical agreements to all instant payment providers. To remind, since April, subscribers of mobile operators have to pay commission fee, while pay their bills through instant payment terminals. The only exception is ExpressPay of Sakartvelos Banki (Bank of Georgia), which decided to pay the increased fee itself. Regarding the latter case Kadagidze declared, not naming the bank, however, that NBG will investigate “if there is regular marketing move, or it is dumping price offering with aim to expel competitor from the market”. Financial condition of instant payment companies will be investigated also.

SOSO ARCHVADZE

AREA OF CULTIVATED AGRICULTURAL LAND PLOTS DOUBLES

ccording to target data of Georgian Ministry of Agriculture, land area totaling to 400,000 ha has been cultivated in this year. Kote Khutsaidze, head of the Ministry’s department, says that area of cultivat-

ed land has been increased by 50%, being “supported by agricultural development program”. Overall, there is possibility to cultivate land area of 740,000 ha in Georgia, but situation in this respect went to worse from 2005, the article notes.

GEORGIA’S FRUITS HARVEST DECLINES IN 2012

ain reason for declining of harvest was strong winds in Kakheti and Shida Kartli during 2012 Summer-autumn time. According to Geostat data, in 2012 fruit harvest in the country equaled to 149 500 tones, which is 40 000 tomes less in comparison with 2011. In this period number of peach and apple is reduced the most. In 2011 harvest of peach and nectarine equaled to 19 100 tons in the country, in 2012 this data reduced to 7 000 tons. Apple

harvest is reduced from 64 300 t0 39 800 tons. Nuts harvest is also declined - in 2012 Georgian nuts harvest equaled to 25 400 tons, in 2011 - 31 100 tons. Also, hazelnuts harvest declined from 5 700 to 4600 tons. Last year grapes harvest equaled to 139 600 tons, in 2011 - 159 600 tons. According to Geostat data, citruses are increased (80 100 tones in 2012, 54 900 tones in 2011), plum (9200 tones in 2012, 7200 tons in 2011), cherry (4 100 tins in 2012, 2700 tons in 2011), wild plum (13 600 tons in 2012, 9700 tons in 2011)

BANKEBI DA FINANSEBI: “UNIVERSAL HEALTHCARE PROGRAM WILL DAMAGE INSURANCE BUSINESS IN GEORGIA”

xpert Levan Kandelaki considers that medical relations must be based on the insurance component, i.e. insurance companies should be involved. “By introduction of socialist elements and diminishing of market relations and this component in healthcare, we put long-term prospects of healthcare sector under the great risk”, the expert declares, while commenting on the universal health insurance program to the newspaper. “It is quite possible that within a year or two, we suddenly discover that budget expenditures, allocated for the program, are not enough”, the expert points. However, in case of insurance companies’ participation in this program, there will be motivation for them “to offer progress-oriented medical service” to beneficiaries due to the competitive conditions, Kandelaki notes. Today, 70% of insurance business’ revenue accounts for the state programs. “If we take off this 70% from the system, we put in risk other kinds of insurance, as well as hospitals, which are owned by the insurance companies”, the expert says. This way, “we may kill insurance business in Georgia”, he declares. Sarke

BUSINESS

caucasian business week

BANKEBI DA FINANSEBI: “IF CREATION OF GEORGIAN PRODUCTION IS A CRIME, I AM THE BIGGEST CRIMINAL IN THIS COUNTRY” GOODWILL NAMED AS ACTIVE Zedazeni (brewery) is not seized so far, the busiPROMOTER OF GEORGIAN nessman notes, adding that investments of 80 million lari were made in this enterprise, emPRODUCTS, CARREFOUR AND ploying up to 1,000 people. Chocheli links the created situation to the offiSMART OCCUPY LAST POSITIONS Tsezar Chocheli cial position, he had occupying in the previous

usinessman speaks with the newspaper about problems, created in his activity under the new government. “After the elections, either checking is conducted in our businesses, or some of them are sealed, or attacks continue with press and informational means”, he declares. According to Chocheli, sleeper factory has suspended work, Barambo (chocolate production) is seized. Bertha (hygienic means production) was seized also, but is already opened.

government (he was a governor of MtskhetaMtianeti region). “We are creating a real production, if it is a crime, (…) we are the biggest criminals, as we have created the biggest production”, the businessman declares and notes that despite all, he continues work on investment attraction and new projects. “In no case we should stop. We will fight to the end for our truth”, Chocheli says. Sarke

COMPETITION LEGISLATION AND POLICY DISCUSSED IN TBILISI

bilisi hosted today a regional round table on competition legislation and policy. The event was attended by Georgian officials, MPs, as well as business representatives and experts from Georgia, Armenia, Germany, Sweden and Poland. According to Georgian Ministry of Economy and Sustainable Development, round table was organized by German society for international cooperation (GIZ), EU representation in Georgia, Polish embassy in Georgia, Swedish International Development Agency (SIDA), Transparency International – Georgia and Georgian Development Research Institute (GDRI).

Participants have discussed competition legislation and various countries’ experience in this respect, including cartel agreements, misuse of dominating position, control over concentration, leniency program and efficiency of competition agencies. Georgian Deputy Minister of Economy and Sustainable Development Natia Mikeladze declared at the conference that Georgia has drafted amendments to law “On Free Trade and Competition”, which are based on best European practice. In near future, the draft will be submitted to the Parliament for consideration. sarke

INDIVIDUAL ENTREPRENEURS ACCOUNT FOR 55.4% IN BUSINESS BODIES REGISTERED IN 1Q13

ublic Register reported that total number of business entities’ registrations made up 11,653 in the 1st quarter. Of them, 55.4% were individual entrepreneurs. Limited liability companies (LLCs) accounted

for 40.3%, non-entrepreneurial entities – for 4%, while remaining 0.3% was distributed among foreign entrepreneurial and non-entrepreneurial entities, joint stock companies (JSCs), legal entities of public law. Sarke

he BPI news agency and the trademark of Choose Georgian have published a rating of the Georgian products promoter trade networks. A total of 13 networks have taken part in the survey: Goodwill, Carrefour, Smart, Nikora, Two Steps, EXEL, Vejini, Fresco, Furshet, Big Ben, Nugeshi, Populi and Ioli. According to the survey, Goodwill is the best network that promotes Georgian products, while the Carrefour and Smart networks have occupied the last positions. Bureaucratic approaches and unfavorable conditions for businessmen make Carrefour and Smart networks the most difficult for penetration. netowkr. The rating of the most active promoter trade networks of Georgian products is as follows:

1. GOODWILL 2. NIKORA 3. FRESCO 4.TWO STEPS 5. VEJINI

he American company OPTIMA GROUP accuses “Sarajishvili” of failing to comply with contract terms. The “Eristavi legal group” which represents OPTIMA GROUP states. According to reports, in 2011 OPTIMA GROUP and “Sarajishvili” signed the agreement which granted exclusive rights to OPTIMA GROUP to export “Sarajishvili” products to the Russian Federation. The general agreement defined the obligations of the parties and granted rights the violation of

he January to March 2013 has recorded a growth in imports and exports of corn and a delcine in reexports, says the national statistics service of Georgia. Corn imports in January to March 2013 made up 6 281.9 thousand USD, up 70.8% compared to the same period of 2012, that is the figure has grown by 2 604.4 thousand USD. Corn exports in January to March 2013 made up 4 834.3 thousand USD, up 537% year on year.

The re-exports ratio in total exports marked 11.3% (547.8 thousand USD), while the figure stood at 77% in 2012. Georgia’s foreign trade turnover in January to March 2013 made up 2144 million USD, down 5% compared to the same period of 2012. The epxorts constituted 565 million USD, up 5% and the imports marked 1579 million USD, down 8%. Georgia’s negative trade balance equaled 1013 million USD that is 47% in total foreign trade turnover.

