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June 22, 2015 #104
June 22, 2015, Issue 104
caucasus1
BE INFORMED, DO BUSINESS
GEORGIA MICROFINANCE SECTOR’S BENEFITS AMID GEL DEVALUATION
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he market of microfinance organizations is one of the flourishing sectors in the Georgian economy with 71 legal entities, 300 service center, 4 344 employees and assets of over 1 billion GEL Pg. 5
APOCALYPTIC MOMENTS FROM TBILISI FLOOD
HOW MUCH MONEY DO YOU NEED TO LIVE IN GEORGIA?
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he amount of money a person needs to support themselves in Georgia is slowly rising. Pg. 5
BLACK SEA TRADE AND DEVELOPMENT BANK HOLDS BUSINESS FORUM IN TBILISI
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n June 19th, the Black Sea Trade and Development Bank (BSTDB) paid host to the regional business forum “Development of Entrepreneurship and Access to Capital”. Pg. 5
PRIMARY HEALTHCARE SECTOR IS A STRONG BASIS FOR ANY MEDICAL AND HEALTHCARE SYSTEM
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lobal Alliance exprt Dr. Dan Oppenheim has got a 25-year experience in providing medical services at hospitals and managing Pg. 4 public healthcare.
ECONOMY MINISTER RECEIVES HEAD OF MAJOR INVESTMENT FUND
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eorge Kvirikashvili, minister of Economy and Sustainable Development has met Gabriel Schultz, general director and founder of large investment fund Schulze Global Investments. Pg. 7
GEORGIAN BUSINESS UNABLE TO CREATE NEW JOB PLACES
AUTHORITIES TO REMOVE TAX ON REINVESTED PROFITS
Opinion of Influential Businessmen
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n 2014 the number of Georgian citizens employed in the business sector has decreased by 2.8% despite the fact that according to official statistics, the unemployment rate has declined. Pg. 6
Research
Irakli Garibashvili: Economic Growth Has Been Preserved despite Significant External Shocks Ilia Eloshvili: Investors to Finance Major Energy Projects by 2 billion USD
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Pg. 13
SERVICE OF DENTAL CLINICS
Visiting a dentist is not connected with pleasant feelings, but, periodically, we still have to use the service. ACT surveyed the residents of Tbilisi to find out for what purpose they usually visit dental clinics.
GAMING VENUES
Giorgi Kadagidze: Natural Disaster Will Not Affect the National Currency Rate Pg. 8 Bidzina Ivanishvili: I will Financially Assist the Government to Cover the Flood Repairs” Pg. 8 Irakli Lekvinadze: Georgian Business Shows Unprecedented Solidarity”Pg. 8 Otar abesadze: The Georgian Authorities Provide Reliable Partnership for Investors Pg. 7
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FLOOD IN TBILISI
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June 22, 2015 #104
caucasus business week
MAIN EVENTS GEORGIA BUYS MILITARY AIR DEFENCE SYSTEM FROM FRANCE
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eorgia will purchase a military air defence system from France – and the corresponding contract has already been signed. The agreement was signed by Georgia’s Defence Minister Tinatin Khidasheli at the Paris Air Showtoday. The 51st edition of the world’s oldest air show brought together players from military and civil aviation. Today was reserved for trade visitors before the show opens to the public later this week. Khidasheli said the “important contract” she signed today would significantly increase Georgia’s security and defence capabilities.
JAILED FATHER PARDONED TO BE WITH FLOOD-AFFECTED FAMILY
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man serving a light sentence has been pardoned by the President of Georgia so he can be with his family as they recover from the destructive flood that hit Tbilisi on the weekend. The man, who was not identified, was behind bars when the flood devastated his family home. Not long after the tragedy Georgia’s Minister of Corrections Giorgi Mgebrishvili granted the man temporary release so he could visit his wife and children, who had suffered in Saturday night’s natural disaster.
BULGARIAN PRESIDENT VISITS GEORGIA AFTER 15 YEAR BREAK
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fter a 15 year hiatus, the President of Bulgaria is visiting Georgia and offering his heartfelt condolences four days after a flood that caused devastating damage in capital Tbilisi. Georgia’s President Giorgi Margvelashvili met his Bulgarian counterpart Rosen Plevneliev today and stressed that the visit of the Bulgarian official during this trying time in Georgia was “very important and sincere”.
WORLD LEADERS OFFER CONDOLENCES TO GEORGIA AFTER FATAL FLOOD The international community is continuing to offer its support and sorrow to Georgia over the tragedy that occurred in Tbilisi on June 13. President of Estonia Toomas Hendrik Ilves, who recently visited to Georgia, expressed his condolences to the President of Georgia Giorgi Margvelashvili about the devastation caused by the flash flood in Tbilisi. Other high officials from EU also offered best wishes and support to the Georgian people. Spokespersons speaking on behalf of EU High Representative for Foreign Affairs and Security Policy and European Commission Vice President Federica Mogherini, European Commissioner for Humanitarian Aid and Crisis Management Christos Stylianides, and European Commissioner for European Neighbourhood and Enlargement Negotiations Johannes Hahn all stressed the EU stood in full solidarity with Georgia in this “hour of need”. Poland’s Foreign Ministry allocated €100,000 to assist Georgia. This was announced by Ambassador of Poland to Georgia Andrzej Cieszkowski on his Twitter account. The United States (US) is joining the international community and offering assistance to help Georgia and its people recover from the deadly flood that hit Tbilisi on Saturday night. US State Department spokesperson Jeff Rathke announced the US was ready to support Georgia in this difficult time.
EU, UNHCR AND FOREIGN GOVERNMENTS OFFER ASSISTANCE TO GEORGIA
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he international community is offering assistance and standing in solidarity with Georgia and its people following the deadly flood that hit Tbilisi on Saturday night. The European Union (EU) has expressed its full solidarity to Georgia as it works to clean up from the devastating flood. The EU released a statement yesterday that said the EU was ready to deploy assistance to help the stricken country.
APOCALYPTIC MOMENTS FROM TBILISI FLOOD: 19 PEOPLE DEAD, DOZENS ARE LEFT WITHOUT HOMES
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eavy rainfall, which started before midnight, turned normally small stream, Vere, which runs in the Tbilisi center across Vake and Saburtalo districts, into a raging river. A huge stream of Vere flooded significant portion of a 4-km highway, linking Vake-Saburtalo road to Hero’s Square; it swept cars and at least one small house, flooding others on its way; 3 people are missing and 19 is dead, for this moment. Central roads were also flooded. Rescue officers managed to take several people out of ground and first floors of flooded buildings. Images on Tbilisi City Hall’s Facebook page showed roads washed away, collapsed hillsides and multiple vehicles tossed like toys. Rescue workers carried people on their shoulders through water that was up to the waist. Garibashvili declared June 15 as a day of mourning, in recognition of the dozens of people who died during and immediately after the catastrophe. He noted every family who had lost a loved one would receive 10,000 GEL (about 4,500 USD) financial aid from the state. GARIBASHVILI: SOLIDARITY PARK WILL HONOUR FLOOD VICTIMS AND RECOGNISE UNITY Head of the Government of Georgia has come up with the idea to establish a new recreational park in the territory of Tbilisi Zoo and Vere river valley in memory of the victims of the June 13 flash flood. Prime Minister Irakli Garibashvili said June 13 was a “tragic day” that united all citizens of Georgia. Furthermore, the following two days had seen thousands of volunteers unite to clear the devastated area in central Tbilisi. These people were “witnesses and participants” of an incredible example of solidarity. GEORGIA PM : FLOOD DAMAGE EXCEEDS 100M GEL Latest estimates have put Tbilisi flood damages at 100 million GEL, says Georgia’s Prime Minister Irakli Garibashvili. “The damage is quiet extensive. We have been working with donor organisations and I hope they would help us to overcome this challenge,” said Garibashvili after meeting with affected families in Akhaldaba, near Tbilisi. The PM said the Government would review the damage and present specific projects to donor organisations, which would then finance the recovery works. ZOO ANIMALS ROAM STREETS IN TBILISI, AFTER DEADLY FLOODS The animals were set free from their enclosures after a heavy downpour that began soon after midnight, which caused a stream to burst its banks and sweep through the zoo, destroying enclosures. Reveling in their unexpected freedom, the animals roamed the streets, causing several awkward encounters with bewildered residents and stunned drivers. 169 FAMILIES ARE LEFT WITHOUT HOMES Dozens of families remain homeless as their houses were destroyed or damaged in the capi-
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tal. They are some victims,” vice mayor of Tbilisi Irakly Lekvinadze told Reuters. He said initial estimates put damages at $18 million. Rescuers who plucked families to safety from flooded homes have been praised for their courage. Prime Minister Irakli Garibashvili vowed that “not a single family” affected by the flood “will be left without attention”. ESCAPED ZOO TIGER KILLS MAN IN TBILISI Police have shot and killed a white tiger that killed a man Wednesday in Tbilisi, Georgia, a Ministry of Internal Affairs representative said, after severe flooding allowed hundreds of wild animals to escape the city zoo. The tiger attack happened at a warehouse in the city center. The animal had been unaccounted for since the weekend floods destroyed the zoo premises. The man killed, who was 43, worked in a company based in the warehouse, the Ministry of Internal Affairs said. Doctors said he was attacked in the throat and died before reaching the hospital. PENGUIN FROM FLOODED TBILISI ZOO SWIMS TO AZERBAIJANI BORDER VILLAGE QESHALO, OTHER ANIMALS ARE STILL MISSING After floods devastated the Tbilisi zoo, some of the surviving animals were rounded up in the Georgian capital -- but a penguin made it all the way to the border with Azerbaijan. An African penguin from the zoo was spotted swimming in a river near a bridge at the international border some 60 kilometers from Tbilisi, the zoo administration said on June 17. “He is alive,” it said. “A group has gone to bring him back to Tbilisi.” Over half of the zoo’s animals -- some 300 animals -- were either drowned in the muddy waters or were later shot by police, but some of them are still missing. Armed police in the Georgian capital are still searching for a tiger and a hyena five days after a flash flood obliterated the city’s zoo and a day after the shooting of another tiger that mauled a cleaner to death as he checked a flooded warehouse. EU OFFERS €3M FINANCIAL AID The European Union (EU) is offering Georgia financial aid to provide durable housing solutions and address humanitarian challenges in the aftermath of severe flood that devastated Tbilisi on June 13. The European Commission said it would provide up to €3 million (about 7.5 million GEL) financial aid to the Georgian authorities and an additional €400,000 (1 million GEL) to non-governmental organisations (NGOs) in Georgia to deal with the most immediate consequences caused by the deadly flash flood. CITY HALL TO TAKE OUT A 18 MILLION LOAN TO REPAIR ROADS City Hall to Take out a 18 Million Loan to Repair Roads Tbilisi Assembly granted the City Hall the right to take out a loan of GEL 18 million to repair roads damaged during the flood.
According to the head of the Finance and Budget Department of the City Hall Levan Tevzaia, the loan recipient will be the Municipal Development Fund. Representatives of the opposition interested in which of the affected streets will be repaired with the use of the loan, as well as who will be the donor - whether the funds will be received from the international financial institutions or through borrowing from the budget of Georgia. Jaba Samushia, the head of the Budget and Finance Committee at the Tbilisi City Assembly says that the repair work will take place in 42 streets of the capital. “A large part of the received amount will be used for the repair of streets affected by the disaster – at the moment their number reaches 15. The loan will be allocated by international financial institutions. In addition, the state will allocate GEL 10 million to overcome the consequences of the disaster. A new draft of Tbilisi budget will be submitted within 10 days. All available resources will be spent on overcoming the consequences of the disaster,”- the deputy notes. GLOBAL CAMPAIGN RAISES $34,810 FOR TBILISI FLOOD VICTIMS People all over the world have a chance to help Georgia’s capital city recover from a devastating flood that slammed Tbilisi. More than $18,000 USD (about 40,500 GEL) has been raised in less than 24 hours through donations from about 375 people via Indiegogo, an international crowdfunding website. The account was established by a Georgian woman on Sunday afternoon to help raise money for people affected by the flash flood. PARTNERSHIP FUND TO ASSIST DISASTER VICTIMS BY 50 000 GEL Partnership Fund will make financial assistance to disaster victims. As the management of Partnership Fund declares, the Fund is ready to allocate 50 000 GEL, which should be spend on families affected from heavy rain and flood. “We are sorry due to the incident, and offer our condolences to the families, who experienced the most difficult situation because of the last night’s disaster. We have allocated 50 000 GEL and the sum should be transferred on a special account. We want to make contribution and alleviate their situation”, Irakli Kovznadze, executive director of the Fund has declared. WORLD BANK GROUP TO PROMISE LONG-TERM ASSISTANCE The World Bank Group notes with grave concern the reports on the recent devastating flooding in Tbilisi that took human lives and brought enormous damage to the capital. Our profound condolences go to the families of the deceased and to the entire country. “We know that the people of Georgia have tremendous resourcefulness and resilience. The loss of life will be deeply felt, but we have every confidence that after the shock and sadness, the city will move forward again. As a longstanding international partner of Georgia, the World Bank Group stands ready to assist the country in coping with the consequences of this natural calamity and mitigating potential disasters of this kind in the future”, the announcement says.
