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BUSINESS WEEK June 17, 2013 #09

caucasian business week

June 17, 2013, Issue 09

caucasian1 Finance Minister: Second Half of The Year Will Be Much Better Pg. 2

BE INFORMED, DO BUSINESS

GEORGIA FDI DECLINED

akstat published preliminary data for the 1st quarter, according to which foreign direct investments amounted to $226 million. The volume has declined by 16% year-onyear. Pg. 2

Irakli Kovzanadze: Our Economic Situation is Absolutely Stable. The Investment Environment will Further Improve

RUSTAVI STEEL LLC RESPONDS TO UNTRUE STATEMENTS MADE BY JOSEPH KAY

IBR - TBILISI CENTRAL EMERGES AS MOST VISITED SHOPPING MALL

liaUni Business Review said that according to conducted study, Tbilisi Central is most popular among Tbilisi malls. Pg. 5

TURKISH AIRLINES IS A MARKET LEADER ACCORDING TO PASSANGER FLOW FOR 5 MONTHS

ccodding to 2013 5 months data, Turkish Airlines is a market elader, market share of which is increased by 2,9%. Ukrainian Airlines impoved position in the first quarter and moved to top-3 list; Syberia took 5th place (instead of Lufthansa) in April-May. Pg. 7

IMF EXPECTS GEORGIAN ECONOMY TO GROW BY 4%

f political situation remains stable in the country, uncertainties for business decline and supportive economic policy is carried out, Georgian economy will grow more quickly in the second half”, - International Monetary Fund considers. It published conclusions about Georgia on its official website. It indicates that in the first quarter of the current year, due to low growth data, the Fund expects 4%

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economic growth of Georgia, 6% - next year. “In this case inflation would be 1,5% by the end of current year, 5% - next year”, - IMF considers. According to Georgian government prognosis, this year economy will grow by 6% and Minister of Finance Nodar Khaduri stated that prognosis would not be reviewed. National Bank stated that they’d review prognosis.

RATING OF GEORGIA’S CREDITOR COUNTRIES

ermany is the largest bilateral creditor of Georgia By the end of May 2013. According to information published on Ministry of Finance website, Georgia owes $253,008 million to Germany. Pg. 9

BANKING NEWS

IVANISHVILI APPEARED IN THE TOP-10 LIST OF ART COLLECTOR BILLIONAIRES

Pg. 8

AZERBAIJAN BRITISH AIRWAYS MARKS ITS RETURN TO AZERBAIJAN

ARMENIA ELECTRICITY, GAS AND WATER TARIFFS RAISED IN NKR

CIS GM’S OPEL TO BUILD CORSA CARS IN BELARUS FOR LOCAL MARKET

eneral Motors (GM.N) will build a small number of its Opel Corsa hatchbacks in Belarus from next year as its European brand seeks to diversify outside its core market. Pg. 12

WORLD NEWS EMERGING MARKETS ACT TO STEM CAPITAL FLIGHT

Pg. 2

WB FORECASTS GEORGIAN ECONOMY TO CLIMB UP BY 4%

s international organization wrote in the report “perspectives of World Economy”, next year 6,3% economic growth is expected in Georgia, in 2-15 - 6%. International Monetary Fund also has similar prognosis to World Bank. It considers that Georgian economy will grow by 4% this year, by 6% - in 2014. Official prognosis of Georgian government is 6% growth in 2013.

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Healthcare Minister: Universal Insurance Policy Increases In Value Pg. 6

Jaba Mamatsashvili Only Professionals Raise Professionals Pg. 5

Giorgi Sigua: We Consider Russia as One of the Main Target Markets Pg. 4

Tariel Khechikashvili: High Quality of Business Freedom is the New Government’s ment’s Main Message ge Proven in Practice Georgian Chantingg Foundation ation A Awards Merited Representatives sentatives of Georgiann Folk Pg. 14

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TOP NEWS

IVANISHVILI APPEARED IN THE TOP-10 LIST OF ART COLLECTOR BILLIONAIRES

rime Minister of Georgia Bidzina Ivanishvili appeared in the list of 10 billionaires, who has invested large portion of his capital in the artworks. Majority of billionaires, as a rule, have invested 5% or about $31 million of their property. Business Insider reports, that Wealth-X made top-10 list of artwork collector billionaires, who’s invested about 18% of their financial resources in art. Wealth-X inform that Georgia’s richest person and Prime Minister Bidzina Ivanishvili, who has been accumulated property with metals and baking activities, has invested 15,6% of his net actives ($6,4 billion) or $1 billion in the art. Wealth-X reports that in 2006 Bidzina Ivanishvili purchased Dora Maar with Cat of Pablo Picasso for $95 million, which, according to BBC news, is the highest price paid for artwork on the auction. Wealth-X named Naser David Halil, British Maecenas of Iranian origin as the biggest art collector. He invested 93% of the property or $1 billion in artworks. Owner of GUCCI and other luxury

brands unifier, Francois Pinoli, who also owns Christie’s and has $9,9 billion property, has invested $1 million or 101% of the property in art. Eli Brode, founder of SunAmerica and KB home, who owns $6 billion, has invested 16,7% of the actives ($1 billion) in art. Owner of Hedge Fund, SAC Capital, whose property equals to $8,3 billion has invested 12% of money or $1 billion in art. David Geffen, owner of DreamWorks Animation has invested 20% of his net actives ($5,45 billion) or $1,1 billion in art. 85-years old Samuel Irving Newhouse Jr, whose net actives equal to $7,1 billion, has invested 9,9% or $700 million in art. Newhouse is a head of Advance Publication. Leon Black, owner of Apollo Global Management, who owns $3,4 billion property, has spent 22,1% of the property in art. Doris Fisher, owner of GAP, who has $2,3 billion, has invested 34,8% of income in art. Norman Bayman, who owns $1,6 billion, has 240 pieces of artwork. He invested $900 million in the artworks, which is 56& of his property.

RUSTAVI STEEL LLC RESPONDS TO UNTRUE STATEMENTS MADE BY JOSEPH KAY

homas Blake, Director of Rustavi Steel LLC: - “Rustavi Steel LLC is aware of a press conference held by Joseph Kay on 11 June in Tbilisi, and would like to put the record straight in response to untrue statements by Joseph Kay. The Rustavi Metallurgical Plant was acquired by BadriPatarkatsishvili in 2005 for USD 36 million, of which USD 26 million came from the sale of TekhNeftInvest and USD 10 million from the proceeds of the sale of Sibneft. The origin of these funds, transfer documents and the names of the corporate entities through which they were transferred to acquire the Rustavi Metallurgical Plantare available and can be made public. This has all been well documented in court proceedings against Joseph Kay, who has been unable to provide any proof to back up his wild claims that he paid for Rustavi. Joseph Kay ille-

REVENUE SERVICE PRESENTED MAIN DIRECTION OF TAXATION POLICY TO BUSINESSMEN

the Service. One of such novelties is “Customer Management – Accredited Representative”, which was named by the Service as tool for making relations between taxpayer and tax body more flexible. The taxpayer publishes information on accredited representative on own page of electronic customer and gives him/her standard or customized access to specific services.

gally gained control of the Rustavi plant in 2008 following Badri’s death, and in 2010 the Gibraltar court ruled that Joseph Kay has no ownership interest in the plant. The Western courts have also labelled Joseph Kay a liar on many occasions. The Patarkatsishvili family regained title to Rustavi in December 2011. The legal owner of the Rustavi Metallurgical Plant, whose interests I represent, encourages the Georgian government to open an investigation into the activities of Joseph Kay during 2008-11.”

FINANCE MINISTER: SECOND HALF OF THE YEAR WILL BE MUCH BETTER

evenue Service of the Finance Ministry made acquainted businessmen with current processes in tax sphere and main directions of taxation policy today. Initiators of the meeting were the Service and Georgian Business Association. According to the Service, several requested electronic services were developed, being presented at the meeting by representatives of IT center of

June 17, 2013 #09

caucasian business week

inance Minister Nodar Khaduri responded to recent conclusion of IMF on Georgia’s economy, naming it “very optimistic”. We agree with the Fund’s forecast regarding increase of economic growth pace in the second half of the year, he declared. To remind, IMF decreased own forecast for Georgian GDP growth in 2013 from 5.5% (as of October 2012) to 4% “because of the slowdown observed through the first quarter”. As IMF stated, “government capital spending fell short in 2012Q4 and 2013Q1 because of the application of stricter procurement procedures and fi-

nancial difficulties in some construction businesses”. “Public consumption also fell in 2013Q1”, IMF said, noting that it was partly “because of the new procurement rules, but also because of centralized purchases (which generated substantial savings)”, and pointed that “this now needs to be reversed in the reminder of the year”. While commenting the conclusion, Khaduri admitted that “there was fall in budgetary expenditure in the beginning of the year”. “Spendings in the pre-election period were ineffective and often corruptive”, so we had to revise contracts, which caused delay in infrastructure projects, the Minister explained.

ROTHSCHILD IS READY TO CONSULT GEORGIAN SIDE

FDI DECLINED

akstat published preliminary data for the 1st quarter, according to which foreign direct investments amounted to $226 million. The volume has declined by 16% year-on-year. On the other hand, capital inflow amounted to $326.7 million, increasing by 1.6% year-onyear. As of the reporting quarter, top investor countries were Japan – 20% ($46.3 million, growth – al-

most 2 times), Azerbaijan – 17% ($38.4 million, growth – almost 2 times), Netherlands – 15% ($34.9 million, against of negative $104.97 million a year ago), the UK – 8% ($18.3 million, decline – 33%), China – 5.5% ($12.5 million, growth – 18 times), Czech Republic – 4.5% ($10.2 million, growth – 2 times), Mauritius – 4.4% ($9.9 million, no investments were fixed a year ago), international organizations – 4% ($9.1 million, decline 20.2%).

NEGATIVE FDI AMOUNTED TO $19.58M IN Q1

akstat has published preliminary data for the 1st quarter, saying that negative showing of foreign direct investments (FDI) made up $19.58 million. In the same period of 2012, this showing was $116.2 million. In the reporting quarter, negative showing of FDI was fixed for 17 countries against of 19 in the same period of 2012. Largest negative FDI was fixed for France – $6.55 million. In the same period of last year, this

country had positive FDI of $15.7 million. Next came Virgin Islands ($2.93 million, against of positive $21.7 million in the 1st quarter of 2012), Panama ($3.53 million, against of negative $723,700), Turkey ($1.22 million, against of positive $32.15 million). To remind, largest negative FDI in the 1st quarter of 2012 had Netherlands – $104.97 million. In the same period this year, this country had positive FDI of $34.86 million.

BUSINESS WEEK

caucasian The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili DISTRIBUTED FREE OF CHARGE Editor-in-chief: Evgeni Mikeladze Mobile phone: 555 472234 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

eorgia’s Finance Minister Nodar Khaduri met with representatives of Rothschild consulting group, being on business trip to Georgia. According to the Georgian Ministry, Rothschild’s representatives expressed desire to start operation in Georgia, providing advisory to both government and business of the country.

The meeting was attended also by San Marino ambassador Bruno Mari. To note, before start of political activity, current Prime Minister of Georgia Bidzina Ivanishvili was Sammarinese consul with office in building of his Cartu group. Rothschild advisory group operates in 40 countries of the world, providing consultation to the government in 11 of them.

TENDERS, ANNOUNCED ON FOOD SUPPLY FOR GEORGIAN ARMY, CANCELLED

eorgian Defense Ministry declared that 4 tenders, announced on food supply for the army, are cancelled. These tenders were announced in February. As the Ministry said, General Inspection has presented at the meeting of the tender commission on June 11 a conclusion, which pointed at “separate complaints” of militaries against transition from unrationed to rationed catering, introduced on May 1. Due to that, the Ministry decided to envisage preferences of the personnel and to restore un-

rationed catering. As this restoration requires major amendment of tender documentation, the Ministry’s tender commission decided to cancel previously announced tenders. However, according to press reports, Defence Minister has fired person, responsible for safety of catering of the personnel, because of militaries’ poisoning in the 3rd infantry brigade. According to these reports, examination of 11 militaries is currently underway, aiming defining reasons of poisoning, while Military Police of the Joint Staff has started a criminal investigation.