The rating was developed by surveying small and medium-sized business companies. The survey was conducted on April 26 to April 28 and a total of 38 manufacturers of food products, alcoholic and nonalcoholic beverages have taken part in it. The trademark of Choose Georgian has been created by the Sales Management Company. The company offers marketing, management and sales management services to regional agribusiness companies and farmers. At this stage, the portfolio includes Georgian honey, tea and natural juices products. BPI.GE

which provides for certain fine sanctions. “OPTIMA GROUP” fulfilled all its obligation that cannot be said of “Sarajishvili”, which tries to avoid the fulfillment of the conditions stipulated by the contract. Non-fulfillment of obligations by “Sarajishvili” harms our clients, so I decided to protect OPTIMA GROUP’s interests through the court. The suit is ready and will be filed in the court in the coming days, “- “Eristavi legal group” announces. commersant.ge

“AEGEAN AIRLINES’ INCREASED FREQUENCIES AND TRANSIT DIRECTIONS

A FIRST QUARTER RECORDS GROWTH IN CORN EXPORTS AND IMPORTS AND DECLINE IN RE-EXPORTS

6. EXEL 7. FURSHET 8. NUGESHI 9. BIG BEN 10. IOLI 11. POPULI 12. SMART 13. CARREFOUR

AMERICAN PARTNER SUES SARAJISHVILI COMPANY TO COURT

EGEAN AIRLINES (“Aegean Airlines”), increased frequencies and transit directions. Airline reported that From April 25 Tbilisi - Athens flights are made twice a week (Monday, Tuesday). Roundtrip ticket cost 380 euros. Round-trip flights towards the largest European cities costs 420-430 Euro. About 50 transit flights

May 7, 2013 #03

are performed. Among the additional flights there are Geneva, Berlin, Manchester, Hanover. “Airbus 320” serves to flights. According o number of transported passengers, “Aegean Airlines” is the Greece’s largest company. Greek Air Company performs direct and charter flights from Athens and Thessaloniki on a daily basis. Air Company came on the market last June. GBC

May 7, 2013 #03

STATISTICS

caucasian business week

REAL GDP GROWTH MADE UP 1.7% IN Q1

he estimated real Gross Domestic Product (GDP) increased by 0.2 percent y-o-y in March 2013. The estimated real GDP growth in Q1 2013 equaled 1.7 percent. The Geostat produces monthly rapid estimations of real GDP growth using administrative data on VAT taxpayersâ&#x20AC;&#x2122; turnover, fiscal and monetary statistics. The compilation of rapid estimates is an internationally adopted practice to obtain preliminary monthly growth of real GDP. For those

sectors, where preliminary monthly data do not exist (e.g. agriculture, non-observed economy etc.), the estimations are based on the data for previous periods. Therefore, the actual quarterly real GDP growth may significantly differ from monthly rapid estimates. Furthermore, the data on VAT taxpayersâ&#x20AC;&#x2122; turnover for the previous months might be updated on a monthly basis, implying corresponding adjustments of real GDP growth estimates.

BANKING NEWS

VTB BANK GEORGIA DIRECTOR GENERAL NAMED AS GEORGIA’S MOST SUCCESSFUL BANKER

PI readers have named Archil Kontselidze, a director general for VTB Bank Georgia as the most successful banker in Georgia. The online survey was conducted from April 3 to May 3 and a total of 923 respondents have taken part in it. 35.4% of the BPI readers have voted for Archil Kontselidze, who has been working as a director general for VTB Bank Georgia since 2009. Born in 1971, Kontselidze graduated from the machine-building faculty of the Georgian Technical University in 1991, the Great Britain’s modern economy and history faculty at the Oxford University in 1993, and a corporate finances faculty at the Bonaventure Universtiy (the USA) in 1994. Before 2009 Archil Kontselidze had worked as a corporate business director for JSC VTB Bank Georgia, EnergoPro Georgia, a financial director for Georgian Railway, a pensions insurance director for a British-Caucasian company, on various positions for Bank Republic and the First Professional Bank (Moscow). At this stage, VTB Bank Georgia is recorded among Georgia’s seven leading commercial banks in terms of assets. The bank ended the year of 2012 in 3.8 million GEL profits. The figure marked 10.3 million GEL in 2011. Clients deposits stand at 294.4 million GEL. The credit portfolio is 371 million GEL. The deposits portfolio grew by 38.8% in the second half of 2012, the loans portfolio increased by 13.3%, assets climbed up by 21% to 540.1 million GEL and the market ratio constituted 3.8% as of January 1, 2013 (3.5% as of January 1, 2012). Russian VTB Bank owned a 96.31% stake in the bank’s authorized captial, Lakarpa Enterprises Limited held a 2.08%. The Russian Federation is a 72.71% beneficiary. The bank’s capital makes up 60.3 million GEL. The 1Q13 profits equaled 2.4 million GEL. Vakhtang Butskhrikidze, a director general for TBC Bank, has occupied the second position in the survey. He ranked first in the 2012 survey. Vakhtang Butskhrikidze has been managing the bank for 10 years. TBC Bank ranks second in Georgia in terms of assets and loans, but is the first in terms of individual deposits. TBC Bank’s profits in 2012 equaled 30.07 million GEL, while the 2011 profits marked 121.1 million GEL (43.05 million GEL in 2010). The bank’s credit portflio equaled 2.249 billion GEL as of Janaury 1, 2013 (2.020 billion GEL as of January 1, 2012). The deposits portfolio marked 2.415 billion GEL (1.97 billion GEL as of January 1, 2012). Total liabilities stand at 3.2 billion GEL. The loans portfolio annual growth made up 11.4% (14% as of December 1, 2012; 19% as of November 1, 2012). The deposits portfolio rose by 22.5%, assets grew by 15% to 3.701 billion GEL (3.224 billion GEL as of January 1, 2012). The bank’s market ratio is 25.8% in terms of assets (25.4% as of January 1, 2012 and 21.3% as of January 1, 2011). The bank’s profits equaled 22 million GEL in 1Q13. Irakli Gilauri, a director general for Bank of Georgia ranks third with 13.8%. He has been leading the bank since 2006. Bank of Georgia ranks first in terms of assets, loans and profits. Bank of Georgia has placed shares on the Georgian

May 7, 2013 #03

caucasian business week

and London Stock Exchanges. The bank is one of the major employers in Georgia with over 8000 workers. Bank of Georgia profits marked 134.349 million GEL in 2012 and 152.8 million GEL in 2011. Bank of Georgia market ratio stood at 37% as of January 1, 2013, while the loan portfolio’s ratio is 36% (3.09 billion GEL). Bogdan Lesiuk is fourth with 9.8%. PrivatBank is among Georgia’s seven leading commercial banks in terms of assets, loans, deposits, network of branches. The bank has been operating in Georgia since 2007. PrivatBank ended the last year in losses of 14.240 million GEL, while the figure stood at 3 million GEL in 2011. Vladimer Gurgenidze is fifth with 7%. He has been managing Liberty Bank since 2009 after Romanian businessman Dinu Patriciu bought the bank. Vladimer Gurgenidze returned to Georgia in 2004 and was appointed a head of Bank of Georgia. Under his management Bank of Georgia strengthened positions on the Georgian market. In 2006 Bank of Georgia placed securities at the London Stock Exchange (LSE) for the first time in Georgia. Under his management Bank of Georgia bought several domestic banks, as well as commercial banks in Belarus, Azerbaijan and Ukraine. At the end of 2007 Vladimer Gurgenidze was appointed as a prime minister of Georgia and remained on the position until August 2008. Liberty Bank is among Georgia’s five leading commercial banks in terms of assets. Liberty Bank profits marked 10 million GEL in 2012 and 12.6 million GEL in 2011 (6.4 million GEL in 2010). The clients deposits equaled 687.6 million GEL as of January 1, 2013 (589.1 million GEL as of January 1, 2012). The credit portfolio is 402.5 million GEL (358.5 million GEL as of January 1, 2012). Total liabilities stand at 794.7 million GEL (645.6 million GEL as of January 1, 2012). The deposits portfolio annual growth rate marked 16.7%. The loans portfolio has increased by 12.3%. The assets annual growth rate made up 21% and equaled 906 538 455 GEL as of January 1, 2013 (749.5 million GEL as of January 1, 2012). The market ratio is 6.3% (5.9% as of Janaury 1, 2012 and 5.1% as of Januayr 1, 2011). The bank’s profits in 1Q13 equaled 320 000 GEL.

