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BUSINESS WEEK May 27, 2013 #06

caucasian business week

May 27, 2013, Issue 06

caucasian1 Georgia to appoint new agriculture minister Pg. 3

BE INFORMED, DO BUSINESS

GEORGIA EXPORT INCREASED, IMPORT DECLINED

n January-April 2013 foreign trade turnover of Georgia (not including non-organized trade) equaled to $3,006 billion, which is 4% less in comparison with last year data.

Deputy Economy Pg. 4 Minister: Economic Trends cannot be Changed in One Day

Pg. 4

TOBACCO MANUFACTURERS EXPECT TOBACCO PRICES TO INCREASE IN 2014

fter tobacco excise increase, price of cigarettes will increase as well, but it will not reduce tobacco consumption in Pg. 6 the country.

MAY NAMED AS THE WORLD’S WORST AIRLINE

AY, the Ukrainian International Airline, has been named as the world’s worst airline. The rating of airlines with the worst reputation has been published by the Business Insider. Pg. 7

GEORGIAN MACROECONOMIC REVIEW

ost-election uncertainty looks to be taking a toll on Georgia’s economic activity, and real GDP growth this year will likely be the weakest since 2009 on a slump in investment demand. Pg. 9

AZERBAIJAN SOCAR TO BORROW $20BLN

ARMENIA RUSSIA MIGHT CONTRIBUTE TO GAS PRICE SUBSIDIES IN ARMENIA

rmenian government is trying to get the Russian side involved in subsidizing increased prices for the Russian gas, Armenian minister of energy and natural resources Pg. 11 Armen Movsisyan said.

CIS & IRAN IRAN’S GAS IMPORT & EXPORT PRICES

rmenia is keen to continue using Iranian gas. Turkey also wants to remain Iran’s gas importer despite its appeal against Iran to the International Court of Arbitration over Pg. 12 gas dispute in 2012.

62% OF GEORGIAN CITIZENS TRUST IN COMMERCIAL BANK

ccording to Gallup research, about 62% of Georgian population trusts in banking-financial institutions of the country. Research revealed that on the question: “Do you trust financial institution or banks in your country” 19% answered negatively, other 19% did not answer. According to confidence indicator Georgia takes third place among post-Soviet countries, following Uzbekistan and Tajikistan. 66-66% of the population trusts to banks and financial institutions in these countries. Gallup researched confidence level towards banks and financial institutions in 135 countries.

The research revealed that in 11 countries confidence indicator varies from 13 to 29%. Banks are trusted the least in Greece (13% yes, 82% no), Iceland (16% yes, 76% no) and Ireland (16% yes, 83% no). It’s noteworthy that 2 post-soviet countries are included in the list of these 11 states. Only 28% of Ukrainians trust to financial institutions, 61% have negative attitudes. As for Lithuania – 29% trust banks, 63% answered negatively. It was revealed that banks and financial institutions have highest trust indicators in Rwanda (91% yes, 8% no), Sri-Lanka (90% yes, 4% no) and Thailand (89% yes, 8% no). Gallup is American company, providing research, analysis and counseling for over 75 years.

Pg. 4

“The Georgian Times” Media Holding Organizes the 14th Business Award Pg. 5

Levan Alapishvili:

COURT TAKES OVER POPULI BANKRUPTCY CASE bilisi city court said that proceedings in a case of insolvency of Populi (food-stores’ chain) are initiated. Respective request was submitted by Roin Migriauli, representing interests of JSC Tskali Margebeli (Healthy Water, producer of Nabeglavi mineral water) and LLC Engadi. The claimants state that the defendant is unable to pay current debts, while his property is mortgaged and cannot be used for attraction of additional resources.

Giorgi Seturidze: “Dhabi Group” was under Pressure and Businesses were Confiscated on Vano Merabishvili’s Direct Orders

Debt of Populi towards Engadi amounts to 553,371 lari (principal – 399,311 lari, penalty – 154,060), while towards Tskali Margebeli – 105,684 lari (principal – 70,687 lari, penalty – 34,997 lari). National Executive Bureau is appointed as administrator of Populi’s estate. Creditors’ meeting is scheduled for June 26. Populi was acquired in 2012 by LLC Ioli Supermarket, while since this year, 69 outlets of its chain are managed by European investment fund SEAF.

“Solely Low Price - A Big Problem Of State Procurements”

Pg. 5

MAGTI EMERGES AS CELL COMMUNICATIONS MARKET LEADER IN TERMS OF REVENUES, GEOCELL RANKS FIRST IN TERMS OF NUMBER OF SUBSCRIBERS TOTAL REVENUE FROM ELECTRONIC COMMUNICATIONS INCREASED BY 6.4% IN 2012 National Communication Commission reported that total revenue of entities, authorized for electronic communications service, amounted to 1.032 billion lari in 2012. This volume exceeds by 6.4% the showing of 2011. Total revenue of broadcasters amounted to 92 million lari, increasing by 2.8% year-on-year. The matter concerns revenues, without VAT and excise dues. As the Commission noted, only 4 entities (companies of A group) had generated revenues by 100 million lari more in 2012. Their revenues made up 830.05 million lari (i.e. 73.9% of total revenues).

At that, revenues of MagtiCom amounted to 288.85 million lari, ones of Geocell – 250.39 million lari, SilkNet – 161.48 million lari, Mobitel (brand Beeline) – 129.33 million lari.

RETAIL INCOME OF MOBILE OPERATORS INCREASED BY 4.5%, WHILE CUSTOMERS’ NUMBER – BY 6.1% IN 2012 National Communication Commission reported that retail revenues of mobile communications operators totalled to 460.5 million lari in 2012. That volume exceeds by 4.5% the showing of 2011. Voice service accounts for 75.9% of total retail revenues, SMS –

for 8.9%, mobile internet – 3.9%, while all supplementary services – for 12.3%. Monthly ARPU (Average Revenue Per User, excluding VAT and excise dues) made up 8.44 lari as of end of 2012 (the 4th quarter). Total outgoing traffic made up 6.69 billion minutes (year-on-year growth – 29%). Major part of the traffic (79.1%) constituted calls in home network. Calls to other mobile operators’ networks account for 15.2%. As of end of the reporting year (the 4th quarter), total number of mobile users made up 4.7 billion persons. If compared with the same period of 2011, growth made up 6.1%. At that, clients’ density made up 104.5%. In terms of users’ number, market share of Geocell made up 41%, MagtiCom – 37.3%, Mobitel (brand Beeline) – 21.0%, SilkNet – 0.7%.

TOP NEWS

caucasian business week

NEW EBRD DIRECTOR FOR CAUCASUS, MOLDOVA AND BELORUSSIA TO START WORKING SINCE JUNE

GEORGIA TO APPOINT NEW AGRICULTURE MINISTER

runo Balvanera is appointed as new regional director of EBRD for Caucasus, Moldova and Belorussia. His predecessor on this post was Paul-Henri Forestier. Balvanera will start official implementation of duties on June 1. Until 2008, he worked in EBRD’s Moscow office. According to EBRD, 150 projects are signed for Georgia as of end of 2012, while investments exceed 1.7 billion EUR.

FORMER HEAD OF OIL AND GAS CORPORATION DETAINED

nvestigation Service of the Finance Ministry detained former head of Georgian Oil and Gas Corporation Zurab Janjgava. Together with him, former head of administration of Mtskheta Vakhtang Kipshidze is detained as well.

LLC New Energy is connected to both cases, in which the blame is of misappropriation of large sums, subjected to imprisonment for 7-11 years. Namely, the Corporation had signed with New Energy a contract on gas pipeline’s AspindzaAkhalkalaki section construction (SamtskheJavakheti region). As the Service said, “Despite that project cost made up 10 million lari, the Corporation had paid 17.7 million lari to New Energy, artificially increasing the work volume”. In case of Kipshidze, the Service said that he assisted to “organized criminal group, consisting former plenipotentiary in Mtskheta-Mtianeti region Tsezar Chocheli, Lukhum Kapanadze, Merab Kupunia and founder of New Energy Nikoloz Shakarishvili, (…) to misappropriate 7.55 million lari”. This is part of those 76.14 million lari, which the government had allotted for internally displaced persons after Russia-Georgia war in August 2008.

eorgia’s new agriculture minister will be Acting Minister of Agriculture Shalva Pipia. As Georgian Prime Minister Bidzina Ivanishvili said in an interview to the Georgian media outlets, the decision has been taken to nominate Pilia’s candidacy for Georgian agriculture minister. Nomination date of the new minister expires on May 24. After resignation of the agriculture minister David Kirvalidze in connection with corruption scandal in the Ministry,

Pipia fulfilled duties of the minister. “I think that I have made a good decision. The person, who fulfills duties of the minister, will be appointed as the minister,” Ivanishvili said. He said that if the investigation toward David Kirvalidze “will be completed well”, then he will return to his post. “Thus, it is a temporary decision, taken before completion of the investigation on the case. And later Pipia will write an application and will give up the seat for Kirvalidze,” Ivanishvili said.

ASKANELI BROTHERS TO GROW OUTPUT

skaneli Brothers, a manufacturer of elite alcoholic drinks, plans to increase the output. Jimsher Chkhaidze, the company founder introduced the investment plans to reporters as part of the May 23 media tour at the company plant. The new shop is being projected, he said. The investment portfolio makes up 3 million GEL. The project will be implemented in line with ISO standards. The new production line will satisfy the global market requirements to penetrate new markets, grow the assortment and establish the trademark of Askaneli Brothers as a valuable trademark on the global market, the company founder noted. Reporters visited the Lilo based plant, attended the wines and brandy bottling process, received information on the laboratory operation standards and investment plans and tasted various brandy and wine products. The plant was built in 2005 and the investment portfolio marked 5 million GEL. The output makes up 25 000 bottles a day. The asset is equipped with Italian Gavagnino&Gatti- and Fimer machineries and German ZETZ filtration systems. The plant has got brandy and spirits manufacturing equipment. Brandy spirits and brand wines are preserved in oak barrels. Strict control at all stages of production ensures production of high quality and wide assortment wines and brandy. The plant uses French technologies in the production cycle. As to the quality control, Tea Kituashvili, the plant’s laboratory head says the quality control is carried out on permanent basis and the vinyards soil is explored. The laboratory examins all reagents that are used in the vinayards at the early stage, at the

ripening stage, idenifies sugar content. “Our products are examined both in Georgia and we send patterns to accredited laboratories for a repeated control. We receive certificates to independent and certified laboratories so as we have rights to send our products to any country. We select only high quality red and white grapes from eastern and western Georgia. We use only those substances that ensure production of high-quality wines”, Tea Kituashvili noted. Several days ago Askaneli Brothers received three awards of Decanter 2013 World Wine Awards. Tsolikauri 2012 Harvest, Roze 2012 Harvest and Saperavi 2011 Harvest were awarded at the London Decanter International Wine Festival.

Foreign famous specialists provide consulting services to Askaneli Brothers, including Ivan Prida, professor and famous winemaking specialist in Moldova, Milosh Mikhlovski, famous Czech professor, and so on. At the same time, the plant specialists are trained in Europe. Moreover, American and German technologists and specialists are also invited to Georgia for training courses. The company keeps high standards and meets requirements of various markets. Askaneli Brothers exports wines to the USA, Ukraine, China, Germany, Great Britain, Estonia, Lithuania, Latvia, Poland, Czech Republic, Kazakhstan, Finland, Azerbaijan and Belarus.