June 17, 2013 #09

ECONOMY

caucasian business week

IMF EXPECTS GEORGIAN ECONOMY TO GROW BY 4%

CBW Newspaper Publishes a full version of IMF report 1. Georgia has tremendous opportunities to implement further reforms and achieve a more prosperous society. If the government can, as it plans, build on Georgia’s achievements over the past years by strengthening judicial independence and the rule of law, by improving the transparency of tax enforcement, by promoting basic freedoms, by fighting poverty and inequality, and by reaching trade agreements with major partners and an Association Agreement and DCFTA with the EU, then the potential medium-term benefits are huge. But to get there, there are many challenges along the way. 2. Following three years of rapid growth, Georgia’s economy experienced a political transitionrelated slowdown. After growing at an average rate of 7 percent from 2010 through the first half of 2012, the economy started to slow in the third quarter of 2012. Inflation has fallen sharply, from 15 percent in May 2011 to -1.7 percent in April 2013, reflecting the lagged effects of exchange rate appreciation, lower food and energy prices (the latter negotiated by the government), but also the slowdown in domestic demand. 3. While possibly already underway before the elections last year, the slowdown also reflects political uncertainty and delays in policy implementation. The slowdown in neighboring economies has not helped, but investors already became cautious ahead of last October’s general elections. Since the elections, this caution appears to have been reinforced by slower disbursement of government spending, higher than anticipated real interest rates, and political tensions. Businesses have explained that announcement of major reforms (though in many cases welcome), before providing details about their content and implementation (for example, healthcare reform, labor code, Partnership Fund, and the establishment of new private equity funds), has added to uncertainty over government policy. 4. Provided that the political situation remains stable, business uncertainty subsides and supportive economic policies are in place, the economy should grow rapidly in the second half of this year. Though projections at this time are subject to greater than usual uncertainty, our baseline forecast has the economy growing rapidly for the remainder of the year (an annualized rate of around 8 percent, seasonally adjusted). Because of the slowdown observed through the first quarter, this should result in GDP growth of 4 percent in 2013, rising back to around 6 percent from 2014 onwards. Inflation would then increase to 1½ percent at end-year and to about 5 percent by end-2014. There are upside and downside risks to the projection: on the upside, opening of the Russian market plus higher investment; on the downside, slower growth in partner countries and delays implementing the policies set out below. Provided that the authorities take the monetary and fiscal policies actions described below, plus improve clarity over their economic policies, the slowdown should prove temporary. 5. The mission supports the new government’s agenda of more inclusive growth. The rapid growth of the last decade resulted in barely any increase in employment. Much of Georgia’s population is either unemployed or underemployed in agriculture. Relative to comparable countries, Georgia performs worse in terms of poverty, and much worse in terms of inequality. Substantial increases in social expenditures and agricultural support already being implemented by the new government should help address these concerns. However, since sustained strong growth is also essential for job creation, the government should accompany its emphasis social issues with more active fiscal and monetary policies, and should boost business confidence and investment by reducing policy uncertainty.

Macroeconomic Policies for Economic Recovery

6. Fiscal policy needs to support economic recovery.Government capital spending fell short in

2012Q4 and 2013Q1 because of the application of stricter procurement procedures and financial difficulties in some construction businesses. Public consumption also fell in 2013Q1, in part because of the new procurement rules, but also because of centralized purchases (which generated substantial savings). The resulting fall in government spending added to the slowdown. This now needs to be reversed in the remainder of the year. Lower growth and inflation will likely reduce revenues by around 290 million GEL (1 percent of GDP) in 2013. With inflation subdued and the current account deficit falling, there is a case for letting the automatic fiscal stabilizers operate. Lower revenues should only be partly matched by lower government spending (which should be feasible given that prices are lower than projected), and the deficit target might need to be increased from 2.8 to around 3.3 percent of GDP. 7. With inflation well below target, further easing of monetary policy also seems warranted. The

drawn-out consultations with key stakeholders, could have contributed to policy uncertainty. Providing detailed information about the objectives, implementation, and the timeline of new policy initiatives before announcing them to the public is needed to help restore business confidence. 10. Georgia’s current account deficit and foreign indebtedness need to be reduced over the medium term. Despite declining recently because of the slowdown, the current account deficit has remained persistently high, averaging 11.5 percent of GDP from 2010 to 2012, one of the highest in the region, while gross external debt has reached 80 percent of GDP. In part the current account deficit reflected large capital inflows which, despite the NBG’s foreign currency purchases, have prevented necessary real exchange rate adjustment. To make sure Georgia’s external indebtedness is sustainable, and to protect from exchange rate shocks or the risk of a sudden stop in capital inflows, the government should gradually lower the current account deficit

12. The government should clarify the role and improve the governance of the different investment funds: • The mission welcomes the increased openness and governance improvements that have already taken place in the new Sovereign Fund (which consolidates the existing Partnership Fund) and strongly supports its commitment to improve governance further, in line with international standards. These governance improvements will make the Sovereign Fund a more valued investment partner. • The objectives and the governance structure of the new investment funds (Agricultural Development Fund, Private Equity Fund), as well as the size of the financing they can realistically attract, should be clarified as soon as possible. While the intention seems good, the potential size of these funds, uncertainty over their scope, and possible preferential treatment could, inadvertently, discourage investment by others. There should also be no perception of any potential conflict of interest in the funds. • Finally, clearer diagnosis of the reasons why private investment is so low in Georgia might make these new funds more effective, or suggest other policies that would better stimulate investment.

Encouraging Inclusive Growth

NBG has already reduced its policy rate from 8 percent in mid-2011 to 4.25 percent. Despite this, the level of credit has remained flat so that credit growth has fallen from 30 percent at end-2011 to 12 percent at end-March 2013, and inflation remains well below the NBG’s 6 percent medium-term target. On balance the mission would recommend some further policy rate reductions. However, more important would be to ensure that existing cuts lead to lower bank deposit and lending rates, especially at longer maturities (where interest rates are considerably higher). To do this, the mission supports the NBG’s initiative to have the government issue treasury bills and deposit the proceeds long-term with commercial banks, to encourage long term lari lending by banks. Other options include making it easier for banks to access NBG lari funding, further encouraging the adoption of flexible rate lari lending by banks, using prudential measures to encourage de-dollarization, and deepening the financial system (development of pension funds). 8. Central bank independence is essential, and cooperation is needed so that monetary and fiscal policy can work together to help end the current slowdown. The mission welcomes the NBG’s moves towards greater transparency, by improving the inflation report, and launching regular meetings to explain inflation developments and the reasons behind MPC interest rate decisions. However, greater cooperation between the NBG and the Ministry of Finance, in a way that preserves central bank independence, would make it easier to measure and diagnose the causes of the recent slowdown, and to devise a coordinated monetary and fiscal policy response that will promote recovery. 9. The government should strengthen communication of its policy initiatives. While broadly supporting the government’s reform efforts, premature announcement of some policy initiatives before details are known, and, in the case of the newly adopted Labor Code, difficult and

to a more sustainable level of around 6.5 percent of GDP in the medium-term, through continued fiscal consolidation, higher private saving, exchange rate adjustment, and structural reforms to improve competitiveness.

Improving Competitiveness and Growth

11. The government should focus its involvement in the energy sector on establishing transparent and fair “rules of the game” overseen by an independent energy regulator: • The recent reduction in tariffs has lowered the profitability of electricity distribution companies and risks hindering investment. In the interests of transparency, we encourage the government to publish the terms of the agreements reached with the electricity distribution companies, so that the reasons behind the tariff cuts can be understood. • To attract the investment necessary to realize Georgia’s vast potential, the government should work with its development partners to improve the sector’s regulatory framework. We encourage the government to re-commit to the rules-based mechanism for setting energy prices, and to quickly develop an energy policy strategy. • The above steps should alleviate investors’ concerns that the government might intervene in price-setting and transmission line access in the future. This should encourage new investment. They might also reduce the need for issuing PPA guarantees, which would expose the government to substantial contingent liabilities, and which should only be adopted as a last resort, once all other options identified by the energy policy strategy have been considered. • The mission encourages the government to make sure that natural gas pricing is being implemented in a way that makes most use of the potentially significant economic rents created by the low price of natural gas imports.

13. If carried out in a balanced way, reform of the Labor Code should promote more inclusive growth. The existing Labor Code meant workers could be fired at will without any system of unemployment benefits to fall back on, and made to work unpaid overtime. Workers faced substantial uncertainty, discouraging investment in skills and human capital, and employment barely increased. A more balanced labor code, where employers need to give clearer reasons for dismissal, and with some increased severance pay, could increase job motivation and productivity, and should bring Georgia in line with ILO and EU commitments. 14. Increases in social expenditure should improve social outcomes, but could be better targeted to reduce inequality: • 80 percent of the government’s social spending increase will be on universal transfers (untargeted), only 20 percent for targeted social assistance. While the social assistance allowance (currently received by 10 percent of the population) was doubled, broadening access to reach the remaining population (around 30 percent) below the poverty line might also have been considered. • Introduction of universal health insurance should improve health outcomes and reduce high costs in the health sector (around 10 percent of GDP), provided public sector capacity is sufficient. The takeover of key services from existing private health insurers by a public entity, the Social Service Agency, will reduce the market for private insurance significantly. The mission recommends that private health provision should remain, while protocols and procedures should be strengthened. However, the reforms do not seem to address the problem of high drug co-payments (a major source of impoverishment) and do little to save costs by promoting generics. • The mission welcomes the government’s plans to improve education, including through greater access to pre-school and financing of textbooks for schoolchildren, and higher teacher salaries. • Finally, on pensions, the mission would recommend that future increases be linked systematically to inflation; for higher pensions in the medium-term, a contribution scheme may be needed. 15. The IMF team is grateful to the authorities for open and constructive discussions during the mission, and also to the many social partners and non-government representatives who made time to meet with us and who helped improve our understanding of recent developments in Georgia.

INTERVIEW

June 17, 2013 #09

caucasian business week

IRAKLI KOVZANADZE: OUR ECONOMIC SITUATION IS ABSOLUTELY STABLE. THE INVESTMENT ENVIRONMENT WILL FURTHER IMPROVE An interview with Director of the Partnership Found IRAKLI KOVZANADZE

- What has the Partnership Fund managed to do during these months? - Partnership Fund generally has two directions. First, the state assets management, which is a part of our capital, including “Georgian Railway” (It

is the largest public corporation), as well as Oil and Gas Corporation, Georgian State Electric System [GSE], Electricity System Commercial Operator [ESCO] and 25 percent in “Telasi” company. Management of these companies is one of the main directions, their proper management and the functions of the Partnership Fund in respect to these companies. For a few months, our first task was to change management as well as to introduce elements of sound corporate management, independent directors and, most importantly, to staff the companies’ management and supervisory boards with qualified persons. We’ve completed this process. These companies are working successfully. We see some progress of the major state assets every day. Next direction is the implementation of investment projects in our investment portfolio. A hotel in Akhaltsikhe nearby Rabat castle is among the last two projects we completed and successfully implemented for the past two months. I think this is the best hotel in the region, which has been completed with our financial assistance. The second project, which has just been completed, is a pig farm. It is located in the village of Koda in Tetritskaro region. Again, as a result of the collaboration of the public and private sectors. I think that it will be the best agricultural enterprise not only in Georgia, but also in the Caucasus region.

In addition, a German company works in our management. The enterprise is equipped with the latestGerman and English technology. Since November pork produced in this farm will be sold in the country. I think that it will occupy 15 - 20 percent of the pork market. It will be one of the best projects in the field of agriculture that have been implemented recently. Here, there was a cooperation of the Partnership Fund, the private sector and banking sector. In addition, we are building a hotel in Likani, it is a famous state complex.. The project is being implemented jointly with the Kazakh side. 50 percent belong to us. We are also completing the hotel’s construction in Kvareli. As you know, we are working on Gardabani thermal power plant construction.This HPP’s capacity is 230 MW and the project’s cost exceeds 200 million USD. Apart from that, we are implementing a hydro project. This is a hydroelectric power station in Upper Svaneti. It will be a 210-megawatt, very powerful plant. The International Finance Corporation [IFC] is interested in this project. We are represented in the sectors which are priorities for the state. These are two main directions in which the Fund operates and I believe that successfully. - Constantly talking about the need to create investment funds. What specific information is available, especially considering that the business has a very great and serious expectation in this regard? - The Partnership Foundation is working on the sovereign fund issue. As Mr. Bidzina Ivanishvili said, the sovereign fund would be established on the basis of the Partnership Fund. The government group was formed which will guide this

process and will provide monitoring. Finance and Economy Ministry officials as well as officials from various departments, representatives of the Partnership Fund, the World Bank and the International Monetary Fund are also involved in this process. In addition, we will hire an international law firm that has working experience with sovereign funds. I think during the summer we will prepare a package which will be submitted to Parliament and the bills associated with the Partnership Fund will be amended. This fund will meet the international standards, it will be an important separation of the functions of management and the supervisory board, there will be an independent institute of directors. The so-called San Tiago principles will be introduced which are important in working with the sovereign fund. As I mentioned before, the process is in a very active phase, every day new working elements are added, we get new information, do the implementation and I think that by autumn this process will be completed. -How would you assess the economic situation in the country during these months? Does the current situation provide a good basis for interest from serious, large investors? - I believe that our economic situation is absolutely stable. Macroeconomic environment is stable, the tax environment in our country is one of the best. We have the lowest tax rates, we are in the fourth place in the world in this regard. I’m sure that the investment environment will further improve and the volume of investment will increase in the country.