Managers of 19 Georgia based commercial banks have taken part in the survey and the rating is as follows: Nodar Javakhishvili (Cartu Bank) - 5.2% Sascha Ternes (ProCredit Bank) - 2.7% Christian Carmagnole (Bank Republic) - 1.8% David Tsaava (Basisbank) - 1.4% Nikoloz Geguchadze (Halyk Bank) - 0.7%. Levan Lebanidze (Bank Constanta) - 0.7% Hasan Ferit Yujeilmaz (Ziraat Bank) - 0.7% Ravil Karaev (Caucasus Development Bank) 0.5% Samir Veliyev (Development Bank of Azerbaijan) - 0.5% Giorgi Ghlonti (KSB) - 0.4%. Konstantine Sulamanidze (Progress Bank) 0.2% Giorgi Gzirishvili (Investbank) - 0.2%. Saribragim Barish (Isbank)- 0.2%, Kairat Kenjegarin (BTA) - 0.1%. The BPI information portal has been operating since December 1, 2011. Business sector representatives and students are main readers of the news portal. BPI

NBG WARNS BANKS TO CONDUCT AD CAMPAIGNS PROPERLY

iorgi Kadagidze, president of National Bank of Georgia (NBG) declared that conducting of ad campaign, which misguides customer through provision of wrong information or leading to baseless expectation, is inadmissible. NBG watches up the process and I do not exclude toughening of legislation in this direction, Kadagidze said after discussion with representatives of commercial banks, held behind closed doors in NBG today. Banking sector should have very strong ethics standard, he noted.

The same attitude had president of Georgian Banking Association Zurab Gvasalia, who declared that “it would be better not to provide information at all than provide only half of it”. The information should be comprehensive, preventing creation of wrong expectations of customers, he noted. Representatives of those 11 banks were invited, which are actively engaged in consumer crediting – Sakartvelos Banki (Bank of Georgia), TBC Bank, ProCredit Bank, Republic, VTB Bank Georgia, KOR Standard Bank (KSB), PrivatBank, etc.

PROCREDIT BANK GEORGIA PROFITS MARK 3.32 MLN GEL IN 1Q13

roCredit Bank Georgia Profits in 2012 marked 21.57 million GEL, while the figure equaled 3.32 million GEL in 1Q13. The bank’s total profits in 2012 made up 21.57 million GEL, up 9.64% compared to 2011. As to the 1Q13 indicators, the profits constituted 3.32 million GEL, down 40.07% compared to the same period of 2012. Total assets stood at 1.05 billlion GEL at the end of 2012, up 8.25% compared to 2011.

Total assets made up 1.01 billion GEL in the first quarter of 2013, up 4.7% year on year. The ratio of nonperforming loans (NPL) in total loans portfolio marked 4.74%, while the figure stood at 3.32%. The bank’s liabilities stand at 907.46 milion GEL as of December 31, 2013, up 8%. The figure marked 873.86 million GEL in the first quarter of 2013, up 1.6%. ProCredit Holding AG&Co holds a 100% sake in ProCredit Bank Georgia. BPI

TOTAL OUTPUT OF COMMERCIAL BANKS MARKED 187.1 MLN GEL IN 1Q13

total output of commercial banks in 1Q13 marked 187.1 million GEL, while the output of the national bank of Georgia (NBG) equaled 17 million GEL, an early report of Geostat, the national statistics service of Georgia, reads. The highest output was recorded in March (65.3 million GEL), while the lowest of 59.2 million GEL was registered in February 2013. The total

output in January 2013 marked 62.6 million GEL. As to NBG, the highest output was recorded in January (6.5 million GEL), while the lowest output was registered in February (4.9 million GEL). The figure equaled 5.6 million GEL in March 2013. The Georgian bank sector registered 20 commercial banks by April 2013. BPI

ADJARA IS LEADING REGION IN TERMS OF CREDITS

ccording to crediting amount, by the end of the first quarter 2013, Adjara is a leader among the regions with 26,4% (2012 -26,5%, 2011 - 28,3%). According to National Bank statistivs, total crediting of 10 regions is 1,992 billion GEL and in the first quarter 2013 5,6% growth was mentioned. In 2012 portfolio increased by 17,3% (2011 -38%). Loan portfolio issued by commercial banks in Tbilisi is reduced by 1,5% in the first quarter. In 2012 growth equaled to 11,7% (2011 growth - 20,5%).

Crediting amount (thousand GEL) according to regions:

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CIS

GEORGIA AGREES TO COMPETE IN SOCHI OLYMPICS

eorgia will compete in next year’s Winter Olympics hosted by Russia, the country’s Olympic committee decided unanimously, marking an ease in ties between the two countries that fought a five-day war in 2008. “The committee decided that Georgia should par-

ticipate, and I think it’s a very good decision,” Leri Khabelov, the committee president, said after the decision late Thursday. “I’m glad that our sportsmen have not been preparing for these Olympic Games in vain.” He said Georgia would send an official request to participate to the International Olympic Committee before May 7. Russia and Georgia severed ties following the 2008 war, which followed years of tension over Moscow’s support for two rebel regions, including Abkhazia, which lies just kilometers from Sochi, where Russia is spending more than $50 billion to host the games. Reuters

RUSSIA TO SPEND OVER $30 BILLION IN NUCLEAR ENERGY DEVELOPMENT

ussia will expend one trillion rubles ($31.3 billion) to develop its nuclear power industry through to 2015. Russia’s next-generation nuclear power plants will have an improved safety design, as well as an improved water desalination system. “Nuclear security and nuclear power production safety should be upgraded with the aid of new technological solutions,” the director of the Russian Foreign Ministry’s department for security and disarmament Mikhail Ulyanov, said on Wednesdayas, as quoted by Itar-Tass. A new generation of Russian nuclear power plants will include such safety features as double reac-

caucasian business week

tor containment, passive heat removal systems, and specialized cooling units, he said. According to Ulyanov, Russia has started designing the reactors that not only generate electric power, but also desalinate water. Plants with such reactors may potentially become “instruments of development for many countries,” the official believes. Ulyanov’s comments came amid discussions on nuclear nonproliferation, and in connection with Geneva Non-Proliferation Treaty (NPT) talks, in which Russia is participating. The next major review of the 1970 Treaty is scheduled for 2015, with preparatory session now taking place. The NPT treaty has been signed by 190 countries.

BELARUS-NETHERLANDS PROJECT FOR FOOD INNOVATION CENTER

he Meat and Dairy Industry Institute of the National Academy of Sciences of Belarus has invited Dutch companies to cooperate in creating a food innovation center and manufacturing deep-freeze ferments for dairy industry, the press service of the Belarusian Foreign Ministry told BelTA. Cooperation was discussed during the visit of the Meat and Dairy Industry Institute delegation to Netherlands on 24-26 April. The visit was organized with assistance of the Embassy of Be-

larus in Netherlands. The delegation was led by the Institute’s Deputy Director for Science Oleg Dymar. While in Netherlands the Belarusian delegation visited the largest agrarian university of Netherlands, a research center of the city of Wageningen and held negotiations with its representatives to discuss the implementation of joint research projects in processing agricultural raw materials and the joint training of Belarusian specialists for the meat and dairy industry. BelTA

UKRAINIAN AGRI-EXPORTS UP 40%

espite the drought, Ukrainian agricultural export increased by nearly 40% by value to reaching US $ 17bn last year, according to the Ukrainian Minister of Agrarian Policy and Food Mykola Prysyazhnyuk who added that Ukraine’s agricultural industry exports twice as much as it consumes domestically. Ukrainian agricultural exports include meat, fish, dairy, poultry, vegetables, vegetable oils, sugar, wine, nuts, apples, as well cereals, including some 6.7m tonnes of wheat worth nearly US$ 1.8bn (up to October 2012), according to ukrstat. gov.ua. The EU and CIS countries are the main markets

for Ukrainian agricultural products. Egypt and Spain are the largest buyers of Ukrainian wheat; some three quarters of Ukrainian barley is exported to Saudi Arabia while Poland is the major consumer of Ukrainian rye and Austria buys Ukrainian apples. Ukraine is in the top three global grain exporters, following the USA, the EU, and Canada, is number one global exporter of barley and sunflower oil, the latter primarily to India, and the third largest corn supplier. In 2012, China – the world’s largest corn consumer – imported Ukrainian corn for the first time. Ukraine has also become the world’s fourth largest potato producer, and fifth largest walnut producer