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TAXES
June 22, 2015 #104
caucasus business week
AUTHORITIES TO REMOVE TAX ON REINVESTED PROFITS
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Opinion of Influential Businessmen
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ast period discussions on the reinvested profits tax abolition have intensified. The initiative was first raised by Economy Minister Giorgi Kvirikashvili. The decision was positively appraised by the Taxpayers Association. The organization put forward its own scheme for the tax removal, under which the tax amount should be reduced stage by stage in line with the following scheme: The current tax: 15%; I stage – 10%; II Stage – 5%; III stage – 0%; Current Tax on Dividends: 5%; I stage – 10%; II stage – 15%; III Stage – 20%. The Authorities should realize the change will intensify the economic activity, the private sector will increase capitalization. A s result, the state budget revenues will grow from other taxes, the Taxpayers’ Association says. Finance Minister Nodar Khaduri has also commented on the gradual removal of the profits tax. The Authorities are working on the tax removal. It will not be abolished immediately, because the budget revenues from the profits tax is 900 million GEL, Khaduri said. “We are discussing the Estonian model, but we should not accelerate the process, because at this stage the state budget receives 900 million GEL. If we immediately remove the tax, the state budget will be cut by 900 million GEL. We are working on the issue and the final model will be expectedly submitted in September, as well as a roadmap for moving to the Estonian model”, Khaduri said. The Finance Ministry is developing a new initiative to exempt the business sector from the profits tax and only dividends will be taxed. The business sector representatives have positively appraised the initiative. The freed funds will be directed to the business promotion and development, they noted. The finance ministry is also developing another model. Deputy Finance Minister Lasha Khutsishvili talked about the tax removal details last week. Today, the issue of removing the profits tax and increasing the dividends tax is being widely considered, but the Authorities have no similar plans, he said. “The Estonian model implies not a growth in dividends tax, but replacing the profits tax and dividends tax by a new tax, that is, a distributed profits tax. It is important that this new tax must not be associated with the dividends tax”, Lasha Khutsishvili said. THE ESTONIAN MODEL Estonia introduced the distributed profits tax 15 years ago and it is regulated by the Income Tax Act, under which the distributed profits tax refers to: 1. the distributed tax; 2. Employees’ Salary Profits; 3. Donations, Contributions and representative expenditures; 4. Some expenditures or/and costs that are not related to a company business performance. According to the Income Tax Act, the profits distribution includes: issuing cash and noncash dividends, reduction of capital, buying off a stake/ share or capital liquidation distribution if it exceeds the deposits. Estonia taxes the profits in the distribution component, but the country does not tax dividends in addition. Moreover, the rate of the distributed profits and the income taxes are the same to prevent registration of profits distribution as wages. The Estonian model’s peculiarity consists in the fact some types of expenditures are taxed by a profits tax to prevent profits distribution through the expenditures component. In the Georgian taxation law, this norm is analogical to the expenditures that are not deducted from the taxable revenues and implies the following categories:
Foreign Investors should be Encouraged to Put Investments in Georgia instead of other Countries, Abuladze noted. “State Expenditures will considerably Decline, Doing Business will Go Easier” Businessman Lasha Papashvili backs all preferences to encourage the economy and asserts these preferences will bring only positive affects. “This is a complex issue. Profits tax removal will make tax audit useless and state expenditures will considerably decline. As a result, doing business will go easier. In general, the business sector will be encouraged”, Papashvili noted. - Expenditures (including for real estate purchase) or issued funds that are not related to the company business activities; - expenditures or issued funds without due documentation; -issued loans or advanced payment in countries with preferential taxation for registered legal entities and so on. The calculation of the distributed profits tax does not require a detailed analysis of separate incomes and expenditures and an accent is made on controlling issued money. The model based on this experience significantly simplifies the tax administration. Indeed, the control is necessary to prevent masking profits as expenditures, but contrary to a classic model of profits tax, there is no necessity of controlling the expenditures that are not related to the outflow of money from the company. Similar expenditures are as follows: amortization, charged interest rates, recalculation losses and so on. It is also important the tax profits of the company equals to the financial profits in the distributed tax model (contrary to the Georgian model). This signifies the tax audit may be fully based on the audited financial accountability of the company and this will cut the time and expenditures that are required for the audit. - Do you expect these changes to bring real support to the business sector and what do the businessmen think about this initiative?
“In this case Georgia will Become more Investment-friendly Country”
‘This Decision will Encourage Businessmen to Make Reinvestments”
Businessman Tsezar Chocheli says these changes will make positive affect on the business development and the economy, in whole. Under the current legislation and system, the government takes 20% and fewer investments are made. This decision will encourage the business sector, Chocheli added. “So far the business sector has avoided making reinvestments and they used to make focus in dividends. I believe this decision will encourage businessmen to make reinvestments”, Chocheli said. Similar models work in many countries, he added. Moreover, many countries have exempted the business sector from all taxes in order to promote the production, he added. “For example, China and Korea have set quite good preferences for the production development. China has developed regions for many years without taxes”, Chocheli noted. Today’s decision will make positive influence on the Georgian economy, he said.
“Administration Burden Removal will Leave Money in Business Sector”
Natakhtari company corporate director Nikoloz Khundzakishvili says the initiative is acceptable. Two models are being discussed. In the first case, reinvested profits will be exempted from taxation. In the second case, the entirely profits will be freed from taxation. Khundzakishvili backs the second case because of less administration. “Reinvestments need further administration to prove whether this or that expenditure is directed for reinvestments. We may create a bad system, by occasion. A full removal will be more convenient for the business. The Administration burden will be removed and the money will remain in the business”, Khundzakishvili noted.
“No businessman Trusts Empty Initiatives, Uncalculated Initiatives”
“Foreign Investors should be Encouraged to Put Investments in Georgia instead of other Countries”
GeoPlant Director Mikheil Chkuaseli: “The Authorities have taken a good decision, but they should not focus on dividends. It is more expedient to revise the budget expenditures than to tax dividends proportionally to reduction in profits tax or growth in dividends tax, Chkuaseli said. In this case Georgia will become more investment-friendly country, he added. “Georgia may develop the stock exchange and the stock market on the regional level and many physical bodies may be related to this process”, Chkuaseli noted. This is an encouraging decision for the business sector, especially, for new investments, he said. “This will be huge stimulus. The existing business has already taken these decisions amid the current taxation regime”, Chkuaseli noted.
Archi Group development company executive director Tornike Abuladze welcomes any decision for removing taxes, but he considers administration to be very important. This is the business sector promotion, but, it mainly promotes foreign investors, he said. Georgian businessmen put money in Georgia, enlarge their business activities in Georgia, while
Businessman Temur Chkonia positively appraises the mentioned initiative, but he thinks the Authorities should develop a joint program with full calculations. The less taxes, the better for the business. At the same time, everything should be calculated to know whether these decisions will serve the state interests. “Every government is trying to do something, but we remain poor anyway. This signifies these attempts and initiatives are not programmed and they are useless. No businessman trusts empty initiatives, uncalculated initiatives. The fact is the Government is trying to do something, but only substantiated and skillfully developed program will bring real results and the business promotion will develop the whole country”, Chkonia noted.
INTERVIEW
4 HEADLINES GEORGIA HOSTS EU TOP OFFICIALS AT BATUMI CONFERENCE
caucasus business week
INVESTORS TO FINANCE MAJOR ENERGY PROJECTS BY 2 BILLION USD The Georgian energy sector will draw considerable investments. Namely, Pegasus East West company plans to invest about 300 million USD to purchase the Gardabani steam power plant. At this stage, the agreed value of the deal makes up 90 million USD. As reported, the plant’s installed generation is 230 megawatts. The asset is being constructed by Turkish company Calik Enerji. It should be also noted the electricity generated by the Gardabani steam power plant will be mainly consumed in Georgia. Deputy Energy Minister ILIA ELOSHVILI talks about the sales of the Gardabani steam power plant and other investment projects in the energy sector.
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ore than 100 foreign guests including high officials from European Union (EU) member states met in Georgia’s coastal city Batumi today to discuss Georgia’s European future. On June 18 and 19 Batumi will host the 12th international conference ‘Georgia’s European Way’, organised by the Office of the State Minister of Georgia on European and Euro-Atlantic Integration. This year’s conference will focus on the outcomes of last month’s Eastern Partnership Summit in Riga and the implementation of the Georgia-EU Association Agreement (AA), which the country signed with the EU in June last year. It will also address the geopolitical situation in the region, along with security challenges in the EU’s Eastern neighbourhood. At the start of the event Georgia’s Euro-Atlantic Integration Minister David Bakradze welcomed guests to the two-day event, followed by greetings by the President of Bulgaria Rosen Plevneliev, Georgia’s Minister of Foreign Affairs Tamar Beruchashvili, Lithuania’s Minister of Foreign Affairs Linas Linkevicius and Deputy Speaker of Latvia’s Parliament (Saeima) Inese LībiņaEgnere.
JANUARY-MAY EXPORTS MARK $884 MLN
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he value of Georgia’s exports and imports reached almost $4 billion USD in the first five months of 2015, say Geostat, the National Statistics Office of Georiga. Preliminary data released today revealed Georgia’s External Merchandise Trade (excluding non-organised trade) amounted to $3.9 billion between January and May 2015. This was a 13 percent decrease on the same period of 2014, stated Geostat. Between January-May 2015, the value of exports decreased by 25 percent, reaching $884 million, while the value of imports dropped by nine percent and amounted to $3.03 billion in comparison to respective 2014 data. The trade deficit equalled $2.15 billion and its share in trade turnover constituted 55 percent. Detailed data on External Merchandise Trade of Georgia will be published by Geostat onJune 22, 2015
EU’S HIGH-SPEED INTERNET NETWORK BOOSTS RESEARCH COOPERATION ACROSS EAP
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esearchers and students across Georgia will soon be able to fully participate in the digital economy thanks to the European Union’s (EU) high-speed Internet network project for Eastern Partnership (EaP) countries. The European Commission signed a €13 million contract with networking organisation GÉANT to expand connectivity in Georgia and five other EaP countries – Armenia, Azerbaijan, Belarus, Moldova and Ukraine. he project aimed to create a regional high-speed Internet network dedicated to research and education (R&E) across EaP nations. It will interconnect the National Research and Education Networks (NRENs) in EaP partner countries and integrate them in the pan-European GÉANT network. EU Ministers responsible for the Digital Economy and their representatives met their Georgian, Armenian, Azerbaijani, Belarus, Moldovan and Ukrainian counterparts on Thursday to discuss the challenges and opportunities of the digital economy of the EaP.
LOCAL INSURANCE FIRM WILL FULLY COMPENSATE TBILISI FLOOD VICTIMS
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Georgian insurance firm is promising to fully compensate every one of its clients who were victims of the devastating Tbilisi flood, which damaged properties, personal belongings and affected the health of many. More than 100 calls have been made to GPI Holding, one of the leading insurance companies in Georgia, by clients reporting their loss. GPI Holding said most claims related to property, health or car damage, and estimated the loss exceeded 500,000 GEL.