Askaneli Brothers was founded 15 years ago and it is one of the leading companies among Georgian manufacturers of elite alcoholic beverages. The company produces 8 varieties of brandy, 32 varieties of wines, 4 varieties of vodka. Askaneli Brothers has obtained over 100 various awards at exhibitions. The company history started in 1880 in the village of Askana, the Guria Region and this history is related to Antimoz Chkhaidze, who founded a wine cellar in Askana. His wines were famous for their special aromas. Descendants of Antimoz Chkhaidze have continued the traditions and today they offer one of the best rbandy and wine products to Georgia and the world.

ECONOMIX

caucasian business week

May 27, 2013 #06

GIORGI SETURIDZE: “DHABI GROUP” WAS UNDER PRESSURE AND BUSINESSES WERE CONFISCATED ON VANO MERABISHVILI’S DIRECT ORDERS An interview with Director of “Coordinating Center of International Investment “ GIORGI SETURIDZE - Vano Merabishvili, Tbilisi Mayor and others are often associated with particular criminal cases. Merabishvili was detained, how do you think, will there be any progress in your case? - It’s hard to say whether there will be any progress, but still I can confirm that according to my truthful information, the pressure on “Dhabi Group” and businesses confiscation was executed by Vano Merabishvili’s immediate order. - What has become a reason for such a loud statement - what evidences allow you to make such a statement? Isn’t it the position of the people who are offended by certain persons? - In 2010, he ordered all the illegal activities that led to the suspension of “Dhabi Group” activities, he personally ordered not to let me out of the

country and closed the border. By his order, the National Bank President Giorgi Kadagidze repeatedly summoned me and gave me his words, as well as the Prosecutor’s Office officials repeatedly summoned me and gave me warnings, threatened the safety of my family members. All this came from Vano Merabishvili. There are many facts, witnesses and if it’s necessary I’ll present these facts to the investigation. - You said that in these particular cases the investigation had not progressed. Why did the Prosecutor’s Office fail to study this case? - In order to restore justice, it is important first of all, the new government to make laws that will not be used for illegal purposes. For this reason the law on “General Courts” was also adopted

and Commission to Study Flaws in Justice was formed. I hope that it will contribute to the restoration of the rule of law. - What interest did Vano Merabishvili have in your case? - Vano Merabishvili had business interests. He totally controlled “KorStandard Bank” where I was a member of the Supervisory Board, as well as laid his hands on “Kempinski” project. However, due to the fact that investors didn’t invest the funds, “Kempinski” project has been stopped. As for the bank, it may be said that until recently Vano Merabishvili and the people close to him have controlled the bank very actively. Many transactions were carried out through this bank. Commersant.ge

DEPUTY ECONOMY MINISTER: ECONOMIC TRENDS CANNOT BE CHANGED IN ONE DAY “Results of our work will be announced in the near future”

he Economy Ministry has started working to improve the economic situation.was told by the First Deputy Minister of Economy and Sustainable Development Dimitri Kumsishvili that economic trends couldn’t be changed in one day and the ministry was now working to improve the legacy left by the previous government. “Work is in progress in a number of areas to improve economic growth rate, “ – Kumsishvili says. Although, Deputy Minister does not specify the areas and notes that the results will be announced in the near future. Note: According to the National Statistics Office, in the first quarter the economic growth rate was reduced. EBRD has cut Georgia’s economic growth forecast from 5% to 3% while the National Bank President impugns a scheduled 6% growth and says that this year 6% economic growth will not be reached due to the fact that the business is passive and moved into a waiting mode.

UNDP IMPLEMENTS AGRICULTURE DEVELOPMENT PROJECT IN AJARA

U representation in Georgia said that project on agriculture development in Ajara, cost of 3.3 million EUR, will be implemented by UNDP (the UN Development Program). The project, calculated for 2013-2016, envisages support of small farmers. Its partners are Ajara government and Ajara’s Agroservice. The project is part of European neighbourhood program on agriculture and rural development (ENPARD), which has started in March. Budget of ENPARD’s Georgian part amounts to 40 million EUR.

AZERBAIJANI PROJECT “DIRSI” REPRESENTED IN 18TH INTERNATIONAL CONSTRUCTION AND INTERIOR EXHIBITION IN TBILISI

ne of the largest foreign investment projects in Georgia is represented in “ExpoGeorgia” exhibition center. The 18th international construction and interior exhibition is held in “ExpoGeorgia” on May 15 – 18. The exhibition presents the largest investment in Georgia by Azerbaijani construction company “AS GroupInvestment “- project “Dirsi”. “AS GroupInvestment Georgia” is represented in

Georgia by its subsidiary “AS Georgia” company. A modern residential complex includes 22 residential buildings, schools, kindergartens, entertainment and trade zone, a medical center and an amusement park. “Dirsi” is a city built on 40 hectares of land. The company presented a model of the residential complex especially for the 18th international construction and interior exhibition.

EXPORT INCREASED, IMPORT DECLINED

n January-April 2013 foreign trade turnover of Georgia (not including non-organized trade) equaled to $3,006 billion, which is 4% less in comparison with last year data. Geostat informs, that out of overall turnover export equals to $785 million (8% more), import - $2,220 billion (8% less).

In January-April, 2013 Negative trade balance of Georgia equaled to $1,435 billion and 48% of Georgia’s trade turnover. In January-April 2013 share of 10 largest trade partners equaled to 67% of Georgian foreign trade turnover. Turkey ($440 million), Azerbaijan ($398 million) and Ukraine ($225) million are the largest trade partners.

GEORGIAN ENERGY DRINK TO BE EXPORTED TO KAZAKHSTAN

edazeni” company will export its energy drink “Wilder’’. As the company informs radio ‘’Commersant, the first Georgian energy drink came to the market at the end of March. They also claim that during this time “Wilder’’ was able to gain user’s trust which is based on the

sales figures. According to them, the first energy drink will be exported to Kazakhstan next week. The company has lost 5 million GEL to launch a new product. A price of a jar of “Wilder’’ drink is 2 GEL. “Zedazeni’’ company receives raw materials from famous Austrian company “Esarom”.

May 27, 2013 #06

INTERVIEW

caucasian business week

“THE GEORGIAN TIMES” MEDIA HOLDING ORGANIZES THE 14TH BUSINESS AWARD An interview with President of Georgian Times Media Holding MALKHAZ GULASHVILI

CIVIL SOCIETY CONFERENCE

n May 23, the first informal conference between Regional Civil Society Network and international/ donor organizations was held at Sheraton Metechi Palace Hotel. Conference was organized by CiDA as part of R-CSN project , the first informal conference for R-CSN and international/donor organizations, organized by Civil Development Agency – CiDA was held. The event aimed to improve the communication between the network members and donors, and to hold joint informal discussions regarding various topics. Members of approximately 45 organizations (including 30 Civil Society Organizations and 15 International Organizations) participated in it. This gave the participants chance to have discussion in informal and easy surroundings. They named themselves the most active and interesting topics for discussions and were divided into groups. Similar kinds of meetings promote the information sharing process regarding interesting initiations and projects, which implementation is vital for supporting the state development in future. Besides this during the conference the donor organizations and NGOs agreed on joint viewpoints and strategy of problems reveling, advocacy and cooperation with citizens. The informal conference this is a discussion type meeting, where the participants define the process themselves. There are no preliminary arranged topics or agenda. This is not a presentation, this is a Brainstorming. Project R-SCN is being carried out by the Policy, Advocacy and Civil Society Development in Georgia (G-PAC).

- The 14th awarding ceremony of the best Georgian companies and businessmen will be held this year on May 30 at “Courtyard Marriott” hotel. Your holding organizes this event jointly with the Ministry of Finance, the International Chamber of Commerce, Business - Association , Chamber of Commerce and Industry, as well as with Association of Public Opinion and Marketing Researches (GORBI). Whether it will look different from the previous ones? - Traditional business rating has been held since 1995, we have played a certain role in shaping the image and face of the Georgian business. This year companies will be evaluated using 14 criteria, 25 top companies will be revealed which, except from nominations, will be awarded. That is the difference. As for the winner, business companies will reveal a winner from 25 companies. Preparatory period lasted for almost two months. Indeed, it’s time-consuming activity, especially when our newspaper has been recently restored. 3 years my family was under a political prosecution and work of holding was suspended. Georgian business positively met our return to the market and took an active part. - What criteria should be met by a company to appear among the top companies? - First of all, it must make 1 million GEL in the budget, then these companies meet at the experts’ judgment “ and receive their assessments. Top 25 is revealed by the scores, but we do not have the right to name the winner, we gave this right to companies. The winner will be awarded with transitional award “Bolnisi Cross “ which is made of precious metal, including gold, silver, turquoise and diamonds. So, the winner will be revealed on May 30 on gala dinner by a vote. - Do only experts participate in selecting a winner? - Experts participated only in evaluation of the companies provided by the Ministry of Finance which made more than 1 000 000 in the budget, they will not take part in the final stage. The best companies are evaluated according to the following criteria: protection of the interests of entrepreneurs, public image, effective management, charity - philanthropy, the effectiveness of advertising campaigns, new technologies, new jobs, recognition abroad, public relations and other. - In what nominations will the companies be represented? - Charity, job creation, efficient management, etc. In total 30 companies will take part, but one company can win in 4 nominations. This will be depending on the contribution to Geor-

gia’s economy or even how much money is spent on advertising... This will be a stimulus for businessmen. As for the state, Finance Ministry rendered a great assistance while making business ranking when provided the lists. The current Minister of Finance, Mr. Nodar Khaduri, headed the “Georgian Times” economic department and business rating was conducted and started by him. - What form will the next contest have? - We would like it to be conducted based on more solid economic data. In the future we plan audit companies to be involved in the survey of companies. Among them will be one well-known auditing company which was named among the world’s 20 best companies and intends to enter Georgia in the near future. Also in the near future we plan to publish a list of Georgian billionaires, we’ve done it before, the planet’s richest Georgians “ and the circulation has broken all records. - And do we have many billionaires? - Perhaps, 10-15 Georgian billionaires in the world. commersant.ge

USAID SUPPORTED SOLAR ENERGY USE IN 4 VILLAGES OF KAKHETI AND SAMEGRELO REGIONS

VALERIAN GABUNIA – “VTB BANK HAS ISSUED LOANS OF 4.2M LARI WITHIN FRAMES OF AGRO-CREDIT PROJECT”

ithin frames of preferential agro-crediting project (started on April 29), VTB Bank Georgia has allocated credits of 4.2 million lari, funding 11 start-ups with 1.3 million lari at that. Out of total, 45% has been allocated for cattlebreeding/bee-keeping/poultry-raising, 25% – gardening and market-gardening, 17% – hot-housing and 13% – for grain crops. According to Valerian Gabunia, director of VTB Bank Georgia’s retail business, majority of loans was issued within frames of the 2nd component (credit for current and fixed assets), while $800,000 was allocated within frames of the 3rd component (funding of agro-enterprises).

eorgia Greens and Agency for Rural Communities’ Development implement project “Growth of Rural Population’s Access to Renewable Energy in Peripheral Regions through Introduction and Dissimination of Respective Technologies”. Within this project, use of solar energy was introduced in 4 villages in Kakheti and Samegrelo regions. Namely, 20 solar collectors, 12 fruit and vegetable dryers, 7 simple systems of house heating and 2 energy effective hot houses were built in villages Khamiskuri and Kheta (Khobi district), Manavi (Sagarejo district) and Shilda (Kvareli district). The mentioned project is implemented within project “Nateli II”, being supported by USAID and supervised by Winrock International Georgia.