Uzbekistan

he Asian Development Bank (ADB) bought Ipak Yuli’s additional shares worth 6.9 billion soum and became its full shareholder with a 13.56 percent stake in the authorised capital, the press service of the Uzbek bank said. The bank’s shares are owned by thousands of shareholders, including legal entities and individuals, the largest of which is the National Export-Import Insurance “UzbekInvest” (nearly 18 percent). Non-state bank Ipak Yuli was created in 1990. The Bank

has a branched structure of mini-banks, express centers, branch offices in Tashkent and several regions of the country. The deal was the first investment in the share capital of a commercial bank in Central Asia, concluded by the ADB’s Department of Private Sector Operations. The investment in the authorized capital of the Ipak Yuli Bank will facilitate the implementation of international banking standards and best international practices as well as strengthen the capital adequacy for the rapidly growing financial institution.

Kazakhstan

azprom will become the operator of KyrgyzGas to the beginning of the heating season. The announcement was made on April 22, at the end of the plenary session of the Kyrgyz-Russian Intergovernmental Commission

on Trade, Economic, Scientific, Technological and Cultural Cooperation by Prime Minister of Kyrgyzstan Jantoro Satybaldyev. According to him, the process of buying stocks of Kyrgyz state company by Russian “Gazprom” is almost complete.

KAZMUNAIGAS TO INVEST $10BLN

tate-run KazMunaiGas, Kazakhstan’s second-largest oil producer, said it would invest 1.5 trillion tenge ($9.9 billion) in exploration in the next 10 years as it aims to nearly double its reserves of crude oil and gas condensate. KazMunaiGas chief executive officer Lyazzat Kiinov said on Monday that the company’s current reserves stood at over 800 million tons of liquid hydrocarbons.

“We want to nearly double (reserves) in 10 years to over 1.4 billion tons,” Kiinov told a news conference. “In general, we are thinking of investing 1.5 trillion tenge within 10 years, that is until 2022.” Larger reserves would boost the market value of KazMunaiGas and increase its output, Kiinov said. The company has said it plans to raise annual oil output by 60 percent to 35.4 million tons by 2022. The Moscow Times

THE ECONOMY IN UKRAINE TO GROW 3.4 % IN 2012

he Ukrainian government expects the country’s GDP to grow 2.5%3.4% in 2013 and 3.4% in 2014 to US government after Russia, the Ukrainian republic was the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Its fertile black soil generated more than onefourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. Likewise, its diversified heavy industry supplied the unique equipment (for example, large diameter pipes) and raw materials to industrial and mining sites (vertical drilling apparatus) in other regions of the former USSR. Shortly after independence in August 1991, the Ukrainian Government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output by 1999 had fallen to less than 40% of the 1991 level. Ukraine’s dependence on Russia for energy supplies and the lack of significant structural reform have made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports to meet about three-fourths of its annual oil and natural gas requirements and 100% of its nuclear fuel needs. After a two-week dispute that saw gas supplies cutoff to Europe, Ukraine agreed to 10-year gas supply and transit contracts with Russia in January 2009 that brought gas prices to “world” levels. The strict terms of the contracts have further hobbled Ukraine’s cash-strapped state gas company, Naftohaz. Outside institutions – particularly the IMF – have encouraged Ukraine to quicken the pace and scope of reforms

to foster economic growth. Ukrainian Government officials eliminated most tax and customs privileges in a March 2005 budget law, bringing more economic activity out of Ukraine’s large shadow economy, but more improvements are needed, including fighting corruption, developing capital markets, and improving the legislative framework. Ukraine’s economy was buoyant despite political turmoil between the prime minister and president until mid-2008. Real GDP growth exceeded 7% in 2006-07, fueled by high global prices for steel – Ukraine’s top export – and by strong domestic consumption, spurred by rising pensions and wages. A drop in steel prices and Ukraine’s exposure to the global financial crisis due to aggressive foreign borrowing lowered growth in 2008. Ukraine reached an agreement with the IMF for a $16.4 billion Stand-By Arrangement in November 2008 to deal with the economic crisis, but the program quickly stalled due to the Ukrainian Government’s lack of progress in implementing reforms. The economy contracted nearly 15% in 2009, among the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for extending Russia’s lease on its naval base in Crimea. In August 2010, Ukraine, under the YANUKOVYCH Administration, reached a new agreement with the IMF for a $15.1 billion Stand-By Agreement. Economic growth resumed in 2010 and 2011, buoyed by exports. After initial disbursements, the IMF program stalled in early 2011 due to the Ukrainian Government’s lack of progress in implementing key gas sector reforms, namely gas tariff increases. Economic growth slowed in the second half of 2012 with Ukraine finishing the year in technical recession following two consecutive quarters of negative growth.

AZERBAIJAN

May 7, 2013 #03

caucasian business week

SOCAR’S OIL AZERBAIJAN CENTRAL BANK’S CURRENCY RESERVES PRODUCTS EXCEED $12.5 BN FIRST TIME he Central Bank of According to Bank’s plans, followEXPORTS EQUAL Azerbaijan (CBA) has ing this year they should total $15 brought its currency bn. 402.671 TONS reserves above psy- Last year the CBA began with forchologically important eign exchange reserves of $10.48 bn IN JANUARY TO mark of $12.5 bn, which it has as- and for 2012 it accumulated them by sailed since 2012. 11.58% ($1.2 bn). Over 2011 foreign The CBA reports that as of 1st May exchange reserves of the Bank grew APRIL 2013 2013 its currency reserves totaled by 63.6%, or $4.07 bn - an absolute

$12.449 bn (absolute record) versus $12.3 bn by 1 April and $11.69 bn by early 2012. Growth of currency reserves reached 1.36% ($167.7 million) for April and 6.89% ($805.1 million) for Jan-Apr 2013.

lack oil left in April the statistics of export of petroleum products of the Marketing & Economic Operations Department of the State Oil Company of Azerbaijan (SO-

CAR). This April the Department increased export of petroleum products by 17.3% compared to the figures of March 2013. According to the SOCAR, overall export of Azeri oil products totaled 113,405 tons in April (this year’s best index) versus 96,673 tons in March. This April it was exported 1,038 tons of motor petrol, 99,970 tons of diesel fuel, 12,307 tons of jet fuel. The data on export of furnace fuel and vacuum gas oil is not brought. “For Jan-Apr 2013 export of oil products amounted to 402,671 tons, including 5,509 tons of motor fuel, 350,298 of diesel fuel, 46,565 tons of jet fuel, and 299 tons of furnace fuel (all its supplies accounted for March),” it was informed. Over 2012 export totaled 1.2 million tons, including 113,027 tons of vacuum gas oil, 921,570 tons of diesel fuel, 60,142 tons of motor petrol, 145,980 tons of jet fuel, and 3,023 tons of black oil. The best export index was recorded in December – 138,144 tons. In 2011 export reached 1.448 million tons (including 104,269 tons in December) and in 2010 – 1.846 million tons. In 2009 overall export of petroleum products made up 1.968 million tons versus 2.58 million tons over 2008. abc.az