June 22, 2015 #104
- The Gardabani steam power plant’s sales is the most relevant issue for the recent days. Pegasus East West Ltd is interested in purchasing the asset. The negotiating process with the company and changes into the asset’s management are very interesting. -Indeed, this is a very important issue. Georgia has not drawn similar major investments for a long period and this is a very good decision for both parties. We have concluded an agreement and the parties have agreed to put the asset into exploitation in late November 2015. At this stage, only little formalities should be decided and after that the company will pay 290 million USD. This is a foreign direct investment that will positively affect the whole economy. This deal will also affect the GEL exchange rate. This is the first asst we have sold and we hope to make similar successful deals in the future too. This is a very strong and experienced business group that operates in Asia, Israel, Africa and so on. It should be also noted Mikheil Mirilashvili is one of the founders of the company. He is a very serious Israeli businessman from Georgia and he is interested in making investments in Georgia ‘s agribusiness, tourism and so on. As to the future projects in the energy sector, we have quite positive expectations. We plan to con-
struct steam power plants with a total generation of 500 megawatts in Gardabani. We have already launched negotiations on carrying out feasibility studies. The preliminary exploration has showed in two years we will draw about 2 billion USD investments to Gardabani as part of the steam power plants construction projects. The Co-Investments Fund has also intensified operation. They have chosen financially problematic projects, concluded agreements on important projects of about 2 billion USD investments. The issue is of Mtkvari, Tskhenitskali, Khobi projects. Negotiations are underway on Oni, where a cascade will be located and negotiations are underway on Namakhvani Cascade too. Moreover, we are working on inauguration of the Nenskra HPP. We will also launch Khudoni HPP. All the mentioned HPPs will generate about 2300-2400 megawatts. - Negative energy balance is one of the major challenges before Georgia. Our country partly depends on electricity imports. Will Georgia depend on energy imports after implementation of these projects? - Georgia’s electricity consumption makes up 10 billion kilowatt-hours a year, of which we import 800 million kilowatt-hours from the Russian Federation for the autumn-winter period. This is a main goal of our government to get rid of the energy dependence. Moreover, we have got problems of commercial character. We have no agreements with the Russian Federation and consequently, it is difficult to make forecasts. Every year prices change, therefore, we cannot make any forecasts. This is a serious blow to our economy. This dependence makes serious problems to major investors. To get rid of the energy dependence, we should construct three additional steam power plants. As reported, we have already constructed the first one and feasibility studies are being prepared for another asset that will be constructed in two years. These assets will provide an energetic basis for the autumnwinter period. The above-mentioned HPPs will also leave generated electricity in Georgia for 12 months
and this list will be also replenished by wind-driven power plants. These projects will be implemented for 7 years for our economic survival. It should be also noted the HPPs will not be exempted from taxes. - You have mentioned HPPs. Do you apply this experience in other regions? We know a part of the territory will be flooded for the Namakhvani HPP construction in the Racha Region. - There are regulations for implementing this or that project. When the Authorities decide to implement this or that project, all procedures should be carried out under determined procedures. The investor must obtain a construction license, feasibility studies should be carried out, public discussions should be organized and so on. If the local residents should be resettled, we should develop a resettlement plan. Both the government and the population must act in line with the legislation. Our experience from relations with the population suggests that, first of all, we should request from investors to submit a refined, international-standard plan in line with requirements of the WB, EBRD or any other major finance institution. Our experience suggests that everything should be carried out in line with the legislation. We should also listen to the population and take into account their problems and answer their questions. The employment issue is also very significant along with Khudoni HPP construction issue. We always try to maximally employ domestic residents, but we know investors do not make focus on patriotic motives and they always care for making profits. They basically bring qualified staff from abroad. For example, over 1200 persons will be employed, including 500 domestic residents. Moreover, the HPP will pay a property tax during the construction period. When the HPP construction ends, the Georgian economy will receive 300-400 million USD a year, while the asset will pay annual 1% of the property tax, that is, 4 million GEL will go the local budget a year. After the construction completion, the asset will employ several hundreds of local residents.
DAN OPPENHEIM: PRIMARY HEALTHCARE SECTOR IS A STRONG BASIS FOR ANY MEDICAL AND HEALTHCARE SYSTEM
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lobal Alliance exprt Dr. Dan Oppenheim has got a 25-year experience in providing medical services at hospitals and managing public healthcare. He has worked as a director general for various hospital in Israel (The Rabin Medical Center, Herzliya Medical Center) and as a strategic and hospitals planning coordinator at various academic institutions. He will also help Georgia in hospital management issues as part of Global Alliance. We have interviewed him about the world’s advanced hospitals planning issues. „The health systems in the world develop at an incredible rate and the investment in these systems is a very important and a very expensive investment. That’s why there’s a great deal of importance to thorough and detailed planning of the various levels of the health system of a country. Each State design its health system based on population size, age, geographical dispersion, morbidity and genetics as well as financial constraints. In order
to make the medical services available, at the highest quality, and using advanced technological means and according to the planned budget. Primary medicine is the basis for any medical service in any country in the world. It would be a huge mistake if a country decides to try and provide all or even most of the medical services through hospitals. it will be a medical mistake and certainly economically. The initial medical evaluation and treatment is given to a sick person, or a casualty by a doctor or by a professional nurse, paramedic or others in the community . Primary medicine is carried out by family doctors and staff assistant, and medical professionals such as pediatricians, gynecologists , ophtalmologists etc. Hospital medicine which is the next level of medical services is based on specific professions and hospital wards for patients that their illness or medical problem cannot be treated in the community. Hospitals provide inpatient services, advanced technologies such as laboratories, x-ray, radiation therapy for cancer patients and much more. The optimal is to provide the best services, in the community, in order to provide the services as close as possible to the patient’s home and family. Since every health budget is a significant part of the GNP every change and lack of control can bring the country significant economic jolt. The United States spends about 17% of GDP on health care and at the same time, approximately 50 million Americans live without appropriate health insurance . In the OECD countries the median of national expenditure on health is 9.3% of GDP so that differences between countries are very big. More money does not always guarantee better health services ! Another very important issue is preventing medi-
cine. There is no doubt that human dream is to avoid disease more than to treat disease. The purpose of preventive medicine and health promotion is to enable the extension of life expectancy, improve quality of life, and creating more years free of disability and disease (“healthy years”) . It can be done within the individual, family, and community. Primary prevention - reducing exposure to risk factors, providing vaccinations, maintaining a lifestyle, avoid smoking, exercise, and more. Secondary prevention – early detection and tracking of disease or a risk factor and it handled by blood tests, blood pressure tests, genetic tests, surveys etc. Tertiary prevention – intervention to reduce complications and reduce the consequences of the disease. All these and other topics are the basis for planning medical services in community clinics enabling every citizen to get preventive medicine and medical care of the highest standard and maximum accessibility. The contact between the medical services in the community and hospitals can be regularly and in a very good technical quality and minimal investment. This relationship allows the knowledge which in hospitals is mainly by doctors to assist and advise physicians at the community especially in periphery areas. Be able to give a second opinion from a professional doctor in a hospital without having the need to mobilize the patient. In countries like Australia that process of telemedicine is part of everyday practice, but also in smaller countries we find these services. In summary: fewer patients to hospitals, more people will prevent diseases, and hospitals will be able to use their budgets and quality of their doctors really just for the most difficult and complicated patients. This is the direction to move the system“.
June 22, 2015 #104
ECONOMIX
MICROFINANCE SECTOR’S BENEFITS AMID GEL DEVALUATION
hostilities, the sector improved all indicators. The effect of the recent currency problems on the microfinance sector is also very interesting.
SECTOR’S PROFITS ROSE BY 12% IN 1Q15 he market of microfinance organizations is one of the flourishing sectors in the Georgian economy with 71 legal entities, 300 service center, 4 344 employees and assets of over 1 billion GEL. The history of microfinance organizations in Georgia started 10 years ago. First microfinance organizations launched operation in Georgia in 2006 after the Parliament adopted a law on microfinance organizations on July 18, 2006. According to the law, a microfinance organization is a legal entity founded as a limited liability company or a joint stock company that is registered by the National Bank of Georgia and that carries out activities under the NBG supervision in line with the legislation. Thus, the range of operation of microfinance organizations has been confined and they must act in line with legislation. They are entitled to issue microloans to legal and physical bodies, including, consumer loans, pawn loans, mortgage loans, unguaranteed loans, corporate loans and
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other loans; to make investments in state and public securities; to carry out money transfers; to act as insurance agents, to provide consultations over micro-crediting; to take loans from resident and nonresident legal and physical bodies; to hold stakes in authorized capitals of legal entities. The stake ratios must not exceed 15% of the authorized capitals of these microfinance organizations. Moreover, the legislation entitles microfinance organizations to carry out other financial services and operations, including micro-leasing, currency exchange, as well as to issue, sell and buy off bonds and promissory notes and carry out other related operations. The main signs and criteria by which microfinance organizations differ from commercial banks imply the rights for receiving deposits and issuing a limited amount of loans to one borrower. Under the current legislation, microfinance organizations are banned to receive deposits from either physical or legal bodies and to issue loans of over 50 000 GEL to one borrower. Despite the current economic problems, the microfinance sector has made significant advancements. Even in 2008, despite the financial crisis and the
GEL DEPRECIATION AND INCREASED PROFITS The GEL exchange rate fluctuations started in the last quarter of 2014 ad the problem remains relevant even today. The first quarter of 2015 turned out the sharpest, when the GEL volatility and public panic and uncertainty reached the peak. Net profits of microfinance organizations in the first quarter of 2015 exceeded 40 million GEL. In 2014 net profits of the microfinance sector marked 80 million GEL. Consequently, the profits of the first quarter of 2015 makes up 50% of the whole net profits of 2014 and exceeds by 122% compared to the first quarter of 2014. As opposed to the first quarter of 2014, the first quarter of 2015 has recorded: 1. A 41% upturn in interest returns (74 million GEL). 2. A 42% upturn in interest expenditures (22 million GEL); 3. A 228% upturn in interest-free revenues (37 million GEL). Including: a 51% growth in revenues from commission fee; a 112% growth in revenues from sales of currency, a 3000% upturn in revenues from recalculation of currency reserves. All these revenues have exceeded 15 million GEL. 4. A 43% growth in interest-free expenditures (over 39 million GEL); It should be also noted a major part of the attracted funds microfinance organizations have drawn from nonresident physical and legal bodies. This factor makes the service of these funds expensive because of the GEL rate devaluation. As to the microfinance sector’s loans portfolio, it exceeds 1 billion GEL and the credits portfolio structure is reflected in the table N1. Thus, amid the current currency problems the microfinance sector is very successful in the shortterm period, but in the long-term period the GEL devaluation will increase service burden on foreign currency liabilities. www.bfm.ge
BLACK SEA TRADE AND DEVELOPMENT BANK HOLDS BUSINESS FORUM IN TBILISI
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n June 19th, the Black Sea Trade and Development Bank (BSTDB) paid host to the regional business forum “Development of Entrepreneurship and Access to Capital”, under the auspices of the government of Georgia and the National Bank of Georgia. Its goal was to introduce Georgia’s economic potential and priorities to international institutions and business organs. The forum was held in the Rustaveli National Theater, and was opened with speeches from Georgia’s Prime Minister, Irakli Garibashvili, and the president of BSTDB, Ihsan Ugur Delikanli. The primary participants in the forums were representatives of various business circles of the region, international experts, and politicians. Different country experiences were exchanged during the meet and best practices were discussed. The president of Georgia’s National Bank and the head of BSTDB from Georgia’s side, Giorgi Kadagidze, was also part of the discussions, along with the VP and Minister of Economy and Sustained Development, Giorgi Kvirikashvili. Alternative lead to BSTDB from the Georgian side, the Minister of Finance Nodar Khaduri, and the director of BSTDB from Georgia’s side, David Lezhava, also attended the meet. The productive discussion was followed by signing agreements of partnerships between the BSTDB and Georgian finance organizations, within the frames of which the Black Sea Trade and Development Bank provided a USD 6 million loan facility to Microfinance Institution Credo LLC, a USD 10 million SME Facility to the Georgian TBC Bank, and a loan of USD 7 million to FINCA Georgia.
