Caucasian Business Week #106

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BUSINESS WEEK WWW.CBW.GE caucasus business week Partner News Agency

July 6, 2015 #106

July 6, 2015, Issue 106





eorgia’s economy could possibly be impacted by the Greek crisis as Georgian diaspora, one of the main donors to the country’s economy, are facing immense challenges to send money back to their home country. Pg. 2



ccording to Ministry of Internal Affairs of Georgia‘s report, in June, 496 758 visitors have crossed the Georgian border. The introduced conditional division is Pg. 6 shown below.



he companies want to jointly enter the hotel business. According to the National Investment Agency, the companies’ officials paid the first official visit to Georgia. Pg. 7



he exclusive retailer of the UEFA Super Cup 2015 tickets finally started selling the tickets today. The website re-launched operating after a week-long technical set-back that left the Georgian society aggravated. Pg. 7

Pg. 3



conomic problems and the depreciation of the national currency caused problems to the banking sector. Pg. 9


he gross external debt of Georgia as of 31 March 2015 amounted to 13.4 billion USD (29.9 billion GEL), which came to 82.8 percent of the last four quarters’ GDP. Pg. 6


Growing Energy Prices? Government to Subsidize Tariffs

t will be announced next week whether a tariff for electricity generated by thermal power plants will increase. The Georgian National Energy and Water Supply Regulatory Commission (GNERC) will take a decision at the session on July 7. If the Commis-



he agreement is already achieved between Georgian government and project investor “Trans Electrica Georgia”, while the memorandum should be amended in the near future. Pg. 7



ccording to “Sakstat”, annual inflation level increased up to 4,5% in June. As for the monthly inflation, price growth has made up merely 0,02% comparing to May. Pg. 6


T Pg. 13

ICE-CREAM SERVICE Hot summer days cannot be imagined without ice-cream. High competition on the Georgian market of ice-cream is probably noticeable for everyone. Local as well as foreign distributors offer consumers a variety of tastes and types of ice-cream.

siderably decreased on the global markets and annual downturn in prices will be maintained for such products in the consumer basket as diesel and petrol. The prices on these products have shrunk by 12.2% and 11.6% respectively. Downturn in oil products prices has considerably lowered the annual inflation. It is worth noting gas prices have increased by 14.5% compared to May 2014. Pg. 5

Colliers: Summer Resorts Hotel Market Overview

he main summer resorts in Georgia consist of the following Black Sea coast cities: Kobuleti, Gonio, Kvariati, Sarphi, Chakvi, Anaklia and Ureki. Kobuleti is a seaside resort on the coast of the Black Sea. It is annually visited by tourists, most-


sion decides to increase the tariff for electricity generated by thermal power plants, it is likely to be reflected in the consumer tariff too. According to Deputy Prime Minister and Energy Minister Kakha Kaladze, if electricity tariff hikes, the government will jointly discuss subsidizing.

12% Contraction in Fuel Prices Result in Low Inflation

n May the general level of consumer prices rose by 0.6% compared to April 2015, while the May inflation in 2014 marked 0.3%. As a result, in the reporting period the annual inflation rate increased month on month and totaled 3.5%. Prices of the consumer basket rose by 3.5% in May year on year. The report of the National Bank of Georgia (NBG) reads prices have con-


Pg. 5


Pg. 2

Economy Minister Has no Expectations of Worsening Relations with International Financial Institutions

Pg. 4

Giorgi Abashishvili: We Envision Georgia as the Transit and Logistics Hub of the Region

Pg. 8

Amiran Gamkrelidze: There 90-95% of Curing Hepatitis C with The New Generation Drugs” David Mirtskhulava: The reason of tariff adjustment was Lari devaluation Pg. 8

Pg. 8

Giorgi Gigolashvili: We should Develop Insurance Culture in Georgia Pg. 4


ly from former Soviet Union countries. The vast majority of Kobuleti visitors are from Armenia. Gonio, Kvariati and Sarphi are next to Batumi in the direction of the Georgia-Turkey border. The Gonio fortress dates from the 1st century AD. Sarpi is the main land border between Georgia and Turkey. Pg. 8

Mega Project in Achara – Free Industrial Zone to Launch Operation in Gonio

free industrial zone will be organized in the Autonomous Republic of Achara, Georgia. The project includes the Black Sea Pearl and it will be implemented on 300 hectar land plot in Gonio. The idea was initiated by Georgia-Blares Business Group that unites investors from various countries. The project author Archil Dolidze says the project has involved sev-

Richard Norland: Sakartvelos Gaumarjos

eral financial groups, including Czech Chester, Tajiti projecting company, Tatra Czech company, American Global Energy and investors from Israel and Canada. The project is being supported by both the autonomous and central governments of Georgia. At this stage, negotiations are underway on conferring a status of free industrial zone. After these negotiations the land plot will be handed over to the group. Pg. 5

Pg. 12








pparently, the new law will provide for formation of public service that will be free of politics. According to Civil Service Bureau Chief Ekaterine Kardava, the bill was drafted with involvement of experts from the EU and SIGMA and through consultations with public servants and academic circles.



eorgia demands 70,320,000 EUR from the government of Russia as compensation for moral damages. On July 2 of 2015 the Ministry presented a document to the Strasbourg Court regarding the violation of rights of Georgians expelled from Russia in autumn of 2006, demanding compensation.



he law on public service will be discussed at the governmental session today, after which it will be sent to the Parliament. As the Prime Minister said at the governmental meeting, reformation of public service was a preelection promise of the Georgian Dream.



ccording to the National Food Agency, this will give the consumers more freedom in choosing products as they will be informed whether they are genetically modified. According to the law, if genetically modified components comprise more than 0.9% of the general mass, it needs to be indicated with a special inscription in the upper left corner of the product’s label.



eorgia and Turkmenistan are deepening bilateral cooperation across a range of sectors including economic, transport, energy, tourism, culture and science. “Turkmenistan has quite clear and strategic view of the development of their country and cooperation with Georgia,” said Georgia’s President Giorgi Margvelashvili.



eorgia is making moves to offer greater support to people living with autism. This week the Prime Minister’s Office and Tbilisi City Hall launched an internationally recognised program that offers free treatment to people in Georgia who suffer from autism.



he Premier Irakli Garibashvili has opened the new enterprise jointly with Irakli Kovzanadze, executive director of Partnership Fund on Thursday. The plan is constructed on Rustavi highway and the enterprises is equipped with modern Italian devices. 60% of products will be sold in Georgia, while the remained share will be exported. The exporting markets include: Kazakhstan, Azerbaijan, Ukraine and Russia.



bilisi International Airport has been given a new name in honour of one of the country’s greatest poets and contributors to Georgian literature. Yesterday 30 members of Tbilisi City Council voted in favour to name Tbilisi International Airport after famous historical writer Shota Rustaveli.