BP: AZERBAIJAN HAS RECEIVED OFFERS ON PURCHASE OF 30 BN CU M OF SHAH DENIZ GAS A YEAR BY EUROPE

he Shah Deniz consortium has begun evaluating binding transportation offers from the two pipeline consortia offering to carry gas from the Shah Deniz field in Azerbaijan

into Europe. BP Azerbaijan (Shah Deniz Project technical operator) reports that this represents another important milestone in the realisation of the Southern Gas Corridor. “The offers received from Nabucco Gas Pipeline International and Trans-Adriatic Gas Pipeline (TAP) at the end of March have now been approved by their shareholders and have become final and binding,” BP Azerbaijan informed. Furthermore, the Shah Deniz consortium also received gas sales offers for more than 30 bn cu m of gas a year from more than 15 different gas buyers across Europe. “The gas sales offers will be considered alongside the transportation offers to determine the commerciality of the pipeline options and the respective markets,” it was reported. Nabucco and TAP are offering to carry 10 bn cu m of gas to different markets in Central and Southern Europe. abc.az

record for the CBA. CBA’s currency reserves reached $6.407 bn by 1 January 2011, $5.175 bn by 1 January 2010 and $6.137 bn by 1 January 2009. abc.az

PASHA BANK FUNDS AZN 10 MILLION AS FIRST TRANCHE FOR FARMERS

he largest private corporate bank in Azerbaijan, PASHA Bank, launches a program of micro-financing for the agrarian sector on lending facilitation. Bank’s chairman of board Farid Akhundov says that in order to develop such operations on 26 April they completed negotiations and became a member of the Azerbaijan Microfinance Association (AMFA). “In the coming days we’ll open funding within the farm crediting program, for which AZN 10 million will be allocated as the first tranche. Within the program the finances will be given to non-bank credit organizations (NBCOs) and credit unions which, in turn, will provide loans to their clients and members. The size of the loan

on the program will be AZN 250,000-500,000. Within its framework PASHA Bank will act as a development bank and will not be engaged in micro-financing directly,” Akhundov said. This program meets the bank-formed strategy of “financial pools” - work in an attractive area of microfinancing through financial intermediaries, which include leasing companies, credit unions, non-bank credit institutions and even banks. “PASHA Bank has always found the agricultural sector interesting for itself. We’ve already financed major projects and companies in the sector and now are expanding market reach with our services. In the future, PASHA Bank plans a number of other tranches for the program to be developed through the AMFA members,” Akhundov said.

Real needs of the microfinancing sector in financing can be estimated at AZN 1 bn and the real lending portfolio “be filled by half”. At that, the common needs of agriculture in funding are estimated at AZN 1 bn a year. abc.az

PASHA BANK CONSIDERING LENDING TO RENEWABLE ENERGY AND ENERGY EFFICIENCY

he country’s largest private corporate bank PASHA Bank has interests in financing the development of alternative energy and energy efficiency. Bank’s chairman of board Farid Akhundov has stated that they considered a possibility of the beginning of such financing - this industry is interesting to us because of its prospects. “However, studies have shown that such fund-

ing does not work out in case with private initiatives without government subsidies. At the same time, the possibility of subsidizing for the development of this segment of the energy market is provided by the Government, but not yet used. In this regard, we’ll expect the adoption of the mechanism of government subsidies, payments by national electricity operator of energy to be delivered to the network

by alternative producers, and only then we will begin detailed working out of our tools in the sector,” Akhundov said. So far only Bank Respublika has announced its own lending program in the field of alternative energy and energy efficiency. This Bank uses a $15-million line to be endorsed by the International Finance Corporation (IFC) on 20 May.

AZERBAIJAN HAS DEVELOPED A LIST OF COMPANIES FOR RECOVERY AND PRIVATIZATION

he State Committee for Property Affairs has developed a list of businesses that have to go through the process of pre-privatization improvement. The Committee reports that since early 2013 the country has privatized around 270 enterprises and facilities, as well as about 220 plots of land on which there are a variety of objects.

“Besides, during this period it was privatized 229 non-residential areas and 225 land plots were leased to individuals and legal entities,” the SCPA informed. Also, during this period in the course of 15 cash and specialized cash auctions the shares of 16 joint-stock companies were privatized. Investors made investments in these businesses for about AZN 1.3 million. Since early 2013 the Committee has registered

about 11,000 mortgage lending agreements, as well as registered ownership right for more than 48,000 objects of real estate, including about 4,000 objects primarily and more than 34,000 secondarily. “From 1 January to 20 April the Committee also developed a list of businesses that have to go through the process of pre-privatization recovery,” it was reported. abc.az

PRICE OF WEDDING SERVICES OF 5-STAR HOTEL OF BAKU SINCE JUNE PUBLISHED

irst five-star Excelsior Hotel Baku has entered into the market of organization of weddings and other celebrations. At today’s news conference in Baku hotel’s operations director Kemal Diler has stated that the hotel’s specialists have monitored the market of wedding services and have identified the most of Baku brand-hotel services on weddings and other special occasions. “In this regard, we’ve decided not to stay away from the general process. Wedding celebrations will be held at the hotel already from June,” Diler said. He points out that wedding celebrations will be held in Afurja hall designed for up to 200 guests. “First and foremost, we will pay special attention to the quality of services, in particular the qual-

ity of the food, rather its necessary conformity to hygienic requirements, the quality of food, etc. Given that the dining hall is located in a five star hotel, we are proud to say about the high quality service for the guests,” Diler said. He emphasized that in the summer, depending on the willingness of young marrieds, wedding celebrations will also be organized nearby an openair pool. “The advantage of Excelsior Hotel Baku is that the wind does not affect our territory, and therefore holding of a wedding near the pool will not create problems with comfort, as it is made in other hotels,” Diler said. He added that prices in the Excelsior Hotel Baku for weddings will be acceptable. “They are set in the amount of AZN 50 per person, depending on the services ordered. We’ve

already signed contracts with companies organizing wedding parties, which offer their services, particularly for weddings, special wedding program, a music program, but each wedding will be individual, depending on the customer. The hotel is also ready to organize weddings for foreigners in accordance with their traditions,” Diler said. abc.az

ARMENIA

May 7, 2013 #03

caucasian business week

ARMENIAN CIGARETTES ARE SOLD IN 22 COUNTRIES OF THE WORLD

he export volumes of the cigars, cigarillos and cigarettes from the Republicof Armenia in the first three months of 2013 have increased 5 times in comparison with the same period of the last year. As Armenpress was reported by the State Revenue Committee at the Government of the Republic of Armenia, in the first three months of 2013 one billion 900 million and 300 thousands tobacco products have been exported from Armenia in comparison with the last year’s 378 million and 800 thousands. The total customs value of the exported tobacco products in 2013 exceeded 21 million USD. In 2013 the largest Armenian tobacco consumers areTurkmenistan, Iraq, Georgia, Jordan and Russia. The Armenian cigarettes are sold in 22 countries of the world. In 2012 the total volumes of the export of the tobacco products from the Republic of Armenia made one billion and 428 million USD. ARMENPRESS

USA BUYS THE ENTIRE EXPORT OF ARMENIAN HONEY

he volume of honey exported from Armenia during the first three months of 2013 recorded a growth of 66,6 percent in comparison with the same period of the previous year. The State Revenue Committee of the Government of the Republic of Armenia informed “Armenpress” that Armenia has exported 2 tones of honey during the first three months of the current year. In the same period of 2012 the amount of

ARMENIAN PARLIAMENT RATIFIES 10.3 MILLION EUR LOAN AGREEMENT FOR BORDER INFRASTRUCTURE MODERNIZATION

rmenian National Assembly ratified a loan agreement with the European Bank for Reconstruction and Development. Under this agreement signed as part of the Northern Corridor Modernization Project, the EBRD will lend €10.3 million to the Armenian government for construction of a new bridge in Bagratashen, on the main checkpoint on the Armenia-Georgia border. In addition to the EBRD, the European Investment Bank, European Union, Neighbourhood Investment Facility and United Nations Development Programme, jointly with the government of Armenia, will finance this project, the total cost of which is €62.6 million. The Northern Corridor Modernisation Project includes the reconstruction of existing infrastructure to meet international standards, as well as the construction of new buildings at the three border control facilities.