HEAD OF NATIONAL TOURISM ADMINISTRATION: WE CONSIDER RUSSIA AS ONE OF THE MAIN TARGET MARKETS An interview with the head of the National Tourism Administration of Georgia GIORGI SIGUA - With what plans did you come to Tourism Agency? - I have very active and ambitious plans. I’ll speak on this issue in more detail on June 18 when a meeting with representatives of the private sector will be held. The meeting will be attended by tour - operators, airlines, restaurant chains, hotels and owners of other facilities who are in touch with tourists and have the main source of income from tourism, pay taxes, and our share in the gross domestic product consists of this components. It is currently about 6.3 per cent, and our ambition is to increase this figure. The average rate in the world makes 9 percent, but Georgia is really a country, which has the potential to significantly increase this figure. A flow of tourists in Georgia is characterized by an increasing dynamics. I had a meeting with 10 Russian journalists, who represent the most influential media outlets. Recently, I’ve invited 20 top tour - operators from Russia because we consider Russia as one of the main target markets. We want to activate in this market. In previous year more than 500 000 tourists came from Russia to Georgia, this year this figure has already increased by 77 percent (I mean the period from January 1 to May 5). I expect this figure to increase to at least 100 percent. As for the total flow of tourists, a 37 percent growth is expected by the most modest estimates

and this year 6 million tourists should come to Georgia. In order to get more tourists and to improve revenues, we have to take care of infrastructure, service improvement, good relations between the government and tourist companies. The National Tourism Administration is doing everything possible. I’ll speak on the topic, strategies and plans in more detail on June 18. - As a whole, how much perspective is the country’s tourism potential you got? Besides, what do you think of that period, overall what does Georgia sell today in terms of tourism? - I was surprised by the current anti-Georgian position in Russia in recent years. The Russians began to consider Georgia as a tourist destination only now. Georgia should be popularized as a tourist area. As for the plans, very active campaigns will be carried out. Now we are going to conduct a campaign in the Baltic region and Kazakhstan. We want to carry out a campaign in Russia and to continue it in Israel. The number of tourists from Israel is growing very rapidly. - Do you consider the former Soviet space a target market? - Not only it. It’s about the fact that 86 percent of incoming in Georgia tourists are from neighboring countries such as Turkey, Azerbaijan, Armenia, Russia and Ukraine as well as Poland and Israel. However, the target market has grown and is growing now. The Baltic countries will be added to this list but the biggest and most important market is Russia. This does not mean that we will not intensify our work in Western European, Japanese and American destinations. We must understand that the closer the country is, the easier to attract tourists. - Constantly heard complaining that we not have good infrastructure, services, and so on, what do we have today? - National Tourism Administration will take care of

this. We will contribute to the improvement of the service in Georgia without any pressure. Besides the sea and the beaches, we have pristine beauty and nature. We‘ll attract tourists not only with wine tours, the sea, the mountains but also with ski resorts, caves, adventure, religious tours, etc. - If we have the resources for this purpose? As far as I remember, the budget of the National Tourism Administration has been cut. - It’s an erroneous information. In fact, on the contrary, the program part has grown. The program part makes 6.5 million GEL or more than it was before. - What legacy did you get at the administration and if a tourist concept is needed? - I discovered that Maya Sidamonidze was not the head of the National Tourism Administration. In fact, it was led by President Saakashvili. Inconsistently, without any strategy, spontaneously. We’ll conduct a serious work. There was a very bad communication and contact with the private sector, I am by no means accusing the former leadership because the National Tourism Administration was headed by President. - You mentioned the neighboring countries, especially Turkey, which is perceived as a serious competitor in terms of the sea resorts. What can we do in this regard? - Georgia’s tourism potential is not only the sea. The sea season lasts two, maximum 3 months in Georgia. At this time we have the opportunity to be tourist destinations throughout the year. We have the sea, harvest and wine tours begin in September. There are many tourist destinations in the mountains, in winter we can offer mountain ski tourism. We plan to continue development of Gudauri, Mestia. A lot of money are invested in Tskaltubo. So, Georgia has the potential to be a tourist country throughout the year.

TI GEORGIA: CONTRACTS WORTH 800M LARI WERE SIGNED IN 2012, BYPASSING STATE PROCUREMENT PROCEDURES

I Georgia, Georgian branch of Transparency International, declared that contracts worth 800 million lari were signed in 2012 with consent of the President and the government, being concluded “bypassing procurement procedures and in vague situation”. Majority of tenders, held in 2012, were related to infrastructure projects. TI Georgia said, noting that winner companies were tied with the authority in this or that way. TI Georgia considers that “this kind of corruption, which contradicts to fundamental principles of procurement, should be eliminated, while guaranty of this will be application of procurement legislation to all funds”. At that, the organization points that bill “On Procurements” gives possibility of bypassing electronic tenders for state-owned enterprises (such as Georgian Railway, Partnership Fund, etc.), reserve funds of the President and the government, as well as for Defence Ministry.

INTERVIEW

June 17, 2013 #09

AVERAGE CONSUMER’S LIVING WAGE MADE UP 132.8 LARI IN MAY

akstat reported that wage of living for average consumer amounted to 132.8 lari in May. Same showing for average family made up 251.4 lari. In the same month of 2012, these showings were 133 lari and 251.8 lari, respectively.

In the reporting month, living wage for 2-member family made up 212.4 lari, 239 lari – for 3-member, 265.5 lari – for 4-member, 298.7 lari – for 5-member one, while for family of 6 members and above – 353.1 lari. In April, living wage for average consumer amounted to 130.5 lari, while for average family – to 247.2 lari.

TBILISI CENTRAL EMERGES AS MOST VISITED SHOPPING MALL

liaUni Business Review said that according to conducted study, Tbilisi Central is most popular among Tbilisi malls. Besides this trading center, the study was conducted in 5 malls of Tbilisi – Tbilisi Mall, Karvasla, Pixel, GTC and Axis. According to the study results, Tbilisi Central accounts for 37% of visitors. IliaUni Business Review pointed however, that 55-60% of this trading center’s visitors are railway passen-

caucasian business week

gers (the mall is located in building of Tbilisi Central Railway Station). Tbilisi Mall accounts for 28%, Pixel – 18%, Karvasla – 7%, while GTC and Axis – per 5%. During a week, visitors were counted daily in rush hours. The total number made up 28,357. At weekend, number of visitors exceeded by 25% on average the number during working days. According to similar study, conducted by IliaUni Business Review in late 2012, most popular trading center (with clear superiority) was Tbilisi Mall.

HIGH QUALITY OF BUSINESS FREEDOM IS THE NEW GOVERNMENT’S MAIN MESSAGE PROVEN IN PRACTICE TARIEL KHECHIKASHVILI:

An interview with “Iberia Business Group” founder TARIEL KHECHIKASHVILI - Are the new government’s actions, messages, steps clear or confusing for you as the head of a large company? - I think the main message that we received from the new government that was the most obvious is that there will be a full support from the government. The main thing is that the business will be exempted from the so-called political pressure. I think this is the most important and positive message. Perhaps business circles and representatives in many countries dream of having the most successful businessman at the head of the government. So, I think that the government speaks in plain language. When it comes to communication, it is obvious that communication is important but not in the form we accustomed in the post-Soviet countries. We have a very bad experience. Under the previous government we did not have a lack of communication. There were many decent people in the then economic team. However, there was also a political pressure. So, communication is not the main thing but a form of communication with business. The new government made the main message. The most important and it is proven in practice that businesses have a high degree of freedom. This is the most important thing. - Does business feel free during the decision-making under the new government?

- Of course. It should be said objectively that business was not previously free and there were different types of pressure. - What is the most acceptable in terms of the new government. Are their actions, labor law or otherwise clear and acceptable for business? - The same labor law is a clear example of that there were debates inside the team regarding laborlegislation and this is a very healthy process. Businessmen have a lot of remarks to the law. It becamethe subject of extensive discussion and I think that it is necessary to improve the law in this regard. A business should always have questions. This is a very common attitude, but unusual for us. We havebusiness relations at an early stage and they have to be developed. Business, which creates the state’swelfare, should be in active communication with the government. - Some auto importers say that public procurements have halved. What are sales figures in your company and what are the forecasts for development? - There was some kind of standby in the market. The political tension creates uncertainty for both organizations and private clients. In general, it was reflected in sales, but it was expected. In May positive changes were observed and I think that the situation

will stabilize and the next year will be very positive. The reduction of public procurements was not surprise for me. The state revised procurements and now announces tenders. Competition intensified and this is normal phenomenon. We, “Iberia Business Group” are ready for competition. - What is meant by an increased competition ? - On the one hand, it means that the process is transparent, on the other hand, there are many new players on the market which are very actively involved in competition. Healthy competition is always the key to success. So, we are not afraid of competition.

ONLY PROFESSIONALS RAISE PROFESSIONALS Centers of professional development and requalification centers are highly involved in transformation of educational system in Georgia. Global Education Georgia has recently entered the system. Managing team of GEG has an innovative approach to education. It should be highlighted that in Global Education Georgia, besides providing high quality education, their concern is a career development of the students. “Education gained at our institution should be seen as a potential for career development and main asset for personal realization” – says General Director of GEG, Mr. JABA MAMATSASHVILI

-Mr. Mamatsashvili, there are many educational institutions in Tbilisi. There is quite a competition on the market. What do you think makes Global Education Georgia better than its competitors? - Due to high competition, our team is oriented on high quality of education. We have implemented modern international methodologies and are providing higher educational equivalents. Even though we are oriented on creating comfortable atmosphere for our students, our main advantage

is our high qualified teachers. They are practitioners, quite successful in their fields. Such people should set an example for new generation, what will be beneficial for Georgia’s educational system’s progress. GEG is uniting modern professionals of Georgia’s education and science. This Center is cooperating with certified professional trainers, as well with professors from major universities of United States and West Europe. -Mr. Mamatsashvili, teaching of which subjects and professional skills are you oriented on? - We had discussed this issue within the team and have decided to conduct a survey, results of which gave us the opportunity to provide the best trainings. GEG is mainly oriented on language courses and developing professional modules. -Language centers are also popular in Georgia. How do you differ your institution from them? - Our teaching methods are as modern as are our books. We offer following language courses: English, Russian, Turkish, Spanish, French, Italian, German and Chinese. Foreign language courses are based on international standards and have 6 levels. We are well aware of what is needed for a successful course and we are ready to provide it. We believe for a language course to be successful, it should include a lot of practical work. Therefore we offer exchange programs for our students. They can practice the language they learn in the country of origin, in education, commercial or any other entity. -As we were informed, you have special courses for foreigners who wish to learn Georgian.

- Yes, we have an exclusive offer – simplified course in Georgian language for those who reside in Georgia. We have many business professionals applying for this course already. Also, we have prep courses for university exams. Our aim is to prepare students for high school graduation exams and university entrance exams. We cover all the necessary topics. Potential magistrate students are also welcome. We have individual and group classes. -What about professional education? What innovations do you have in that field? - As you know there are training centers offering professional courses. Prior to offering our course, we check the market needs of those professions and make them as innovative as possible. Many companies are cooperating with us, which raises the future employment possibilities of our students. -I believe our readers will be interested in your programs. - I would like to highlight our Pharmaceutics course. We are partnering with PSP chain and successful graduates of our course will be able to make internship in PSP pharmacy. Leader of the program is Ekaterine Pruidze, experienced trainer of PSP chain. -What about other programs? - First time in history of Georgia’s training centers; GEG offers a practical course in journalism. We have partnered up with Public Broadcasting Channel 1, what will give our students ability to apply their knowledge in real life. Their teachers will be acting professionals, sharing experience of many years with them. The course in oriented on providing a deep knowledge of every matter. We are also cooperating with other media entities, which are glad to accept interns who we recommend. The course is conducted by Tamar Bolkvadze, Natia Tsuladze, Giorgi Gugushvili, Maia Ramishvili and Zurab Kukuladze – famous presenters, television and journalism special-

ists. Our partner organizations are interested in potentially hiring successful students in Hotel Management. We have a wonderful course in that field. We guarantee that our students will be the best candidates to fill in available positions. After completing hotel management and effective customer service program, students will be able to do the internship in 5 star hotels in Antalya. Living and canteen will be free for them. Aim of the training is implementation of modern standards and new technologies in hotel management and tourism. -Accounting courses are also very famous in Georgia. Do you cover them as well? - Of course we do. Besides full course in accounting, we offer: computer programs, marketing, general management, PR, HR and customer service. Our trainers are internationally certified professionals of their field. -Mr. Mamatsashvili, what about the Judicial course? - We practically have a judicial school, which gives a unique chance to learn from the strongest professionals, to cover the most important topics. Taxation law is led by Mr. Zviad Rogava, Criminal law is led by Ms. Nino Geventadze, and Administrative law is led by Irma Kharshiladze. Also, we are cooperating with Gia Mefarishvili, Jemal Gakhokidze, Mikheil Manishvili, Irakli Gabisonia, Givi Amiranashvili, Nona Todua and Nunu Kvantaliani. -Educational institutions are less active in summer. What do you have to offer for the beginning of school year? - Well, our center is fully functioning in summer and we are capable to provide certain programs. However, everything becomes more active in September. We plan to use summer time to widen our contacts and have more partner organizations, so by the beginning of school year, besides providing high quality education we can contribute more the future career development.

BUSINESS & ECONOMY

FINANCIAL SECTOR WAS THE MOST ATTRACTIVE SPHERE FOR THE FOREIGN INVESTORS IN THE FIRST QUARTER

inancial sector was the most attractive sphere for the foreign investors in the first quarter. Geostat informs, that in the first quarter 2013, the highest investments of $65 million was made in the financial sector, which is 29% of the direct foreign investments. Supposedly, entering of Azerbaijani Pasha Bank (which founded bank with the same name in January of the current year) contributed in the leadership of this sphere.