July 6, 2015 #106

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merican diplomat Richard Norland, who has served as the Ambassador of the U.S. to Georgia since March 2012, bids farewell to his colleagues and supporters in the South Caucasus country, as he is due to leave his post in September of this year. On what is his last America’s Independence Day in Georgia as the Ambassador of the U.S., Mr. Norland addressed the Georgian public with a moving farewell speech, in which he touched upon the main political challenges facing Georgia, as well as its advantages. He emphasized Georgia’s strive for its territorial integrity, stating: “It is my fervent wish that Georgians, Abkhazians, and Ossetians will be given the chance they deserve to live and thrive together in peace on the land they all share in common.” Ambassador Norland also acknowledged Georgia’s current economic instability and highlighted the country’s global role in the EastWest communication, which serves as the guarantor for the country’s security status: “Georgia is a key piece in a vast new effort to rebuild East-West ties across Eurasia, and we are proud to work with our strategic partner in unlocking these new opportunities, just as we are proud to work together to strengthen global security.” Apart from its political charge, Ambassador’s speech was filled with his warm regard toward and Georgia and its people, emphasizing his wife Mary’s role as the motivator behind the good

endeavors he has taken for the country. You can read the whole speech below: Dear Prime Minister, Dear Ministers, Dear Colleagues and Friends, Thank you for joining us to celebrate America’s birthday. Thank you for the support and cooperation that each and every one of you has brought to the task of strengthening U.S-Georgia relations. I will be brief, because my heart is full of mixed emotions on what is to be my last Fourth of July as Ambassador to Georgia. I am full of admiration for how far Georgia has come in building its democracy -- not only in the 22 years since I was here the first time, but even in the last three years since Mary and I arrived. I feel deeply enriched by the friendships we have made among the people of this ancient land with its incredibly rich and diverse cultural heritage. And of course, although we are sad to be leaving Georgia, we look forward to returning home where we will be nearer to our children and grandchildren, at least for a while -- and where I will give our daughter’s hand away in marriage on September 12. Yet I am conscious that we depart even as many challenges still stand before Georgia: an unstable regional security picture, combined with economic and political uncertainties at home and abroad that the best minds in Government and Opposition and Civil Society must now try to address. And I regret that I never had a chance to get back to the beautiful mountains North of Tskhinvali, or to Sokhumi, both of which I visited when I worked here in 1993. It is my fervent wish that Georgians, Abkhazians and Ossetians will be given the chance they deserve to live and thrive together in peace on the land they all share in common. So I very much feel mixed emotions -- yet one thing is clear: the United States stands with Georgia, today just as strongly as when Georgia’s independence was restored 24 years ago. When your sovereignty and territorial integrity are questioned, we are with you. When floods come, we are with you. When your armed forces ask to be strengthened and modernized, we are with you – just as you have been with us on the battlefield, displaying courage and valor.

When your children need education and jobs, we are with you -- along with your friends in Europe, the Far East and elsewhere. Georgia is a key piece in a vast new effort to rebuild East-West ties across Eurasia, and we are proud to work with our strategic partner in unlocking these new opportunities, just as we are proud to work together to strengthen global security. Ambassador Ian Kelly, my successor, and his wife Francesca are looking forward to picking up this dynamic relationship where Mary and I leave it off. He will inherit a team of superb professionals at our Embassy -- and I cannot thank enough my American colleagues from across the U.S. Government inter-agency community, as well as our dedicated local staff whose continuity and support are indispensable to our mission. I also want to use this occasion to thank my wife Mary for her support and engagement during this tour. Her advice has been indispensable to me -anything you think I did right over the past three years is probably thanks to her; anything I did wrong was my own fault. To our friends from around Georgia, thank you in advance for extending to Ian and Francesca the world-famous hospitality you have shown to Mary and me and to all of us at the Embassy. Good luck as you continue to build a stronger, more prosperous, more secure Georgian state -and please know that no matter where we are, Mary and I will always carry a little part of Georgia in our hearts. Until we meet again: Sakartvelos Gaumarjos! Prior to his assignment to Georgia, Mr. Norland has served as Ambassador of the U.S. to Uzbekistan, in office from 2007 to 2010. He has also served as the Deputy Chief of Mission at the American Embassy in Kabul and Riga, after completing his diplomatic service in Afghanistan. Georgia will remember Mr. Norland as a dedicated and active ambassador; positive comments coming from Georgians have filled the U.S. Embassy’s Farewell post to Facebook. Mr. Norland’s successor Ian Kelly is due to take up his position at the United States Embassy to Georgia in September of this year. Mr. Norland will remain in Georgia until Mr. Kelly’s accession to the new post.



eorgia’s economy could possibly be impacted by the Greek crisis as Georgian diaspora, one of the main donors to the country’s economy, are facing immense challenges to send money back to their home country. Banks in Greece closed on Monday and will not reopen until July 7, as officials scrambled to avoid financial panic. Daily withdrawal limits were imposed on ATM machines and money transfers to destinations outside of Greece have been banned. This could raise problems for Georgians who are financially depended on financial assistance from diaspora in Greece. But Greece’s Deputy Foreign Minister Giorgos Tsipras told his Georgian counterpart that “in all likelihood” after the referendum on July 5 (where voters will choose ‘yes’ or ‘no’ for further bailout air), the existing banking crisis “will be defused”. Today Georgia’s Deputy Foreign Minister Vladimer Gurgenidze met Tsipras in Greece to talk about the Greek financial crisis and its impact on the country’s residents, including Georgian diaspora. The officials discussed the possibility of Greece fast-tracking its ratification of the Association Agreement (AA) signed between Georgia and the European Union (EU) in June 2014. Tsipras thanked Gurgenidze for the solidarity Georgia expressed towards Greece. He promised the Greek government would “do its best” to pro-


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tect Georgians’ interests. Meanwhile while in Greece Gurgenidze will meet with Georgian diaspora to learn more about the current situation and the effect the current crisis was having on their living conditions. About 150,000 ethnic Georgians live in Greece. In April this year Greece was the second largest source of remittances to Georgia, with money transfers worth $13.3 million USD. Russia was the largest source of remittances ($37 million USD) while Italy placed third ($8.2 million). From January to May 2015, remittances from Greece dropped 18.1 percent to $68.9 million (from $84.2 million) year-on-year. Meanwhile Georgia’s Deputy Finance Minister Giorgi Kakauridze said: “The situation in Greece will of course affect money transfers to Georgia

but remittances are already significantly reduced not only from Greece, but from other sources as well, so it will not have a significant effect on the Georgian economy anymore.” In total remittances to Georgia were down by 23.2 percent to $438.1 million USD in the first five months of 2015 from $570.6 million USD in the same period last year. The data, published by the National Bank of Georgia (NBG) showed Georgia experienced 24.4 percent less money transfers in April this year than in the same time in 2014. NBG noted the total sum of money transfers from abroad constituted $91.1 million, which was $29.4 million less than the sum of money transfers in the same period of 2014.

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Editor: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Lazare Gvimradze


July 6, 2015 #106



ccording to data by the National Wine Agency, Georgia exported 13 706 653 bottles of wine, to 33 countries, which had the overall cost of $39 425 552. In June, export was highest compared to the bygone months of the year – 3 251 246 bottles. For comparison: January saw 1 343 018 bottles exported, February – 1 558 631, March – 2 198 535, April – 2 878 656, and May – 2 476 567. According to the calculation period, export growth is taking place in strategically relevant markets, like China – 23%, Japan – 21%, Latvia – 20%, Estonia – 16%, Germany – 5%, Canada – 159%, USA – 61%, Kazakhstan – 6%, Great Britain – 33%, and Hong Kong – 230%, among others. The top five exporting countries are Russia with 6 555 183 bottles, Kazakhstan with 2 275 722 bottles, Ukraine with 1 257 918 bottles, Poland with 796 076 bottles, and China with 759 969 bottles. Locally produced wines lead the export quantity – “Kindzmarauli” (red halfsweet wine) – 1 960 717, “Mukuzani” (red dry) – 637643, and “Tsinandali” (white dry) – 432 128 bottles. Because of unstable political and economic events, 2 of the largest exporting countries, Russia and Ukraine, suffered a decline in export of -63% and -60%, respectively. This influenced the 6-month export statistics, which shows a 49% fall compared to the previous year. The decline index in January was 87%, in February – 71%, in March it was 67%, in April – 58%, and in March it was 54%. It is also notable that wine was only exported to 16 countries in January, went up to 25 countries throughout the first quarter, and to 33 countries by June. It’s important to emphasize that the export index for 2015’s first 6 months (13 706 653 bottles) was significantly higher than the same data from previous years, excluding 2014. For example: 2012 saw the export of 9 105 787 bottles, 2013 – of 11 354 671 bottles of wine. Decline is noted in regards to 2014 (26 872 145 bottles), which is the result of embargoes of many years being lifted, causing a boom of wine export to Russia’s market with peak results. Along with this, in the calculation period there are 2 523 161 bottles of 0.5l brandy exported to 15 countries, which reaches $7 073 805 in price. 57 402 bottles of 0.5l Chacha were also exported to 17 countries around the world. Overall the revenue in the first half of the year through export of wine, brandy, Chacha, grape products, tap brandy, and brandy spirits reached $58,3 million.