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caucasus business week
The Black Sea Trade and Development Bank was founded in 1994, and, incidentally, its founding agreement was signed in Tbilisi. The BSTDB is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. The BSTDB headquarters are in Thessaloniki, Greece. BSTDB
supports economic development and regional cooperation by providing loans, credit lines, equity and guarantees for projects and trade financing in the public and private sectors in its member countries. The authorized capital of the Bank is EUR 3.45 billion. BSTDB is rated long-term “A-“ by Standard and Poor’s and “A2” by Moody’s. For information, visit www.bstdb.org
TOP STORY
HOW MUCH MONEY DO YOU NEED TO LIVE IN GEORGIA?
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he amount of money a person needs to support themselves in Georgia is slowly rising. Figures from Geostat, the National Statistics Office of Georgia, revealed the country’s minimum subsistence level had slightly increased in the past 30 days, as well as the same time in 2014. Figures showed the minimum subsistence level for an able-bodied male in May 2015 was almost 162 GEL. This was about nine GEL higher than in May 2014, where the minimum subsistence level was 153.5 GEL. For the average consumer, the minimum subsistence level was 143.4 GEL. Last month this figure was 142.2 GEL, while in May 2014 a person needed 135.9 GEL to survive. For an average family the minimum subsistence level reached 271.6 GEL in May this year. As for households, the minimum amount of money needed to survive was: For a one-person household – 143.4 GEL For a two-person household – 229.4 GEL For a three-person household – 258.1 GEL For a four-person household – 286.8 GEL For a five-person household – 322.6 GEL For a six or more person household – 381.4 GEL Geostat calculated the average subsistence rate based on the 2015 consumer basket. The composition of the updated 2015 consumer basket was identical to the consumer basket of 2014, which contained 295 items. Each year the weight of the products and services were updated to reflect any price changes. The consumer basket was used to calculate the Consumer Price Index - the inflation rate in the country - which reflected the structure of consumption of products of an average consumer in the country. Meanwhile, Georgia’s annual inflation rate is dropping but the monthly inflation rate is on the rise. Geostat revealed the monthly inflation rate in Georgia reached 0.6 percent in May 2015, while the annual inflation rate equalled 3.5 percent. To compare, April data noted the monthly inflation rate in Georgia reached 0.3 percent, while the annual inflation rate equalled 2.5 percent.
BUSINESS
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caucasus business week
GEORGIAN BUSINESS UNABLE TO CREATE NEW JOB PLACES
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n 2014 the number of Georgian citizens employed in the business sector has decreased by 2.8% despite the fact that according to official statistics, the unemployment rate has declined. The difference between these two figures shows that unemployment in the country is reduced at the expense of the self-employed and employees of the public sector. At the same time the number of employees in the business sector is decreasing. In 2014, the unemployment rate grew by 2. 2% in comparison with 2013 and totaled 12.5%. According to the Georgian Statistics Service, the economically active population amounts to 66.5% of the total population – this indicator in 2014 exceeded the level of 2013 by 0.3%. In 2014 the employment rate reached the 11year maximum and economic activity was higher only in 2012. The number of employed increased by 1. 6% in rural areas and cities. The so-called self-employed traditionally dominate in Georgia. In 2014 in comparison with 2013 year, the number of contract workers increased by 5. 2%, the self-employed – by 1.1%. Along with the general increase in the level of
employment, the statistics show a reduction of jobs in the private sector by 2.8%. If in 2014 the business employed 550 885 people, in 2014 this figure fell to 16 000, ie by 2.8% and amounted to 534 952. Experts do not call the statistics into question, however, in their opinion, the situation is still dramatic, and improved situation by 2.2% does not change anything substantially. In addition, experts believe that the difference between the decline of employment in business and a general increase in the level of employment is caused by incorrect methodology of calculation. According to the expert Soso Archvadze, this can be explained by the fact that the total number of employed is determined based on the survey of families, while employment in the business sector – based on the results of the quarterly report of the company. The expert Nodar Kapanadze says job cuts in business by 16 000 within a year does not go beyond the statistical error, accordingly, it cannot be regarded as something particularly dangerous. “At this stage there is no particular danger, but if the reduction continues in 2015, then we can say that there is a tendency with which we must fight,” – he explains. With regard to the overall decline in the unemployment rate, in his opinion, it is merely sporadic and not a system. The expert Zviad Kandelaki notes that a reduction of employed in business structures indicates that the business still faces problems, and the number of employed in the country grows only at the expense of the selfemployed and employees of state agencies.
NUMBER OF DOMESTIC TRIPS DECREASED IN Q1, WHEREAS THE COSTS ARE INCREASED
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umber of domestic trips made by internal visors is reduced. According to official statistics, over 974,8 thousand visits have been made by internal visitors in Georgia in Q1, 2015, which is the minimum of three quarters. Sakstat started making of statistics from Q2 of the previous year and reportedly, there is not possibility to compare this index to the data of Q1, 2014. Over half of the visits - 53,9%, have been carried out in order to see friends and relatives, 12% - shopping, 11,5% - treatment/healthcare, 7,5% - professional/economic activity. It should be noted, that the volume of average
monthly expenditure has been increased comparing to the previous quarter and the figure has amounted to 114,6 million GEL. However, this figure has been 104,3 million GEL in Q4, 2014. Whereas, average expenditure on per visit has been 117,5 GEL. Visitors’ satisfactory level is grown comparing to the previous quarter. Over 34,9% of visitors have been “extremely satisfied”. The index has totaled to 31,9% in the last quarter. However, visitors’ satisfactory level has been much higher in Q3,2014, while 38,7% of visitors has been “extremely satisfied”. It should be noted, that the statistics includes visits of 15-year old and elder people.
Q1 RECORDS 10% DECLINE IN AVERAGED MONTHLY SALARIES
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ccording to “Sakstat”, average monthly salary has been 855,9 GEL in Q1 of this year, the volume of monthly salary has been reduced by 94,2 GEL comparing to the previous quarter. Average monthly salary of employed men
amounts to 1030,2 GEL (Q4 – 1146,2 GEL), average monthly salary of women – 650,1 GEL (Q4 – 710 GEL). It should be noted, that average monthly salary of persons employed in the enterprises has been 851,7 GEL, while in nonenterprise – 862,4 GEL. Wages according to the sectors in Q1, 2014:
June 22, 2015 #104
GEORGIA FOREIGN TRADE TURNOVER IS ON YEAR’S MAXIMUM IN MAY
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eorgia foreign trade turnover (exempt unorganized trade) has made up 3,917 billion USD in JanuaryMay, which is less by 13% comparing to the index of the previous year. Export of 884 million USD has been made in first 5 months of the year, the figure is decreased by 25% comparing to January-May, 2014. To note, import is reduced by 9% and the figure has made up 3,033 billion USD. The
negative trade balance has totaled to 2,150 billion USD in January-May, 2015 and 55% of negative trade balance. It should be noted, that Georgian export volume is grown by 9 million USD up to 195 million comparing to April. Import is increased by 156 million up to 707 million USD. Foreign trade turnover has made up 902 million USD merely in May, which is the maximum of this year.
INCREASED PRICES MAKE GEORGIAN SHEPHERDS INCOMPETITIVE
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eorgia produces 300 000 tones of sheep wool per year, most of which is destroyed on the spot. According to the head of the Sheep Breeders Association Beka Gonashvili, export of wool from Georgia has decreased significantly. “We are having a very difficult time. Azerbaijan still remains the biggest export market for Georgian sheep, but in recent period exports have declined in this direction. High taxes are one of the factors hindering the development of the industry. The situation is aggravated by the import of Armenian sheep to Georgia which are sold under the guise of Georgian. Of course, this cannot happen bypass the government and it is obliged to bring order to this sector. The quality of Armenian sheep is much lower than ours, but we cannot give them competition because they are much cheaper, “- he said. Sheep breeders complain that the tax on pasture is too high. “I have 500 sheep, but their maintenance is very expensive, so I’m thinking about selling them. Prices for grazing land increased to GEL 15 per 1 hectare per month and add to that veterinary
checks, payment of a shepherd - GEL 600 -1 000 per month. In general, the maintenance of one sheep costs about GEL 100-1 200, so the business is unprofitable. The government seems to have forgotten about us, it does not remember about the fact that Georgia has a sheep breeding,”- says one of the sheep breeders. The cost of the sheep on the farm is GEL 150180, while export price rises by GEL 30-40. According to the Statistics Service, the strong growth in exports of sheep began in 2009 - the sheep were sold in Iran, Azerbaijan, Turkey, Lebanon, Qatar, Emirates. According to experts, this result was caused by the low price, high quality, and lowest cost of transportation. But over time, the rising cost of sheep affected exports, which currently is limited with Azerbaijan and Iran. “In the past year, there was not much demand from Iran, I hope that this year the situation will improve,” - he says. According to the Georgian Statistics Service, in 2013 the export of sheep decreased by 10%. In 2014 sheep exports were valued at $ 15.5 million, while in 2012 – at $ 18, 1 million.
TBILISI FLOOD INSPIRES AMENDMENTS TO CONSTRUCTION CODE
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uilding Code draft that is being developed for several months, will be revised due to a natural disaster occurred in Tbilisi on June 13. According to David Gigineishvili, the Head of Spatial Planning & Construction Policy Department at Ministry of Economy, changes that are to be made to the Code in terms of the safety of construction will be defined in the near future. “In general, the current draft includes a lot of regulations on security issues, so it is difficult to say what exactly will be revised,” - he says. The official notes that the current version of the Code provides for the mandatory expert evaluation of geological problems, moreover, a geological report is required in the current Code, as the building cannot be built if not know the condition of the soil and the type of foundation to build.
Regulations do not cause questions but the professionalism of those who make reports. “Therefore, the new Code provides for evaluation of the geological expertise. It will specify the criteria to be met by the experts. In particular, they must have a minimum of 10 years experience in the construction industry, “- David Gigineishvili points out. According to him, after the draft code is revised , it will be sent to Parliament. “However, the adoption of a new Building Code does not mean that reform is complete, as only general principles will be formulated in it. After the adoption of the new code, we will have to adopt technical regulations, which will include general principles that bring them closer to European. The new Code will be implemented gradually, “- the official adds. In his words, the whole reform will take about 5 years.