The improved border crossing points, equipped for vehicles and pedestrians, will have a more efficient and increased processing capacity, as well as providing a multi-directional road crossing for international cargo and passenger traffic. Located 200km from Yerevan, Bagratashen is the main land transport corridor connecting Armenia, through Georgia, with the rest of the world. The European Bank for Reconstruction and Development has invested about €579 million euros under 110 projects since it launched its activity in Armenia. Of this amount, €90 million has been targeted for improvement of infrastructures. ARKA

ARMENIA’S EXPORT OF SHEEP AND GOAT TO IRAN INCREASED FOR ABOUT 50 TIMES

exported honey equaled to 1,2 tones. The total customs value of the exported honey for 2013 is USD 20 thousand and the entire volume was send to the U.S. In a conversation with “Armenpress” the Chairman of National Beekeepers Association Telman Nazaryan stated that the expected amount of honey depends upon the weather conditions, level of bee deceases, and a number of other conditions as well. ARMENPRESS

he sheep and goat livestock exported from the Republic of Armenia during the first three months of 2013 has recorded a palpable growth in comparison with the level of the same period of the previous year. The State Revenue Committee of the Government of the Republic of Armenia informed “Armenpress” that during the first three months of 2013 18,991 sheep have been exported from the Republic of Armenia. During the same period of the previous year this number reached only 400 livestock. Iran bought almost the entire amount of Armenia’s sheep export for the first three months of 2013. The total costumes value of the sheep exported from the Republic of Armenia equals USD 2, 922,300. ARMENPRESS

TOP TEN ARMENIAN BANKS BY DEPOSITS

eposits in Armenia’s top ten banks singled out for the largest amount of deposits totaled AMD 1137.5 billion in 2012 after growing 20.4%, compared with 2011. According to the data of ARKA News Agency’s rating, the deposits attracted by these ten banks made up 78.45% of the aggregate deposits in Armenian banks in 2012. The Central Bank ofArmeniasays 21 banks function inArmenianow. HSBC BankArmenia, with its AMD 133.5 billion, is topping ARKA News Agency’s ranking in 2012, just as in 2011 – 13.9% year-on-year growth. Its deposits’ share in the total amount of deposits in Armenian banks was 11.74% in 2012. Ameriabank, with its AMD 126.3 billion, came second in ARKA News Agency’s 2012 ranking (the bank was third in 2011), showing a year-onyear growth close to 40.3% and a 11.10% share in the total amount of deposits in the country’s banks. Ardshininvestbank, with AMD 108 billion and a 14.9-percent year-on-year growth, ranked third. Its share was 9.5%. Unibank was the fourth biggest deposit-keeper among Armenian banks in 2012. The bank has built up its deposit portfolio 41.8% over the year to AMD 104.2 billion. Its share in Armenian banks’ aggregate deposit portfolio was 9.16%. The bank ranked seventh in ARKA News Agency’s 2011 rating. VTB Bank (Armenia) came fifth here improving its 2011 position by one notch and exchanging ranks with Armbusinessbank. The bank built up

its deposit portfolio 34.1% to AMD 100.2 billion accounting for 8.81% of Armenian banks’ aggregate deposit. Armbusinessbank’s AMD 92 billion (a 4.4% year-on-year growth) won the sixth position to the bank. The share in Armenian banks’ aggregate deposit portfolio was 8.09%. Converse Bank was placed seventh in ARKA News Agency’s ranking. It deposit portfolio amounted to AMD 80.8 billion in 2012 after shrinking 18.1%, compared with the previous

year. The bank had 7.11% in Armenian banks’ aggregate deposit portfolio in 2012. The bank was second in the 2011 rating. ACBA-CREDIT AGRICOLE BANK kept its 2011 rank pegged in 2012. The bank won its eighth rank in 2012 for its AMD 67.8 billion (20.2% growth and 5.96% share). Artsakhbank, with its AMD 40.5 billion (29.4% growth and 3.56% share), was named the ninth largest depositee among Armenian banks. It was tenth in 2011.

Areximbank – Gazprombank Group, with AMD 38.9 billion (19.5% year-on-year growth and 3.42% share) rounds out the top ten. The bank was ninth in 2011. ARKA News Agency’s ranking is based on the data of the agency’s Banks of Armenia quarterly bulletin, which contains all the indicators of Armenian banks. The figures are taken from banks’ regular and additional financial reports. ARKA

FOREIGN PRESS GEORGIA

caucasian business week

May 7, 2013 #03

GEORGIA’S DANGEROUS SLIDE TOWARD NATO

ower shifted in Tbilisi, Georgia, when Bidzina Ivanishvili’s Georgian Dream party triumphed at the polls. Yet Prime Minister Ivanishvili, though hostile to Western-favorite President Mikheil Saakashvili, has continued the latter’s quest to win a NATO security guarantee against Russia. Washington should firmly spike what would be a Georgian Nightmare. Georgia suffered through a tumultuous birth when it split from the Soviet Union two decades ago. Saakashvili ousted Eduard Shevardnadze, the former Soviet foreign minister, in the 2003 “Rose Revolution.” The Western-educated Saakashvili looked to the United States and Europe for support. But he found himself alone when he started and lost a war with Russia in 2008. Even before that conflict, Tbilisi courted the United States and NATO. Shortly after achieving independence, Georgia contributed troops to the NATO mission in Kosovo, joined the North Atlantic Cooperation Council (later renamed the Euro-Atlantic Partnership Council), and joined the Partnership for Peace program. But that was just the start. Observed NATO: “Relations between NATO and Georgia have deepened significantly over the years since dialogue and cooperation was first launched in the early 1990s.” The Saakashvili government inaugurated an Individual Partnership Action Plan with NATO and joined the International Security Assistance Force in Afghanistan. In 2006 Tbilisi gained an Intensified Dialogue on membership and at the April 2008 NATO Summit alliance leaders agreed that Georgia would eventually become a member. Moreover, Saakashvili emphasized his personal ties to America, hired an adviser to Sen. John McCain as a lobbyist, and sent troops to fight in Iraq. President George W. Bush showered Tbilisi with praise and money and staged a state visit to Georgia. The Bush administration also strongly backed Tbilisi for membership in what nominally remained the North Atlantic Treaty Organization. However, leading European members of the alliance were less disposed to confront nucleararmed Russia over a border dispute considered vital by the latter but irrelevant to Europe. The 2008 conflict vindicated their stance. Neverthe-

less, the Bush administration continued to press for Georgia’s admission. So has the Obama administration, though without obvious enthusiasm. Last year Secretary of State Hillary Clinton declared that the 2012 NATO summit in Chicago should be the last such meeting that did not focus on enlargement. Georgia is considered to be in the first tier of aspirants, along with Bosnia and Herzegovina, Macedonia and Montenegro. Although NATO insiders say opposition to Tbilisi’s membership has ebbed, several members remain negative, including Germany. A NATO research paper by Karl-Heinz Kamp of the NATO Defense College admitted that “The crunch point of the enlargement question” is Georgia. Nevertheless, NATO and Georgia continue to act as if “yes” is the inevitable answer. Alliance officials are regular visitors to Tbilisi. Last April Secretary General Anders Fogh Rasmussen declared: “Georgia is a special partner for NATO.” Two months later NATO Deputy Secretary General Alexander Vershbow said in Tbilisi: “At our NATO Summit in Bucharest in 2008, the Allies decided that Georgia will become a member of NATO. The Chicago Summit made clear that Allies stand by that decision and recognized the progress Georgia has made in meeting NATO’s standards.” Last September Rasmussen commended Georgia’s “very significant” contribution to the Afghan mission and offered NATO’s “unwavering support for Georgia’s territorial integrity and sovereignty within its internationally recognized borders.” He concluded, “you have a friend in NATO—and a future home in NATO.” Prime Minister Ivanishvili visited NATO headquarters in November and in December NATO foreign ministers met with the NATO-Georgia Commission amid much praise for Georgia’s participation in ISAF. Last year the alliance also held its annual “NATO Week in Georgia.” Explained NATO Special Representative James Appathurai, “it’s very important that the people of Georgia understand not just what the goal of NATO membership is, but also what NATO is and what it does.” Georgian officials certainly understand. NATO membership carries an American security guar-