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he following is the full text of a letter, written on June 30 and sent by Greece Prime Minister Alexis Tsipras to the country’s international creditors: “To the President of the European Commission Mr. Jean Claude Juncker To the President of the European Central Bank Mr. Mario Draghi To the Managing Director of the IMF Ms Christine Lagarde Dear Managing Director, dear Presidents, I am writing to inform you on the position of the Hellenic Republic towards the list of Prior Actions of the Staff Level Agreement as published on the European Commission website on June 28th 2015. The Hellenic Republic is prepared to accept this Staff Level Agreement subject to the following amendments, additions or clarifications, as part of an extension of the expiring EFSF program and the new ESM Loan Agreement for which a request was submitted today, Tuesday June 30th 2015. As you will note, our amendments are concrete and they fully respect the robustness and credibility of the design of the overall program. 1. VAT reform: Maintain the 30% discount on islands, to be applied to the new rates. 2. Fiscal structural measures: Gradually increase the advance payment of individual business income tax to 100 percent and phase out the preferential tax treatment for farmers (including the subsidies for excise on diesel oil) by end-2017. Reduce the expenditure ceiling for military spending by E200 million in 2016 and E400 million in 2017 through a targeted set of actions, including a reduction in headcount and procurement. 3. Pensions: The 2010 reform will be fully implemented but the 2012 reform (sustainability factor) will be postponed until the new legislative reform is implemented in October 2015. EKAS will be phased-out by end-2019 but without any immediate action on the top 20% of beneficiaries. All nuisance charges will be phased out by end2017, starting from October 31, 2015. 4. Labour markets: The new framework will be legislated in autumn 2015. 5. Product markets: Immediately implement specific recommendations from OECD’s toolkit 1 (tourist rentals, tourist buses, truck licenses, code of conduct for traditional foodstuff and eurocodes on building materials), toolkit 2 (beverages and petroleum products), and open the restricted professions of notaries, actuaries, and court bailiffs, liberalize the market for gyms and eliminate significant portion of nuisance charges. Moreover, in cooperation with the OECD, implement an ambitious reform package including: • Create One-Stop-Shop (OSS) services for businesses (best practice analysis, as well as a comprehensive roadmap already prepared and completed in cooperation with the OECD); • Conduct immediately a comprehensive competition assessment on specific sectors characterized by oligopolistic practices (e.g. construction, wholesale trade, agricultural products, media, etc.) and adopting recommendations accordingly (roadmap and timelines already prepared by the OECD); • Implement immediately a comprehensive strategy against corrupt business practices, for example in the area of public procurement procedures (roadmap and timeline already prepared by the OECD). ADMIE will be split from the PPC into a separate legal entity under state majority ownership. Thank you in advance for your support. I look forward to hearing from you. Yours faithfully, Alexis Tsipras”



ccording to Enterprise Development Agency, the project will cover the remained regions in Georgia from June 29 – Kakheti, Mtskheta-Mtianeti, Shida Kartli, SamgereloZemo Svaneti, Guria and Adjara. In addition, business proposals submission should be available in online regime at the web-site: www. within the project frame.





multi-million dollar construction manufacturing plant for producing vital building materials has opened in Georgia. Plant will produce polyurethane sandwich panels that are primarily used in industrial construction.



opularity of holidays abroad has declined markedly among the Ukrainians. This is evidenced by the results of the survey conducted by HeadHunter Ukraine international HR portal. This applies to all countries the Ukrainians went on vacation, including Georgia.



eorgia is gaining an international reputation as a popular destination, with latest figures showing more visitors are coming here than 12 months ago. Today the Information-Analytical Department of the Ministry of Internal Affairs published data showing the number of visitors who entered Georgian territory in June 2015.



- A few days ago Statistics Service released information, according to which, in May 2015 the economy grew by 2.1%. How positive is this figure for the country? - Apart from data for May, Gruzstat also released information regarding the growth in the first quarter, which amounted to 3. 2%, so the average growth data for 5 months amounted to 2.5%. In May, the most notable growth was observed in sectors such as construction, finance, energy and real estate. In this sense, 5% growth in the real estate sector is especially positive, as this figure does not take into account the privatization of state facilities and these data apply only to private acquisitions.

The June 13 natural disaster has left clear messages to the Georgian society that the insurance culture in Georgia remains undeveloped. Insurance companies have remunerated only a 1/8 part of total losses. In his interview to the Banks&Finances GIORGI GIGOLASHVILI, a head of the Insurance Institute, talks about the current problems and reforms in the insurance sector.



multifunctional medical center managed by the American Hospital group will be opened in a former traumatological hospital. Azerbaijani group Sayali LLC is going toinvest $ 31 million in the complex. For the same purpose the Overseas Private Investment Corporation (OPIC) allocated a loan of $ 18 million to the company.



uropean igaming and sports betting group Betsson AB has confirmed that it has passed all provisions to acquire Georgian betting operator Europe-Bet for a consideration of $50 million (£31 million). The acquisition deal will see Betsson become the second largest Georgian betting operator, taking 30% market share as the gambling group takes over Europe-Bet’s online and retail betting divisions.

tions with them. We consider their every word and are working together with them. As you know, the initial project is very different from the one we have now. It happened because the developers of the document took into account many of the comments from both international financial institutions and members of the government of Georgia. This is a normal process. I also have claims to the project, in particular, to the procedure of appointment of members of the Supervisory Board at the Supervision Service, etc. I hope that the document will be further improved. So I do not expect any deterioration in relations with international partners. - As is well known, tourism is one of the pillars of the Georgian economy. How the government prepared for the tourist season? As reported, after the disaster in Tbilisi foreign tourists en masse canceled a trip to Georgia. - Such cases have occurred , but recently the situation is getting better. Now the number of visitors began to grow, so we do not expect a significant negative effect of flooding in Tbilisi. The government has done a lot in order to stimulate tourism, in particular, visa-free regime has been restored with many countries, moreover, the citizens of countries with which the visa regime retained, will be able to visit Georgia without a visa if they have even one visa label in passport to one of the 50 European countries, America, Canada and Japan. In addition, the list of required documents that must be present when obtaining e- visa has been significantly reduced. So, the situation is certainly not ideal, but the dynamic is clearly positive.