LEVAN ALAPISHVILI - “SOLELY LOW PRICE – A BIG PROBLEM OF STATE PROCUREMENTS”

xpert Levan Alapishvili declares that low quality of work, fulfilled for the state procurements, is still a challenge for both local and central government. The procurement organization saves the expenses and declares that they buy high quality for an optimal price, but it is wrong, he notes. The article brings comment on the subject, made by company Legi, founded through Ukrainian investments. The investment volume amounted to $5 million, and from 2012, the company’s factory produces concrete tiles and building blocks, which are used for reconstruction of Batumi and Kobuleti. However, the company declares that the advantage during the state procurements is still given to the low price, correspondingly, companies manufacturing products of high quality are forced to worsen the quality or close the production.

BUSINESS

caucasian business week

May 27, 2013 #06

AS TENSIONS EASE, MOSCOW ALLOWS BACK GEORGIAN MINERAL WATER

fter a seven-year embargo, Russia has allowed a shipment of Georgian Borjomi mineral water into the country, a move commentators in Moscow see as a sign that political tensions between the neighboring countries are easing, dpa reported.

Moscow banned imports of Borjomi water, Georgia’s third-largest export, in 2006 in response to the policies of then Georgian President Mikhail Saakashvili, a critic of the Kremlin. The official reason given for the ban was alleged poor hygiene standards. Russia fought a war with its South Caucasus neighbour in 2008, ostensibly to protect the pro-Russian areas of Abkhasia and South Ossetia, where Russian troops have been based ever since. Relations between the two countries have thawed since the victory of Bidsina Ivanishvili in last year’s parliamentary elections. Two trucks with water from the Georgian spa town were on their way to supermarkets around Moscow, the Russian customs agency said on Wednesday. It is expected that Georgian wine, which enjoys a very strong reputation in Russia, but which was also banned in 2006, will be allowed to be imported again soon.

GENNADY ONISHCHENKO REJECTED SCHUCHMANN WINES BECAUSE THEY WERE SOURED

ussia’s Chief Sanitary Doctor said that his office had blocked three species of Georgian wine, because it was soured. “Interfax” reports that the Sanitary Inspection found defects in three types of wine which the Georgian company presented for examination in order to bring it in Russia. “We made the expert conclusion about incompatibility of “Schuchmann Wines” products with the regulations. When pouring, a foam forms, gas bubbles appear and boiling starts. It is soured, “- the head of Russia’s Sanitary Watchdog “Rospotrebnadzor” says. Russian “Kommersant” writes that earlier, Mr. Onishchenko has rejected five kinds of brandy produced by “Askaneli Brothers”, one of the largest alcohol beverage producers in Georgia. Chief Sanitary Doctor of the Russian Federation said that the quality of the products did not conform to current standards. In response, “Askaneli Brothers” called Onishchenko’s statement misunderstanding, stating that they had already addressed an official letter to Gennady Onishchenko and called for a clarification from him. Along with that, they noted that products will be sent to Moscow for recertification in the nearest possible time. In total 234 types of Georgian wine, cognac, chacha and mineral water were submitted for state registration in the Russian Federation. This week, after a long hiatus deliveries of Georgian mineral water “Borjomi” to Russia were resumed. commersant.ru

GEORGIA AND AUSTRIA DISCUSS ECONOMIC COOPERATION ENHANCEMENT ISSUES

he 3rd meeting of Georgia-Austria intergovernmental commission on economic cooperation and GeorgiaAustria business-forum were held in Tbilisi today. Delegation of Austrian businessmen included representatives of financial, logistics, construction and other spheres. The 1st meeting of the mentioned commission

was held 10 years ago, while the 2nd one – in 2011 (in Vienna). According to Sakstat, Austrian direct investments to Georgia amounted in 2012 to $7.64 million, dropping 3.7 times year-on-year. Austrian import to Georgia made up $82.67 million (about 1% of Georgia’s total import), while Georgian export to this country – $734,400.

BRAZILIAN BUSINESSMEN ACQUAINTED WITH GEORGIA’S POTENTIAL

roup of Brazilian businessmen, visiting Georgia, has already met with the Prime Minister, leadership of Regional Development and Infrastructure Ministry and Partnership Fund. The visit of Brazilians is of an introductory character. The delegation consists of representative about

15 companies, engaged in such fields as infrastructure, agriculture, manufacturing, foodstuff, aviation, etc. According to Sakstat, import from Brazil in 2012 amounted to $120.09 million, while no Georgian export was implemented to this country. In 2012, number of Brazilian visitors to Georgia made up 427.

TOBACCO MANUFACTURERS EXPECT TOBACCO PRICES TO INCREASE IN 2014

fter tobacco excise increase, price of cigarettes will increase as well, but it will not reduce tobacco consumption in the country - tobacco manufacturers and importers respond to the government’s decision which envisages excise tax increase aimed at reduction in tobacco consumption. According to Amiran Gamkrelidze, head of the National Center for Disease Control, excise tax increase will begin from 2014, stage by stage. Commersant.ge was told at “Eliz” company that increase in the excise tax would be straightly proportional to price growth on tobacco products. In addition, the company says, the number of us-

ers will not be reduced because of the increase in price and it might give impetus to smuggling in the country. Price hike on tobacco products is expected in “Best Tobacco” company. According to them, those companies that are working on a high profit margin, will not increase tobacco prices on the first phase, but companies working on minimal profit will increase prices on the initial stage. At the same time, the company explains that the number of cunsumers will not reduce and the price increase will lead to consumers’ redistribution of high and medium-paid products. In particular, those who consumed expensive cigarettes will move to relatively cheap products.

NATIONAL BANK TO INTRODUCE TOP MARGIN FOR REFINANCING RATE

iorgi Kadagidze, president of National Bank of Georgia (NBG), declared that upper limit for refinancing rate is established at 2% for local micro-financial organizations. This regulation will be enacted on Monday, May 27. Kadagidze has declared the mentioned today, during the meeting with representatives of microfinancial organizations. Until now, there was no such limit for these organizations.

Kadagidze also said that as main operation area for micro-financial organizations are regions, while their clients are mainly from low-income groups of population, there is necessity of ethics code, especially from the point of view of clients’ protection. There are 63 micro-financial organizations, operating in Georgia now. As of December 31, 2012, they have issued loans of 518.56 million lari, which volume has increased year-on-year by 68.5%.

DUTCH INVESTORS INTERESTED IN PROJECTS OF UNITED WATER SUPPLY COMPANY

roup of Dutch investors has visited United Georgian Water Supply Company today. The visit was of introductory character, so the guests became acquainted with ongoing and planned projects of the company. According to the company, the investors, who got interested in the projects, will consider prospects of participation now. United Georgian Water Supply Company was

established in 2010. It serves 266,064 household and 12,131 corporate consumers countrywide, except Tbilisi, Mtskheta, Rustavi and Ajara autonomy. The company runs 6 regional branches and 54 service-centers. Tomorrow, Dutch delegation is going to visit facilities of Tbilisi water supply company Georgian Water&Power (GWP, which serves also Mtskheta and Rustavi) – Grmagele head and water quality controlling lab. As GWP said, aim of the visit is experience sharing.

May 27, 2013 #06

BUSINESS & ECONOMY

“WHAT AMENDMENTS HAVE BEEN MADE TO KHUDONHES AGREEMENT”

he Georgian government issued a decree, which amends the agreement, signed with TransElectrica on construction of KhudonHES. According to Deputy Energy Minister Ilia Eloshvili, the company should take construction permit until 2014. Besides, amended agreement envisages that KhudonHES will sell electricity on local market during 4 months instead of previously envisaged 3. Cost of 1 kWh should be 5.84 cent for 10 years. The population resettlement plan should be drawn in compliance with the World Bank standards.

Co-financing fund will be established in the near future

Recall that Turkish investors plan to start the construction of a textile factory in Georgia in the near future. Up to 800 locals will be employed at a factory where men’s shirts of Zara, H & M, Next and Max Spenser trademarks will be sewed. According to Chalishkan, so far, investors were in a waiting mode, but it lasted only a few months and in the next six months specific investment projects will be launched. In his words, not only Turkish but also Iranian and European businessmen express their interest. Construction of fast food chain “Burger King” is on the interest level. The Association explains, negotiations are underway regarding Burger King’s entry into the country. Against this background, it becomes known that co-financing fund initiated by Prime Minister will be established in the coming days. Economy minister told radio “Commersant”. Prime Minister announced first about the creation of the Sovereign Fund, a Private Onvestment Fund, as well as the Youth Fund at a meeting with the media a few months ago. Investment, the same co-financing fund, should be filled by private capital and will fund 25-75% of the cost of interesting business ideas.

FORMER HIGH-RANKING OFFICIAL OF SAKSTAT: REVISION OF THE METHOD OF CALCULATING LIVING WAGE HAS BEEN POSTPONED

ome experts speak about the need to change the method of calculating a living wage. As per the National Statistical Service [Sakstat] data, in April 2013 the minimum wage for the average user made 130.5 GEL, which is 4.35 GEL per day. Estimating Sakstat data, a former high-ranking official of Department of Statistics says that a decrease in

MAY NAMED AS THE WORLD’S WORST AIRLINE

According to Khatuna Gogoladze, Minister of Environment and Natural Resources, the amendments put the country in a more profitable position, but the drawbacks of such agreements is that country poses definite problems in case of the project failure. Currently, Ministry of Environment and Natural Resources expects recommendations of foreign experts. Netherlands Commission for Environmental Impact Assessment has studied the project and declared that the information is insufficient to take the right decision and additional works should be carried out, which requires at least 1 year.

HEAD OF INTERNATIONAL INVESTORS ASSOCIATION: FOREIGN INVESTORS ARE COMING OUT OF A WAITING MODE

oreign investors are coming out of a waiting mode - the head of the International Investors Association Osman Chalishkan states in a conversation with commersant.ge. He says that among foreign investors, Turkish businessmen are showing the greatest interest towards Georgia and have already expressed their willingness to implement particular investment projects in Georgia. The construction of a textile factory in Kutaisi is among the projects where Turkish investors plan to invest a total of 1.500.000 USD.

caucasian business week

the minimum wage is associated with deflation. Soso Archvadze states “Commersant” that the prices of certain food products reduced, while the relationship between prices of food products and the subsistence level is high. Archvadze notes, the calculation methodology should be revised and the political will is needed. In his words, statements on this issue were made during the election campaign. However, the changes are delayed

AY, the Ukrainian International Airline, has been named as the world’s worst airline. The rating of airlines with the worst reputation has been published by the Business Insider. “These airlines are very irresponsible, especially in Economy Class flights”, the article reads. The research is based on the Skytrax system of evaluation. The ten worst airlines are from the PostSoviet countries and Africa. №1 Turkmenistan Airlines, Turkmen airline holds Boeing airplanes, but Accoridng to the Skytrax system, the airline has got one the worst services. №2 Sudan Airways - Sudan airline has been banned to perform flights to EU. The company basically performs flights in Sudan, Africa and Near East coutnries. №3 Ukraine International Airlines - Ukrainian airline performs flights to 60 directions to Europe, Near East and Asian countries. The company also performs Tbilisi to Kyiv flights.