In Comparison with January-march of last year, direct foreign investments in the energy sector increased by 2,3 times. $42 million was invested in the energy. $13 million was invested in the mining industry, which is 6,6 million less in comparison with last year. Investments in transport and communication and processing industry considerably declined. Accordingly $11,9 million and $11,3 million was invested there. In January-March 2012 $38,1 million and $64m5 million was invested in these sectors. In the other sectors of economic $83 million investments were made, which is $16,5 million more in comparison with January-March 2012. Reminding that, according to Geostat preliminary data, in January-march 2013, 226,2 million direct foreign investments was made in Georgia. In the first quarter of the current year direct foreign investments equaled to $ 226,2 million, in the same period of last year - $269,4 million.

GEORGIAN RAILWAY FREIGHT TURNOVER SHRINKS

n 4 months of current year, majority of Georgian Railway main freights declined. According to statistics of Georgian railway, in January-April 2013 only oil and oil products shipping increased in comparison with 4 months 2012. In particular, in January-April 3 265 091 tons of oil and oil products were shipped through Georgian Railway, which is 283 027 tons in compari-

son with the same period 2012. In the same period, Georgian Railway shipped 240 013 tons of iron and manganese or, which is 4 960 tons less. 139 448 tons of chemical and mineral fertilizers were transported (January-April 2012 – 183 186 tons). In the reporting period, amount of grains and grain product freights considerably declined in the shipping. In January-April 2013, 147 328 tons of such freight was shipped, while in the analogical period 2012 Railway served to 438 717 tons of freight. Sugar and raw sugar freight amount declined by 16,9 thousand tons and 158 370 tons were shipped in the 4 months of the current year. Another group with declined shipping is color metals. In January-April 262 782 tons of color metals were shipped. In the analogical period 2012, 352 950 tons were shipped.

KAKHETI TRADITIONAL WINEIRY SENDS FIRST CONSIGNMENT OF BRANDY TO RUSSIAN MARKET

akheti Traditional Winery sent first batch of cognac to Russia. Ria Novosti reports about it, based on representative of Kakheti Traditional Winery. Agency informs that 21,6 thousand bottles of cognacs are already sent to Russia.

Agency writes that by the end of the week will be defined when Georgian wine export starts to Russia. Georgian mineral water Borjomi should appear on the shelves in the nearest days. Ria Novosti also pays attention to the statement of Gennady Onishenko, head of Rospotrebnadzor. They inform that main sanitary official of Russia stated on June 10 that all barriers are removed for returning of Georgian wine to the Russian market. Reminding that Russia announced embargo on Georgian products in 2006. Then Rospotrebnadzor “disclosed” Georgian products in incompatibility with sanitary-hygienic norms. Georgian side linked embargo to political decision.

GOMI AND USHBA LAUNCH TALKS WITH DISTRIBUTOR COMPANIES ON VODKA EXPORTS TO RUSSIA

odka producer ‘’Ushba Distiller” plans to start export of its products to the Russian market in a month and a half. The company’s CEO explains to “Commersant’’ that negotiations are in the final stages with three major Russian distribution companies. According to Dimitri Abesadze, “USHBA” will compete with products displayed in the Russian market in quality.

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Another vodka company “Gomi” also plans to export its products to the Russian market. The company’s representatives notes that negotiations are already underway with major Russian distribution companies, however, the samples were not sent to the Russian side yet. They say, “Gomi”focuses on the Russian market and does not plan to add export countries. The company states thatthey are going to compete on the Russian market in the product’s quality and competitive pricing policy.

GMP STATED ABOUT 35% GROWTH OF MEDICINE IMPORT

eorgian Pharmaceutical Company GMP increased export. Company management informs that by the beginning of the year till now GMP increased medicine expert by 35% in comparison with analogic period 2012. Over 60 medicines produced by GMP are exported in 11 countries of the world. Currently registration of GMP medicines is going in EU. Main stage of enterprise inspecting of the enterprise was also successful. It’s noteworthy that Georgian Pharmaceutical Company GMP issued 7 new medicines last year.

IN MAY INDUSTRIAL PRODUCER PRICE INDEX DECLINED

eostat informs that in May industrial producers’ price index declined by 0,01% in comparison with Aril, reduced by 0,5% in comparison with May 2012. Besides, index is increased by 61,9% in comparison with average of 2005. According to official data, in comparison with April, price change in the processing industry had main influence on the index formation in May. In particular, prices increased by 0,1% and accordingly, section contribution in the total percentage rate of the index made up 0,08 percent points. Prices increased in the following sub-sections: cellulose-paper industry and editorial work (19,2 %); industry of food (including beverages) and tobacco (1,4%). In the same period prices declined on the following sub-sections: metallurgical industry and manufacturing of ready-made metal products (3,4%); chemical industry (4,8%). Meanwhile, in comparison with May 2012, price

changes in these sections influenced index formation in may: processing industry: prices decline by 1,4% in the given period and section price in the annual interest change data of the index equaled to 1,21 percent points. Prices also declined on metallurgical industry and ready-made metal production (13,5%). During last year prices increased in the industry of food (including beverages) and tobacco (4,4%), prices increased by 17,1% in mining industry. The company successfully passed industrial process program management in accordance with standards for European registration, which proved once more that quality management is as well ensured as in Europe; It’s one of the important indicators that GMPproduced medicines has as guaranteed quality, as in famous European enterprises”, - company states. It’s noteworthy that GMP-produced medicines have been exported since 2007.

HEALTHCARE MINISTER: UNIVERSAL INSURANCE POLICY INCREASES IN VALUE

inister of Labor, Healthcare and Social Protection David Sergeenko declared that universal insurance policy will increase in value since July 1. The Minister reminded at the news briefing today that current policy envisages 3 components: planned outpatient service, emergency outpatient service and emergency hospital treatment. Since July 1, planned hospital treatment is added, Sergeenko declared, noting “True, this is a single component, but its value far exceeds total value of current policy, so value of (medical) assistance increases several times”.

IDFI: USAGE OF INTERNET IN GEORGIA HAS SEVERAL OBSTACLES

nstitute for Development of Freedom of Information (IDFI) declared that usage of Internet in Georgia has several obstacles. These obstacles are of both technical (for example, coverage of broadband network) and social (low purchasing power, lack of skills and desire to use Internet) character, IDFI defined. Study, conducted by IDFI, revealed that majority of customers uses Internet and social networks as source of information, while bidirectional communications and declaration of own sharp position are not among priorities. According to IDFI, part of Georgians considers Internet as less important communication mean, while others have difficulties in access (lack of computer, skills and interest). Difficulties are much wider spread in regions, where 67% of population never used Internet. According to IDFI, distribution of wired Internet

users (392,436 in total) in 2012 was as follow: Tbilisi – 251,788, Imereti – 37,883, Ajara – 27,177, Kvemo Kartli – 27,782, Shida Kartli – 12,873. Remained 5 regions accounted jointly for 34,933 users. In its turn, distribution of wireless (WiFi) Internet users (17,872 in total) was as follow: Kvemo Kartli – 4,456, Samegrelo – Zemo Svaneti – 3,457, Imereti – 3,036, Shida Kartli – 1,603, Tbilisi – 418. Number of WiFi users in remained regions totaled to 4,902. Among mobile operators, leader in terms of mobile Internet users’ number was Geocell – 582,606. MagtiCom had 380,822 users, while Mobitel (Beeline brand) – 378,124.

BUSINESS

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CHINA HANDED OVER 30 UNITS OF MACHINERY TO GEORGIAN AGRICULTURE MINISTRY

eorgian Ministry of Agriculture received 30 units of melioration machinery, being provided by Chinese government as grant. Respective agreement was signed in

Tbilisi today.

TURKISH AIRLINES IS A MARKET LEADER ACCORDING TO PASSANGER FLOW FOR 5 MONTHS

As the Ministry told Sarke, total cost of machinery makes up about $4 million. The Ministry is going to hand over the machinery to United Melioration Systems Company. This company has started this year works on 98 objects, of which rehabilitation is already completed on 65.

ILIAUNI BUSINESS REVIEW: 74.44% OF GOODWILL CUSTOMERS ARE PLEASED WITH SERVICE QUALITY

liaUni Business Review, customers’ poll issue of Ilia State University, said that polling of about 100 customers of Goodwill supermarkets has revealed that 74.44% are satisfied with service quality and skills of staff. At that, 83.33% are pleased with quality of goods. 20% said that they are not forced to wait in queues, 47% – that there are rare queues, while

33% complained of frequent queues. Out of total number of interviewed persons, women accounted for 52.22%. At that, 85% of interviewed women are satisfied with service quality and skills of staff, while 87.23% – with quality of goods. Among polled men, these shares are 62.79% and 79%, respectively.

GEORGIAN SIDE IS INTERESTED IN IPO ON WARSAW STOCK EXCHANGE

hile taking part in Warsaw IPO summit, Georgian Minister of Economy and Sustainable Development Giorgi Kvirikashvili expressed interest towards inclusion of Georgian companies in

Currently 25 air companies operates on Georgian air market, among them 2 are Georgia (Georgian Airways, Fly Georgia). In January-May 2013 Tbilisi, Batumi and Kutaisi airports served to 547 748 passangers. Flights will be resumed from Mestia airport soon.

listing of Warsaw Stock Exchange. He declared that many investors are interested in operation on this exchange, so “we should not miss this opportunity”. Summit in Warsaw took place on June 6-7. Kvirikashvili headed the Georgian delegation.

GEORGIAN MARKET’S LEADER COMPANY TSKALI MARGEBELI CELEBRATES 15TH ANNIVERSARY

AMENDMENTS TO LABOR CODE APPROVED

he Parliament approved yesterday amendments to Labor Code (91 MPs voted “pro”, 26 (National Movement fraction) – “contra”). The amendments became effective upon

publication. The approved amendments enforce requirement to conclude labor agreement in written form, if labor relations exceed 3 months. The agreement, exceeding 30 months, is considered as termless. The sides of labor relations may conclude probation agreement (also in written form), but they are allowed to conclude it only once and for duration up

to 6 months. The probation work should be paid. In case of cancellation of labor agreement, employer is required to notify employee in advance of 30 days, sending him/her a letter. At that, compensation should be paid to employee within 30 days, not less of salary for 1 month. In case of employee’s request, employer should provide within 7 days a written explanation of reasons of agreement cancellation. The amendments also envisage conclusion a collective agreement, establishment of trilateral social partnership commission (employer, the government and employee associations), etc.

RUSSIAN TRAVEL COMPANY ENTERED GEORGIA

ussian travel agency Pegas Touristik, which opened office in Tbilisi in March, starts operation on Georgian market. At this stage, the company offers tours

to Turkey. Transfer will be implemented by Turkish Airlines, starting from June 13 until end of Septem-

ber. First charter flight will be implemented from Tbilisi to Antalya. According to Pegas Touristik, only complete travel packs are available (transfer and 7-day accommodation in double room – $215-263 per person in 3-star hotel and $310-454 – in 4-star one). The company promises to Georgian customers to offer 23 directions of the world in near future.

GEORGIA UPDATED LIST OF PREFERENTIAL TAXATION/ OFFSHORE COUNTRIES

eorgian government approved list of countries with preferential or offshore regime of taxation. Accordingly, old list of 2010 is cancelled.

The new list includes 66 countries against of 79 ones of the old list. The new list does not include Argentina, Bahrein, Brazil, European countries, Malta, Singapore, South Korea and UAE. Instead, Brunei, Curacao, Fiji, French Polynesia, Liberia, Maldives, Mariana Islands, Oman, Puerto Rico, Solomon Islands, Tuvalu, Virgin Islands, etc., are added.

skali Margebeli, a manufacturer of Nabeghlavi and Bakhmaro mineral waters, celebrates 15th anniversary. The Georgian market’s leader company was founded in 1997. Besides success on the domestic market, Nabeghlavi has been penetrated in foreign countries too and the brand is sold in 18 countries of the world, including: the EU and CIS countries, Near East and North America, Azerbaijan, the USA, the Baltic states (Lithuania, Latvia, Estonia), Turkey, Turkmenistan, Israel, Cyprus, Moldova, Poland, Greece, Armenia, Tajikistan, Ukraine, Kyrgyzstan, Kazakhstan. In 2007 Tskali Margebeli showed interest in re-

vival of the Georgian agriculture sector and developing the food industry. This period was marked by commencement of history of Marneuli Food Factory and Marneuli Agro companies. In 2009 these companies were united in Margebeli Holding. It is worth noting the European Bank for Reconstruction and Development (EBRD) allotted a 18 million USD preterential loan under the guarantee of Nabeghlavi, because it was almost impossible to draw other financial resource to this field independently. Since 2007 Tskali Margebeli has made over 43 million GEL investments to create full-cycle European standard agriculture production system.

BANKING NEWS

8 TBC BANK TO PROVIDE FREE CONSULTING SERVICES TO ENTREPRENEURS

BC Bank started business support program (7 steps to success), which provides free counseling for entrepreneurs in all directions, legal, management of marketing operations, business planning/management/control. On the project presentation Vakhtang Butskrikidze, director general of the bank, stated that number of training attendants is unlimited. During the course case studies classify expenditures, which will help attendants to define prognosticated profit and make long-term effective decision. Ministry of Finance also expressed wish to participate in the training. On the presentation Minister Khaduri offered area and intellectual resource of the ministry academy. 200 persons already completed trainings. Asian Development Bank (ADB) is a project partner, which assigned $60 000 for the project. Besides, ADB has opened $50 million credit line for TBC to lend micro, small and medium-size business. 5-years loan was allocated in 2012. Vakhtang Butskhrikidze expects enhancement of knowledge of the potential debtors and accordingly, increase of loan accessibility. He mentioned that bank serves to 43 000 legal entities, whose inputs in 2012 budget equaled to 603 million GEL. Management expects considerable growth of small and medium-size business lending, share of which in the bank’s total portfolio (2,3 billion GEL) does not exceed 12% currently.