Georgia must Introduce Obligatory Civil Insurance Responsibility before Third Persons



Real estate market shows growth and it is very good. A 10% growth in the energy sector is also very positive. The decline was recorded in sectors such as trade in automobiles, metallurgy, etc. Therefore, we do not want to present a picture as if all is well. However, even 2.1% real growth in the economy, in any case, is a positive fact. - Can all these figures be considered as a sign of economic stabilization in the country? - Of course. We assume that the economy is gradually stabilizing, including the exchange rate. In summer, it is caused by the influx of tourists and a decline in imports, respectively. As for the fall, we are preparing for the implementation of major infrastructure proj cts with foreign money that will support the stability of the national currency in terms of the completion of the active tourist season. Before the arrival of winter, the government plans to carry out a number of serious measures to stabilize the economy, and we have every reason to believe that it has already begun. We have no reason to expect additional fluctuations in the exchange rate of the national currency. We expect that in general the lari will fluctuate around that figure which is available now. Recently, topic of the separation of the supervision system form the central bank has become very relevant. Large international financial institutions oppose this decision. - Whether the government and parliament take into account their recommendations, and whether their possible ignoring can lead to serious deterioration of relations with them? - The opinion of international institutions is very important for Georgia as well as good, friendly rela-


eading specialists, scientists, delegates and representatives of local and foreign enterprises, exporter organisations, Governmental bodies and civil society are teaming up to develop a Non-Timber Forest Products sector in Georgia. Georgian non-timber forest products have been recognised as one of the promising fields of Georgia’s developing agricultural sector that can promote the country’s prospects as a producer of ecologically clean, high quality products.

eorgia’s Finance Minister Nodar Khaduri is on an official visit to China for the purpose of showcasing Georgia’s investment and business environment in a bid to attract more Chinese investments. China was one of the top trading partners of Georgia in the first four months of 2014, with trade amounting to $248 million USD. Following behind was Turkey ($476 million) and Azerbaijan ($290 million).

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- The recent natural disaster has showed there is an undeveloped culture of insurance in Georgia. The insurance sector is an only mechanism of financial protection from natural disasters worldwide. What is the role of the insurance sector in similar forcemajeure situations? - First of all, let’s talk about specific figures and what the natural disaster has taught us. The Government has set up the coordination staff at the insurance sector state supervision office. According to the last information, about 170 victims have applied to insurance companies for remuneration of both real estate and automobile losses. The quantity of both statements is almost the same. The calculated losses make up about 3.5 million GEL and it should be noted the insurance sector has met quite prepared this disaster. They have showed readiness and mobilization and in hours after the natural disaster they started estimating the losses and available results and determined the further steps. I have not seen any statement with any pretence. According to preliminary estimations, losses from damaged houses, apartments, business offices, automobiles from the natural disaster may be 24-25 million GEL, may be more. Currently, losses of 3.5 million GEL have been calculated, that is about 1/8 of the supposed insured property. If everything were insured in Georgia like the USA, where insurance premium per capita makes up 3700-3800 USD, remunerated funds would be far

higher after the natural disaster. In Georgia insurance premium per capita makes up about 100 GEL. This signifies the Georgian insurance sector covers an only insignificant part of available beneficiaries. This points to a law insurance culture, including in terms of knowledge, experience, adequate estimation of risks and so on. For example, let’s take automobiles. About 1 million vehicles are registered in Georgia and only 60 000 ones have been insured, that is 6%. Moreover, only a small portion of 60 000 insured vehicles have been insured voluntarily, but a major part of the insured vehicles belong to foreign or state offices that keep respective teams who know it is more reasonable to pay insurance premium, not to remunerate the losses from their own pockets. - What do you think about an introduction of mandatory civil responsibility insurance before the third party and what will be positive and negative results of this decision? - Let’s refer to another example. In the 1920s Sweden introduced obligatory insurance of responsibility before the third party. This package includes a social aspect. First of all, this innovation will promote the insurance market as the infrastructure will be developed, the turnover of money will increase, and the level of professionalism will be upgraded. It is worth noting any sort of insurance services is oriented on beneficiaries. No government will introduce this service to promote only the insurance business. In our cases, also, this service will protect the interests of beneficiaries, that is, owners of vehicles. There are many cases when vehicles hit and damage the property of other citizens and the vehicle owner cannot repair the damaged property, or the vehicle hits citizens and the vehicle owners cannot afford to remunerate the healthcare recovery costs. Therefore, the obligatory insurance of responsibility before the third party will enable insurance companies to immediately resolve the arisen problems. This reform must be implemented in Georgia definitely. - How efficiently does the primary chain of the overall healthcare program work? Are financial interests of doctors protected in this chain and what is the source of the problem before them? - Starting July 1, 2013 the overall healthcare pro-

gram has gradually reached that part of Georgian citizens, who had never received insurance services and less than 1% remains, which has not joined the program. As a usual, if citizens are not beneficiaries of a health insurance or any other programs, they will have to seek financial resources themselves. Today the overall healthcare program has resolved this sharpest social problem. Unlike previous programs, beneficiaries are able to choose medical assets all over the country. Moreover, in the previous program, the waiting period was 4-6 months on planned operations, while now this period has decreased to 2 months and hundreds of medical assets have been involved in the process. As to the primary chain of the program, this segment, as well as the hospitals segment, remains separately and follow the market economy principles. Indeed, the overall healthcare program has made positive effect on this chain too, because the state-allocated financial resources per beneficiary is distributed to outpatient and inpatient hospitals and these assets receive financial support according to the number of ascribed patients. Moreover, the condition of village doctors and nurses has also improved to a certain extent. Their salaries have increased by 30%. Despite these positive changes, I believe the primary healthcare chain should be further improved and it requires more attention. I hope the Health Ministry and due organizations have been working on specific ways and means for making advancing this segment. I think the major challenge is to improve the quality of management at outpatient and inpatient hospitals. A complex of education programs and certain regulations should be introduced to this segment. I have heard the share of a family doctor per beneficiary exceeds 10%-15% in the state-allocated allocated finances and their salaries are about 300-400 GEL. In this case, it is difficult to request from doctors to work with devotion and show a high level of professionalism. Infrastructural arrangement of inpatient assets is also a serious problem in villages. Along with successful operation of the overall healthcare program, the Health Ministry should improve the primary healthcare segment and the positive effect will be doubled.

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caucasus business week



n May the general level of consumer prices rose by 0.6% compared to April 2015, while the May inflation in 2014 marked 0.3%. As a result, in the reporting period the annual inflation rate increased month on month and totaled 3.5%. Prices of the consumer basket rose by 3.5% in May year on year. The report of the National Bank of Georgia (NBG) reads prices have considerably decreased on the global markets and annual downturn in prices will be maintained for such products in the consumer basket as diesel and petrol. The prices on these products have shrunk by 12.2% and 11.6% respectively. Downturn in oil products prices has considerably lowered the annual inflation. It is worth noting gas prices have increased by 14.5% compared to May 2014. In the reporting month compared to May 2014 a general level of food product prices increased by 4.1%. A major upturn in prices was recorded on fruits and vegetables (27.1%). Moreover, annual growth in prices was registered

on oil and fat products, sugar and confectionaries. Downturn in prices was registered on milk, cheese and eggs, vegetables. Prices of alcoholic beverages have increased by 2.7%. An 11.9% upturn was registered on alcoholic beverages and tobacco products after excise tax increased on tobacco products and alcoholic drinks. As to other groups of the consumer basket, prices considerably increased as a result of the exchange rate devaluation. A major rise in prices was registered on furniture, home appliances, repair works, medications. In the reporting month compared to May 2014 a 9.5% upturn was registered on products with a long-term use. This category mainly includes imported goods such as automobiles, major home appliances and so on. The exchange rate depreciation has affected the upturn in prices in this category. Lower growth in prices was recorded on services and goods with a short-term use. The downturn marked 3.4% and 3.3% respectively, while prices rose by 0.6% on goods for a medium-term use.