№4 Uzbekistan Airways - Since 1992 the airline has recorded three crashes with 54 passengers died. №5 Air Koryo - North Korean airline has got only two new airplanes. The company plans to buy new airplanes in the Russian Federation, because the USA and the EU countries have introduced sanctions against the country. №6 Bulgaria Air – Bulgarian airline holds 18 airplanes and performs flights to Europe, the USA and Canada. №7 Rossia airline holds Airbus airplanes. Recently the airline merged with Aeroflot airline. №8 Iceland Express - Iceland airline holds only two Airbus A320 airplanes. In 2012 the company merged with WOW Air airline. №9 Tajik Air - the airline was founded in 1923. One airplane crashed in 1997 and 78 passengers died. №10 Syrian Air - As a result of EU sanctions, the Syrian airline performs less flights. The last crash was recorded in 2012. BPI

USERS OF BEELINE RELEASED FROM COMMISSION FEE OF UNISTREAM

emittances system Unistream announced that mobile communications’ users of Beeline brand will not pay a commission fee, while transfer money from their mobile balances to Georgia and CIS. Upper limit for single transaction makes up 15,000 Russian roubles. According to National Bank of Georgia, Unistream is on the 2nd place in terms of remittances to Georgia in the 1st quarter ($41.64 million, market share – 13.4%, year-on-year decline – 4%).

“IOLI’’ OWNER BLAMES FORMER GOV’T FOR THE COMPANY’S BANKRUPTCY

oli” owner accuses the former government of bankrupting the company. As Joni Gigani explains to radio “Commersant’’, the criminal case was groundlessly launched against their businesses, the fact that his family has not favored the National Movement. Gigani claims his property may be lost in case of non-payment of loans.

Gigani says that at this stage “Ioli” company went bankrupt, 400 employees remained unemployed. However, in order to continue production, search for investors continues. According to Gigani, he applied to the Prosecutor’s Office to investigate the case a few months ago, but any changes in the case are not being observed.

BANKING NEWS

caucasian business week

BANK SECTOR ENDS JANUARY TO APRIL PERIOD IN 101.690 MILLION GEL PROFITS

anking sector of Georgia completed January-April 2013 with 101,690 million GEL profit. April profit is increased by 36,4 million GEL, almost doubled since analogic period of last year. There’re 13 profitable banks out of 20 by May 1. For the reporting period, own funds of banking sector (stock capital) equals to 2,559 million

PROCREDIT BANK TO FUND ENERGY EFFICIENT PROJECTS WITH OEE SUPPORT

GEL (first quarter 2013 – 2,5 billion GEL). Supervisory capital equals to 2,639 billion GEL (first quarter 2013 – 2,6 billion GEL), capital adequacy ration – 17,7% (first quarter 2013 – 17,7% (first quarter 2013 – 17,7%). For the reporting period Return on Equity (ROE) equals to 12,1%, Return on Assets (ROA) – 2,1% (accordingly – 10,5%, 1,8%). Consolidated information includes data of 20 commercial banks.

TBC PRESERVED LEADERSHIP ON INDIVIDUAL DEPOSITS MARKET IN APRIL

SC TBC Bank preserved leadership on the individual deposits market in April. Bank informs, that according to May 1, 2013 situation, TBC Bank’s market share was defined by 34,4% based on this data (01/05/12 -34%). For the reporting period, individual deposits portfolio of TBC Bank equals to 1,42 billion GEL. Total deposit portfolio of the clients is 2,301 billion GEL (01/04/13 -2,273 billion GEL).

BANK OF GEORGIA COMPLETED JANUARY-APRIL WITH 36,4 MILLION GEL PROFIT

SC Bank of Georgia completed January-April 2013 with 36,4 million GEL profit (first quarter 2013 - 24,014 million GEL). In the analogic period of last year ban’s profit equaled to 56 million GEL. April profit is 12,4 million GEL (04/12 -12,5 million GEL). By May 1, it takes first place among 13 profitable banks. The bank is a market leader according to almost all data. According to actives, its market share is defined by 36%, amount - by 5,236 billion GEL (01/05/12 -34,8%, 4,373 billion GEL).

ProCredit Bank signed today in Tbilisi an agreement with Austrian development bank (OeEB), which envisage funding of energy efficient projects and small and middle enterprises in Georgia. Total volume of OeEB’s line of credit makes up $15 million. Half of this volume is envisaged for energy efficient projects. In 2012, the Georgian bank introduced “eco-

BANK OF GEORGIA DOUBLES BONUSES FOR ONLINE SHOPPING BY AMEX HOLDERS

cashback of 2% (instead of regular 1%). Within the action, the bank also offers American Express Rewards debit card for 10 lari instead of regular 40 lari. Bank of Georgia is exclusive emitter of American Express cards in Georgia. As of May 2012 (the latest available data), number of AmEx cards made up 104,973, accounting for 78% of total number of the bank’s credit cards.

VTB BANK GEORGIA TO PAY DIVIDENDS IN 2013 TOO

TB Bank Georgia declared that it is going to pay dividends from profit of 2012. Date of accounting is set on May 31, while date of payment start – June 17. According to audited data of VTB Bank Georgia, profit for 2012 amounted to 8.4 million lari. Shareholders of the bank are Russian VTB group (96.31%) and Lacarpa Enterprises Limited (2.08%). Last year, VTB Bank Georgia had paid dividends from profit of 2011 also (9.3 million lari, or 5.78 tetri per share), while in 2010 the bank had a loss.

loans” for private and corporate clients, which is intended for funding of energy efficient projects, projects in renewable energy and environmentfriendly investments. Renewed “eco-loans”, which will be issued with preferential terms, provide borrowers to cut energy spendings and treat energy resources with higher responsibility, ProCredit Bank said. ProCredit Bank cooperated with OeEB since 2008.

NUMBER OF REMOTE BANKING TOOLS’ USERS EXCEEDS 750,000

ational Bank of Georgia (NBG) reported that as of end of 2012, there were over 750,000 users of remote banking tools in the country. Number of unique users of remote tools is presumably less, as one person may use several different tolls at once, NBG noted. Remote banking tools became available in Geor-

gia since 2000 (bank-client tool), while internet banking and telephone banking appeared on the market in 2001. In the past years, internet banking partially replaced bank-client service. According to NBG, operations through banking cards accounted for 47.5% of total payments in 2012. Transaction through internet banking accounted for 22% of total non-cash payments.

NBG: DIVERSIFICATION OF LOCAL BANKING SECTOR’S BORROWINGS DESERVES LOW-RISK ASSESSMENT

ank of Georgia announced online shopping action for holders of American Express cards, which will last until July 20. Those cardholders, who will pay with their AmEx cards while shopping online during this action, will get 3 Membership Rewards for each spent lari (instead of regular 1.5 MR points), while holders of American Express Blue cards –

May 27, 2013 #06

ational Bank of Georgia (NBG) declared that borrowings of local banking sector (including debt securities) “is distributed from the point of view of payment terms, and especially envisaging the creditors, in the way, which is assessed as bearing a low risk”. Out of total borrowings, international financial institutions account for 58%. Parent banks account for 10%, while remained 32% is share of

other private institutions. According to NBG, borrowings of the banking sector totaled to 3.266 billion lari as of end of 2012, accounting to 22% of the sector’s total liabilities (in 2011, this ratio was 17%). As NBG pointed, “the banks have decreased their balances in that part of subordinated loans, which was connected with extra expenses, and replaced it with relatively cheap borrowings”.

RATIO OF GEL-DENOMINATED DEPOSITS SLIPS BY 4% IN 2012

ational bank of Georgia (NBG) reported that ratio of deposits, place in lari, to total deposits (larization ratio) has tended to decrease during 2012. Total decline made up 4 percent points, so the ratio made up 36% by the end of the year. NBG explains that decline of larization ratio in the

beginning of 2012 was caused mainly by the government’s operations. Thus, high public expenditures of the end of 2011 led to growth of deposits in lari, but tax collection in March caused its decline again. In next months, NBG says, growth of deposits in foreign currency was caused by placement in banks of income, gained through placement of state-owned companies’ Eurobonds.

NUMBER OF RTGS TRANSACTIONS GROWS BY 8.7%, VOLUME SHRINKS BY 55.3% IN 2012

ational Bank of Georgia reported that there were 11.2 million transactions, implemented during 2012 through Real Time Gross Settlement (RTGS) system. Their volume totaled to 126 billion lari. If compared with 2011, number of transactions has increased by 8.7%, while their volume – by 55.3%, NBG said. Daily average showings made up 44,300 transactions and turnover of 498.9 mil-

lion lari. According to NBG, RTGS system served 72.3% of total volume of transactions, implemented during the reporting year in Georgia, exceeding this way at least 4 times turnover of any other system of non-cash payments. RTGS accounted for 24% of total non-cash payments, in which term this system lags behind both innerbank payments (37%) and cards’ transactions (38%), NBG noted.

STATISTICS

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caucasian business week

GEORGIAN MACROECONOMIC REVIEW Post-election uncertainty looks to be taking a toll on Georgia’s economic activity, and real GDP growth this year will likely be the weakest since 2009 on a slump in investment demand. That said, we remain confident the government will try to spur growth by unfreezing investment projects towards the year-end. The Georgian economy’s key positives are a narrowing of the C/A deficit, sizeable external debt inflows, and related exchange rate stability, which is poised to persist through the year-end.

Economic growth falters, likely to pick up in 2H13

eorgia’s GDP growth decelerated to an estimated 1.7% yoy in 1Q13, its slowest pace since 3Q09. A sharp decline in capital investment looks to be the main culprit. Following last October’s change of power the government froze several large-scale investment projects to check their feasibility and costs. Investment will remain the hot topic this year as far as GDP growth is concerned. Government and central bank officials have indicated most projects will be restarted in 2H13, which should spur economic growth. Domestic demand remains robust, according to our estimates. The government has maintained a high growth rate in public employee wages (budgetary salary funding is up 12% yoy in 1Q13) and social benefits (up 8% yoy). The past 6 months of annualized consumer deflation have also supported private domestic demand. In addition, exports look to be contributing positively to GDP growth – merchandise exports added 8.4% yoy in nominal terms in 4M13, which, adjusted for inflation, also implies decent growth in real terms. In light of the weak 1Q data and the government’s stagnant capital spending, we downgrade our 2013 GDP growth forecast to 3.8% from 5.1%. That is still one of the highest rates among CEE peers, according to consensus projections. We fully expect a return to a 5%+ growth rate in 2014 as the government is preparing to stimulate investment soon.