antee. To win that commitment Tbilisi is working hard. Michael Cecire of the Foreign Policy Research Institute recently wrote of “Tbilisi’s desire to shed its reputation as a Euro-Atlantic security liability, dating back to Georgia’s five-day war with Russia in 2008.” The new government reaffirmed Tbilisi’s desire to join NATO, doubled Georgian forces in Afghanistan, and continued military training exercises with the U.S. More recently Georgia announced its intention to provide troops for the European Union’s training mission in Mali (growing out of France’s invasion). Earlier this year Tbilisi promoted military cooperation with Hungary and Lithuania. Most important, Tbilisi announced plans to turn its military into a niche counterterrorism force under the NATO doctrine of “Smart Defense,” which envisions a division of labor among members. That is, Georgia will effectively disarm against Russia in the expectation that the West will offer substitute protection. Tbilisi’s desire for great-power protection is understandable. But that is no reason for the U.S. to oblige. The purpose of the alliance is to ensure American security. During the Cold War, Washington used NATO to prevent Soviet domination of Eurasia. Moscow was an ideologically driven hegemonic competitor that possessed ample military power and a demonstrated willingness to use force to achieve its ends. Western Europe mattered to U.S. security because it was a large industrial and population center made temporarily vulnerable by the devastation of World War II. Thus, America extended military guarantees as a means to advance its own security. By this standard the alliance already was a little tattered as the Cold War came to a close. The sclerotic Soviet Union and its unreliable Warsaw Pact allies looked like unlikely aggressors. And the Western Europeans were capable of doing far more for their own defense. Then the collapse of the Soviet Union eliminated both the ideologically driven hegemonic competitor and the residual threat of invasion. NATO’s raison d’être disappeared almost overnight. Of course, no member government considered allowing NATO to go the way of the Warsaw Pact. Instead, the alliance decided to expand up to Russia’s borders, absorbing not only the former War-

saw Pact members but also the seceding republics from the Soviet Union. Washington ended up guaranteeing the security of states which had been under Moscow’s domination throughout the Cold War, and some even before. NATO handed out military commitments like party favors. In most cases the risk of war was slight. Russia is a difficult, unpleasant actor, but it is not likely to start a war with most of its former subject states. Moscow lacks the will and the ability, as well as any compelling reason to do so. Georgia is a glaring exception. Tbilisi went out of its way to become a Western outpost in a region of historic Russian interest. At least the Baltic States were independent before being absorbed by Stalin’s USSR and had much in common with the European nations they adjoined. Georgia was inviting America into an area where Washington had never been involved. Moscow’s displeasure was both predictable and extreme. Moreover, Saakashvili was reckless even without possessing a formal NATO guarantee. Moscow may have desired a conflict and been prepared to take advantage of it; however, Tbilisi started the shooting. Such a government is not a reliable ally. NATO is supposed to make Americans safer. Yet expansion to Georgia would make war more likely. A flare-up in fighting between Tbilisi and Abkhazia or South Ossetia could draw in Russia, setting up a NATO confrontation with Russia. The result could be the war that the West managed to avoid throughout the entire Cold War. Of course, Americans would do most of the fighting—and the conflict would have a worrisome possibility of going nuclear, especially given Moscow’s relative conventional weakness. There’s no obvious reason to preserve a U.S.dominated NATO. The Europeans have a larger GDP and population than America; they enjoy roughly ten times the GDP and three times the population of Russia. Europe’s defense should be up to the Europeans. The case is even stronger against further NATO expansion, adding security liabilities rather than assets. If the alliance has any value, it is to deter war. Adding Georgia as a member would make conflict much more likely. Washington should firmly and finally say no to Georgia in NATO. Nationalinterest.org

May 7, 2013 #03

WORLD NEWS

caucasian business week

YEAR OF THE YUAN CHINA’S EXPLOSIVE CURRENCY GOES GLOBAL

he ‘people’s currency’ of China is redefining the global economic monetary system. The closedcapital pariah is blossoming into a reserve standard and is hedging appeal against the indebted dollar and the untested euro, piquing foreign interest. Degenerating credit quality across the board has prompted asset managers to shy away from the dollar, euro, Japanese yen, British pound, and Swiss franc. And some are turning to the yuan, a currency that 10 years ago was completely off limits to foreign investors. An HSBC forecast projected that by 2015, the yuan will become one of the three most used currencies in global trade, in league with the dollar and euro. The report, issued in April, also foresees a third of China’s cross-border transactions being carried out in yuan. China has been making a concerted effort to establish itself as an international currency reserve. China already has agreements with Russia, Vietnam, Thailand, and Japan allowing trade to be settled in yuan instead of dollars As China launches its global currency, European financial centers are hoping to become Europe’s yuan hub. London, Paris, and Zurich have all made very vocal bids for this title. According to Bloomberg, the Bank of England has an inside track to be the first Group of Seven nation to sign a currency-swap with the People’s Bank of China. The deal may grant the UK central bank as much as 400 billion yuan ($64 billion) in reserves. Many national banks are switching over to the yuan to diversify their reserve currencies, Australia the most recent to join ranks with the world’s second largest economy. The Reserve Bank of Australia announced in April it will transfer 5 percent of its foreign currency reserves ($2.1 billion) into Chinese bonds, deepening ties with its Pacific neighbor and biggest trade partner, and reflecting a global shift to the yuan. The move is an “important milestone in deepening our financial and economic linkages with China,”Australia’s Treasurer Wayne Swan said in an emailed statement to Bloomberg. China and Australia are major trading partners, so an investment in Chinese currency reserves will benefit transactions between the two countries.

Now, they can conduct business transactions directly from yuan to Australian dollar, cutting out the middle man, the US dollar or euro. The Chinese yuan is the 13th most-used currency in the world for international payments, according to a February 2013 report by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). It jumped 6 places from the previous year. SWIFT reported that the value of payments in yuan soared $171 year-on-year in January, or 24 percent. The yuan has surpassed the Russian rouble and the Danish krona in international transactions. Close behind are the South African rand and the New Zealand dollar. The euro is the most used currency, followed by the US dollar, and then the British pound. The debut The yuan has been dubbed a ‘hermit currency’, isolating itself from foreign investment and setting its own rules, but is now slowly entering world currency markets. “The hermit is ready to come out of its shell and the sooner the better for China to play a major role in the global economy,” said Patrick Young of DV Advisors. Cross-border yuan payments through Singapore rose 30 percent month-on-month in January 2013. Payments through London grew at an even faster pace, at 40 percent, according to the HSBC report. The top-five currencies for international payments in January 2013 were the euro (40.17 percent), the US dollar (33.48 percent), the British pound (8.55 percent), the Japanese yen (2.56 percent), and the Australian dollar (1.85 percent). “The Yuan will take its place as a leading global currency, it is not likely to challenge the dollar’s hegemony for some time, ” Patrick Young said. In 2012 there was a 900 billion yuan ($145 billion) increase in trade payments, according to The Economist. Only three years ago there were almost zero transaction payments settled in yuan. “The world’s reserve currencies are distributing away from dollar centrality to a broader spread of currencies. To that end the Yuan and indeed the rouble are all likely to take a greater share of global reserves as indeed the economic power of the east expands,” Young added. Recent economic problems linked to the euro and the dollar have set a trend for currency reserve diversification as an alternative, Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow toldRT. “It is definitely a trend and this trend will continue. There is a global demand for more reserve currencies. The world economy wants to diversify the set of reserve currencies as a way from the volatility and the problems associated with the current reserve currencies, because both the US and Europe are plagued by economic problems. This is natural and clear that the global economy should

use more foundations, more columns on which to stand and build a stronger foundation of a more complex global economy,” said Lissovolik. The numbers are on the rise, but they still pale in comparison to the dollar. The yuan only comprised a 0.63 percent market share of the global currency market as of January 2013. Its ranking is still a minute fraction of China’s export market, the world’s second-largest, after the EU. The dollar, the current market and commodity standard, totals $11 million in currency reserves.