t will be announced next week whether a tariff for electricity generated by thermal power plants will increase. The Georgian National Energy and Water Supply Regulatory Commission (GNERC) will take a decision at the session on July 7. If the Commission decides to increase the tariff for electricity generated by thermal power plants, it is likely to be reflected in the consumer tariff too. According to Deputy Prime Minister and Energy Minister Kakha Kaladze, if electricity tariff hikes, the government will jointly discuss subsidizing. In April, thermal power plants appealed to the Georgian National Energy and Water Supply Regulatory Commission (GNERC) to adjust electricity generation tariff due to the lari devaluation. According to the information published on the GNERC website, upon written request submitted to the Commission, public administrative proceedings began regarding electricity tariff adjustment for “Mtkvari Energy” and “Georgian International Energy Corporation”. It should be noted that the lari has lost about 30% of its value in recent months, however, it is up to the commission to decide how much and

how accurately the lari depreciation will affect the cost of thermal power plants tariff. But while the Commission will count the loss of thermal power plants, the additional costs and only then they will adopt a decision. It’s noteworthy that the share of electricity generated by thermo power plants account for 19.7% of the total energy production. For example, in 2014 Georgia consumed 10 153.70 mln KWh of electric power, of which 1 932.59 mln KWh was generated by thermal stations. Recall that electricity and gas tariff reduction was one of the main pre-election promises of “Georgian Dream” coalition. In December 2012, the Government decided to reduce the power tariff by 3,54 tetri for the groups which consumed 100 -300 kilowatts of electricity. Accordingly, from January 2013 the residents of Tbilisi who consumed less than 100 kW / h of electricity pay 9.94 tetri instead of 13.48 tetri; the tariff for consumed 101 kW -300 kW reduced from 16 tetri to 12.46, while the tariff for 301 kW and more was not reduced and totaled to

17.69 tetri. The population in regions pay 9.44 instead of 12.98 tetri for consumed 100 kW / h of electric-

ity, for 101- 300 kW - 12.98 cents instead of 16.52 tetri, and the tariff for more than 300 kW remained unchanged at 17.49 tetri.



free industrial zone will be organized in the Autonomous Republic of Achara, Georgia. The project includes the Black Sea Pearl and it will be implemented on 300 hectar land plot in Gonio. The idea was initiated by Georgia-Blares Business Group that unites investors from various countries. The project author Archil Dolidze says the project has involved several financial groups, including Czech Chester, Tajiti projecting company, Tatra Czech company, American Global Energy and investors from Israel and Canada. The project is being supported by both the autonomous and central governments of Georgia. At this stage, negotiations are underway on conferring a status of free industrial zone. After these negotiations the land plot will be handed

over to the group. The industrial zone will be divided in three zones: the first one will include business assets on 10 hectare land plot, including a stock exchange, leasing companies and business bodies. The second section will include a tourism zone with top class hotels. The third section will include a virtual zone with IT field laboratories, Archil Dolidze said. The company has obtained a permission to carry out primary works, including planning, exploring the river Chorokhi embankment strengthening works and geodesic monitoring. “It takes much time to obtain the status and receive the land plot. We have to carry out a number of works to obtain the status and receive the land. Both central and Achara governments are

providing full support to us”, Dolidze said. IBM company will be invited to the virtual zone. Negotiations are underway with Ukrainian and Russian offices of IBM. The virtual zone is expected to employ about 4 000 young individuals and they will be retained in the IT field. “We enable the world business circlers to work in a harmonic environment in Georgia. We provide fully acceptable environment in terms of taxation and political situation. They are sure today they can work in Georgia in normal and peaceful atmosphere without bureaucratic barriers and obstacles. The travel zone is our interest. We plan to place several top class hotels without asphalted roads. We will organize a separate sector for villas, a Hollywood studio. Negotiations are underway with Warner Brothers. They like the Georgian culture and nature very much”, Dolidze told the IPress news agency. Construction works will be carried out by Georgian construction materials and an additional 93 hectare land plot will be allocated to organize a due production zone. “At least 13 enterprises will be constructed for plants of sandwich panels, blocks and decorative reinforcements. Negotiations are also underway with the city hall to open a wastes processing plant and re-cultivate the old trash dump. Negotiations were completed with foreign partners for organizing a new runoff and constructing a new terminal at the airport terminal. The project calls for hosting over 1 million tourists a year. To this end we need ecologically clean food products and we have proposed to construct an agro complex in the Guria Region”, Dolidze said.

The Region’s authorities have showed readiness for constructing an agro complex in the Guria Region. Over 100 million USD will be invested in the Region. Guria governor Gia Salukvadze noted enterprises will basically make focus on food products. “The project calls for employing 30 000 to 50 000 individuals in the construction process and 20 000 to 25 000 individuals after completion of the construction project. A total investment value of the project is about 15 billion USD. Moreover, the financial resources may further increase”, Salukvadze said. “Several financial groups have showed interest in the project implementation from Switzerland, United Arab Emirates and they represent such banks as Deutsche Bank, BNP Paribas and so on. The Abu Dhabi Sheikh has also expressed interest in the project implementation during his visit to Georgia”. The Prime Minster of Georgia has also explored the project. The group of investors has already met with the economic team and Giorgi Pertaia. The project elaboration started 8 months ago and the group is excepted to receive the status of a free industrial zone in September 2015. Construction works are expected to start in autumn 2016, Dolidze said. ICBT Corp unites Georgian and foreign companies. The Achara government has also promised assistance to investors. “This is a very ambitious project. Investments of 10 billion USD will be expectedly put in the project implementation. The guests have talked about the project in details. The supreme council chairman wishes success to the guests and promised assistance to them”,the supreme council’s official statement reads.



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ccording to Ministry of Internal Affairs of Georgia‘s report, in June, 496 758 visitors have crossed the Georgian border. The introduced conditional division is shown below: 1) TOURISTS – 197 537 VISITS (39, 8% OF THE TOTAL NUMBER) 2) TRANSITS – 131 710 VISITS (26, 5% OF THE TOTAL AMOUNT) 3) OTHERS – 167 511 VISITS (33, 7% OF THE TOTAL NUMBER). As for the period of January-June, 2 332 303 visits have been made it to the South Caucasus country,

which by 3, 5% exceeds the corresponding data for the year of 2014. Most visits have been made from Turkey (-19, 8%) in June, 2015, Azerbaijan (+15%), Armenia (+33%), Russia (+47%) and Ukraine (-5%). A positive trend is maintained with the EU countries. Following countries have distinguished themselves in terms of arrivals’ number: Lithuania (27%), Czech Republic (26%), Great Britain (22%), Germany (18%), Latvia (13%) and the Netherlands (12%). Among Central Asian countries: Uzbekistan (110%) and Kazakhstan (32%). From Eastern European countries – citizens of Belarus (47%) and Moldova (36%). From the United Arab Emirates, an increase of an impressive 678% is observed. Number of the USA’s citizens has also grown by 12%.

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tarting July 1st of this year, tariffs on domestic and export transits will reduce by 20%, says Georgian Railway’s management. The change will apply to both domestic transit and exports of all kinds of dry goods, as well as container shipping.

This marketing decision in the rail transport sector will reflect on company’s future sales growth, significantly contributing to increasing Georgian products’ competitiveness and local production volumes. This in turn will positively reflect on the country’s economic growth prospects.



he gross external debt of Georgia as of 31 March 2015 amounted to 13.4 billion USD (29.9 billion GEL), which came to 82.8 percent of the last four quarters’ GDP. The net external debt of Georgia totaled 8.8 billion USD (19.6 billion GEL or 54.2 percent of GDP) as of 31 March 2015. Net public sector external debt was 3.2 billion USD (7.2 billion GEL or 20.0 percent of GDP). During the first quarter of 2015, the gross external debt of Georgia decreased by 151.3 million USD (313.7 million GEL). Out of that, transactions led to an increase of gross external debt by 124.9 million USD (258.8 million GEL), other changes to 94.6 million USD (196.1 million GEL) and price changes led to its increase by 45.8 million USD (94.9 million GEL). During the same period, exchange rate changes led to a decrease of gross external debt by 416.6 million USD (863.5 million GEL). External liabilities of the government sector decreased by 177.0 million USD (366.9 million GEL) during the first quarter of 2015. Out of that, exchange rate changes and transactions resulted in an decrease of government debt by 172.3 million USD (357.2 million GEL) and 33.9 million USD (70.2 million GEL) respectively. While price changes led to an increase of 29.2 million USD (60.5 million GEL). External liabilities of the National Bank of Georgia decreased by 19.7 million USD (40.9 million GEL). Out of this, exchange rate changes lead to a decrease of 12.0 million USD (24.9 million GEL) and transactions – to 7.7 million USD (16.0 million GEL). By the end of the first quarter of 2015, the external debt of the National Bank of Georgia amounted to 232.0 million USD, of which 198.6 million USD are Special