TBC BANK ENDS JANUARY TO MAY PERIOD IN 25.5 MILLION GEL PROFITS

SC TBC Bank completed January-May 2013 with 25,5 million GEL profit. May profit equaled to 5,3 million GEL. By June 1, bank’s credit portfolio is 2,283 billion GEL (01/05/13 -2,236 billion GEL), deposits - 2,4 billion GEL (01/05/13 - 2,3 billion GEL), overall obligations - 3,046 billion GEL (01/05/13 - 2,9 billion GEL). Bank actives are 3,6 billion GEL (01/05/133,billion GEL). Bank operates for over 20 years. Main stockholders are: TBС HOLDING - 20,68%, European bank for Reconstruction and Development EBRD (19,8%), IFC (International Financial Corporation) -19,8%, DEG (Deutsche Investitions- und Entwicklungsgesellschaft mbH) - 11,32%, Development organization of KfW German Bank, Holland Development Bank FMO (Nerlandese Financierings-Maatschappi Voor Ontwikkelingsladen N.V.) -3,23%.

BTA ENDS JANUARY TO MAY PERIOD IN 1.463 MILLION GEL LOSSES

SC BTA Bank (Georgia) completed January-May 2013 with 1,463 million GEL (01/05/13-1,452 million GEL). By June 1, deposits (without banks’ deposits) equals to 40,5 million GEL (2012. -32,3 million GEL), credit portfolio - 75 million GEL (2012 -80,3 million GEL), overall obligations - 101 million (2012 - 97 million GEL). Bank actives are 124 million GEL (2012 .-122,6 million GEL). BTA Bank operates since 2001. 49% of its stocks belongs to JSC BTA BANK, 51% - Silk Road Financial Group. Large beneficiaries are fund Samruk Kazina (39,9%) and Georgie Ramishvili (31,6%). Stock capital of the bans is 25 million GEL (2012 -25,6 million GEL). Overall authorized capital of the bank equals to 577 million GEL (01/05/13-565,4 million GEL). GBC

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EBRD NAMED BANK OF GEORGIA AS THE MOST ACTIVE PARTICIPANT BANK OF TRADE SUPPORTING PROGRAM

ank of Georgia accepted award of European bank for Reconstruction and Development (EBRD). This prize is awarded to the participant banks of EBRD trade support

program, which most actively issue and confirm operations. The winner is evaluated by number of issued guarantees. Bank of Georgia informs that it’s unconditional market leader according trade funding, which is considerably determined by cooperation with world’s largest financial institutes, among them EBRD, TFP, IFC, GTFP and ADB with TFP program directions. Cooperation gives additional opportunity to bank to offer unique individual products for trade funding to their customers.

ILIAUNI BUSINESS REVIEW: 60% OF LIBERTY BANK CLIENTS ARE SATISFIED WITH SERVICE QUALITY

lia State University published next issue of its Business Review, saying that customers’ evaluation of Liberty Bank was studied in May. During the study, 100 clients of the bank have assessed situation with queues, service quality and skills of staff. The study revealed that 60% of interviewed have

positively evaluated service quality, while 40% – are discontent with it. 66% are satisfied with skills of staff, while 34% have assessed this parameter negatively. At that, 94% complained of queues, saying that they are almost always in the bank. Only 6% said that they have no problems with queues.

VTB BANK GEORGIA ENDS JANUARY TO MAY PERIOD IN 4.565 MILLION GEL PROFITS

TB Bank Georgia completed January-May 2013 with 4,656 million GEL profit (first quarter 2013-2,4 million GEL). Bank’s profit equaled to 3,8 million GEL in 2012. By June 1, non-banking deposits are 317,1 mil-

lion GEL, credit portfolio - 423,1 million GEL (first quarter 2013 -393 million GEL), overall obligations - 506 million GEL (first quarter 2013 - 498 million GEL). Bank’s actives are 571 million GEL (first quarter 2013 - 560,8 million GEL). Former United Georgian Bank operates on the market since 1995. Russian VTB is owner of 96,31% of the Authorized capital of the bank, 2,08% belongs to its affiliate Lakarpa Enterprises Limited. Beneficiaries are Russian Federation (72,71%) and Bank of New York International nominees (15,2%). Authorized capital of the bank equals to 65 million GEL (First quarter 2013 - 62,7 million GEL). GBC

PROCREDIT BANK GEORGIA ENDS JANUARY TO MAY PERIOD IN 6.39 MILLION GEL PROFITS

SC ProCredit Bank (Georgia) completed January0may 2013 with 6,39 million GEL profit (first quarter 2013 - 3,3 million GEL). By the end 2012 bank’s profit equaled to 21,58 million GEL.

By June 1 deposit amounts’ amount was 495,4 million GEL, credit portfolio - 701,09 million GEL, overall obligations - 839,4 million GEL, bank’s actives - 970,4 million GEL JSC Procredit Bank is a member of international banking group, operates in Georgia since 1999. It’s mainly oriented on the crediting of small and medium-size businesses. 100% of the bank stocks belong to Procredit Holding (ProCredit Holding AG &Co. KGaA). Out of 9 beneficiaries, more than 10% belongs to: IPC (17,88%), KFW (13,74%), DOEN Foundation (13,44%), IFC (10,39%). Stock capital of the bank equals to 1140,2 million GEL

CREDIT PORTFOLIO OF CONTINENTAL MICROFINANCE ORGANIZATION STANDS AT 4.2 MILLION GEL

redits, issued by micro-financial organization Continental City Credit, totaled to 4.2 million lari. According to audited report for 2012, chartered capital of the organisation, established in March 2012, amounts to 4.8 million lari. The loss for the reporting year amounted to 193,128 lari. Continental City Credit is represented so far in Tbilisi only – head office on Chavchavadze Avenue and branch in Gldani district.

INVESTBANK ENDS JANUARY TO MAY PERIOD IN 605 442 GEL PROFITS

SC Invest Bank completed January-May 2013 with 605 442 GEL loss (2012 profit: 3,3 million GEL). By June 1, non-banking deposit portfolio equals to 14,8 million GEL (2012 -15,9 million GEL), loans - 7,8 million GEL (2012-6,9 million GEL), overall obligations - 18,6 million GEL (2012. -17 million GEL). Bank actives equal to 33 million GEL (2012 32,3 million GEL). Invest Bank has operated since 2003. 70% of the bank stocks belong to KSN Foundation, 30% - TRENDFOR HOLDING LTD. Beneficiaries are Michael Hagen (70%), Brenda Patricia Cocksedge (15%), Stefan John Kelly (15%). Stock capital of the bank is 14,4 million GEL (2012. -15,3 million GEL).

PROCREDIT BANK GEORGIA TO PROVIDE FINANCIAL SUPPORT TO LAGODEKHI PROTECTED AREA

rocredit Bank will assign funds for Caucasus Nature Fund for administrative expenses of Lagodekhi protected territory. David Morrison, head of Caucasus Nature Fund (CNF), Rati Japaridze - chairman of Protected Territories Agency and Sasha Terrenes, director of Procredit bank signed grant contract on Thursday, in the Ministry of Environmental Protection and Natural Resources. Procredit Bank informs that they cooperate with Fund and Agency for 3 years and implemented several projects on the protected territories. Along with financial support, ecologic activities are permanently carried out with bank initiative. In the framework “Thank you that you love nature and protect cleanliness!” they delivered 60 trash bins to Lagodekhi state protection area. Also, bank employees took care on cleaning and marking of Protected area’s way. “As financial institute with social responsibility, Procredit Bank is actively involved in similar activities and will continue in this way. Caring for environment is extremely important not only for bank, but also for each employee”, - Sasha Terrens, director general of ProCredit bank stated.

OTC DEAL FIXED ON 0.6% OF LIBERTY BANK

eorgian Stock Exchange reported that 0.6% of shares of Liberty Bank was sold through OTC deal today. Buyer is not known at this stage. Single deal was made on 37.73 million shares, sold for 377,291 lari. Respectively, price per share was equal to nominal value – 0.01 lari. There were no large transactions on shares of Liberty Bank, starting from April 2011. Main shareholders of the bank are Liberty Holdings Georgia – 74.76%, BNY Limited – 11.26% (nominal ownership), Liberty Capital – 8.31%.

IFС GIVES CREDIT TO FINCA

nternational Financial Corporation (IFC) opens credit line to microfinance organization Finca. Funding is assigned for the support of small and medium-size business lending. The sides will sign Loan agreement on June 17, at 12:00 in the hotel Radisson Blu Iveria and organize press conference where management will present new products.

June 17, 2013 #09

STATISTICS

caucasian business week

RATING OF GEORGIAâ&#x20AC;&#x2122;S CREDITOR COUNTRIES

ermany is the largest bilateral creditor of Georgia By the end of May 2013. According to information published on Ministry of Finance website, Georgia owes $253,008 million to Germany. Russia takes second place among bilateral creditors with $104,560 million; Japan follows it with $92,279 million. Top-10 list of Georgiaâ&#x20AC;&#x2122;s bilateral creditors include: France - $51,982 million, USA - $32,139 million, Kazakhstan - $27,774 million, Turkey $24,270 million, Kuwait - $22,706 million, Ar-

menia - $15,103 million, Azerbaijan completes list with $12,699 million. Iran is also among the creditors ($9,925 million), Austria ($9,925 million), China ($4,404 million), Netherlands ($3,811 million). Georgia has the least debt of Uzbekistan (314 000), Ukraine (287 000) and Turkmenistan (211 000). Overall Georgia has 17 bilateral creditors. According to Ministry of Finance data, by the end 2013 foreign debt of the country was $4 207 616 000, by the end April $4 224 531 000. GBC

AZERBAIJAN

caucasian business week

June 17, 2013 #09

WORK UNDERWAY TO SET UP HIGH-TECH PARK IN AZERBAIJAN

SOCAR CHIEF MEETS SPANISH BUSINESSMEN

resident of Azerbaijan`s state oil company (SOCAR) Rovnag Abdullayev has met a Spanish delegation, who are in Azerbaijan to attend an Azerbaijani-Spanish business forum. Abdullayev hailed the bilateral ties between Azerbaijan and Spain. He said the importance of reciprocal visits, meetings and exchange of views in terms of expansion of the bilateral relationships. Rafael Aguilar, who headed the Spanish delegation, said Spanish companies which would attend the Baku forum specialized mainly in energy, oil and chemistry, and engineering. Abdullayev provided an insight into recent global and regional oil and gas projects implemented by Azerbaijan. azernews.az

AZERBAIJANI E-COMMERCE MARKET EXCEEDS $1.1 MLN THIS YEAR

he electronic commerce market amounted to 901,100 manats (over $1.14 million) in Azerbaijan in January-May 2013, the State Statistics Committee reported on June 12. Some 93.6 percent of the total volume sold in the five-month period fell to foodstuffs. Total retail sales in Azerbaijan increased 1.8 times compared to the same period of last year. The retail sales amounted to 7.5 billion manats. Compared to the same period of 2012, the sale of consumer goods rose by 8.8 percent. E-commerce growth is closely linked to information and communication technologies development. 2013 was declared the Year of ICT in Azerbaijan and to develop the domestic ICT sector, the ICT University was established under a presidential order in February. Online payments in Azerbaijan became possible in early 2009. Five to six years are needed for online sales to develop fully in the country. Currently, Azerbaijan is at the first phase of ecommerce implementation, with some products and services available online. In the future, the ecommerce sector will increase with online ticket and food ordering. When consumers start ordering online products and service online, sellers will expand their offerings and improve the existing services, which will lead to a sizeable percentage of e-commerce volume in the country’s economy. E-commerce is an industry which concerns buying and selling of product or services online. The participants of e-commerce are legal entities and individuals engaged in e-commerce and buying goods and services. azernews.az

rganizational work on creating an IT high technology park is underway in Azerbaijan, Deputy Minister of Communications and Information Technologies Elmir Velizade said on June 13. According to Velizade, the next step in these efforts is work on formulating a concept of operations and construction of the technology park. “Total area of 30 hectares in Sumgayit (an industrial city some 30 km north of the capital Baku) has been allocated for the construction of the high-tech park,” Velizade said. Creation of a technology park is a priority trend for the development of the ICT industry in the country. The project envisages providing opportunities for the development of small and medium-sized innovative enterprises, creation of a regional base for production and export of electronic hardware and software, turning the country into an effective transit information center, training and development of human resources for the emerging information society, as well as implementation of ICT in various industries. One of the important issues in the framework of the project is to cut fiscal, social and customs duties. A positive solution of these issues will create favorable environment for the import of goods into Azerbaijan, as well as encourage exports to regional markets. In April, the ICT Ministry said that work on the construction of a 20-hectare high-tech park had

started in Azerbaijan; it is supposed to be a territory with all the necessary conditions for the preparation of new and high technologies and researches. The high-tech park also envisages local and foreign ICT companies’ involvement. The government also passed a decision on which participants of the high-tech parks will be tax and customs duty-exempt for seven years. ICT plays one of the leading roles in the non-oil sector of the country’s economy and the budget revenues it generates have been increasing yearon-year. 2013 was declared the Year of ICT in Azerbaijan and the ICT University was established under a presidential order on February 2.