‘Dim sum bonds’

Another pin in the narrative of the yuan is Hong Kong and ‘dim sum bonds’. The yuan hasn’t been officially available for foreign trade, but ‘dim sum bonds’, a bond dominated in Chinese yuan assets and issued in Hong Kong, has allowed foreigners a loophole to invest in domestic Chinese debt. China has set up special administrative regions in Guandong province, Hong Kong and Macau, which operate with their own currencies, but are still closely linked to the Chinese economy. Hong Kong has long served as a roundabout way to get exposure to China’s closed capital market, but still only equal about 1% of those in mainland China. The offshore status allows foreigners to circumvent the tight currency controls through the financial hub. The more offshore (or ‘onshore’, in the case of Hong Kong) deposits that are out of the control of the PBoC, the less effective the capital controls are.

History of currency manipulation

The yuan hit a 19 year high on April 26 at 6.1616 against the dollar after the PBoC loosened controls on the reference rate to increase investment, as well as an effort towards making the yuan a ‘floating’ currency by 2015. In 2012, the yuan advanced 1 percent against the dollar, but in 2013, it could appreciate between 2.1 percent to 6.1 percent, according to a Bloomberg survey. China insulates the yuan under strict government controls but has recently taken steps to trim the nation’s reliance on the dollar by establishing demand for their own currency. China severed its currency peg to the dollar in July 2005 after 10 years of a stable, almost unchanging exchange rate. Before 2009, the central government had prohibited export of the currency and its use as tender in international transactions. By keeping the floodgates of market volatility closed for more than a decade, the value of the

Circulation of Global Payments January 2013 SWIFT DATA 1. EURO 40.17% 2. U.S. DOLLAR 33.48% 3. BRITISH POUND 8.55% 4. JAPANESE YEN 2.56% 5. AUSTRALIAN DOLLAR 1.85% 6. SWISS FRANC 1.83% 7. CANADIAN DOLLAR 1.80% 8. SINGAPORE DOLLAR 1.05% 9. HONG KONG DOLLAR 1.02% 10.THAILAND BAHT 0.97% 11.SWEDISH KRONA 0.96% 12.NORWEGIAN KRONE 0.80% 13.CHINESE YUAN 0.63% 14.DANISH KRONE 0.58% 15.RUSSIAN RUBLE 0.56% yuan has been set at an artificially low level, which in part facilitated China’s 30 year export boom. China enabled its currency to strengthen 21 percent between July 2005 and July 2008, including an inaugural single-day gain of 2 percent. With almost no international capital flow, the fixed currency safeguarded China from the Asian financial crisis of 1997 and the US banking crisis of 2008 and subsequent world recession. Appreciation efforts were cut off to brave the global recession and climbed 10 percent against the dollar since the state deregulated controls on June 19, 2010. The consensus among politicians and economists alike is that the yuan is expected to ‘float’ in 5 years. Before the yuan can ‘float’, be dictated by markets and not government manipulation, China will have to restructure its interest rate system, which, currently set by the state, has little maneuverability and range. If China accelerates the process, implications are bullish. A higher interest rate will slow investment expansion and growth, which will kick back GDP. If the yuan becomes too expensive too quickly, it will hinder export demand, a lifeline to China’s economy which has kept it relatively unscathed from the worldwide recession. If the yuan rises too quickly, it will also inflate prices, which could force toy, textile, and electronic factories to move inland in search of cheaper labor. China’s growth has slowed to 7.7 percent in the first quarter, missing the 7.9 percent benchmark of the previous quarter. China must find closely monitor its growth slump in tandem with currency valuation. Because of its export-driven economy, relinquishing full control of the currency in the short-term is highly unlikely. rt.com

RUSSIAN BILLIONAIRE SWITCHES TO APPLE FROM FACEBOOK

all Street’s disillusionment with Apple hasn’t deterred Russia’s richest man Alisher Usmanov. Fresh from a 10-fold investment return from Facebook he’s buying $100 million worth of Apple stock. Analysts cast their doubts on Apple when its stock plunged below $400 and it posted its first profit decline in a decade, which was followed by an 18 percent second quarter earning dip. The stock closed Monday on the NYSE near $420, a far cry from the $705 peak price that coincided with the release in September of the iPhone 5. Apple’s sales surpassed Wall Street’s estimates by almost a 2 million units, but the profit drop stole the financial headlines. Apple sold 37.4 million iPhones and 19.5 million iPads, bringing in $43.6 billion, up 11% from $39.2 billion year-on-year. Apple will still need to fend off competition from Samsung, as they edge their influence in the smart phone and tablet market. With record low stock prices and little market confidence, Usmanov is capitalizing on investors’ spout of doubt. “When the company lost $100 billion of its market value, it was a good time to buy its shares, as the capitalization should re-

bound,” Usmanov told Bloomberg in an interview in Moscow. Apple’s gross margins are likely to continue shrinking in the short-term, but Usmanov sees the long-term market potential of the iPhone. “But for the next three years I believe Apple is a very promising investment, especially given large dividend payments and buybacks.” “I believe in the future of this company even after Steve Jobs,” Usmanov added. Usmanov, a metal tycoon who exited the metal business and entered telecoms at just the precise moment, has made the lion’s share of his wealth from the Mail.ru group. He has 10% ownership in Facebook, Mail.ru has 40 percent in Vkontakte, Russia’s copycat version of the social network, which has 100 million users and counting. Usmanov is also after a majority share in Vkontakte. Usmanov acquired Facebook shares through his Mail.ru group in 2009, when the social-media network was valued at $6.5 billion, according to Bloomberg estimates. Usmanov’s company sold a $1.7 billion share during Facebook’s initial public offering in May 2012, pocketing $1.4 billion in the deal.

n an effort to become familiar with the holding’s strategy, operations and challenges, Minister of Finance, Nodar Khaduri, visited the production facilities of Margebeli Holding – Marneuli Agro, Marneuli Food Factory and Margebeli Farm in Teleti. “We have said many times that it is important for us to see the production on the spot; discuss what problems the businessmen might have, what their priorities are, and how the government can help them,” said Khaduri on April 29. He added that at a glance, his first impression was quite good and expressed hopes that with similar thrift in this sector, the country will increase food security and export potential. Marneuli Agro is an agricultural enterprise located in eastern Georgia’s Marneuli and Gardabani regions, and produces every kind of vegetable and cereal crops through the use of modern technology and methods. The company covers 370 hectares of land in Gardabani and 1,200 in total. It produces more than 30 different types of ready-made products and employs around 300 people seasonally. During his visit, Khaduri overviewed the production process of various products in the Marneuli Food Factory and its infrastructure, which was founded in 2007. The factory manufactures 50 different products including various jams, sauces and vegetable marinades and is engaged in processing raw materials. According to factory director, Irina Gaphrindashvili, the Minister and she discussed the problems concerning the manufacturing sector in Georgia and how difficult and specific it is. “Those are tax-related issues and some of them are specifically for this business, as they emerged after processing,” she explained, adding that as Khaduri mentioned, work in this direction is already in progress and special groups have been established. Additionally, the minister noted that the talks touched upon the potential of agriculture and the government’s role to lead those processes in the correct way in order to ensure full use of this potential. “We have talked about many issues with the minister,” one of the heads of the Holding, Mikheil Svimonishvili said. “I am glad that this field is prioritized. We discussed the general economy of the country, the development of this discipline and what role it might have in the development of the country,” he added. In addition, the minister discussed the marking approach of non-alcoholic beverages, as Margebeli Holding has a subsidiary of the Tskali Margebeli Company that produces Bakhmaro and Nabeglavi mineral waters.

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MINISTER OF FINANCE VISITS MARGEBELI HOLDING SUBSIDIARIES

TBILISI GUIDE

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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 12 T. Tabidze St. Tbilisi Tel: 55 03 20, Fax: 25 12 26 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.

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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 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 Resident Mission of the Asian Development Bank (ADB) Address: Chavchavadze Ave. 39a 0162 Tbilisi Tel: 225-06-19, 225-06-20, 225-06-21 Fax: 225-06-22 e-mail: tpapuashvili@adb.org 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

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 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

Price: 2.950.000$ Business center Total Space: 3000 sq.m. Home conditions: New building Renovation: Newly renovated Adress: , Tbilisi, Vake-Saburtalo, Didi digomi, Agmashenebeli alley Telephone: 2333560; 599363399

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

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