Driving Rights (SDR)1 which have no maturity date, therefore there is no obligations to repay them as long as Georgia is a member of the IMF. External liabilities of the banking sector increased by 71.8 million USD (148.8 million GEL), of which 133.1 million USD (275.9 million GEL) grow was led by transactions, and price changes raise banking sector debt by 2.9 million USD (6.0 million GEL). While exchange rate changes decreased banking sector external debt by 64.2 million USD (133.1 million GEL). Other sectors’ external liabilities increased by 23.4 million USD (48.6 million GEL) during the reporting period. Of that amount, nonfinancial corporations’ debt increased by 26.0 million USD (54.0 million GEL), and the external liabilities of nonbanking financial corporations’ decreased by 2.6 million USD (5.4 million GEL). Other sectors’ liabilities increased by 84.1, 18.7 and 13.7 million USD (174.4, 38.7 and 28.4 million GEL) due to transactions, other and price changes, respectively. While exchange rate changes led to a decline of other sector debt liabilities by 93.1 million USD (192.9 million GEL). Intercompany lending decreased by 49.8 million USD (103.2 million GEL) during the first quarter of 2015. Exchange rate changes and transactions led to decrease of 75.0 and 50.7 million USD (155.4 and 105.2 million GEL) respectively; while Other changes led to grow of lending by 75.9 million USD (157.4 million GEL). Liabilities denominated in foreign currency decreased by 49.8 million USD (103.2 million GEL) and amounted to 12.7 billion USD (28.2 billion GEL) and liabilities denominated in the national currency decreased by 101.5 million USD (210.5 million GEL) and totaled 773.2 million USD (1.7 billion GEL).





eorgia is joining the China-led Asian Infrastructure Investment Bank (AIIB) as a founding country, giving the nation the opportunity to attract funds to implement new infrastructure projects. The country’s Finance Minister Nodar Khaduri signed a special document in China today cementing Georgia’s place as one of 57 AIIB founding nations. The AIIB Founders’ Agreement will govern the partnership between the founding countries. Georgia was the 45th country to join the AIIB. The AIIB is expected to be established by the end of this year and aimed to provide loans for developing countries in Asia for infrastructure projects. It will be an international financial institution that supported economic development and improve infrastructure in Asia, support regional partnerships and establish tight cooperation with other financial institutions. By joining AIIB Georgia will be able to attract preferential financial resources for implementing infrastructural projects.

A further seven countries have the chance to sign the Bank’s foundation agreement before the end of 2015. Meanwhile also today it was decided the next round of negotiations will be held in Tbilisi on August 24 and 25. This ministerial will see parties discuss the amount of the Bank’s initial capital. At the same time, nations will introduce candidates they wish to present forward for the AIIB presidential role. AIIB founding nations are: Australia, Azerbaijan, Bangladesh, Brunei, Darussalam, Cambodia, China, Georgia, India, Indonesia, Iran, Jordan, Kazakhstan, Korea, Kyrgyzstan, Laos, Malaysia, Maldives, Mongolia, Myanmar, Nepal, New Zealand, Oman, Pakistan, Philippines, Qatar, Russia, Saudi Arabia, Singapore, Sri Lanka, Tajikistan, Thailand, Turkey, United Arab Emirates, Uzbekistan and Vietnam. AIIB member countries are: Austria, Brazil, Denmark, Egypt, Finland, France, Germany, Island, Italy, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, South Africa, Spain, Sweden, Switzerland and the United Kingdom.

ccording to “Sakstat”, annual inflation level increased up to 4,5% in June. As for the monthly inflation, price growth has made up merely 0,02% comparing to May. Annual inflation level has been fixed on 2,9% point. Food staff and non-alcohol beverages have been decreased in price by 1,9% in June comparing to May. Seasonal factors made the basic impact on these groups, namely, vegetables and greens have been decreased in price by 17,9%. Costs have been reduced on milk, cheese, egg sub-groups (-1,4%) and fish (-1,1%). However, price increase of 5,6% has been fixed on fruit and grape.

Costs are grown by 3,1% on the transport group. As for 12-month period, price increase of 5,7% has been fixed on food staff and non-alcohol beverages in June 2015. Including, grape price has been grown by 35%, oil and fat – 9,8%, coffee, tea and cocoa – by 7,9%, vegetables and greens – by 5,4%. Costs are increased by 7,4% in the healthcare sector. Prices are grown on medical products, apparatus and device sub-groups – by 15,9%, outpatient services – by 5.3% and hospital service - by 3,7%. Price increase of 11,4% has been fixed on tobacco group and alcohol beverages. Costs are growth on alcohol beverages (13,8%), as well as tobacco products (8,7%).



eorgia has ended the first six months of the year on a financial high – the country fulfilled its tax revenue plan and the state budget experienced a significant surplus. Georgia’s Revenue Service of the Ministry of Finance announced all four categories of state budget revenues (revenues, privatisation, decline in financial assets and increase in liabilities) ended the first six months of 2015 in surplus, compared to what was planned. From January-June 2015, state budget revenue increased by 105.6 percent, or 252 million GEL, amounting to 4,787,100,000 GEL. This amount was projected to reach 4,535,100,000 GEL. In the same time budget tax revenues amounted

to 3.5 billion GEL which was 102.2 percent of what had been allocated in the Government’s six month plan. This figure was 378.1 million GEL higher than the funds accumulated in the same time in 2014. Consolidate budget tax revenues amounted to 3,814,400,000 GEL which was 106.2 percent more than planned. This year’s figure exceeded last year’s corresponding data by 11.9 percent or 405 million GEL. As for expenditures, in the first six months of 2015 budget spending reached 4,572,700,000 GEL. This was 96.2 percent of the six-month plan. Now, at the end of the first half of the 2015, the state budget balance has a balance of 253.5 million GEL, which was 427 million GEL more than what was initially planned.

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he companies want to jointly enter the hotel business. According to the National Investment Agency, the companies’ officials paid the first official visit to Georgia on June 1420 and after visiting tourist resorts and regions, decided to build and operate 4-5 middle-class instead of the planned one. They also showed their interest in steel production. One t of the companies is an Indian Unique Mercantile India Private Limited. It is mainly engaged in the insurance business, but has recently entered the real estate and hotel business sectors. The company started the hotel business development in Singapore and Bali, and now expresses

its interest in Eastern Europe, including Georgia. Another company is Apna Punjab Resorts Limited which also works in the hotel business and operates hotels in India and Thailand. The company also has experience in spa resorts management and development. A tour of the Indian companies’ leaders to Georgia was organized by the Investment Agency of Georgia. The Agency says the leadership of the Indian companies held meetings with representatives of different agencies, including the Partnership Fund, the National Tourism Administration and the banks. They also visited various investment locations in Mestia, Kutaisi, Borjomi, Kutaisi, Batumi, Kobuleti and Tbilisi.