Start-ups financing

Velizade also said that the structure of Azerbaijan’s State Fund for ICT Development, which was established to implement the state policy on development and support of small enterprises in the scientific and technical fields, will be formed soon and it will start financing start-up projects in the near future. The Fund defines three ways of financing - investments, grants and credits. Priority will be given to export-oriented projects. Grants will be awarded primarily for the development of innovative ideas after detailed study. Each Azerbaijani citizen may avail of the advantages of the ICT Fund’s financing. Financial aid

to enterprises will be arranged through contests. Businesses can borrow small, medium and large loans. The amount of small credits ranges from 10,000 to 50,000 manats (up to over $63,000) for a threeyear term, while medium-sized credits are worth 50,000 to 500,000 manats and provided for a period of up to five years; large loans are allocated in the amount from 500,000 to 1 million manats for ten years. The annual interest rate should not exceed 5 percent. The maximum grant available is up to 300,000 manats, provided for a period of 36 months. The amount of small grants is designated at 10,000 to 100,000 manats, while medium grants could be from 100,000 to 200,000 manats and large ones -- from 200,000 to 300,000 manats. According to the ICT Ministry, primary financing volume of the Fund for 2013 is 15 million manats ($19 million). azernews.az

BRITISH AIRWAYS MARKS ITS RETURN TO AZERBAIJAN

ritish Airways has celebrated its successful six month return to Azerbaijan with its partners and customers at a ceremony held in conjunction with the American Chamber of Commerce Azerbaijan (AmCham) at the Hyatt Regency Hotel in Baku. Following the integration of bmi into British Airways, October 2012 marked the official launch of British Airways in Azerbaijan. The event was hosted by the Director of the American Chamber of Commerce Nargiz Nasrullayeva-Muduroglu, and attended by British Airways executives, members of the media and British Airways’ partners and customers. “As the largest representative of the business community in Azerbaijan, AmCham is delighted to welcome BA back to the country and celebrate their official launch with our member companies and esteemed guests,” the AmCham director said. Paolo De Renzis, Area Commercial Manager for the Middle East and Central Asia, said: “We are

delighted to be back in the Azeri market, after a smooth and effective transition.” “Azerbaijan is an extremely important market to us. Our priority right now is to showcase our exceptional customer service and world-class product offering as we reintroduce ourselves to the market,” De Renzis added. As part of the integration, the airline recently completed a refurbishment of all its A321 aircraft to provide Azerbaijani customers with greater comfort and an improved flight experience. Customers can now choose from Club World (business class) and World Traveller (economy class) with the latest on-demand in-flight entertainment technology and new seating for enhanced comfort. Customers from Azerbaijan con-

tinue to fly in to Heathrow T1, while flying with British Airways will mean they have access to a network of more than twenty destinations in the US and Canada. The airline offers a smooth and seamless transfer experience at London Heathrow, where the minimum connection time between T1 and T5 is 90 minutes. With its partners in the oneworld alliance, British Airways offers a global network of hundreds of destinations, seamless customer service, and shared benefits for frequent flyers. azernews.az

AZERBAIJAN DRAWS $1.4 BLN DIRECT INVESTMENT, INJECTS $4 BLN ABROAD IN Q1

he Central Bank of Azerbaijan (CBA) has said the total amount of foreign capital in Azerbaijan in direct investments hit $1.4 billion in January-March 2013. The share of the oil and gas sector stood at 83.2 percent. According to the balance of payments released by the CBA, the investments were mainly directed to financing the work carried out in the territory of Azerbaijan, particularly under the energy projects on the part of BP Exploration Ltd at the Shah Deniz gas field and the Azerbaijan International Operating Company (AIOC) on the Azeri-Chirag-Guneshli (ACG) block of oil and gas fields. Azerbaijan is an important current and future supplier of both oil and natural gas. ACG and Shah Deniz are the country’s largest hydrocarbon deposits, which are located in the Caspian Sea. The country received $2 million in bonuses for oil contracts in 2012, against $20 million in 2011. According to the CBA estimates, the volume of direct investments attracted to the non-oil sector totaled $238.1 million, accounting for 16.8 percent of the total amount. The CBA reported that the share of oil and gas products in exports stands at 94.5 percent. In January-March 2013, Azerbaijan exported $7.4 billion worth of petroleum products. The share of

refined oil products totaled $0.4 billion, while oil exported by the country was worth $7 billion. The AIOC produced oil products worth $6.6 billion of the total volume of exported oil. Other companies exported $0.4 billion worth of oil, of which $42.7 million fell to the share of condensate from the Shah Deniz field, and $332.5 million - to the share of the Azerbaijani state energy company SOCAR. Total value of exports attributable to the non-oil sector amounted to $452.1 million, increasing by 28.6 percent over a year. Azerbaijan’s exports during the reporting period amounted to $8.3 billion. The country invested $4 billion abroad in January-March 2013. According to the balance of payments, the funds were formed through direct investments ($184.8 million), portfolio investment ($53.7 million) and other investments ($3.74 billion). Other investments included trade loans and advances ($1.59 billion), loans and advances ($14.6 million) and deposits and cash ($2.13 billion). During the reporting period, liabilities in the amount of $1.34 billion, of which $1.01 billion fell to portfolio investments, formed in Azerbaijan. The analysis of the balance of payments by sec-

tors shows that as in previous years, foreign trade operations in the oil and gas sector had a positive balance, while red ink was observed in the nonoil sector in January-March. The total foreign trade turnover in Q1 2013 amounted to $10.7 billion, and the trade surplus made up $5.9 billion. During the reporting period, trade relations were maintained with 125 countries. 9.4 percent of the trade turnover accounted for the CIS countries, and 90.6 percent - other foreign countries. Intensive trade relations were observed with Italy, the UK, Turkey, the United States, Russia, Thailand, Indonesia, Germany, Japan, and Taiwan. They accounted for 67.7 percent of export and import transactions in Azerbaijan. In January-March, the current account surplus amounted to $4 billion or 13 percent less than in the same period last year. Current account surplus of the oil and gas sector of Azerbaijan amounted to $5.8 billion. However, according to the balance of payments, current account surplus of the oil and gas sector fully covers the current account deficit in the nonoil sector in the amount of $1.8 billion. Overall balance of payments surplus amounted to $1.67 billion, a decline of 31 percent. azernews.az

June 17, 2013 #09

ARMENIA

caucasian business week

MINISTRY OF AGRICULTURE AGAINST LEASING OF SYUNIK MARZ’S PASTURES TO IRAN

T ELECTRICITY, GAS AND WATER TARIFFS RAISED IN NKR

he Commission for Public Services Regulation and Economic Competition of the Nagorno Karabakh Republic held a sitting today to discuss the planned increases in water, gas and electricity tariffs. According to Karabakh-open.info, the gas tariff for those using up to 10,000 cubic meters a month will be raised to 156 AMD per cubic meter, i.e. the same tariff as in Armenia. The decision will take effect on August 1. The new tariff for those using over 10,000 cubic meters of gas a month is 290 AMD per cubic meter, starting from July 10. The commission also decided to set the new day tariff of electricity at 38 AMD per one kWh and

the new night tariff at 33 AMD per one KWh. Yet the commission chairman said the tariff will remain the same for citizens as the prime minister had issued a statement, in which the government expressed willingness to subsidize the day tariff by 13 AMD and the night tariff by 8 AMD, which means that the population will pay 25 AMD for electricity in the daytime and at night. Citizens currently pay 25 and 15 AMD respectively. The new tariffs will be used starting from July 10. The commission discussed water tariffs as well: the tariff was left the same for citizens – 100 AMD per cubic meter of water plus 12 AMD for sewer services. For other users, the tariffs were raised to 134 AMD and 16 AMD, respectively.

ABOUT AMD 74 MLN ALLOCATED TO FUND FOR SUPPORTING HAILAFFECTED FARMERS IN ARMENIA

everal state structures of Armenia have allocated about 74 million drams to the Fund which was set to support the hail-affected farmers, deputy Aleksan Petrosyan told reporters on

Thursday. According to him, 20 million has been allocated by the Police, about 20.1 million drams- State Revenue Committee, 10 million drams- Central Bank, and nearly 6 million drams- Armenia’s parliament. The City Hall of Armavir town has set 1.5 million drams. “As to the companies, the highest financial assistance at 4 million drams was provided by MAP,”

Petrosyan informed. The donations were even made by individuals: a woman from the Armenian community of Switzerland donated $500 to the Fund, he said. Yerevan Brandy Plant agreed to allocate about 20 million drams to the Fund till the end of the month, he added. Petrosyan informed the hail damage can reach 25 billion drams, and all the money donated to the Fund will be allocated to support the Armenian farmers. You can support the farmers donating money to the following bank accounts at Converse Banks : 1930047127690100 (AMD) and 1930047127690101 (USD). Hail damaged crops on about 17,000 hectares in Armenia on May 12. The government program adopted on May 23 envisages a number of measures to repair the harm, including individual approach to farm loan servicing, land tax and irrigation fee benefits, new anti-hail installations. ($1 – 410.83 drams). ARKA

FRENCH DEVELOPMENT AGENCY PROVIDES ARMENIA WITH 500 THOUSAND EUROS GRANT TO ARMENIA

he French Development Agency has provided Armenia with a 500 thousand euro grant for preparation of a number of infrastructure projects, the press service of the Armenian ministry of finance said. The agreement was signed Wednesday by Armenian finance minister David Sargsyan and French ambassador to Armenia Henri Reynaud. Specifically, approximately 300,000 euros will be used to finance a complete study of the irrigation systems in Ararat Valley as part of a broader project for construction of a water reservoir in Vedi. About 100,000 euros will be used for a comprehensive study of community development pro-

grams included in the tourist center Tatev. The minister said the rest of the money is very likely to be spent on conduct of a research to gauge chances for working out a national program for the management of solid waste, as well as providing assistance in the implementation of a program in the field of water management. The French Development Agency is a public institution financing sustainable development projects carried by governments, public companies, and the private and associative sectors on five continents. These projects focus on urban development and infrastructures, rural development, industry, financial systems, and education and health. It offers a range of financial instruments: subsidies, guarantees, shareholdings, and all forms of assisted and commercial loans—in response to each situation. Established in 1941, it is a central figure in France’s official development assistance system. ($ 1 – 411, 94 drams). ARKA

he Ministry of Agriculture of the Republic of Armenia is against the idea of leasing of the pastures of the Syunik Marz to the foreign businessmen. This was stated by the Head of the Veterinary and Animal Husbandry Department of the Ministry of Agriculture of the Republic of Armenia Ashot Hovhannisyan at the meeting with the journalists held on June 11. As reported by Armenpress, he noted that in those territories local sheep production could be organized, which will be old to the Iranian businessmen. The suggestion was submitted to the Government of Armenia by the Ministry of Agriculture. As stated by Ashot Hovhannisyan, the Government supports the position of the Ministry of Agriculture in this issue. The press spread news, according to which the former Governor of the Syunik Marz Suren Khachatryan visited the slamic Republic of Iran on January 15.

During the visit a memorandum of understanding was prepared with the Governor of the Atropatene Province Alireza Beigi, which provided for the conditions of leasing of the Syunik Marz’s pastures to the Iranian businessmen. The issue emerged a wave of public discontent. The Government of the Republic of Armenia clarified the issue, informing that no legal document is available on leasing the pastures to the Iranians. ARMENPRESS

IMPORT VOLUMES OF PINEAPPLE DROPPED

he volumes of import of pineapple to the Republic of Armenia in the first three months of 2013 have dropped by about 19 times in comparison with the same period of the revious year. As Armenpress was reported by the State Revenue Committee at the overnment of the Republic of Armenia, in the first three months of 2013 1,7 tons of pineapples were imported to Armenia and in the first three months of 2012 - 33,1 tons. During the first five months of 2013 the pineapple was imported mainly from the Netherlands, with the average customs value of 3313 AMD for one kilogram. In 2012 111,7 tons of pineapples (2097 AMD for 1 kilogram) were imported to Armenia from Iran, Netherlands, Belgium and the United Arab Emirates and in 2011 – 155,2 tons. In 2011 the pineapple was mainly imported from the United Arab Emirates, Germany, Greece, Iran and Ecuador with the average customs value of 1891 AMD for 1 kilogram.