Narrowing C/A deficit, debt inflows support currency stability

eorgia’s current account (C/A) deficit narrowed to 11.8% of GDP in 2012 from 13.5% in 2011, and we expect the trend to continue

through end-2013. Preliminary 4M13 merchandise trade data point to a significant adjustment in trade flows ytd – nominal exports grew 8.4% yoy while imports declined 8.1% yoy (mainly on a drop in investment good purchases). This helped narrow the goods trade deficit by USD 0.26 bln to USD 1.44 bln in 4M13. The narrowing of the C/A gap will also be supported by growing exports of tourism services – the number of tourists entering Georgia surged 32% yoy in 4M13 to 1.3 mln. All in, we improve our projection for the 2013 C/A gap to 11.3% of GDP vs. our earlier 12.6%. FX inflows through the financial account seem sizable, but a larger part looks to be flowing to the non-financial sector. An influx of debt and FDI has thus far covered the C/A gap by a wide margin. The NBG has been purchasing excess FX from the market and reserves have risen 3% in 4M13 despite a scheduled repayment of a USD 90 mln IMF loan. Reserves hit a record USD 2.97 bln at the end of April. The FX surplus has continued in May and the NBG already bought net USD 80 mln mtd. We upgrade our projection for Georgia’s end-2013 reserves to USD 2.8 bln from USD 2.5 bln. The projection accounts for c. USD 270 mln to be repaid by the NBG to the IMF this year. We also marginally upgrade our end-2013 exchange rate projection to GEL 1.65/ USD from GEL 1.72/USD, meaning we expect the NBG will keep the currency virtually stable over the year.

Banking sector slowdown to continue

he banking sector is now facing its weakest growth prospects since early 2010 – the pace of asset growth slowed considerably from 26% y/y in mid-2012 to 13% at end-1Q13. The corporate sector’s reluctance to borrow, due to bleaker growth prospects and political turbulence, is the key driver. Many corporates seem to be looking for debt abroad as interest rates offered by Georgian banks remain high. The aggregate corporate loan portfolio contracted each month in the 1Q, driving a quarterly 2% decline. Meanwhile, individuals continue to borrow actively – the retail book added 3.4% in 1Q13. Although we expect loan demand from individuals to remain robust through the year-end, it’s unlikely to fully offset weak loan origination in the corporate segment. We see banking sector asset growth decelerating further to 7-9% yoy by the end of the year. Banking sector funding is becoming increasingly reliant on customer deposits – their share in total liabilities grew an impressive 4.8ppts in 1Q13 to 69%. We think this positive development will continue through the rest of the year and we see the loan-to-deposits ratio coming down 5ppts yoy to 102% in 2013.

AZERBAIJAN

caucasian business week

May 27, 2013 #06

WORLD LEADERS CONGRATULATE AZERBAIJANI PRESIDENT ON REPUBLIC DAY

he leaders of numerous countries have congratulated Azerbaijani President Ilham Aliyev on the Republic Day, May 28. German President Joachim Gauck says in his letter that for more than 20 years since the establishment of diplomatic ties between the two countries, German-Azerbaijani relations have expanded and evolved in many areas on the basis of mutual interest and respect. Azerbaijan is the most important partner for Germany and Europe within the framework of the EU Eastern Partnership program, the message said. Gauck wrote that Germany will continue to strongly support Azerbaijan in the development of democracy, rule of law and integration into Europe. The letter said his country considers it important to maintain an open dialogue between partners on all policy matters. Austrian President Heinz Fischer, in his letter, extended his most sincere congratulations on the occasion of the national holiday of Azerbaijan. “Taking this opportunity, I wish you good health, and a happy future to the people of Azerbaijan,” Fischer said.

King of Saudi Arabia Abdullah bin Abdul Aziz Al Saud wrote in his letter, “On behalf of the people and the Government of the Kingdom of Saudi Arabia and on my own behalf I convey to Your Excellency my sincere congratulations on the occasion of the national holiday of your country. We wish you good health and happiness, and sustainable development and prosperity to the brotherly people of Azerbaijan.” A letter from President of the Republic of Korea Park Geun-hye says the past years have seen a significant increase in mutual understanding and cooperation between the two countries. “I hope that our friendly and good relations can be further strengthened in various fields for the mutual benefit of our two peoples in the years ahead,” the letter said.Pakistani President Asif Ali Zardari, for his part, wrote, “I am sure that the existing high level cooperation will further bring our fraternal ties closer in the coming years, bringing prosperity to the people of our two countries.” On May 28, 1918, the first democratic republic in the Muslim world was established, which marked a glorious page in Azerbaijan’s history.

SOCAR TO BORROW $20BLN

zeri state energy firm SOCAR plans to borrow more than $20 billion over the next five years to finance energy projects to help boost gas exports to Europe, a challenge to plans by neighboring Russia. SOCAR, one of the world’s oldest oil companies, wants to send gas to Europe, hoping to capitalize on a desire in European capitals to diversify their supply from Russia after Moscow’s “gas

wars” with Ukraine disrupted supplies in 2006 and 2009. Vice President Suleiman Gasymov said he would approach foreign banks as well as turning to the state oil fund to pay for a $5 billion refinery in Turkey, a $17 billion oil and gas processing and petrochemical complex, the $8 billion Trans-Anatolian natural gas pipeline project (TANAP) and new drilling rigs on the Caspian Sea worth $4 billion. Reuters

IMF: EXPANSIVE FISCAL POLICY IN AZERBAIJAN REDUCES REGIONAL BALANCE OF CURRENT OPERATIONS

AGRICULTURAL PRODUCTION EXPECTED TO GROW 7 PCT IN 2013

he IMF issued a renewed Regional Economic Outlook for the Middle East and Central Asia. For the first time the Fund separated countries of the Middle East from the countries of the Caucasus and Central Asia (CCA). The IMF sets for the last sub-region to which Azerbaijan relates the following medium-term challenges: Enhancing Inclusive Growth Key medium-term challenges for the region include creating jobs and fostering high, sustained, and inclusive growth. “While some CCA countries have made progress toward achieving a business-friendly environment, further efforts toward this end will be needed by all. Countries also need to reinvigorate their efforts to diversify their economies away from natural resources, further improve their infrastructure, reduce the role of the state in the economy, and promote transparency and good governance. Lowering regional trade barriers would also promote greater economic diversification and growth,” the IMF Outlook says. The IMF emphasizes that financial sector reform should aim at enhancing competition and improving access to finance. “Reform should include improving regulatory and supervisory frameworks, addressing directed or connected lending, deepening domestic capital markets, improving credit information, and strengthening creditor rights,” the forecast says. The IMF also points out that the Caucasus and

he Ministry of Agriculture predicts up to 7 percent growth in the agricultural production of Azerbaijan in 2013. Minister Ismet Abbasov said that agricultural output increased by more than 6 percent in 2012. In January-April 2013, the growth made up 4.8 percent. “However, taking into account that most of the work is scheduled for the second half of the year, we expect the growth at the level of 6-7 percent,” Abbasov said at the opening of the WorldFood Azerbaijan-2013 international food industry fair on May 22. The minister said such fairs play an important role in the process of the development of the agriculture sector. Touching on the issue of establishing a specialized agricultural bank in Azerbaijan, Abbasov said its creation would be beneficial. “Currently various banks and non-bank loan organizations allocate loans to agriculture. Furthermore, the National Fund for Entrepreneurship Support under the Economic Development Ministry allocates preferential loans for the development of this sector. However, the establishment of a separate specialized agricultural bank in the future would be beneficial,” Abbasov said. According to him, it is to be established as a new bank or by changing the specialty of one of the existing banks. Earlier Chairman of the Central Bank of Azerbaijan Elman Rustamov said that the establishment of an agricultural bank in Azerbaijan is in

Central Asia (CCA) region continued to post solid economic growth in 2012, though, at 5.7 percent, moderately lower than in previous years. This moderation in growth reflected subdued external demand, a sharp decline in agricultural output in Kazakhstan, and disruptions to gold production in the Kyrgyz Republic. “The near-term outlook remains broadly favorable for CCA oil and gas exporters (Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan), reflecting the region’s limited direct exposure to Europe, and continued high oil prices,” Regional Economic Outlook says. The Fund estimates that growth is projected to be resilient, at an average of 5.8% in 2013 and 6.1% in 2014. Most oil and gas exporters are projected to grow between 5 percent and 8 percent in 2013–14, supported by high non-oil growth and, in Kazakhstan, higher oil production. “Azerbaijan’s growth—still largely sustained by strong non-oil growth—is expected to recover in 2013–14, as oil output is beginning to stabilize,” the forecast says. The current account balances in the CCA oil and gas exporters are projected to continue declining in 2013 and 2014, reflecting an expansionary fiscal policy in Azerbaijan, and a modest decline in projected global energy prices. By contrast, CCA oil and gas importers are expected to post lower deficits in 2013 and 2014, helped by lower import growth and strong remittance inflows in the Kyrgyz Republic and Tajikistan. abc.az

the focus of the CBA. The need for establishing it emerged with the growing strength of the country’s agriculture sector. Rustamov also said that around the world different models are applied to increase support of the financial sector to agriculture, with different combinations of public and private presence. “Currently we are studying the international experience. We are considering all forms of the expansion of financing for agriculture -- from the expansion of banks and non-bank credit organizations in the regions to the creation of a specialized universal bank,” he said then. The WorldFood Azerbaijan-2013 fair is being held at the Baku Expo Center from May 22 to 24. The fair is organized by Iteca Caspian LLC and ITE Group PLC with the organizational support of the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) and the National Confederation of Entrepreneurs (Employers) Organization of Azerbaijan. A record 179 food and beverage companies from 31 countries are being represented, covering a spectrum of food and beverage industry sectors. This year’s newcomers include companies from Azerbaijan, Russia, the USA, Jordan, Uzbekistan and Turkey, as well as national group stands from Latvia, Belgium and Iran. The exhibition combines several events - WorldFood, WorldDrink and WorldFoodTech. Stands present food industry equipment, meat, tinned produce, groceries, ingredients, tea, fruit and vegetables, patisserie and drinks.