EXPERT: VISA REGIME LIBERALIZATION IS RELATED TO CURRENCY CRISIS
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ccording to the expert in the field of tourism Siko Gegidze, the government has gone on a radical easing of visa regulations it adopted due to the currency crisis, through which the authorities were forced to admit their mistake. “Mitigation of visa regulations will soon allow to overcome the negative effect brought by their introduction. We know that people learn from mistakes, but sometimes there is no need to make them. Such as the introduction of completely unnecessary and extremely stupid visa regulations. They jeopardize the development of mass tourism. The cancellation of regulations was delayed, but anyway, better late than never. We shall see the results of this decision very soon, and within
a month the number of tourists will start to grow, “- he says. As for Iran and China, which are not included in the list of countries with visa-free regime, the expert believes that it is necessary to develop a specific approach to these countries. “But of course, there is no need to rush into extremes and forget that the country has its own interests. In any case, adoption of visa regulations was a crime against the tourism industry. Fortunately, the Government has recognized its mistake, but it happened because of a currency crisis. If not the reduction of foreign exchange earnings and devaluation of the Georgian lari, no one would remember about tourism and its problems, and visa regulations would remain in force, “- Siko Gegidze notes
June 22, 2015 #104
INTERVIEW caucasus business week
THE GEORGIAN AUTHORITIES PROVIDE RELIABLE PARTNERSHIP FOR INVESTORS
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Lecturer OTAR ABESADZE, an advisor to the Georgian Minister of Education and Sciences, PHD Student at the Tbilisi State University Faculty of Economics and Business - How would you appraise Georgia’s current economic situation, the current challenges and the fundamental problems before the country? Why does the GEL exchange rate depreciate? - Today the Georgian economy fully depends on our neighborhood, the region. Our major economic partners Turkey, Ukraine, Russia, Azerbaijan, Armenia and so on are our neighboring countries and we are interconnected with each other, especially Georgia, which, in practice, is involved and dependent on the neighboring economic monsters. Georgia is an imports-dependent country with a negative trade balance. The imports considerably exceed the exports and this is a negative factor in itself. We have lost the last 10 years, in practice, while our neighbors have make benefits from this. They have developed production, while we have lost trade positions in the region. Today we have to make tenfold effort to regain positions and follow the regional economic order. Since 2008 the inflow of foreign direct investments (FDI) has been declining in Georgia because of the August war and the regional developments. I have been meeting with many investors and businessmen all over the world and we should not think foreign investors make investments in only Georgia. Our country is a regional hub and this is our advantage to persuade them to make investments in Georgia so as to distribute the investors’ products and services to the whole region. And this region is a very beneficial market. Both the political stability in Georgia and the whole situation in the Region make guarantees for investors and the FDI inflows directly depends on these circumstances. The year of 2014 has recorded intense activities in this respect. In 2014 the FDI inflows marked over 1.2 billion GEL and this is a record figure since 2008. This is result of the Government’s proper and consecutive policy. As to the GEL exchange rate devaluation, the process was inspired by regional problems and politicallymotivated positions of the National Bank’s management, as well as by ignored government recommendations. The region’s two major economic players such as Ukraine and Russia remain in hostile relations, there is also inflation processes. EU has set sanctions against Russia and so on. All these developments are reflected on Georgia. Therefore, this is the responsibility of the NBG, as an insurer institution, to carry out the correct monetary policy and provide maximal cooperation with the executive power. I believe the situation will be stabilized. Summertime has come. Tourists inflows will grow. The Authorities have also simplified the visa regime. Georgia will also host Youth Olympic Games and the UEFA Super Cup match. All these events will add a new stimulus to the Georgian economy and I hope the NBG will not miss this chance to cooperate with the Authorities to stabilize the national currency. The Government should provide maximal efforts to draw FDI and timely sell privatization assets. - What steps are being taken for drawing investments to Georgia? - Georgia is a very attractive country in terms of investments. Our country owns seaports, the silk road crosses our territory and we have got ideal geopolitical and strategic location to organize the region’s main economic distributing hub that will be the regional re-exports center. The FDI inflows are growing and the figure exceeded 1.2 billion GEL in 2014. It is also important the Government is working on revision of the tax law to further increase investors’ interest in Georgia.
The Saudi Arabia Prince has also expressed interest in making investments in Georgia. This will be a good signal for many major investors to persuade them the private property and investors are strongly protected in Georgia and the Georgian Authorities provide reliable partnership for them since 2012. - How would you characterize the current situation in the education system? What would you say about the finished and ongoing reforms and the main challenges before the system? - I can openly note the Education Ministry is an exceptional institution in terms of reforms starting 2012. Our team at the head of Giorgi Margvelashvili has come to the Ministry. I was an advisor to Margvelashvili. Today he is a president. We started the system reformation. First of all, we started to free the system from politicization. We have carried out fundamental reforms. In Georgia school textbooks are issued to all classes. We have constructed 9 secondary schools, rehabilitated over 1500 secondary schools. We have increased salaries to teachers, organized doctor’s rooms at the schools, reformed the service of resource officers. We have started financing studies at 21 university faculties and all vocational schools, as well as doctoral studies. We have increased salaries to scientists four times from 150-200 GEL. In this way we have kept the Georgian Dream’s promises for making the education accessible to everyone. The previous Authorities used to make statements on constructing a technological university in Batumi. The United National Movement (UNM) asserts we have suspended the project, but in reality in 2011 the previous Authorities received a letter from the Millennium Challenge program notifying the selected building could not meet university standards. Therefore, they failed to obtain the grant. We obtained the grant for technological university in 2013. In the second half of 2015 Georgia will build one of the most modern technological universities in the Caucasus and Eastern Europe with the participation of Cartu Group. Anyway, major challenges are still relevant, including in the fields of infrastructure, education quality, salaries for teachers and scientists and so on. This is a planned and scheduled process. I believe we will have created preconditions by 2016 so as the Georgian education system follow the European and western educational system. - Georgia’s current political reality. What is the current situation in Georgia? What standards are practiced in the country and what does the political renewal mean? All political parties are talking about the renewal. - This is a very healthy process. Political renewal, promotion of new faces is very important on both regional and central levels. Today we have a different reality. The new generation knows western value and modern political standards, the culture of debates very well. The new generation has got profound knowledge of concrete themes and analytical skills. The society should accept a healthy analysis and information, valuable staff policy based on education, professionalism and modern political standards. - What would you comment on Georgia’s foreign policy, neighborhood policy, associated membership with EU, NATO integration process and international challenges? What is your opinion on the current developments in Ukraine? What would you comment on appointment of Georgian nationals on the top positions in Ukraine? - The international political course and orientation is
clear and unchanged. We are striving for joining EU and the NATO as soon as possible. The Associated Membership Agreement is also very important and our country will make much benefit from this. We also expect visa regime liberalization in the near future as an additional stimulus for Georgian citizens. I will not talk much on citizens of our neighboring and friendly Ukraine and high-ranking officials in this country. I just want that the head and other top officials of one of the administrative units of the friendly country, who have obtained Ukrainian citizenship and have got Georgian roots, abstain from interfering in internal political affairs of their neighboring and partner country. This would be at least politically unethical steps. This is my personal opinion that the concept of a former president does not exist. All presidents, both good and bad ones, represent their countries to a certain extent. There is no precedent in the world the president had refused the citizenship of his own homeland. This is his personal shame. I believe this conduct manifestly shows the attitude the Odessa Region’s Head Mr. Mikheil Saakashvili has got to the national values. I believe the Georgian People realizes everything very well. -According to the inquiry by the Georgian League for Students Rights, you have been named the 2014 most successful young leader. What has preconditioned this recognition? Students have also highly appraised you as a TSU lecturer. - This was very interesting. I think this is rather a challenge than a recognition. At the inquiry presentation they named the details for which I was chosen: Employment of about 1700 students during the census, a project for 21 free of charge professions and financing doctoral studies. I have initiated all these projects. The TSU is my second home. In two month I will defend my thesis to become doctor of sciences of the TSU business and economics faculty. As to the lecture courses, it is a huge challenge for me. Students’ appraisal encourages me to permanently renew the syllabus and introduce modern standards of education in my lectures. I believe a very good generation is coming that easily responds to all challenges and is ready to receive maximal benefits. - You are very active in the social network and, in general, in the political context concerning Tkibuli. Is it your way to politics? Do you plan to run for the parliamentary elections in Tkibuli? - Tkibuli? Tkibuli is a city of life. This case is an absolutely different case. We, Tkibuli young people, have decided to create a Facebook page named as “Tkibuli - the City of Life”, where we would exchange ideas for beautifying our town and assisting it. This idea has united over 1 700 residents of Tkibuli, who have revived the town, in practice. We have created regional internet television OkribaInfo, set up nongovernmental organization Regional Development – Life Generation, founded a fan club for the Tkibuli Coalminer football club and so on. We have been conducting charity events, literary contests and we also plan very good and positive activities. The main thing is Tkibuli’s young people have gathered and organized a very strong force in the city that is united around the Georgian Idea of the City of Life. Tkibuli is a city of coalminers. It is a very small tcity and everybody knows each other. There is no envy and evil in this city. The residents live like a big family and we, Tkibuli young people, students and the new generation are developing a new strategy for the advancement of the region and the city.
As to the politics, I have also noted I am one of the ordinary soldiers in my political organization. I will be there, where my political team needs, either in Tkibuli or in any other city or the structure. I am a team player and I see I must be in this team with my potential. - You are a member of the Georgian Dream ruling political coalition. Previously, you have led the Georgian Dream youth organization. How would you appraise the Georgia Dream’s chances for the 2016 parliamentary elections? - The 2016 parliamentary elections will be very important for the development and advancement of Georgia. I believe our citizens recognize the ongoing reforms. Our society makes adequate reaction to our initiatives and we provide maximal efforts to respond to their needs and demands. The party’s structure and readiness is also very significant. Today the Georgian Dream has carried out internal reorganization to move to the modern political structure with modern views and activities. Moreover, the Georgian Dream has joined the Party of European Socialists. This is a very significant step on the global political arena. I believe the Georgian Dream will win the 2016 parliamentary elections, because our team has returned the freedom of speech and choice to our citizens, as well as property immunity. The modern democratic society is based on all the mentioned values. We have been providing maximal support to the private sector. We offer considerable social packages to our citizens. I would stress healthcare system reformation, overall insurance, C hepatitis treatment and so on. We have carried out considerable reforms in the education, agriculture sectors. We have ploughed huge spaces that are unprecedented even for the Soviet period. For 2.5 years we have asphalted more space of motorways than the UNM has done for 9 years. We prioritize human rights, education and healthcare. We follow this direction purposefully and we are developing the country. We know we have to deal with huge challenges and we will definitely reach desirable results. All our efforts will be reflected in the 2016 parliamentary elections. I trust the justice and unbiased position of our citizens.
ECONOMY MINISTER RECEIVES HEAD OF MAJOR INVESTMENT FUND
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eorge Kvirikashvili, minister of Economy and Sustainable Development has met Gabriel Schultz, general director and founder of large investment fund Schulze Global Investments. The meeting was attended by Ketevan Bochorishvili, deputy minister of Economy and Sustainable Development and George Tsikolia, chairman of “Entrepreneurship Development Agency” of Ministry of Economy and Sustainable Development. According to the Ministry, Schulze Global
plans to made direct foreign investment in Georgian energy projects . On this purpose, the company plans to establish investment fund in Georgia, which will fund construction of small and middle-sized new hydro power stations. According to George Kvirikashvili, it is important that Investment Fund has such important partners, such as Austrian Development Bank, European Investment Bank and other big financial institutions. He declares, that the Fund will be oriented on the regional investments and he has preferred
Georgia, as a point of entrance in the region. George Kvirikashvili says, that Schulze Global is world scale investor, which plans to establish modern business-practice in Georgia, new jobs and to apply best international practice in HES construction. Schulze Global is oriented on the world’s developing markets. The Fund manages several million investments on the different international markets in Asia, Africa and Latin America. The fund cooperates with the most prestigious institutional investors.
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ANALITYCS
QUOTES
GAMING VENUES
“Economic Growth Has Been Preserved despite Significant External Shocks”
IRAKLI GARIBASHVILI Prime Minister of Georgia Economic growth and improved business environment have been preserved in Georgia despite significant external shocks, - said PM Irakli Gharibashvili at the annual Black Sea Trade and Development Bank meeting. “Georgia traveled a long path of further development of the principles of market economy, strengthening of democracy and pluralism.
We should emphasize the government’s efforts of the recent years, due to which we signed an Association Agreement with Europe, which in turn, is another important step towards European integration. The Deep and Comprehensive Free Trade Agreement, which is an important part of the Association Agreement, creates good prospects for Georgian business in terms of involvement, investment and economic development. Our goal is to contribute to the expansion of the country’s economic development and living standards by supporting businesses and the private sector, which will move us closer to the European family,”- said the Prime Minister. “It should be noted that despite significant external shocks, as of today, Georgia has maintained economic growth and improved its business environment. Ours is one of the world’s most astonishing open countries with a simple tax system and low taxes. All this is proven by international ratings, where Georgia holds leading positions,”Garibashvili said.
“Natural Disaster Will Not Affect the National Currency Rate”
GIORGI KADAGIDZE President of the National Bank of Georgia According to the President of the National Bank of Georgia Giorgi Kadagidze, Tbilisi flood will not have a major impact on the national currency. “Considerable sums must be allocated to overcome the natural disaster but at the same time they are not so large to significantly affect the rate of the lari,” - he says.