The pineapple currently costs about 4800 AMD at the Armenia’s supermarkets, that is, about 45% more than the import price is. Pineapple is grown in Brazil, Thailand, Philippines, India, Nigeria, Mexico, Indonesia, China and Costa Rica. Pineapple is known for its numerous useful properties. ARMENPRESS

ARMENIA TO RECORD 5% GDP GROWTH THROUGHOUT 2013-2015: WB REPORT

rmenia will reach a 5% GDP growth in 2013 and will maintain it throughout 2014-2015, says the WB global economic prospects 2013 report released Thursday. The authors say the Armenian economy will keep growing more moderately in 2013-2015 against the 2012 high growth rates. The country will be pursuing cautious tax, budgetary and monetary policies to avoid “overheating” of the economy, reads the report. Some other CIS countries’ GDP will grow as follows: Russia – by 2.3% in 2013, 3.5% in 2014 and 3.9% in 2015, Georgia – 4% in 2013, 6.3%

in 2014 and 6% in 2015, Azerbaijan – 4.8% in 2013-2014 and 2.9% in 2015. Global GDP will grow by about 2.2% this year, 3% and 3.3% in 2014 and 2015 respectively, according to the report. Armenia’s GDR rose by 7.2% in 2012. Under the 2013 budget, the country’s GDP is expected to grow by 6.2%. Armenian president Serzh Sargsyan assigned the government to ensure 7% economic growth in 2013. As per the projection of the Central Bank, economic growth will constitute 5-6% by the end of 2013. ARKA

ARMENIA TO PARTICIPATE AT ITE& MICE TRAVEL EXPO IN HONG KONG

he National Competitiveness Foundation of Armenia informs Wednesday it will head to Hong Kong to participate in “ITE& MICE” travel expo to be held from June 13 to 16. Present are some 50 countries and regions from different continents and over 600 exhibitors who presented latest travel updates and ideas. The main goals of the Foundation is to promote Armenian tourism at the Asian market and to establish new business contacts. The Armenian delegation will also meet with the representatives of Hong Kong tourist companies to develop the bilateral tourism cooperation. ARKA

12 Kazakhstan

enewable energy’s share to hit 50 percent by 2050 in Kazakhstan. Renewable and alternative energy sources will provide 50 percent of all energy produced in Kazakhstan in 2050, the Minister of Environmental Protection Nurlan Kapparov said at the briefing in the Central Communications Service under the President. This target is a part of the Concept-2050 which envisages transition to “green” economy. In 2030 the level of renewable and alternative sources is expected to hit 30 percent. According to the Presidential order, the concept on Kazakhstan transition’s to “green economy” is being implemented since June 1.

CIS

caucasian business week

RUSSIA RANKED WORLD LEADER IN SHALE OIL RESERVES

azTransGas Tbilisi Returned to Kazakhs. After four years of suspension Kazakh management will be restored at KazTransGas Tbilisi, the Kazakh-owned gas distribution network of Georgian capital - Georgian and Kazakh governments agreed during a two-day meeting in Astana past week. Georgian side does not name the exact timelines when the management take-over will take place. It just promises the take-over will come “soon” and expects an inflow of Kazakh investments afterwards. KazTransGas Tbilisi owned by the Kazakh national energy giant KazMunaiGas affiliated company KazTransGas is under control of temporary management at the moment assigned there by Georgian National Energy Regulatory Commission in March of 2009 until clearance of USD 40 million arrears the Company owed to the state owned Georgian Gas and Oil Corporation. However Astana perceived introduction of the temporary management as annexation of the company by previous Georgian authorities for the debt rather increased than decreased during four years in spite of milder payment terms given by the state to the temporary management. After power shifted in Georgia past fall Astana immediately asked new authorities to return the seized assets to its legal owner of the Kazakh state company and Tbilisi promised to solve the issue but it lingered for several months unsettled up to May and the temporary management expiring on May 1st of 2013 was prolonged twice to June 1st of 2013 initially and then to June of 2014 as far as Tbilisi could not make its political decision until sides met in Astana by end of this past May. Meantime Astana promised to restore the frozen Kazakh investment projects put on halt in Georgia after assignment of temporary management in KTG Tbilisi.

Turkmenistan

hree cotton spinning enterprises to start production in Turkmenistan by 2014. The building of cotton mills is being carried out in the Kunyaurgench Etrap (district) of the Dashoguz velayat (region) and the cities of Turkemabat and Seydi of Lebap velayat. According to the report, construction of these complexes is entrusted to the Turkish Norsel International Insaat Dis Ticaret Sanayi Limited, which undertook to put them into operation in February 2014. Production of 6000 tons of cotton yarn per year is planned to be launched in the Kunyaurgench Etrap (district) of the Dashoguz velayat (province) of Turkmenistan. The facility in the city of Seydi will have the same output. The plant in the city of Turkmenabat will produce up to 4000 tons of cotton yarn per year.

Uzbekistan

ingapore-based Indorama to invest $20 million in textile project in Uzbekistan. Singapore-based Indorama Industry Pte ltd will invest $20 million in implementation of the third stage of textile production in the Ferghana region of Uzbekistan in 2014-2015. As reported, the first stage of textile production for processing of cotton worth about $30 million was commissioned by Indorama in September 2011, while the second phase costing $31 million is scheduled to enter service in late 2013. Following the commissioning of the second phase, the annual capacity of the unit created on the basis of the Kokand Textile Mill will increase by 5,000 tons to 15,000 tons of cotton. Funding for the project is provided through direct investment of the Singapore-based company and loans from foreign banks involved in the project financing. An agreement has recently reached between the State Joint-Stock Company (SJC) Uzbeklegprom and the Singaporean company on further expansion of the project. The agreement for implementation of the third phase of the production of cotton yarn in Kokand will be signed in the near future.

June 17, 2013 #09

ussian shale oil reserves are estimated at 75 billion barrels, which puts the country on top of the global standings, followed by the US and China. According to the report by the US Energy Information Administration (EIA), the estimated American shale gas resources equal 58 billion barrels, with third-place China having 32 billion barrels. But it’s the Chinese, who hold the leadership in shale gas reserves, with 1,115 trillion cubic feet. 802 trillion cubic feet puts Argentina in second, with Algeria not far behind on 707 trillion cubic feet. The US is fourth when it comes to shale gas (665 trillion cubic feet), while Russia is ninth with 285

trillion cubic feet. The EIA’s report indicates that the worldwide resources of oil and gas from shale formations are greater than was previously thought. The global shale oil resources are estimated at 345 billion barrels and shale gas – at 7,299 trillion cubic feet, which is a 10 per cent increase in comparison with the 2011 data. According to EIA’s administrator, Adam Sieminski, the report shows “a significant potential for international shale oil and shale gas.” The increase in estimates is explained by more countries joining the efforts to search for deposits, following the ‘Shale Revolution’ in the US. “As shale oil and shale gas production has grown in the United States to become 30 percent of oil

and 40 percent of natural gas total production, interest in the oil and natural gas resource potential of shale formations outside the United States has grown,” Adam Sieminski explained in a statement. Also on Wednesday, British oil giants BP have Russia’s natural gas reserves estimate at 32.9 trillion cubic meters from 44.6 trillion in last year. According to the company’s benchmark Statistical Review of World Energy, it’s Iran, who climbed to the top of the global standings, with the proven reserves of 33.6 trillion cubic meters. BP said that this year they decided to adjust its estimates for the former Soviet Union states, including Russia, where data on reserves remains classified. “Traditionally countries of the former Soviet Union had different criteria than used elsewhere. So we used a conversion factor to convert that from those countries where we don’t get direct data,” Christof Ruhl, BP’s chief economist, is cited as saying by Reuters. “In some countries, reserves are still a state secret, so we have to rely on these data.” But Russia remains a much larger gas producer than Iran as the international sanctions prevent the Islamic Republic from exploiting its natural resources in full. The estimate of gas reserves in the US where the energy industry has been transformed by shale oil and gas, due to lower prices and reduced drilling. The American gas reserves ended 2012 at 8.5 trillion cubic meters, down 0.3 trillion from indications of 2011. BP cut proven global gas reserves by nearly 21 trillion cubic meters from 208.4 trillion cubic last year to 187.3 trillion cubic meters as of end of 2012.

GM’S OPEL TO BUILD CORSA CARS IN BELARUS FOR LOCAL MARKET

eneral Motors (GM.N) will build a small number of its Opel Corsa hatchbacks in Belarus from next year as its European brand seeks to diversify outside its core mar-

ket. Opel, known as Vauxhall in Britain, said on Thursday that parent GM signed a deal to assemble the subcompact car from semi-finished kits at the Minsk factory of British-Belarusian company Unison. Initial plans call for a series of 7,000 cars in the first full year of production, for sale in Russia, Belarus and Kazakhstan. Assembling vehicles in this way is a common and inexpensive way for carmakers to circumvent import duties. Only a small amount of work is done locally, with the bulk of the manufacturing process carried out at home - in Opel’s case, at its Eisenach and Zaragoza plants in western Europe. The deal is for production to continue into 2017, with an option to add further models. “Building the Corsa in Belarus is part of our strategy to make cars where we sell them. The supply of assembly kits to a growing market also means additional utilization of our capacities in

Eisenach and Zaragoza,” Opel production chief Peter Thom said. GM’s losses in Europe more than doubled to $1.8 billion last year and it expects only a slight improvement in 2013, with car demand near 20year lows. Apart from Russia and Turkey - the only two big growth markets where Opel maintains notable operations - the business depends mainly

KAZAKHSTAN’S INVESTMENTS TO UZBEKISTAN EXCEED REVERSE INVESTMENTS

nvestments of Kazakhstan to Uzbekistan from 2004 to 2012 exceeded the reverse investments by 10 times, press service of the Ministry of Economy and Budget Planning of the Republic of Kazakhstan reported. “During the period from 2002 to 2012, the inflow of direct investments from Uzbekistan to Kazakhstan’s economy amounted to $10.5 million while the volume of Kazakh investments in

Uzbekistan from 2004 to 2012 amounted to $102 million,” the statement says. According to the ministry, the volume of the foreign trade turnover between Kazakhstan and Uzbekistan for 2012 totaled nearly $ 2.1 billion, which is 11 percent more than in 2011. Kazakhstan’s exports to Uzbekistan in 2012 amounted to 1.344 billion (up 14 percent), while the import from Uzbekistan to Kazakhstan amounted to 817 million dollars (up six percent).

on demand in western European countries such as Italy,France and Spain, where overall car sales have plummeted. Overcapacity problems in Opel’s western European plants has led to speculation that the Mokka SUV could soon be built in Zaragoza, Spain, and the Chevrolet Cruze in Opel’s Polish plant in Gliwice, rather than South Korea. Reuters

WORLD NEWS

June 17, 2013 #09

caucasian business week

DOLLAR SLUMPS VERSUS YEN; WALL STREET RISES ON DATA

he U.S. dollar fell to a 10-week low against the yen on Thursday, extending a selloff on worries about an end to central bank stimulus, while Wall Street stocks moved higher on stronger-than-expected U.S. economic data. Japan’s Nikkei .N225 fell 6.4 percent overnight, its second-biggest daily drop in more than two years. European markets lost more than 1 percent before recovering to end slightly lower. Concern about a pullback of central bank support mounted after recent comments from Federal Reserve Chairman Ben Bernanke on the Fed’s stimulus program and a decision by the Bank of Japan earlier this week to hold off on easing further. The concerns have fueled a selloff in global equities, emerging markets, risky bonds and commodities, all of which have been buoyed by central bank liquidity, while driving the safe-haven yen sharply higher. “This week’s BOJ meeting, which offered no new policy initiatives or stimulus programs, was the catalyst for the rapid change in sentiment in the foreign exchange market,” said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York. The dollar lost 1.3 percent to 94.77 yen as weakness in equities and emerging markets prompted investors to buy back the low-yielding Japanese currency, which is a favorite funding currency in

these trades. The dollar fell as low as 93.78 yen, its lowest since April 4, giving back almost all the gains made since the Bank of Japan’s aggressive monetary easing was announced on that day. Losses in Japanese stocks also prompted foreign investors to unwind hedges they took out to protect themselves from the yen’s recent slide. That also contributed to the currency’s gain. U.S. stocks got a lift after data showed retail sales rose more than expected in May and first-time applications for jobless benefits fell last week, suggesting resilience in the U.S. economy.

The Dow Jones industrial average .DJI gained 113.46 points, or 0.76 percent, at 15,108.69. The Standard & Poor’s 500 Index .SPX was up 14.10 points, or 0.87 percent, at 1,626.62. The Nasdaq Composite Index .IXIC was up 27.92 points, or 0.82 percent, at 3,428.35. “The bright spot for the entire week was the data point today on U.S. retail sales. That data supports the notion that the U.S. consumer is moving forward with spending despite the uncertainty of Fed tapering,” said Anastasia Amoroso, global market strategist at J.P. Morgan Funds in New York. The Federal Reserve meets next Tuesday and

Wednesday. Some analysts said if the Fed does not hint at an imminent exit from its quantitative easing next week, the market could see a relief rally. The MSCI All-Country World Index .MIWD00000PUS was flat at 361.65 follow two days of losses that moved it further away from a five-year peak set last month. European shares .FTEU3 closed 0.07 percent lower as bargainhunters picked up hammered mining and banking stocks. An index of emerging market equities .MSCIEF hit 11-month lows and was last down nearly 1 percent. Most emerging currencies remained under heavy pressure, with the Indian rupee falling to a record low. The euro lost 1.3 percent 126.38 yen, while against the dollar, it traded little changed at $1.3338. Brent crude rose 58 cents to $104.07 a barrel, having traded as low as $102.75 on reports indicating weak demand, including a cut in the outlook for global economic growth by the World Bank. U.S. crude rose 30 cents to $96.18 a barrel. Spot gold fell 0.7 percent to $1,378 an ounce. Investors headed for traditional safe-haven government debt. The benchmark 10-year U.S. Treasury note was up 14/32, the yield at 2.1776 percent. German government bonds had their biggest gains in a week. Reuters

EMERGING MARKETS ACT TO STEM CAPITAL FLIGHT

merging markets from Brazil to India took steps to stem an outflow of capital as concern mounts that developed nations are approaching the beginning of the end of an era pumping unprecedented liquidity. India’s central bank sold dollars the past two days to stem the rupee’s slide, two people familiar with the matter said, while Indonesia unexpectedly raised its benchmark interest rate today. Brazil said yesterday it would unwind some of the capital controls it began putting in place in 2010 -- when the Federal Reserve was embarking on its second round of quantitative easing, known as QE2. Thailand said it sold dollars in the past week. The moves follow the Bank of Japan’s decision this week to refrain from adding stimulus even after a slide in the nation’s stocks that risks hurting its campaign to revive growth. The MSCI Emerging Market Index of shares has fallen more than 10 percent since Chairman Ben S. Bernanke said May 22 the U.S. Federal Reserve could scale back asset buying if it’s confident of sustained economic improvement. “People are taking money off the table wherever they made the most money,” said Tim Condon, head of Asia research inSingapore at ING Groep NV, who previously worked for the World Bank. “Markets are re-pricing for what we would see in a normalization of U.S. Treasury yields and all that central banks can do right now is to batten down the hatches. We haven’t seen the end of this volatility.”