ARMENIA

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caucasian business week

PRINCE CHARLES TO VISIT ARMENIA MAY 28-30

is Royal Highness, Prince of Wales is the first member of the royal family to pay a private visit to Armenia on May 28, the UK Embassy in Armenia reported Fri-

day. Prince Charles will arrive in Armenia as a guest of “Yerevan My Love” charity foundation and will stay here till May 30. According to the source, Charles will visit the most famous historical monuments of Armenia,

an ancient country that was first to adopt Christianity as its state religion, attend the gala concert and dinner in support of the charity’s work in preserving the cultural heritage of Armenian capital Yerevan. Prince of Wales will visit Matenadaran, an ancient manuscript repository. Recognized by UNESCO as a center of global cultural significance, it holds the ancient manuscripts in Persian, Arabic, Japanese, Russian and Hebrew languages. Charles will also take a tour around Holy Echmiadzin, a spiritual and administrative center of the Armenian Apostolic Church, and visit Pontifical residence of Catholicos of All Armenians Karekin II. Prince of Wales will also attend the concert to be held at Yerevan Opera House, afterwards joining the reception and gala dinner to honor the philanthropists as part of “Yerevan My Love” program. Yerevan My Love is creating a “heritage oasis” close to the city’s St Sarkis Church that will provide arts and crafts workshops, computer classes, educational activities, a theatre and concert hall, an arts gallery, and an open-air amphitheatre for the benefit of disadvantaged families, particularly children. Yerevan My Love also plans to establish a National Park in the city to unite Armenia’s worldwide diaspora with its homeland. The British landscape architect, Lord Randle Siddeley & Associates, has been commissioned to carry out the design development for the 101-hectare site, which will incorporate a Museum of Diaspora. “London has Hyde Park and Yerevan will have “Hye Park”, with the name drawn from the Armenian-language word for “Armenian,” the source stated. ARKA

TOTAL ASSETS OF ARMENIA’S CREDIT ORGANIZATIONS HIKED TO 185.4BLN DRAMS IN Q1

otal assets of Armenia’s credits organizations climbed by 34.3% or 47.4 billion drams to nearly 185.4 billion drams by the end of March this year. An analysis by ARKA news agency showed National Mortgage Company has the largest total assets in the period – over 25.7 billion drams. The total assets of this organization rose by 36.57% or about 6.9bln drams as compared to Q1 2012. The organization accounts for 13.85% of the overall total assets of credit organizations. The next top four leaders are Finca with total assets of about 21.7bln drams (increase of 32.03% or

5.3bln) and share in overall assets of 11.73%, Norvik (21.49bln drams, increase of 8.56% or 1.7bln, share 11.59%), Bnakaran Yeritasardnerin (about 16.7bln drams, increase of 1.4 times or 9.8bln, share 8.99%) and Aregak (around 13.6bln drams, increase of 11.14% or 1.4bln, share 7.37%). “G and A” credit organization recorded the highest assets growth rates in the period – 75.67% (by 437.4 mln drams to 1bln drams); so did Kilikia – 63.61% (by 836.8mln drams to 2.1bln drams). There were 33 credit organizations operating in Armenia as of the end of March 2013. ($1=414.82drams). ARKA

RUSSIA MIGHT CONTRIBUTE TO GAS PRICE SUBSIDIES IN ARMENIA

rmenian government is trying to get the Russian side involved in subsidizing increased prices for the Russian gas, Armenian minister of energy and natural resources Armen Movsisyan said. On May 16, Armenian prime-minister Tigran Sargsyan said the gas price will be 30% subsidized if it is raised. “The main aim of the negotiations is to get the Russian side involved in the subsidizing announced by the government, as it owns 80% of ArmRosgasprom”, Movsisyan said during the gas price debates in the parliament Thursday. The problem is that 30% export tax is added to Gasprom’s selling price, which results in a $270 gas price at the border, the minister said. ArmRosgasprom’s application to Armenia’s Public Services Regulatory Commission says as from April 1, according to its agreement with Gasprom, the company pays $270 per 1,000 cubic meters of the gas at the border, instead of the previous $180. During the debates at the parliament, ARF Dash-

naktsutiun faction deputy Artsvik Minasyan asked how could Armenia benefit from its 20% share in ArmRosgasprom, if it is unable to influence the company’s decisions. “We are getting no dividends: everything is being directed at development”, the minister said in response. On May 14, ArmRosgasprom cjsc and TransGas limited filed an application with Armenia’s public services regulatory commission for review of the Russian gas price. The new tariffs will take effect on July 7-10. Customers with monthly consumption of up to 10,000 cubic meters will pay 156,000 drams per 1,000m3 (18.2% increase); the price fixed for major consumers (with consumption of over 10,000 m3 per month) is $276.98 per 1,000m3 (13.9% increase). ArmRosgasprom closed joint stock company founded in 1997 holds the monopoly for gas supplies and distribution on Armenia’s domestic market. The company’s stockholders are Russian Gazprom (80%) and the Armenian government (20%). ($1=414.82drams). ARKA

ISRAELI AIRLINE ARKIA TO OPERATE FLIGHTS BETWEEN TEL AVIV AND YEREVAN FROM JUNE

WB TO PROVIDE ARMENIA WITH $ 30 MN

he WB Board of Executive Directors approved a loan to Armenia to the amount of $ 30 million as part of the modernization of irrigation systems, Armenia Today said today. This program will promote the activity of the Ar-

menian government, aimed at ensuring stable and low-cost irrigation with little energy consumption through four target irrigation systems. Moreover, the program will help to provide decision-makers and concerned people with reliable data and information.

ARMENIA’S COMMERCIAL BANKS PURCHASE OVER $104.2MLN AT INTRA-BANKING FOREX MARKET LAST WEEK

rmenian commercial banks purchased more than $104.2mln at a weighted average rate of 415.93drams per $1 in intra-banking foreign exchange market on May 13-18, the press service of the Central Bank reported. In the same period, about 7.8mln euros and over 816.5mln rubles were purchased on the intra-banking forex market at weighted average exchange rates of 537.50drams per €1 and

13.19drams per ruble respectively. At the same time, about $116.9mln, about €15.4mln and about 136mln rubles were sold on the intra-banking forex market at weighted average exchange rates of 417.13drams, 540.56drams and 13.37drams respectively. Dram loans extended by Armenian banks during the week before (May 6-12) totalled 33.1bln drams; dollar loans amounted to a total of $30.3mln. ($1=417.05drams). ARKA

he second-largest Israeli airline Arkia will start operating regular flights between Tel Aviv and Yerevan from June, Marcelo Wende, the chief executive officer of Armenia’s international airport Zvartnots told journalists today, adding that regular flights will help strengthen Armenian-Israeli ties. He said six million Israeli citizen’s travel abroad annually for vacations and given good ArmenianIsraeli relations, Armenia has the potential to attract some of them. Alexander Nurok, Arkia’s representative in Armenia, said the flights will boost both tourism industry in both countries and also Armenian-Israeli relations. He said Israel has facilitated the process of obtaining visas for citizens of Armenia. Earlier they had to travel to neighboring Georgia to get visas, where there is an Israeli Embassy. Now vi-

sas can be obtained at local travel agencies. He said the airline is making two weekly flights to Tbilisi, and after studying the Armenian market it decided to start flights to Yerevan as well. Nurok said the airline will be operating a weekly flight by Embraer E-95 aircraft with 120 economy class seats. The two-way ticket cost is 310 euros. The first flight from Tel Aviv to Yerevan is scheduled for May 28. All the tickets have already been purchased. Arkia was founded in 1950 and is the second largest airline in Israel after El-Al. In 2012 it flew 1.6 million passengers. Armenia’s Zvartnots airports is run by Argentinean Argentine American International Airports, owned by Argentine citizen of Armenian origin Eduardo Eurnekian. The 30-year concession agreement with Armenian government was signed in 2011. ARKA

CIS & IRAN

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Ukraine

krainian business to invest in new airport construction in Georgia. Ukrainian businessmen are ready to make investments in the construction of a new airport in Georgia, Minister of Finance of Georgia Nodar Khaduri said at a meeting with the parliamentary minority on Friday. According to him, he has already met with representatives of Ukraine who were already interested in investing in the construction of David the Builder International Airport in Georgia at the time of the previous government. “They were willing to take part in the construction of the airport, and, most importantly, they are still ready to build the new airport,” Khaduri said.

Kazakhstan

ran, Turkmenistan, Kazakhstan to inaugurate joint rail project. Iran, Turkmenistan and Kazakhstan will inaugurate a joint rail project in the forthcoming days. The project which is dubbed the Caspian Sea eastern rail corridor will officially come on stream in the presence of the three countries’ presidents. The rail corridor will be around 1000 kilometres in length, 140 kilometres of which will be in Kazakhstan, 700 kilometres in Turkmenistan and 90 kilometres in Iran. Construction of the QazvinRasht-Astara railway is projected to come on stream by March 2014.

Kazakhstan

azakhstan: will borrow $1 billion. Kazakhstan plans to borrow around $1 billion at foreign markets in 2013. Speaking at the annual meeting of the European Bank for Reconstruction and Development (EBRD), Kazakhstan Finance Minister Bolat Zhamishev invited international banks to submit their offers for becoming the loan’s lead manager. “We are applying to foreign markets not for the sake of money but for a loan that is to become a benchmark presenting us at this market,” the Minister said.

IRAN’S GAS IMPORT & EXPORT PRICES

rmenia is keen to continue using Iranian gas. Turkey also wants to remain Iran’s gas importer despite its appeal against Iran to the International Court of Arbitration over gas dispute in 2012. Free Europe Radio/Radio Liberty quoted Minister of Energy and Natural Resources of Armenia, Armen Movsisyan on May 21 that Iran sells natural gas to Turkey and other nations (Armenia is the only importer of Iranian gas after Turkey) for $370 per thousand cubic meters. According to official data, Armenia imported 500 million cubic meters of gas from Iran in 2012 and bartered with electricity, while Turkey’s gas imports from Iran were around 8.4 bcm. According to Iran’s official statistics, Iran imported 4.5 bcm of gas from Turkmenistan during the last Iranian calendar year which ended on March 19, 2013, while the total gas export to Turkey during mentioned time was 8.4 bcm. The head of Iran National Gas Company Javad

BELARUSIAN-CHINESE CARS ON SALE IN RUSSIA IN JUNE

Owji said on April 10 that Iran earned $3.5 billion from exporting 4.5 bcm of gas during last solar year, while imported gas value from Turkmenistan was €1.8 billion ($ 2.32 billion). Then Iran paid $515 per 1000 cm of Turkmen gas during last solar year and the price of Iranian exported gas to Turkey was at $416 per 1000 cm during March 19, 2012 to March 19, 2013. The prices of Iran’s gas deals with Turkmenistan and Turkey are kept confidential, but according to Iranian media outlet’s reports, Tehran and Ashgabat agreed on a gas price of $75 per 1000 cm in 2005; this figure doubled in 2008. Some assesses published on Iranian media outlets in 2011 say that Turkmen gas price for Iran was about $270 to $300. On the other hand Turkish media reports had said in 2011 that this country imports Iran’s gas at $500 per 1000 cm citing on the souraces who were familiar to the issue. Turkey appealed to the International Court of Arbitration over the Iranian gas price and shortage

in delivered gas amount in March 2012. Turkey demands 10 bcm gas per year from Iran based on signed contract, but Iran is unable due to lacking surplus gas. However, new figures announced by Owji shows a huge rise in value of Iran’s imported gas price and a plunge in Iran’s exported gas price during last solar year compared to 2011. Turkmenistan has halted exports of gas to Iran three times during last five years and the flow of gas has been restarted after negotiations each time. Turkmenistan decreased gas exports to Iran in 2001 winter and reportedly stopped supplying gas to Iran completely last winter for several months. Despite this fact that Iran holds World’s second gas reserves (above 33 trillion cm), however, the country’s gas production meets only domestic consumption. Based on the latest report released by U.S. Energy Information Administration (EIA) both Iran’s gross gas production and consumption stood at 224 billion cubic meters in 2012.