In his words, the National Bank does not intend to change the approach to the banking sector because of the Tbilisi flood, as the effects of the disaster are not so massive to change the regulations of the financial system. “Banks will have to take a loss on themselves. If there is a need for introducing any benefits, for example, in taxes payments, then the decision will be taken by the Ministry of Finance not only for banks but also for other companies. At this stage there is no need in this,”- George Kadagidze notes. According to Alexi Alexishvili, Director of the consulting company PMCG, Tbilisi flood will have no direct impact on the currency velue. “It all depends on how the Ministry of Finance will allocate costs. Perhaps they will be reduced only for infrastructure projects and maintained for social programs. We have to see what changes will be made in the budget. They hardly will affect the rate of the lari as expenses redistribution is quite frequent,”- he notes.
“I will Financially Assist the Government to Cover the Flood Repairs”
BIDZINA IVANISHVILI Former Prime Minister and Businessman
Georgian Ex-Prime Minister Bidzina Ivanishvili said he would financially assist the government in restoring the damage caused by the 13 June flooding in Tbilisi. Ivanishvili spoke about this with the press. “I have already spoken to the finance minister, as well as other ministers in this regard. I asked them about the process of allocating funds for the damage repairs. These professionals are facing some very tough decisions today. As I have already said before, everyone should do their own job. Repairing the damage is the government’s job; they are actively seeking resources to finance the repair works. I will personally finance whatever the government will not be able to finance in this regard,” Ivanishvili said.
“Georgian Business Shows Unprecedented Solidarity in Overcoming the Flood Consequences”
IRAKLI LEKVINADZE Vice Mayor of Tbilisi According to the Vice Mayor, businesses responded quickly to the natural disaster of June 13 by providing all possible assistance to the victims. At the same time, businesses are working on the long-term plans for restoration of the dam-
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aged infrastructure of the capital. “Tbilisi does not remember a disaster like this for decades, and in this situation the business teamed up as never before. Businessmen on their own, without any reminders and calls began to help the population. Up to 100 companies helped the affected population, and their number is growing every day,” Vice Mayor says. In his words, the damage from the disaster is very great. “Of course, the disaster victims are in most serious and irreparable trouble. In addition, about 80 families are left without a roof over their heads, about 400 people moved to temporary accommodation in hotels and apartments. We are working on providing them with temporary rented accommodation and how to provide them with apartments in the future – we will decide together with business, “- Irakli Lekvinadze notes.
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urrounded by countries where gambling is prohibited or severely restricted, Georgia has a regional competitive advantage in the gaming business. A steady stream of foreigners from Turkey, Azerbaijan, Armenia and the Middle East are attracted to Georgia for this reason. The casino market in Tbilisi and Batumi is better developed than in other Georgian regions. In December 2014, eight casinos are operating in the country and three casinos are due to open during the next three years. Besides casinos slot clubs and bookmakers are popular gambling amenities all around the country. The government has loosened casino regulations to attract foreign and local investments and stimulate the development of the casino business. Georgia has introduced a flat tax system so that gaming operators no longer have to pay income tax. Payouts are also no longer taxed. Quarterly fees on tables, slot machines and Gaming are required, on top of an annual license for slot machines. The turnover of gaming venues has been growing since 2009 and reached its highest level of GEL 1,314 mln in 2013. The reported turnover of gaming venues in 2013 is more than three times higher than the same figure for 2011. In the first half of 2014 turnover of the casino industry amounted to GEL 338.1 mln. We expect the annual turnover of gaming venues in 2014 to be lower than in 2013 reflecting a reduced number of tourists form Turkey. Gaming regulations in Georgia 1. A casino operator has to obtain a permit from the State Authorities of Georgia. The permit is issued by the Revenue Service of Georgia; 2. The fees for obtaining the permit are – for the whole territory of Georgia (excluding Batumi, Dusheti Municipality nearby the Lake Bazaleti, Gudauri recreation territory, Bakuriani, Kobuleti, Borjomi, Tskaltubo and Signaghi municipalities) – no less than 5 000 000 (five million) GEL per year; 3. A casino operator in Tbilisi is entitled to a free permit for opening three gaming clubs in the
territory of Tbilisi. The permit for operating the gaming club will be granted for no more than the permit granted for casino operation. 4. The validity of the permit is five years. 5. In order to obtain the gaming permit the person shall meet the special requirements defined by the law and special acts of the Government. The requirements are the following: a) Casino Regulation that shall include: the list of tables in the casino, indicating the manufacturers number, title, date of production, manufacturing country; the minimum and maximum bets; the manual for operation; Gaming Rules; Rules of Conduct; the place and the time for issuance of prizes; the time for consideration of the claim; b) Types of coins; c) The types of games that are not indicated in Casino Regulations are prohibited to be offered.
June 22, 2015 #104
SOLIDARITY caucasus business week
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TBILISI SOLIDARITY AND GREAT EFFORT AFTER TBILISI FLOOD
Photos by Aleko Sharvadze
Disaster zone, Vere became the center of Solidarity. In an emotional show of solidarity after the disaster, hundreds of Tbilisi residents volunteered to join a clean-up operation across the city. Georgian actor Giorgi Nakashidze said: ‘What happened was an apocalypse’, as he helped National Guard soldiers clear mud and fallen trees from the streets. ‘In my lifetime, I didn’t see such a tragedy in our country. All those who care about our city, about people, should help rescuers and those who have suffered,’ he said in televised remarks. Some homes were swept away along with cars, with the floods even washing coffins out of the ground in a cemetery. ‘It was a disaster on an unprecedented scale,’ said 23-year-old volunteer Tsotne Japaridze. Georgian Prime Minister Garibashvili praised the ‘tremendous’ contribution of the volunteers. “They are real heroes, as well as those rescuers who saved the lives of more than a dozen that night” – writes international agency The people of Georgia and companies have donted more than 15 million GEL in less than 9 days.
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June 22, 2015 #104
June 22, 2015 #104
COMPANY NEWS caucasus business week
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NATAKHTARI DONATES 20 000 GEL TO FLOOD VICTIMS
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arious business and civil sectors have united in helping Tbilisi’s victims of the flooding on June 13th, with material donations as well as food, technical supplies, and human resources. The company “Natakhtari” is joining the efforts and expresses condolences towards the families of the deceased. It has also joined in
the assistance of surviving victims to a certain extent, donating 20 000 GEL in the help fund, as well as delivering gloves, sacks, lemonade, water, food and umbrellas to volunteers working to help clear out damaged areas. “Unfortunately, this is the least the company was able to do for the victims and volunteers working on-site,” notes the marketing director for Natakhrati, Tornike Nikolaishvili.
PASHA BANK DONATES 10 000 GEL TO FLOOD VICTIMS
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asha Bank, expresses its condolences to the families of the victims Company has helped volunteers, with food, water and other significant product in these days, The Bank donated 10.000 GEL, which was directly transferred to the account of the City Hall.
SOCAR ASSISTS VICTIMS BY 50 000 GEL AND 10 TONS OF FUEL
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ompany Socar expresses its condolences to the families of the victims. Today Socar was working in an emergency mode. 10 000 liters of fuel, provided by the company
will be given to Tbilisi City Hall, for heavy vehicles, working on cleaning-up procedures. Socar, allocated 50 000 GEL to help flood-affected residents of Tbilisi. Other assistance proposals are also activly discussed in the company.
BANKS TO WRITE OFF FINES AND RESTRUCTURE CREDITS FOR VICTIMS OF THE NATURAL DISASTER
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ommercial banks are ready to review the bank obligations for the people suffered during the disaster. The Central Bank has already begun to record appropriate data. The Association of Banks of Georgia will provide for the systematization of the process and will act as a mediator between the banks and population. “The City Hall gave us a list. There will be the individual approach, if a client is included in this list,” – Zurab Gvasalia, President of the Association, says. In Gvasalia’s words, 31 people living on Svanidze street have taken a loan, the total value of loans is GEL 70 000. This amount will be distributed among several banks and will not become a problem for the banking sector. Either a loan restructuring or a penalty write-off will be considered, however, in each case there will be an individual approach. Banks will begin to help borrowers in 2-3 days.
CBW was interested in the total amount of the loan and the mechanism that will be used by the commercial banks to review bank liabilities? Tamuna Kirvalidze, Director for external relations and media communications at “TBC Bank” , says that the bank is ready to consider the benefits for their clients affected by the June 13 disaster. Restructuring, write-off of fines, and so on will be considered. “The City Hall and the National bank handed over the lists that will be studied “, - he said. According to the public relations department at “Bank of Georgia” , for the time being the identification of people is carried out and the lists are being studied. “When this process is completed and the data is specified, only then the details will be known “, - say in the bank. Bank “Republic” is also involved in repayment of bank liabilities of the disaster victims. In particular, what relief the banks will provide to the affected borrowers will be announced later.
INSURANCE COMPANIES TO COVER TBILISI FLOOD LOSSES
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p to 160 individuals and entities applied to the Georgian insurance companies for obtaining compensation for the damage or destruction of motor vehicles in the disaster in Tbilisi on June 13. According to the Insurance Supervision Service, issuing compensations has already started on a daily basis under the control of the Service. The representative of the insurance company “GPI -Holding” Tina Stambolishvili says that vehicle insurance accounts for about 80% of the total compensations – at this stage we are talking about GEL 600 – 700 thousand. “Issuance of compensation began on Tuesday and will last for several days. Compensation will not be deductible, and victims will receive 100% of the amount due to them, “- she says. With regard to property insurance, at this stage a damage is being counted and the results will be announced shortly. Vakhtang Ebitashvili, a representative of the insurance company “Aldagi”, notes that as of today, 100 people have applied to the company for compensation, 40 of them related to vehicles, 60 – to property. “We have already started to give compensation for the cars, we’ve simplified the procedure and do everything without unnecessary formalities
and additional documentation as quickly as possible. At this stage, we are talking about hundreds of millions of the lari. Half of the amount has already been issued, “- he says. According to him, there are also 40 complaints about real estate, and as soon as the damage is studied, compensations will be issued. Citizens mainly seek health care at the insurance company “Ardi” as well as there are many requests for compensation for damaged vehicles. The total amount of losses that will be reimbursed by the company will amount approximately to GEL 150 000. “There are also cases related to real estate. The company decided to issue compensation as quickly as possible, without additional procedures and fees deduction (franchise). It is a measure of our solidarity with the victims of the natural disaster “- say “Ardi “. The company “Irao” works mainly in a field of motor and property insurance. In general, the company will have to pay GEL 100 000 as compensation for motor insurance. The process will begin in the coming days. “Kopenbur” company says that according to available data, the company will have to pay compensation for damage of 16 vehicles. According to the sales manager at “Kopenbur” Ivane Kakhadze, the company will have to pay GEL 300 000 through the car insurance.