Stocks Fall

The MSCI EM index was down 1.6 percent as of 4 p.m. in Hong Kong. The yen, typically a haven in times of global market turmoil because of Japan’s status as world’s top net creditor, climbed 2.1 percent to 94.05 per dollar at 8:29 a.m. in London. Foreign selling of Thai, Indonesian and Philippine stocks has reached record levels as the threat of reduced Fed monetary stimulus spurs the biggest equity declines since 2011. Overseas investors unloaded a net $2.7 billion from the three stock markets so far this month, the biggest eight-day outflow since Bloomberg began compiling the data in March 1999. Three years after emerging-market policy makers from Brazil to South Korea warned about destabilization from record Fed stimulus, they are now

coping with the prospect of the spigot being tightened. Fed actions have pumped more than $2.5 trillion into the financial system since 2008.

Brazil’s Move

Brazil’s government said yesterday it will eliminate a tax on currency derivatives in a bid to arrest the decline of the real that is at a four-year low. The 1 percent tax had been applied on bets against the dollar in the country’s futures market in a bid to weaken the Brazilian currency. Finance Minister Guido Mantega had already announced on June 4 the elimination of a 6 percent tax on foreign investment in bonds purchased in the Brazilian market. Indonesia’s surprise increase in its benchmark borrowing cost today comes after the central bank this week raised the rate it pays lenders on overnight deposits and said it’s ready to buy government bonds from the secondary market to support the weakening rupiah. The currency pared losses after today’s decision, having touched 9,925 earlier, the weakest level since Sept. 15, 2009. Bank Indonesia will continue to sell dollars and buy government debt, Deputy Governor Perry Warjiyo said today. The rupiah is one of the worst performing currencies in Asia in the past year, and overseas investors have pulled more than $2 billion from stocks and local-currency bonds in Indonesia in the past two weeks.

Philippine Assurance

Indonesia’s central bank is studying plans to allow banks to sell their rupiah term deposits to other lenders to ensure rupiah and dollar stability in the market, Warjiyo said. The Philippine central bank will ensure that price movements including those in the foreignexchange market are not excessive, Governor Amando Tetangco said today before keeping the benchmark rate unchanged. Recent movements in the currency and stock markets are “part of investor reassessment of global risk,” he said. The Philippine benchmark stock index fell 6.8 percent today, the biggest drop since October 2008. Turkish central bank Governor Erdem Basci yesterday said that concern about Fed tapering of asset purchases has created significant market tension, sending bond yields higher across the globe. His Thai counterpart Prasarn Trairatvorakul today said a sell-off in his nation’s stocks isn’t a surprise given a past surge. He told report-

ers in Bangkok that Thailand sold dollars in the past week to smooth volatility in the baht.

Priorities Changed

“Emerging markets put measures in initially to limit capital inflows and now that currencies are weakening and giving them some concern about funding the current account, it’s perfectly natural that they no longer meet the needs of the policy makers,” said Richard Jerram, chief economist at Bank of Singapore Ltd., who has analyzed Asian economies for two decades. “Their economic concerns have changed, their priorities have changed so the policy changes make sense.” The Reserve Bank of India sold dollars through six state-run banks to prevent the rupee from dropping to 60 versus the U.S. currency, according to two people familiar with the matter who asked not to be named as the information isn’t public. The government plans to eliminate the cap on foreigndirect investment in telecommunications and raise the limit in defense to lure funds and boost the rupee, two Finance Ministry officials with direct knowledge of the matter said this month.

Indian Caps

Indian Finance Minister Palaniappan Chidambaram said in March a review of foreign-direct investment caps had begun, part of a government push to woo capital, fund a record currentaccount deficit and revive economic growth. The imbalance in the broadest measure of trade has weighed on the rupee, which plunged to its weak-

est level on record this week. Thai Finance Minister Kittiratt Na-Ranong said today the country should use its foreign reserves as a “cushion” to prevent excessive movements in the baht. Sri Lanka’s central bank yesterday said it will relax some foreign exchange regulations. The temptation for central banks to engage in competitive devaluation is fading as rising Treasury yields diminish the allure of assets in emerging markets, Bank of Israel Governor Stanley Fischer said yesterday. Brazil’s Mantega coined the term “currency war” in 2010, saying his country was the victim of rich nations that were using monetary policy to devalue their currencies and fuel exports. As speculation increased that the Fed will pare asset purchases, yields on 10-year Treasury bonds reached 2.29 percent on June 11, the highest since April 2012 and up from a record 1.38 percent in July. Wall Street’s biggest bond dealers are telling clients to shift from most fixedincome markets into U.S. stocks amid the worst debt losses since 2011. JPMorgan Chase & Co.’s Emerging Markets Currency Index has fallen 4 percent in the past month as investors pull money out of developing nation bond funds. “This kind of volatility is crazy but it reveals the amount of money that people feel might be trapped in fixed-income investments,” Condon said. “People have been warning for the longest time that this is the biggest bubble in the world. Those people look like sages now.” Rt.com

VARIOUS

caucasian business week

SO, 2013 AND FIFTH YEAR OF TBILISI INTERNATIONAL FESTIVAL OF THEATRE

e started in 2009 - building the festival’s reputation slowly on the quality of its programme, with the work of major international directors and companies presented during the international programme and a wide ranging programme of work from all over Georgia in the Georgian Theatre Showcase. Earth is different since 2009 - five years turn to be absolutely enough to change our lives - yes, we live in difficult times, rapid changes and full of contradictions period. Together with many concerns, we are constantly worried with diverse and numerous information, mostly negative. But aspiration of humans towards self-understanding is constant in all times. And the strive for happiness - non-stop and persistent. Yes, humans never consider life useless and always search for new questions and new answers - man always wants to be better.

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Festival is also changing its shape, its form, content - the festival program in general, as well as theatre itself, we believe, should be the mirror that reflects us, our times, and our society. What do we want? The Festival should influence the work of artists and generate a growing public demand for the arts! With 2013 program we think to be the unlimited space for individual and collective freedom with great anticipation of something, that truly “inspires to live better life on earth ! “ The 2013 journey will suggest you to discover great works by famous artists: Robert Lepage, Silviu Purkarete, Maya Klezcewska, Pippo DelBono, Company UK 1927 in main program alongside with emerging artists from Japan, The Netherlands, Argentina, Israel, Finland, Lithuania, Russia. And Remember, that LIFE IS BETTER WITH A LITTLE DRAMA IN IT !

GEORGIAN CHANTING FOUNDATION AWARDS MERITED REPRESENTATIVES OF GEORGIAN FOLK Additionally, Jemal Chkuaseli, the director of Georgian Song and Dance Ensemble Erisioni, was recognized as Merited Song Conductor for the popularization and promotion of traditional songs and dances globally. Robert Gogolashvili, one of the best song conductors in Georgia, was also recognized as Merited Song Conductor by the Fund, while Phridon Sulaberidze was acknowledged as the Dancer of the Century. Temur Kevkhishvili, for his contribution to folk songs and high-performance act, was acknowledged as The Voice of the Century. “Georgian Chanting in my perception is connected to the Patriarch (Leader of Georgia’s Orthodox Church, Ilia II), who encouraged us to love and cherish it even more,” said Vano Chkhartishvili,

eorgian Chanting, a newly established local fund aiming to promote traditional Georgian songs and chanting, organized its first charity concert on June 11, where excellent, recognized masters were rewarded with a special trophy and monetary gifts. The concert featured the Tbilisi Holy Trinity Cathedral Choir, Mariam Roinishvili, the Rustavi, Didgori, Shavnabada, Imeri, Basiani and Elesa ensembles and the Children’s Choir. Additionally, the Georgian State Academic Folk Song and Dance Ensemble Rustavi performed Kartuli, Rachuli and Khevsuruli. During the concert, the Georgian Chant Fund re-

the founder of the foundation, in his speech adding that the Foundation has big plans for development and support of traditional singing, song writing and chanting. And lastly, Vano Chkhartishvili awarded Anzor Erkomaishvili, for his contribution to Georgian folk with the title of The Caretaker of the Century. In addition to this, each person was rewarded with a monetary prize from 2,000 to 5,000 lari. The Foundation plans to carry out scientific research of traditional chanting and singing, the retrieval and restoration of ancient samples, as well as the launching of audio, video and digital versions of the songs, so they are accessible to the public. It also organizes various concerts, evenings and festivals in Georgia and abroad.

vealed those who dedicated their lives to promoting Georgian folk, traditional songs and chanting across the country. Andro Simashvili, Rostom Gogoladze, Polikarpe Khubunava were rewarded with the title of Georgian Folk Song Caretaker, together with Islam Pilpani for the promotion and restoration of Svan songs and instruments and Tristan and Guri Sikharulidze for popularizing Guruli songs. Mikheil Kilosanidze, a sound director who has recorded thousands of traditional songs, was recognized as the Folk Song Registrar, and Ensemble Elesa was rewarded with the title Young Generation, for researching and restoring lost Ajarian songs.

ANADOLU MEDICAL CENTER: EARLY DIAGNOSIS AND INNOVATIVE TREATMENT METHODS INCREASING CANCER PATIENTS’ SURVIVAL Georgian patients were given Medical Second Opinion and free consultation from Anadolu Medical Center specialists

n Saturday, at Radisson Blu Iveria Hotel, leading Turkish Medical Institution Anadolu Medical Center organized specialized Conference Discussion about “Latest Medical Updates”. During the conference, discussion was held with participation of Georgian specialists from leading medical centers. At the end of the event, Georgian patients were given free Medical Second Opinion. Also, successful story of patient Nikoloz Tsa-

malashvili was presented, who has defeated cancer with the help of Aanadolu specialists. The hosts of the event were: • Prof.Dr.Hüseyin Baloğlu / Multidisciplinary Comprehensive Approach to Cancer •Prof.Dr.Kayıhan Engin / Advanced Radiotherapy Applications • Dr.Kezban Berbeoğlu / Differentiated Thyroid Cancer: Radioiodine Treatment Anadolu Medical Center is leading European Medical Institution using cutting edge treatments. Since 2002, Anadolu Medical Center had close partnership and a data-sharing collaboration with John Hopkins Medicine, one of the most respected medical institutions worldwide, with over 100 years of expertise and experience. Anadolu Medical Center’s Oncology Center closely follows standards of care developed and practiced by Johns Hopkins in cancer research. The Oncology Center offers services related to the diagnosis and treatment of all types of cancers as well as preventive medicine. The Center is equipped

with world standard technology in the field of cancer treatment and also offers a comprehensive screening program, developed to identify healthy individuals and inform the public on cancer prevention. Designed around the concept of a “hospital within a hospital”, the Anadolu Oncology Center gives the patients the opportunity to receive treatment in a private dedicated environment. The concept enables all disciplines involved in the treatment and observation of cancer patients to work in collaboration under the same roof. This is of great

importance, as both the patient and primary doctor can effortlessly access the assistance of other medical disciplines. A multidisciplinary approach is recommended also for the diagnosis and treatment of gynecologic cancers. Anadolu Medical Center developed a dedicated international department of 50 full-time employees, providing translation in 15 languages and coordinating all aspects of the patient’s and his family visit, including scheduling appointments, arranging accommodation and an interpreter to facilitate all the communication.

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Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 4 Odessa St., Tbilisi Tel: 224-48-58 E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: 75 21 11, Fax: 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 91 01 94, 91 01 95, Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08 E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16

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

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89 GEORGIAN NATIONAL MUSEUM - PICTURE GALLERY Tbilisi. 11 Rustaveli Ave. Tel: 98 48 14 KARVASLA’S EXHIBITION HALL Tbilisi. 8 Sioni St. Tel: 92 32 27, KOPALA Tbilisi. 7 Zubalashvilebi St. Tel: 99 99 02, Fax: 99 99 02 MODERN ART GALLERY Tbilisi. 3 Rustaveli Ave. Tel: 98 21 33, Fax: 98 21 33 M GALLERY Tbilisi. 11 Taktakishvili St. Tel: 25 23 34 ORNAMENT - ENAMEL GALLERY Tbilisi. 7 Erekle II St. Tel: 93 64 12, Fax: 98 90 13

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

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL

PUBLICITY

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