SOVEREIGN FUNDS AND CHINESE BANK BUY INTO RUSSIA’S VTB

T B

elarusian-Chinese cars Geely will be put on sale in Russia in June, head of the sales and service division at BelGee Alexei Krichmar told reporters answering a question of a BelTA journalist on 23 May. He informed that the cars will be sold via the Geely retail network in Russia. Alexei Krichmar informed that Geely SC7 cars have already been tested and are now available for retail customers. They cost about $13,000. About 30 cars have already been purchased by individual customers. “As for companies, they are concluding letters of intents,” he said. The first batch of Belarusian-Chinese assembly cars made by the Borisov-based company BelGee has been available in dealerships since March. The company has also assembled several EMGrand X7 crossovers that are undergoing tests. The crossovers will soon be available in dealerships. The cost of the cars has not been finalized yet, but their price is likely to range

from $19,000 to $23,000. Three modifications of EMGrand X7 crossovers will be available. The joint venture plans to sell about 700 cars in Belarus in 2013. The company caters to mainstream customer groups. Next year BelGee has plans to sell 2,000-2,500 Geely cars. The lineup of the cars assembled in Belarus will be expanded. In general, BelGee is determined to hold from 7% to 12% of the Belarusian market of new cars. The private joint-stock company BelGee was set up on 23 December 2011. The investment contract with the Chinese company Geely was signed in March 2012. The enterprise to assemble cars uses premises rented from the Borisov-based company OAO Avtogydrousilitel. The enterprise can use semi-knocked down kits to assemble 10,000 cars per annum. It employs 57 people. BelGee founders are OAO BelAZ (50% of the shares), the Chinese company Geely (32.5%), and the Belarusian-Chinese automobile parts manufacturer Soyuzavtotekhnologii. BelTA

he sovereign wealth funds of Qatar,Norway and Azerbaijan and China Construction Bank (601939. SS) have bought about 55 percent of the new shares on offer from VTB (VTBR.MM), Russia’s second-largest bank, it said on Wednesday. VTB said it has completed its 102.5 billion-rouble ($3.3 billion) offering of new shares at 4.1 kopecks each. The government’s stake, which did not participate in the offering, was diluted to 60.9 percent from 75.5 percent. A share issue was essential for VTB to improve its capital adequacy ratio and fuel lending growth targets for this year set at between 15 and 20 percent. Chief Executive Andrei Kostin, under whom VTB also offered shares in 2007 and 2011 at 13.6 kopecks and 9.15 kopecks respectively, told President Vladimir Putin in Sochi that sovereign wealth funds are “a quality label” for the bank. “It’s a signal for other investors - if a sovereign wealth fund had come others may follow,” Kostin said. He added that each of the three sovereign funds - Azerbaijan’s SOFAZ, Norges Bank Investment Management and Qatar Holding - invested between 15 billion and 20 billion roubles ($479-639 million) each. Investors from Brazil also took part, he said. VTB has placed shares via the Moscow Exchange, executing Putin’s earlier order to conduct state privatization deals in Russia to turn Moscow into a global financial center rivaling

New York or London. The share issue will boost VTB’s Tier 1 capital ratio to 11.9 percent of assets from 10.3 percent at December 31. The new Tier 1 ratio, a measure of a bank’s ability to absorb losses, will be higher than Russia’s biggest lender Sberbank’s (SBER.MM) ratio, which stood at 10.4 percent at the end of last year. “The transaction allows us to meet our capital adequacy targets and also provides funding for the continued growth of the business,” Kostin said in a statement. VTB’s existing shares closed trading at 4.99 kopecks on Wednesday. VTB management has promised to present a new strategy later this year, turning to a new page in the bank’s history. On Tuesday Kostin told Reuters TV he expects VTB to post a record net profit of over 100 billion roubles in 2013. ($1=31.2910 Russian roubles). Reuters

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WORLD NEWS

caucasian business week

INSIGHT: LUXURY BRANDS POSITION FOR U.S. BOOM

ost men might balk at spending $600 on a pair of Dior sneakers but for U.S. shoppers like Ephraim, an upbeat 30-year-old, such indulgences are becoming increasingly commonplace. Ephraim is the kind of man who gives luxury goods makers high hopes that the U.S. market can fuel future growth, as China runs out of steam and demand in Europe sags. “There is a cultural shift,” Ephraim says while browsing at Saks Inc’s New York City flagship. “Men are becoming more fashion forward.” The growing appeal of luxury goods to men and increased confidence among affluent spenders as the U.S. economy and asset prices recover have boosted sales and encouraged luxury brands to step up their investments in the United States. More foreign shoppers are also thronging stores as the U.S. government eases visa restrictions to attract more tourists. Luxury spending in the United States collapsed after the 2008 financial crisis but roared back to pre-crisis levels by 2012. Last year, the world’s No.1 and No.3 luxury groups LVMH and PPR saw higher growth rates in the United States than in China for the first time in years. Sales in the Americas are expected to grow 5-7 percent this year, compared to 6-8 percent in mainland China and 0-2 percent in Europe, according to consultancy Bain & Co. Evidence is already showing through. Ralph Lauren this week forecast U.S. sales growth of 4-7 percent while high-end department store Saks reported quarterly sales up 5.9 percent, almost double what analysts had forecast. “(There is) renewed confidence, a genuine rebound in fashion and luxury consumption”, said Sidney Toledano, head of French fashion house Christian Dior, part of LVMH.

GROWTH SPURT

Major brands like Prada, Hermes, Burberry, and Hugo Boss are opening shops or expanding existing ones in the United States, and are stepping up their advertising spend. In July, Alexander McQueen will open a 3,900-

The U.S. State Department says it has cut the wait for a visa-related interview in Brazil, where most U.S. luxury shopping tourists come from, to two days. Clerks at Saks said they had noticed an increase in Brazilian tourists. The State Department also plans to waive interviews for some visa applicants and is expanding or building new consulates in China and Brazil. Tourism from China is expected to more than triple to 3.9 million people by 2017 from 2011. Tourism from Brazil is forecast to rise 83 percent to 2.8 million, according to the U.S. Department of Commerce. “We have not had a major breakthrough yet. However, it is moving in the right direction,” said Omar Saad, senior managing director and head of the luxury team at ISI. The appeal of America to Brazilians is twofold - it is closer than Europe and prices are much lower than at home. A Burberry man’s coat costs $3,100 in Sao Paulo against $995 at the New York flagship on 57th street. foot store on New York’s Madison Avenue. Next year, Burberry plans to launch a new flagship on Rodeo Drive in Beverly Hills. LVMH and PPR, soon to be renamed Kering, are also expanding in the United States while putting the brakes on China, which had been the major driver for luxury sales until last year. “I think the U.S. holds a lot more potential than people believe while the focus has very much been on the BRIC (Brazil, Russia, India, China) countries,” said Robert Chavez, head of U.S. operations at Hermes. The French group, which opened its only shop dedicated to men on Madison Avenue in 2010, now makes about 15 percent of its sales in the United States, up from 10 percent five years ago. China, Hong Kong, Taiwan and Macao account for 20 percent. “We have noticed a rise in men’s purchases, particularly in the last two years,” said Chavez. Ties, shoes and $8,000 custom-made three-piece cashmere suits are all doing equally well. In the 212 billion euro luxury as a whole, the United States outguns China, even before the new growth spurt. Bain & Co. values the U.S. market at 59 billion euros, Europe at 74.2 billion

EU WANTS BIG COMPANIES TO REVEAL NATIONAL TAX BILLS

he EU is urging big companies to disclose the tax bills paid in each country where they operate in order to reduce tax avoidance among multinationals. The European Commission’s official in charge of drafting business regulation Michel Barnier says the authorities have already oblige banks to report their profits, taxes and subsidies, and starting from 2015 it will apply to other big companies, reports Reuters. “We will expand these reporting obligations to large companies and groups,” he said on Thursday. The move was triggered by the revelation of tax

avoidance schemes by Apple and other major international businesses. Governments have been complaining that corporate tax avoidance has become a serious international problem. This week the US Senate issued a report on its investigation into Apple’s tax avoidance schemes. In the report the Senate accuses Apple Inc. of shielding around $74 billion in taxes via a complex web of subsidiaries that were tax residents in no country. CEO Tim Cook denied all the accusations, saying the company contributes a lot to the US economy and has said Apple complies with the spirit and the letter of the law. “We don’t depend on tax gimmicks,” Cook told a Senate Subcommittee hearing. “We don’t stash money on some Caribbean island.” Apple is not the only big company that has faced tax disputes. Google, Starbucks and Amazon are under scrutiny of the UK government which is currently checking their tax integrity. Starbucks pledged to pay an extra £20 million in UK tax last year. Governments have displayed a clear intention to force big businesses to report profits. Earlier this year the EU agreed to force European banks to report on a country-by-country basis. The US and the EU have also agreed to oblige mining and oil companies to publish tax and other payments to resource rich nations, to reduce corruption, Reuters reports. rt.com

and China-Hong Kong around 22 billion.

TOURISTS ARE COMING

PPR boss Francois-Henri Pinault reckons that rising numbers of tourists to the United States will enable it to narrow the gap with Europe, where visitors account for about half of luxury sales. That contrasts with 15-20 percent in the United States. “We will never have as many tourists as in Europe but I think that ratio could reach 30 percent over the next few years,” said Milton Predaza, chief executive of Luxury Institute, a U.S. consultancy. In 2010, 6 million tourists from Brazil, India and China flew to Western Europe compared to 2.6 million to the United States. Travel agents say U.S. visa approvals require more proof of employment history and finances than for France or Italy. The United States would earn $20 billion more from luxury sales if it had as many tourists from emerging markets as Europe, New York-based brokerage International Strategy & Investment Group (ISI) estimates.

RISE OF “HENRYS”

Pam Danziger, president of marketing consulting firm Unity Marketing and author of studies on the U.S. luxury industry, believes growth is also being driven by what she calls HENRYs “high earning, not rich yet” Americans making $100,000-$249,000 a year. She estimates about 24.2 million households are HENRYs. To capture those buyers, brands are now expanding beyond New York, which accounts for a third of U.S. luxury sales, and the next two main cities of Los Angeles and Miami. Last month, Hermes opened in Greenwich, Connecticut - an area popular with financial professionals and their families - and plans to expand in cities like LA, Miami, Houston, Dallas and Boston over the next two years. PPR’s brands, which include Balenciaga, Gucci and Stella McCartney, are looking at Dallas, Atlanta, Chicago, Miami, Orlando and Philadelphia. “The U.S. is an emerging country when it comes to luxury,” said Boston Consulting Group senior partner Jean-Marc Bellaiche. Reuters

EUROPEAN CAR SALES IN FIRST RISE FOR 18 MONTHS

ew car sales across Europe rose in April for the first time in 18 months, helped by strong demand in the UK and by the early Easter break. Registrations rose 1.8% to 1.08 million in April, compared with a year ago. The last rise was in September 2011, said the industry association, ACEA. While the figure was an improvement on last year, it was the third lowest total for April on record. However, UK sales were 15% higher and were the best for April in five years. Without the UK figures, registrations would have recorded another fall. Seasonal factors, in that most of Europe had two more selling days last month thanks to the Easter holiday falling in March this year, also flattered the figures.