rom 1 July ad valorem tax on imported tobacco goes into effect. Cigarettes price will rise in Georgia the second time in 2015. However, this does not mean that price of cigarettes will rise today as the new tax will apply to the importing products and not the cigarettes already on sale. The first reason for the increase in prices was the increase in the excise tax on tobacco products, this time – the introduction of ad valorem tax, providing for a 5% tax of each pack of cigarettes. Despite the fact that the law on ad valorem tax was adopted a few months ago, there are still no precise instructions as to how it will be collected, and what importing companies and producers should do. In particular, it has not been determined what cost will be taxed – the invoice, distribution or retail price. On this basis, the Revenue Service of the Ministry of Finance has developed a specific norm of accrual of ad valorem tax rate in cooperation with representatives of the tobacco business. Nevertheless, they still have claims to the government. In particular, according to the Head of Corporate and Regulatory Affairs Caucasus & Moldova at Imperial Tobacco Irakli Nadareishvili, representatives of the tobacco business offered the Government the European model of taxation, but the department rejected it and adopted rules, which leave a lot of possibilities for interpretation and misunderstandings. In particular, he notes that in

2016 the tax will be collected at prices in 2015. “That is, if a packet of cigarettes in 2015 costs GEL 2, then in 2016 we will have to pay 5% of GEL 2, regardless of how much cigarettes would cost in 2016. Perhaps they will be more expensive, and in this case it is profitable for us , but in any case this rule is not very correct, especially since it is not a specific price, but average. To determine the price will not be easy, and the methodology on which the Revenue Service is working now, in any case will be unreliable “- he says. According to him, the average price will be compiled by adding up the prices of different brands of cigarettes in 5 different cities of the country. Irakli Nadarejshvili is sure that this method of counting contains considerable risks. “Unfair importers can use a variety of schemes, if in 2016 the price of cigarettes, which now cost GEL 2 , increases to GEL 3, they will sold them for GEL 3, but pay tax on GEL 2. It will be possible to produce the same cigarettes, but with a different design, and in the case of price increases continue to pay the minimum. There are many different schemes that can be used in this case, “- he explains. According to him, the methodology of counting raises questions among local producers of cigarettes. In doing so, the companies offered a more transparent and understandable method of collection of the ad valorem tax on the basis of the approval of a maximum price for cigarettes.



seb Gogilashvili, head of Tbilisi Insurance State Supervisory Service and Devi Khechinashvili, president of Insurance Association has submitted the mentioned data at the briefing on Monday. According to Insurance Supervisory Service, the loss of private individuals’ insured vehicles amounts to 551 511 GEL and at that, 70% of the loss is refunded. Loss of legal entities’ vehicles has made up 662 104 GEL and 40% is refunded.

As for the loss of private and legal entities, legal entities’ loss – 2 790 940 GEL, while private individuals – 235 126 GEL. “This is the loss announced by the insurance companies. Now the documents are signed and refund of the loss will be made after the exact calculation”, - the Regulatory notes. It should be noted, that 203 cases are registered as a result of disaster. The number of insured vehicles amounts to 121, while the insured real state property - 82.



ccording to Enterprise Development Agency, the project will cover the remained regions in Georgia from June 29 – Kakheti, Mtskheta-Mtianeti, Shida Kartli, Samgerelo-Zemo Svaneti, Guria and Adjara. In addition, business proposals submission should be available in online regime at the web-site: within the project frame. The new direction of the project envisages funding of business ideas. Business subjects involved in the business idea will be funded by 5000 GEL. However, 10 000 GEL is envisaged for 2-member groups, 15 000 GEL – for 3-member groups. Informational meetings will be held in the regions

in the parallel regime in Samthskhe-Javakheti, Kvemo-Kartli, Imereti, Racha-Lechkhumi and Kvemo Svaneti. The project envisages holding of trainings to deepen business ability. Submission of proposals in business idea contest will be finished on August 3. To note, 20 million GEL is allocated form the state budget in order to implement the program. The term of financial assistance is defined by 16 months. It should be noted, that investment of 112 121 000 USD will be made in the project “Produce in Georgia” in order to develop production in Georgia. Implementation of the program started from the previous summer.



he exclusive retailer of the UEFA Super Cup 2015 tickets finally started selling the tickets today. The website re-launched operating after a week-long technical setback that left the Georgian society aggravated. Technical manager of Giorgi Chkhikvishvili told the media today that the problem has been fixed and the website is ready to sell the tickets. UEFA experts also contributed to fixing the website, he said. “Per minute 50 individuals will be able to visit the web page. They will be assigned a number in the queue and told the approximate time when they will be able to buy the ticket. One individual will be able to buy a maximum of 4 tickets per visit,” Giorgi Chkhikvishvili told the press. This way the process of obtaining the tickets has become even more wearisome. People found

themselves assigned a number of ranging from 1 to 200,000 to obtain the 30,000 available seats. “Up until this moment 1,200 tickets have been sold. There are 104,562 people in the line currently,” reads’s post from several hours ago. “You are now in the queue” — reads the Biletebi. ge slit that the ticket-buyers were assigned after finally accessing the website. The slit also shows the number of one’s position in the UEFA Super Cup virtual queue. Currently, is still on stand-by. “Dear Football Fans, Tickets will be available through this website, so please return from 9.00 CET on 1st July.” This way, Georgia found itself in the waiting mode for the highest profile football game that is going to take place in Tbilisi’s Boris Paichadze Dynamo Arena on August 11, 2015.



he agreement is already achieved between Georgian government and project investor “Trans Electrica Georgia”, while the memorandum should be amended in the near future. “There is an active conversation why the state does not participate in the project. However, we held negotiations and the state left opportunities to acquire 20% from the company at any time, it can be made at the beginning stage of the project or during the implementation of the project. Whereas, the agreement will be signed on the

concrete project in the these days and it will envisage the new terms”, - Kakha Kaladze, minister of Energy has declared to the reporters on Thursday. The Vice Premier has noted, that Khudon HES is a strategic project for Georgia. As David Mirtskhulava, representative of “Trans Electrica Georgia”, the deal is made and “Trans Electrica Limited”, founder of “Trans Electrica Georgia” will come from offshore jurisdictions. Now, the company is registered on Virgin Islands. In addition, the HES’s output energy will be totally consumed in Georgia through several years.



new multi-million GEL facility is being built in Georgia’s Kakheti region to restore the country’s ancient winemaking tradition and develop the region’s historic, cultural, educational, recreational and touristic potential. The multi-functional facility, called Qvevri House, will include a cultural/tourist centre, workshop and museum where visitors can learn the ancient qvevri (clay jar) winemaking methods. The facility will also aid the local economy and offer employment opportunities to local residents. Construction of the new Qvevri House started yesterday in Ikalto village, Kakheti. An area of land measuring 5,407.55 m2, earlier allocated to the Qvevri House project, had all the preconditions to create a learning-manufacturing (workshop) and cultural centre that will be equipped with high-class modern technologies, read the project brief. The project, valued at almost 2.3 million GEL, was initiated by the Municipal Development Fund of Georgia’s Regional Development and Infrastructure Ministry and was being financed by the World Bank Group. Those who will benefit the most from Qvevri House are the Kakheti population and tourists who visit the region, however Georgia’s younger generation will also be able to learn the ancient qvevri winemaking methods and preserve the historical tradition. Georgia’s unique qvevri winemaking method has

been approved by UNESCO to be included in its list of Intangible Cultural Heritage. Qvevri is a large clay amphora-like vessel that is traditionally buried in the ground up to its neck, in which wine is fermented and stored. After the fermentation process, which occurs naturally without the addition of any nutrients, the qvevri is sealed with a wooden lid then buried. The wine is left to mature for up to six months before it is opened and ready to be sampled. This technique is used all over Georgia but mainly in the Kakheti region, in east Georgia. Construction of Qvevri House is expected to be completed by September 2016. The project brief noted the Qvevri House would encompass several components; cultural-educational, manufacturing and tourist-recreational. School students from across Georgia will utilise the new facility and, guided by experts, will be taught the traditional qvevri way of winemaking as well as various methods of how to make old Georgian drinking pottery and wine vessels. Courses and practical classes will also be open to locals, tourists and all interested parties. Qvevri House will also have a space where people can make qvevri jars. In addition, the workshop will include a museum where ceramic items are showcased. At the same time visitors will have the opportunity to make their own ceramic items. When complete the Qvevri House facility will also boast a library and Internet cafe.