BUSINESSMEN’S SUPPORT TO NATURAL DISASTER VICTIMS
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usinessmen teamed up to help the victims of the natural disaster- cash assistance, food, technical and human resources. According to recent data, the disaster caused a severe material damage of about GEL 40 million, however, the capital continues to count the cost of the heavy rainfall. More than 40 families have been left homeless. Apart from GEL 10 000 “Wissol Group” transferred to the disaster assistance fund, supermarket “Smart” will supply the victims of the natural disaster with food. “Lisi Development” is ready to suspend the construction of its facilities and help the Tbilisi government. The company “Gulf” will convey 10 tons of fuel to the municipality to carry out rehabilitation works. The Red Cross organization is mobilized on Svanidze Street to help the disaster victims. Special accounts have been opened by Liberty Bank and TBC Bank to help disaster victims. The Ministry of Finance thanked the banks for their support. According to the Finance Ministry, starting with June 15, anyone can transfer money to these accounts. The account numbers are as follows: Liberty Bank For domestic transfers (in GEL) - GE27LB0010045017001717 LBRTGE22 For international transfers (in USD, EUR, GBP) - JSC LIBERTY BANK Swift - LBRTGE22 GE27LB0010045017001717 TBC Bank: Transfers in GEL - GE67TB1100000036082020 Transfers in USD - GE67TB1100000036082020 Transfers in EUR - GE34TB1100000361808808 “Bank Republic” - GE74BR0000000036080080 Bank “Republic” will provide financial and humanitarian assistance to the disaster victims. “ProCreditBank” transferred GEL 30 000 to the City Hall. The money will be spent on rehabilitation of affected people and roads. ProgressBank- GEL 50 000 Basis Bank opened a special account to help the victims of the disaster, where anyone has the opportunity to contribute. The Partnership Fund will donate Gel 50 000 to the disaster victims. “Rakia Group” will transfer GEL 20 000 to help the victims of the disaster. The company “Axis” took a decision to use its construction technology and physical resources to clean up the city. Georgia Industrial Group transfers 10 000 GEL. “Zedazeni” - GEL 10 000. “PSP Group” - 100 000 GEL. Medical corporation Avex - 25 000 GEL. Insurance Company Imedi L - 25 000 GEL. Insurance company “Aldagi” will buy refrigerators and television sets for 25 families. Pharmaceutical company “GLOBALPHARM” – GEL 10 000, which is JSC “Basis Bank” to be credited. The company “Europebet” will transfer GEL 50 000 to the disaster assistance fund. “Zodi Plus Ltd – GEL 4 000. “Beeline” - GEL 20 000 and a special short number 0901700150 was created for Beeline subscribers, the call costs 1 GEL. Magticom- GEL 50 000 “SOCAR” – GEL 50 000 and 10 000 liters of fuel. Rompetrol- 20 000 liters of fuel The company “Duty Free Alliance” will transfer GEL 10 000 to help the victims. Bank of Georgia allocated GEL 100 000. The company “Toyota Caucasus and Central Asia” allocated GEL 10 000 to support restoration works. “Barambo” transfers GEL 15 000 to the disaster assistance fund. Tegeta Motors - GEL 5 000. Silk Road Group and its affiliated companies, Silk Road Bank, Silknet, Radisson Blu Iveria Tbilisi, Radisson Blu Batumi - GEL 50 000. Georgia Department of Audits at this point significantly reduces administrative costs and allocates GEL 50 000 from the agency’s budget. Israel-Georgia Chamber of Business President Itsek Moshe promised to buy housing for 2 families. IDS Borjomi Georgia distribution warehouses are working in emergency regime. Cars have been loaded and the water is supplied to all the volunteers in various districts of the city. Spar Georgia families affected by the large volume of food and hygiene products to help. Also actively involved “Foodmart” and “easy gastronomy”. “Fresco” natural disaster food assistance. Spar Georgia will help the affected families with the large volume of food and hygiene products. “Foodmart”, “Fresco” and “Ioli gastronomy are also actively involved in the campaign. “Nikora” supermarket chain will hand over gift cards worth GEL 20 000 to victims to the natural disasters. The NGO “Citizen” is ready to help build a new zoo in the capital. “Georgian Water and Power” is ready to provide a shelter for two bear cubs. Chamber of Culture began to gather household items and products for the victims of natural disasters. Also, Rustavi, Kutaisi and Gori municipalities are ready to help the city government of Tbilisi.
CURRENCY
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INVESTMENT OPPORTUNITIES IN A EUROPEAN PERSPECTIVE
By Simon Fasdal, Head of Fixed Income Trading, Saxo Bank
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he recent rise in European yields and the strengthening of the Euro have made equity investors cautious and reminded us that markets also correct from time to time (dax down 10% in 1 month), but nevertheless many European markets have still gained more than 15% Year to date. In that context, investors might ask if European equities have seen their best performance for the year, and if it is time to scale down on risk. I do not believe that, in fact I see the European investment theme intact, for the rest of 2015. But first, let us take a look at the present turmoil. The fear of Fed hikes and the quite clear lack of further impact from the ECB’s QE, were the factors to ignite a yield climb that took German 10y yields from 0 to 1%. Zooming in, this is a massive move, in a larger context, it was only the velocity of the climb that was astonishing. The stronger euro represented a much bigger drag on European equities, because this is what QE is really about, boosting economy (and equities) with a weaker currency. So both higher yields and a stronger euro represent initial negative factors on European equities. But digging deeper into the European soil, we find that the
fundamentals are actually improving, economic sentiment is getting better and since June these have again started to surprise market expectations to the upside (Surprise index going higher). So all in all, yields are climbing on a positive note, the emerging evidence is that we will - at some point - see a self-sustainable European growth. The fuel for further improvements should come from the lower oil price which takes quite a while to work its way into the European and global economy, but also from a reactivating ECB. The QE path will only work if it is non reversible, which in my view means that they will do more to boost the QE capabilities, mostly by using the bond market as catalyst for a weaker Euro and potential stronger equities. One could ask, if that could lead to excessive stimulus, and of course that is an issue, but 6 months ago the fear scenario included a Eurozone depreciated into a vicious Japanese style deflationary circle, which luckily did not become the case. Summing this up, European equities could easily set sail for further gains in the rest of 2015. Turning to Greece, the attempt by the Greek equity markets to jump start into 2015, have been halted, but more importantly, if we compare to pre European crisis levels (primo 2011), the ASE index is half the value today. Looking to Spain and Portugal, their equity markets have gained ground, Portuguese PSI is close to same level as the start of 2011, whereas Spain’s trades are somewhat 6% higher, than the pre-crisis level. Seen in this very opportunistic and pragmatic light, one could argue that the upside potential is huge, if Greek equities at some point should close the gap. This would call for a viable solution to the present situation, including public sector reforms. But one prerequisite is already there; the Greek competitiveness in the private sector has improved in the last couple of years because of the quite hard, but maybe necessary, deleveraging that has taken place in the wake of the crisis. So if the necessary reforms are done, Greek equities could be one of the best European opportunities in a medium to long term view.
ECB SAID TO CONFER ON EMERGENCY GREEK AID AMID CASH FLIGHT
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he European Central Bank plans to hold an emergency session of its Governing Council on Friday to discuss a deterioration in liquidity at Greek banks, three people familiar with the matter said. The call is scheduled for noon Frankfurt time, when officials will consider a Bank of Greece request for an increase of more than 3 billion euros in Emergency Liquidity Assistance, one of the people said. All three people asked not to be identified as the plans aren’t public. An ECB spokesman declined to comment. The call comes just two days after Greece received a 1.1 billion-euro ($1.25 billion) increase in ELA that took the cap to 84.1 billion euros. The short interval reflects an acceleration in deposit flight amid uncertainty over the country’s future as the latest bailout talks ended without progress on Thursday. “The solvency of the Greek banking system is utterly dependent on the stance of the ECB,” said Stephanie Flanders, chief European market strategist at J.P.Morgan Asset Management in London. “ECB officials have said all along that the bank
is a ‘rule-based’ institution and, beyond that, the key decisions about Greece need to be taken by politicians. But that is going to be a difficult line to sustain in an environment in which the interpretation of those rules is deeply political.” POLITICAL UNCERTAINTY Greek deposit withdrawals have exceeded 4 billion euros this month, with the pace of outflows markedly accelerating this week, a person familiar with the matter said. About 1.85 billion euros was withdrawn in the last two days alone, the official said, asking not to be named, as he wasn’t authorized to speak publicly on the matter. German government bonds rose on Friday, extending a second weekly gain, and the euro fell. Ten-year bund yields fell 3 basis points to 0.78 percent as of 9:43 a.m. Frankfurt time. The euro fell 0.3 percent to $1.1328. With Greece cut off from global markets, the country’s financial system depends on centralbank liquidity to replace deposits withdrawn amid the political uncertainty over the country’s place in the euro. The ECB has consistently said it will fund solvent banks that have enough collateral, but can’t allow the liquidity injections to be used to finance the government. The total level of available ELA has risen from less than 60 billion euros in February, when the ECB effectively locked Greek banks out of regular refinancing operations. The Governing Council reviews the amount weekly and can restrict the funding. It also has the power to insist on higher discounts on the collateral banks post to receive the cash.
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ven if Greek tantrum failed to heal Euro-region during its last proclaimed deadline and US consumer details, namely the Retail Sales and Consumer Sentiment, printed better than expected numbers, early week losses by the greenback forced the US Dollar Index (I.USDX) to register consecutive second weekly decline. Japanese Yen signed its victory as uncertainty over the Grexit, coupled with this week’s FOMC, continue supporting safe haven demand while the GBP registered considerable gains supported by improved economic details. Moreover, AUD flashed mixed gains due to countermoves between weaker details from China and strong employment numbers at home signaling lack of clarity and the NZD kept running into losses as RBNZ unexpectedly cut its benchmark interest rate and favored loose monetary policy. With the major central bankers, namely Federal Reserve, Bank of Japan and Swiss National Bank, scheduled to hold their monetary policy meeting during the current week, Forex market is likely to witness wild moves adjacent to announcements. Moreover, Testimony by the ECB President, Inflation numbers from UK and US, coupled with US housing market details and manufacturing signals, also, the UK labor market results, can continue offering liquid trading sessions. Recent economics out of the US again favor early interest rate hike by the Federal Reserve; Though, June rate hike, during the FOMC meeting on Wednesday, is out of table and the rate announcement is less likely to reveal any surprises. However, FOMC Economic Projections, accompanying the rate release and the press conference by Fed Chair, following the rate decision, could provide considerable market moves. In its latest economic projections, released during the March meeting, FOMC members expected lesser growth and Inflation numbers as compared to December forecast, signaling a later rate hike; however, recent announcement by the Fed Chair, Janet Yellen, in April meeting, indicated the rate hike by the end of 2015. Off-late the US economics are favoring the chances for the FOMC projections to inflate, that in-turn support the early interest rate hike. Moreover, forecasts for the Fed Fund rate by FOMC members could also provide considerable information to project Fed’s first interest rate hike since 2006. Other than the numbers, press conference by the Fed Chair would also provide meaningful information to determine near-term USD moves. Improvement in US numbers pushed the central banker to become hawkish off-late and an intact tone, supporting the early interest rate hike, may result noticeable USD gains. In addition to the FOMC, Empire State Manufacturing Index & Industrial Production on Monday, Building Permits and Housing Starts on Tuesday and the CPI, together with the Philly Fed Manufacturing Index, scheduled for Thursday release, are some of the important details that could help determine near-term greenback gains. While the Industrial Production is likely to test five month high of 0.2%, manufacturing details, as signaled by the Empire State and Philly Fed indices, favor the greenback advance by printing 5.8 and 8.1 numbers. However, the housing market stats, Housing Starts and Building Permits, indicates soft numbers to 1.10M and 1.11M as compared to 1.14M each respectively. Moreover, CPI release for the month of May is expected to test the highest level since July 2013, with 0.5% growth, and can provide an important support to the USD if matches the forecast. With majority of the economic details supporting the greenback advance, a hawkish FOMC could provide considerable USD up-move; however, even with the neutral tone of the Fed policy makers, optimistic numbers could limit the nearterm USD declines. ECB President, Mario Draghi, is scheduled to testify before the European Parliament’s Economic and Monetary Affairs Committee, on Monday. Should the ECB Head kept singing the optimistic tone, the Euro can witness a mild pullback from its recent decline, due to Grexit fears. However, a neu-
June 22, 2015 #104
FOMC TO DETERMINE NEAR-TERM USD DIRECTION tral or dovish tone of the central banker can become an added reason for the Euro to extend its decline. Failure to agree with its international creditors for one time, at its self proclaimed deadline, during last week, made Greece the enemy of Euro. However, the international creditors are ready to discuss the aid-for-reform package on Thursday. After the troubled region bundled the IMF payment at the end of the June, it looks forward towards Germany and France to get the support during discussions. Should the Greece again fails to get the basic reform list approved from its international creditors, it is likely to witness chances of bankruptcy, and the Grexit from EU as well, supporting the Euro plunge. Moreover, ZEW Economic Sentiment indices for EU and the Germany, scheduled for release on Tuesday, are also expected to weaken the Euro as the EU index is likely to test four month lows, by printing 60.3, while the German reading may mark six months’ low of 37.5. Recent rout of UK economics have been quite mixed and the releases of headline numbers, from labor market and the inflation details, coupled with the Retail Sales, contributing major part of the GDP, could become important to determine near-term GBP up-move. Monthly Inflation gauge for May, scheduled for Tuesday, is expected to test the five month high of 0.1% gain against the previous -0.1% and an actual reading matching with the forecast could support chances of the interest rate hike by the BoE in early 2016, pushing the GBP upwards. The UK labor market numbers, namely the Average Earnings, Claimant Count and the Unemployment Rate, scheduled for Wednesday release, are also supporting the UK currency up-move as Earnings are likely to rally by the highest since October 2011, 2.5%, while the Claimant Count Change is expected to plunge to -12.5K against its previous reading of -6.5K. Moreover, the Unemployment Rate is expected to remain unchanged at 5.5%. Retail Sales, scheduled for Thursday release, may become the only drag to limit GBP gains as it is expected to register no growth into the Britain’s retail sales as compared to the previous 1.2% reading. Release of recent BoE meeting minutes, scheduled on Wednesday, continue supporting the unchanged monetary policy and asset purchase program. Should any of the MPC members support an alteration into the current monetary policy, chances are likely that the GBP could witness a bit more of the up-move. Although, both the central banks, namely Bank of Japan (BoJ) and Swiss National Bank (SNB), aren’t expected to alter their current monetary policy during Friday and Thursday respectively, it will be beneficial to observe press conference by the central bank heads, following the rate announcements, to determine near-term moves of JPY and CHF respectively. Considering recent comments from Japanese PM’s advisor supporting strong JPY, words from BoJ Governor, Hruhiko Kuroda, is likely to become important for the Japanese Yen. Should the central banker support an on-going loose monetary policy, with the lesser urge to stronger JPY, the national currency could extend its declines while an urge favoring the strong currency may help reverse some of the JPY losses. The SNB Chairman is less likely to support CHF strength and an announcement favoring the weaker Swiss currency could become a reason for the CHF plunge. Reserve Bank of Australia (RBA) recently avoided hiking interest rate hike in its June meeting, supporting the AUD advance. Should the meeting minutes reveal an optimistic outlook of the export oriented nation, the Australian Dollar is more likely to maintain its upward trajectory while a dovish tone, supporting the readiness to alter the benchmark interest rate, can drag the Aussie downwards. Considering the recent decline in commodity prices, coupled with the unexpected rate cut by the RBNZ, quarterly release of New Zealand GDP, scheduled for Wednesday, is likely to provide an additional drag to the NZD as the growth number is likely to mark second consecutive quarter of less number by printing 0.6% mark.