Downturn

Demand for new cars across Europe fell to a 17year low last year, with most economies weak, or in recession, and unemployment hitting record highs. For the first four months of the year, overall volumes were down 7%, compared with the same period a year ago. Car manufacturers have seen sales of their smaller, mass-market models fall off, with lower income buyers unable to afford new cars in the

economic downturn. Peugeot Citroen saw both of its main brands lose sales, with Peugeot sales falling 7.5% and Citroen down 13%. Fiat saw sales fall 4%, but its Alfa Romeo brand saw sales collapse by a third. Seat, which is owned by Volkswagen, saw sales jump by 35%. Most of Seat’s sales are in Spain, a country that saw car sales rise 10.8% despite the torpid state of its economy. Regionally, results varied widely across markets. As well as strong growth in the UK and Spain, Germany’s sales rose by 3.8%. But in France sales fell by 5.3% and Italy saw a drop of 10.8% in registrations. “We are pleased to see a rise in European new car registrations in April after such a long period of depressed demand,” said Mike Baunton, SMMT Interim Chief Executive. “We note it is only a small increase with yearto-date figures still lower than last year, but it is certainly very welcome as half of all UK vehicle exports go to the continent. “Here in the UK, the picture has been positive for some time with confident consumers attracted to dealerships by new, innovative, fuel-efficient vehicles and affordable finance deals. “The UK new car market has grown for 14 consecutive months and in April, registrations recorded their best performance since 2008.” bbc.co.uk

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GOOGLE JOINS APPLE AVOIDING TAXES WITH STATELESS INCOME unsuccessfully in the past. Meanwhile, the U.S. Senate Permanent Subcommittee on Investigations found that Apple avoided paying income taxes on $74 billion of profit during the past four years in part by movingpatent rights to a web of offshore subsidiaries that pay virtually no income taxes. Apple Chief Executive Officer Tim Cook yesterday maintained the company had done nothing wrong and said it pays “all the taxes we owe -every single dollar.” The Cupertino, Californiabased company is also not alone in moving profits to such offshore units.

‘Double Irish’

.S. Senate scrutiny of Apple Inc. (AAPL)’s tax strategies turned the spotlight on a unit with $30 billion in profit since 2009 that’s incorporated in Ireland, controlled by a board in California, and doesn’t pay taxes in either place. Apple officials acknowledged yesterday at a congressional hearing that the entity -- a key subsidiary in Apple’s offshore tax strategy -- is managed and controlled in the U.S., yet it still isn’t paying U.S. federal income taxes. The shifting of profits by multinational companies is costing the U.S. and Europe at least $100 billion per year in lost tax revenue, according to Kimberly Clausing, an economics professor at Reed University in Portland, Oregon. “Over the decades, Congress and governments around the world have allowed a system to develop which allows multinational companies to earn income tax-free by using contracts to shift the income, on paper, to companies in low-and zero-tax countries,” said Michael Durst, a retired international tax attorney based in Washington. The result “is eroding public confidence in the

fairness of tax systems in the United States and around the world.” Similar practices by an assortment of companies -- fromGoogle Inc. (GOOG), owner of the world’s most popular Internet search engine, to Forest Laboratories Inc. (FRX), the maker of antidepressant drug Lexapro -- are drawing increased scrutiny from regulators in the U.S. and around the world, particularly as European nations face a backlash against austerity measures.

Tax Avoidance

Corporate tax avoidance is now being targeted on several fronts. The Organization for Economic Cooperation and Development, a think tank funded by governments around the world, is scheduled to release an “action plan” in July to deal with tax revenue lost to profit shifting. The plan came in response to a request by the Group of 20 nations. The European Commission also is targeting key rules that enable corporate profit shifting. In the U.S., President Barack Obama’s Treasury Department in April released a list of global tax loopholes to close, many of which it has targeted

Google, for example, has used a pair of tax shelters known by tax attorneys as the “Double Irish” and “Dutch Sandwich” that move foreign profits through Ireland and the Netherlands toBermuda to avoid about $2 billion in income taxes a year, according to the company’s filings in the U.S. Like Apple, Mountain View, California-based Google shifts profits into an Irish subsidiary that doesn’t pay taxes in Ireland. In Google’s case, it says the unit is managed in Bermuda, which has no corporate income tax. Google has been questioned by the U.K. Parliament twice since November over its tax affairs and is in a more than $1 billion dispute with French tax authorities. Yahoo! Inc. (YHOO) has funneled hundreds of millions of dollars in profits through a Dutch bookkeeper’s suburban home office en route to subsidiaries in Mauritius and Switzerland. Like Apple, Sunnyvale, California-based Yahoo has deposited profits in an Irish subsidiary that claims not to be a tax resident in Ireland, but instead in the Cayman Islands, filings show. Forest Labs, Cisco Forest Laboratories, based in New York, has used a virtually identical strategy to that of Google, claiming most of its profits are offshore, even as its sales are almost entirely in the U.S. It has also used an Irish unit that claims to be headquartered

in Bermuda, and therefore not on the hook for Irish income taxes. Cisco Systems Inc. (CSCO), based in San Jose, California, has avoided paying billions of dollars in income taxes by attributing about half its worldwide profits in recent years to a tiny unit at the foot of the Swiss Alps. Cisco spokeswoman Kristin Carvell had no comment for this article. Yahoo spokeswoman Sara Gorman, Google spokeswoman Samantha Smith and Forest Laboratories Vice President Frank Murdolo didn’t return calls for comment. The Irish Finance Ministry yesterday said there’s “no possibility” of special tax rate deals for companies, in an e-mailed response to questions on Apple’s tax treatment of profits of Irish affiliates.

‘Check-the-Box’

The companies have also depended on a U.S. tax regulation known as “check the box” -- cited by the Senate investigators in the Apple case -- that makes offshore transactions effectively invisible to the IRS. Senate investigators drilled down into a crucial component of Apple’s strategy that Edward Kleinbard, a former corporate tax attorney and professor at the University of Southern CaliforniaLaw School, said may make the company vulnerable to taxation in the U.S. In the panel’s report, the top Irish subsidiary receiving offshore profits was found to have held almost all its board meetings in California, with its sole Irish board member rarely attending. “Apple says their Irish subsidiaries’ ‘mind and management’ lies outside Ireland, but the real question is, do those subsidiaries have any mind of their own at all?” Kleinbard said. “If they are not really competent to make independent decisions to take on risks and make contracts on their own behalf, then the structure collapses of its own weight, and the income properly should be taxed to the United States.” Bloomberg

ON BEING PROPPED UP Spain’s pain is likely to continue, despite some promising reforms, unless new sources of growth emerge

HE gloom in Spain is almost palpable. Yet two years on from the protests begun in Madrid by young Spaniards known as los indignados, most accept their lot with resignation. The government of Mariano Rajoy is unpopular, but so is the opposition. And whereas many other stricken euro-zone countries blame the Germans for their woes, Spaniards recognise that they are paying for their own excesses, especially the burst property bubble. The numbers are grim. The economy is in deep recession. In the first three months of the year GDP shrank for a seventh quarter in a row. The public finances remain stretched, with the budget deficit at 7% of GDP. Bond yields have fallen, but the credit crunch for small firms is worsening. Corporate bankruptcies are running at ten times pre-crisis levels. And unemployment is at a record 27% (see article). Spain could be the biggest test for the euro. Four countries—Greece, Ireland, Portugal and most recently Cyprus—have been bailed out and are in programmes agreed on with the “troika” of the IMF, the European Union and the European Central Bank. But Spain is the only big euro member that has come close to a bail-out. Instead, it last year took a halfway offer of €100 billion ($129 billion) support from the European bail-out fund for its banks (it drew €41 billion). Unlike France, it has made big structural reforms. Unlike Italy, it has a strong government that expects to last until the next election in late 2015. Moreover, a few glimmers of hope can be discerned amid the gloom. Thanks to the ECB, long-

term bond yields have fallen back to pre-crisis levels. Sharp fiscal consolidation has trimmed the budget deficit from 11% of GDP in 2009 to 7% this year. Overspending by fractious regions has been painfully brought under control. And Spain has been given an extra two years to hack its deficit below 3%. The government’s programme of restructuring and reform has also started to produce results. As many as 38 financial institutions have been merged, mainly local cajas brought down by property lending. The remaining banks have been recapitalised and some €50 billion of their worst assets transferred to a bad bank, Sareb. Provisioning against bad debts has risen sharply. Unlike many other euro-crisis countries, the public sector is shrinking: 375,000 civil-service jobs have gone. The real economy is also showing signs of improvement. Measured by unit labour costs, Spain has done more than most to regain competitiveness (see chart). The external current account has switched from a deficit of almost 10% of GDP in 2008 to a surplus, and not only because of import compression. In 2012 exports rose faster than in any other EU country. Reforms last year made it easier to fire workers, so industry is readier to hire again. This new labour-market flexibility is one reason why many car makers are moving production from other EU countries to Spain. Even so, three big problems could undo this limited progress. One is the credit crunch. Despite lower bond yields, credit for small and mediumsized enterprises remains scarce and expensive compared with northern Europe. And although

both capital and provisioning have increased, the banks are still rolling over dodgy debts from many construction firms. Property prices are down by over a third from their peak, and ministers insist the system could absorb a drop of 50%—but if the recession continues, the fall could be larger still. The second problem is reform fatigue. Spaniards have accepted changes, including wage cuts, to restore lost competitiveness. But more is needed: welfare reforms, a lower minimum wage in some regions, encouraging mini-jobs and part-time work and reducing the burden of pensions. It is not clear that Mr Rajoy’s government has the guts to push such reforms through. Yet without them Spain’s scary level of unemployment is likely to persist. Ministers say the jobs market is more flexible than it looks because in the boom years 5m immigrants came in, and the bust is seeing large net emigration: the population is shrinking. But long-term high unemployment will reduce the quality of the workforce.

Above all is the third problem, insufficient demand and a lack of sources of growth. With public spending, consumption and investment constrained, the government is relying on rising exports. Yet total exports are less than a third of GDP and almost two-thirds go to the recessionhit euro zone. It is hard to see how even strong exports can make up for weak domestic demand. And if GDP growth does not revive, the problems of Spanish banks and the credit crunch will quickly return. Luis de Guindos, Spain’s finance minister, said last year that Spain was the place where the battle for the euro would be fought. It is also crucial for the future of the EU: the recent Pew report on public opinion found that the favourability rating for the EU had fallen in Spain by fully 34 points, from 80% in 2007 to only 46% now. If this most Europhile, reform-minded country cannot make it, can anybody? The Economist

May 27, 2013 #06

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. 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

TBILISI GUIDE

caucasian business week

Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy 7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Resident Mission of the Asian Development Bank (ADB) Address: 1, G. Tabidze Street. Tbilisi Tel: +995 32 225 06 19, EXT:101 Cell: +995 577 900 128 e-mail: qtvalavadze.contractor@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

For Sale 550000 $ / 846 $ m² Space 650 sq.m Land 150 sq.m Address Tbilisi, Vake-Saburtalo, Saburtalo, Sairme hill Phone 595008000 All floors: 4 Room(s): 12

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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caucasian business week

May 27, 2013 #06