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June 22, 2015 #104
RESEARCH
SERVICE OF- 2014 ENERGY SECTOR DENTAL CLINICS
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isiting a dentist is not connected with pleasant feelings, but, periodically, we still have to use the service. ACT surveyed the residents of Tbilisi to find out for what purpose they usually visit dental clinics. According to the survey, 2 out of 5 people (41%) visited dentist last year. As it has been revealed, more women use the service then men. Last year, almost half of the women (48%) and 1/3 of men (32%) from Tbilisi visited to dental clinics Tbilisi residents apply dental clinics most in cases of therapeutic treatment (i.e. dental caries treatment) (29%). 1/10 of Tbilisi residents visited dentists for surgical manipulations (teeth extraction / implantation). Minority of the capital’s residents (1-2%) visit dental clinics for esthetic dentistry (teeth bleaching / whitening) or orthodontics (brackets). NAMELY WHICH OF THE DENTISTRY SERVICES DID YOU USE LAST YEAR?
As for the marketing activities of the dental clinics, presumably, they should be improved – 30% of Tbilisi residents cannot recall names of any dental clinics. At the same time, the spontaneous recognizability of any of the clinics does not exceed 9%. According to the 39% of Tbilisi residents, they do not know which clinic to visit in case of any need. At the same time there is no clear-cut leader among the clinics- up to 200 most visited clinics have been mentioned in the survey, but the frequency of naming them is not more than 4%. The survey has been conducted on 405 adults from Tbilisi, in May 2015. The statistical error of data does not exceed 4.9%.
ALMOST HALF OF THE WORLD’S POPULATION LIVES IN 16 COUNTRIES
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early half of the world’s population lives in China, India, Japan, South Korea, Australia, New Zealand, and the ten member states of the Association of Southeast Asian Nations (ASEAN), which have a combined GDP of$US21.2 trillion. More importantly, these countries all also happen to be part of the proposed Regional Comprehensive Economic Partnership (RCEP), a “mega-regional” trade agreement. And that fits into the larger trend in the global economy: regional trade reform is “on the move,” according to HSBC’s Douglas Lippoldt.
NEIGHBORHOOD
Turkey spends $2bln on R&D activities in 2014
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he Turkish government spent slightly less on research and development (R&D) last year compared with the previous year, according to a report from the Turkish Statistical Institute (TÜIK) on June 18. Allocation for R&D activities fell 3.73 percent to $2 billion, the report said. The amount was 0.32 percent of gross domestic product in 2014. It amounted to 1.12 percent of the government budget expenditure last year, down from 1.28 percent the previous year. The report said for the budgetary year of 2015, there has been $2.15 billion initially appropriated for R&D. The total amount of indirect R&D support (tax incentives, exemptions, reductions in R&D workers’ taxes and social security contributions) was $500 million last year.
Azerbaijan Airlines awarded prestigious “4 Star” rating of Skytrax
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zerbaijan Airlines (AZAL) is proud to inform you that it has received a prestigious “4 Star” rating out of 5 from the leader in air transport research, world-famous British consulting company Skytrax. AZAL was awarded this status based on the results of independent international audit of Skytrax, which assessed the airline’s quality and level of services. Airlines rating by Skytrax is measured on a scale ranging from 1 star to 5 stars, and is recognized by the aviation community as an unbiased and indisputable criterion in service quality rating. According to the current rating of “Skytrax”, a total of 35 airlines are registered in the rating of “4 Stars”. By receiving the “4 Star” rating, AZAL joins other well-known global carriers like Emirates, Air France, Lufthansa, Turkish Airlines, KLM, British Airways, Japan Airlines and others.
Russia to construct new gas pipeline to Germany via Baltic Sea – Gazprom
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azprom is planning to construct two threads of a new gas pipeline with a capacity of 55 billion cubic meters per year. Shell, E.On and OMV have been invited to participate, said the company. This could double direct supplies of Russian gas to Europe. The four companies have signed a memorandum of intent to create the gas transportation infrastructure to ensure direct supplies of Russia gas to European consumers. “The memorandum demonstrates the intention of the sides to construct the two threads of the pipeline from the coast of Russia through the Baltic Sea to the coast of Germany. The capacity of the new pipeline will be 55 billion cubic meters annually,” Gazprom said in a statement.
Armenia to facilitate exports of dual products
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rmenia will ease the export procedure for dual (civil and military) goods. The necessary draft amendments to the respective laws were approved at Thursday’s Cabinet meeting. In particular, the respective private and general permits will be issued for five years. In addition, a one-year term will be set for the one-time perm.
AZAL enters list of leading airlines
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owadays, the fear of flying is a major obstacle for people to desire to travel domestically and abroad. Azerbaijan state airlines AZAL, one of the most reliable airlines in the region, has entered the club of companies offering highly-rated services. AZAL was awarded with a prestigious ‘4 Star’ rating out of five from the leader in air transit research, worldfamous British consulting company Skytrax.
WORLD NEWS
Asia-Pacific to leave N.America behind as world’s richest region by 2016 – study
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he Asia-Pacific region has overtaken Europe in terms of global wealth management for the first time, becoming the world’s second wealthiest region with $47 trillion says a report released by BCG. It’s on the way to overtaking North America next year. In 2019 private wealth in the countries in the Asia-Pacific area is expected to account for onethird of global wealth, according to the report published Monday. North America, where private wealth amounted to $51 trillion in 2014, remained the richest region in the world. According to forecasts, private wealth in the Asia-Pacific region (excluding Japan) is expected to reach $57 trillion in 2016, whereas in North America the amount of private wealth in 2016 is projected at $56 trillion. The average growth rate of private wealth is expected to be around 6 percent per year and reach $222 trillion in 2019. Globally private financial wealth grew by nearly 12 percent in 2014 to $164 trillion. Nearly threequarters (73 percent, or $13 trillion) of private wealth growth was achieved through the growth of existing assets, with the remainder (27 percent, or $5 trillion) generated by newly created wealth.
LinkedIn relaunches Pulse to become ‘world’s first personalized business news digest’
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f you’re not reaching, engaging, and monetizing customers on mobile, you’re likely losing them to someone else. Register now for the 8th annual MobileBeat, July 13-14, where the best and brightest will be exploring the latest strategies and tactics in the mobile space. LinkedIn, the business-focused social network, has redesigned and relaunched its Pulse news app for iOS and Android — and the focus is very much on personalization. Prior to its $90 million acquisition by LinkedIn back in 2013, Pulse was a Flipboard-esque news-aggregator app, collating your favorite publications and news sources and presenting them in a pretty, interactive mosaic. Following a rebrand to “LinkedIn Pulse,” the app has become a core facet of LinkedIn’s publishing ecosystem — the app analyzes what’s being written and splits the content into “channels,” which users are asked to “follow.” And you have probably used Pulse without knowing it — it powers much of the content you see on LinkedIn’s homepage.
Qatar Airways is now the best airline in the world
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atar Airways has been named the Best Airline in the World for 2015 by leading aviation consumer website Skytrax. The Gulf-based carrier was presented with the honor at Tuesday’s award ceremony at the 2015 Paris Air Show. The other carriers to make the Skytrax top 10 include (in no particular order): Singapore Airlines, Turkish Airlines, ANA, Cathay Pacific, Emirates, Etihad, Qantas, Garuda Indonesia, and EVA Air. “I am honored to lead a company that has paved such an accomplished path to excellence, and innovation, demonstrating the team’s unwavering pride in their work and the experience provided to each of our passengers,” Qatar Airways Group CEO Akbar Al Baker said in a statement. “Becoming an award-winning airline takes dedication and passion— and retaining such a ranking takes commitment, which I thank each and every team member at Qatar Airways for.” Qatar’s victory unseated last year’s winner, Cathay Pacific Airways.
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caucasus business week
June 22, 2015 #104
June 22, 2015 #104
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 16 Akhmeta Str., Avlabari, 0144 Tbilisi. 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: +995 32 2 75 21 11, Fax: +995 32 2 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 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 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 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy
TBILISI GUIDE
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7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street
Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge Embassy of the Slovak Republic Address: Chancery: 85 Irakli Abashidze St. Tbilisi, 0162 Georgia Consular Office: 38 Nino Chkheidze St. Tbilisi, 0102 Georgia Phone: 2 222 4437, 2 296 1913 e-mail: emb.tbilisi@mzv.sk
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 CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 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 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
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,
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 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
Real Estate International Real Estate Company (IREC) Tbilisi. 9 P. Aslanidi St. Tel: +995 32 238 058 Mob: 599 95 76 71 Email: Info@irec.ge www.irec.ge
GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition. Contact information: Email: info@gsservices.ge. Address: Shalva Dadiani 10
Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432
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, NIKORA AND SMART
PUBLICITY
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Two residential complexes include 464 apartments with parking, green area, outdoor swimming pool and playground for children. ”Metrocity” is unique with its special maintenance services. “Metrocity” integrates two five star hotels, private school and residences with private swimming pool, panoramic terrace restaurants, casinos, Spa, shopping center including 100 brand stores, sport club, cinema, bowling center, playground for children, gold sand beach and the biggest conference hall in Transcaucasia for 1500 guests.”MetroCity” can be found just 2 km from Batumi International Airport and 500m from the city center. The complex with its location is harmoniously mixed with mountains and sea views. The project implementation has begun in February 2015 and will be successfully completed in April 2017. Residences from 38 m2 to 300 m2 are available.
10% Deposit 36 MONTH INTERNAL CREDIT 25% Deposit 60 MONTH INTERNAL CREDIT
STARTING PRICE IS FROM 1425 $ Address: Leh and Maria Kachinsky Str.1, Batumi Tel: +995 577 14 17 14 sales@metrocity.ge www.facebook.com/MetroCity.GE
www.metrocity.ge
June 22, 2015 #104