“The Country’s Economic Development Depends on Energy Development”

KAKHA KALADZE Deputy Prime Minister, Minister of Energy Economic development depends on the development of energy. Georgia is rich in water resources and the Ministry of Finance and the government are actively working this resource to be maximally used. I want to assure you that our hearts and

the doors are open for every investor who comes to Georgia , - the Deputy Prime Minister, Minister of Energy Kakha Kaladze said at TBC bank’s head office while opening the first Georgia-Italy Energy Business Forum. Kaladze notes that various international forums were held in Georgia that speaks about significance of Georgia as a regional center. In his words, many projects have been implemented, are carrying out and will be implemented in future. Kakha Kaladze thanked “TBC Bank” and noted that “TBC” Bank is actively involved in the development of energy. Kaladze said in his speech that the Georgian government offers investors liberal tax system, as well as a highly skilled and competitive workforce. According to him, the government also attaches great attention to the wind power stations and the first project will be launched in 2016. The Forum was organized by the Georgian Energy Development Fund and the Italian consulting firm Nomisima Energia with the support of “TBC Bank”.

“We Envision Georgia as the Transit and Logistics Hub of the Region”

GIORGI ABASHISHVILI Economic Advisor to the President of Georrgia “One of the most important directions we are working on with the president of Turkmenistan is the dialogue process between Turkmenistan and the EU in regard of transporting the country’s gas

to the EU markets. It has to noted that Georgia is also going to actively participate in this process once it starts. This will give Georgia yet another big share of wins in terms of transit revenues and will strengthen our role in the energy security of Europe. Georgia can play a tremendous role in terms of logistics. Another important direction that was outline during the president’s visit to Georgia was the transportation sector. The so called “Lapis Lazuli” program, in which Georgia will play a major role in transporting products from Afghanistan to Turkmenistan via Azerbaijan. Apart from their clear economic benefits, these types of projects bring tremendously important security guarantee to Georgia. We envision Georgia as the transportation and logistics hub of the Eurasian region. Turkmen side also supports this concept. There will be many more decisive projects undergone in this direction in the near future.”

“The reason of tariff adjustment was Lari devaluation”

DAVID MIRTSKHULAVA Former Energy Minister

“Tariff should always be flexible, and it should exactly reflect sector’s real costs. Also is has to ensure, purchase of fuel, that is needed for functioning Georgia’s power grid, in order to give us an opportunity to buy natural air. For this we need financing. It is not surprising that depreciation of Lari required purchasing, similar volume, as it was last year. So, the government has to contribute more money now. According to this, the issue of tariff adjustment has become actual. This problem is actively discussed at Regulatory Commission. However, I think that right the Lari devaluation was the reason why tariff adjustments have become inevitable. Georgian energy sector has no resources, to solve social problems in a country. Generally, it is not allowed as well. It is entirely Government’s duty.

“There 90-95% of Curing Hepatitis C with The New Generation Drugs”

AMIRAN GAMKRELIDZE National Center for Disease Control (NCDC) The Hepatitis C Elimination Program that has been launched in Georgia is of outmost importance in terms of Healthcare. There are up to 180

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million of Hepatitis C infected individuals in the world. This disease represents the 21st century’s biggest healthcare challenge. Fortunately, in the last 3-4 years new generation medicaments targeting this disease have been invented. These are so-called medicines of direct activation, the Sofosbuvir’s group drugs. These medicaments will totally revolutionize humanity’s experience of fighting Hepatitis C. The healing probability with these drugs ranges from 90-95%. According to the information I have, up to 5000 individuals have already registered for the program in Georgia. They are already undergoing health screenings. After, this data will be sent to the corresponding Ministry departments, where experts look at the data and make decisions on the specific healthcare route that this or that individual requires.



he main summer resorts in Georgia consist of the following Black Sea coast cities: Kobuleti, Gonio, Kvariati, Sarphi, Chakvi, Anaklia and Ureki. Kobuleti is a seaside resort on the coast of the Black Sea. It is annually visited by tourists, mostly from former Soviet Union countries. The vast majority of Kobuleti visitors are from Armenia. Gonio, Kvariati and Sarphi are next to Batumi in the direction of the Georgia-Turkey border. The Gonio fortress dates from the 1st century AD. Sarpi is the main land border between Georgia and Turkey. The number of hotel guests going to summer resorts declined in 2008. From 2009 to 2012, numbers were increasing, but in 2013 the number of hotel guests declined by 4%. The total number of accommodation units in these cities is 82, which has grown by nine since 2013. The total number of rooms and beds supplied is 2,399 and 6,264 respectively. In 2014 the number of rooms has grown by 25% compared to 2013 data, with the number of beds having grown by 31%. REGIONAL BUSINESS DESTINATION HOTEL MARKET OVERVIEW Kutaisi, Rustavi and Poti are considered to form the Regional Business Destination segment in Georgia, attracting around 11% of national tourism. Kutaisi is Georgia’s second largest city, legislative capital and the capital of the western region of Imereti. It is 221 kilometres (137 miles) west of Tbilisi. The landmark of the city is the ruined Bagrati Cathedral, built by Bagrat III, King of Georgia in the early 11th century. The Bagrati Cathedral and the Gelati Monastery, a few km east of the city, are UNESCO World Heritage sites. Besides the

churches, there are many interesting places in Kutaisi, such as: Sataplia Cave, where one can observe footprints of dinosaurs and Geguti Palace, which was one of the residences of Georgian monarchs. Rustavi is a city in the southeast of Georgia, in the province of Kvemo Kartli, situated 25 km southeast of the capital Tbilisi. It has a population of 122,900 as of the 1st January of 2014. The economy of the city is mainly dominated by the Rustavi Metallurgical and Nitrogen factories. Several years ago, the country’s main car market was transferred from Tbilisi to Rustavi and several administration buildings were constructed at the same place. Rustavi became the only location for Tbilisi and its catchment area to obtain a driving license. Poti is a port city in Georgia, located on the eastern Black Sea coast in the region of Samegrelo-Zemo Svaneti in the west of the country. Built near the site of the ancient Greek colony of Phasis and deriving its name from the same, the city has become a major port, city and industrial center since the early 20th century. It is also home to a main naval base and the headquarters of the Georgian navy. Adjacent to the Poti port area is the Free Industrial Zone, inaugurated in April 2008. The number of hotel guests in Regional Business Destinations has been growing through 2009 to 2012, but in 2013 it has declined by 23%. The biggest increase was in 2010 (109%). The share of business travellers peaked in 2010, reaching 81%, then it declined to 53% and 50% in 2011 an 2012 respectively but in 2013 the share of business travellers increased again to 58%. The total number of accommodation units supplied is 84, it has grown 33% since last year. The total number of rooms and beds supplied is 978 and 2,044 respectively.

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nergy project value funded by TBC Bank totals to 150 million USD within the last 3-4 years. David Tsikauri, deputy general director of TBC Bank has announced about TBC Bank’s portfolio at the first energy forum of Georgia-Italy on Thursday. “We host international forum of energy issue for the 4th time. This is a world event, which has been

planned jointly with “TBC Bank”. The part of carried out projects is small, middle and big HES. We actively work to this direction. Energy is one of the priority direction in Georgia and there has been opportunity to inform representatives of Italian companies about it”, - David Tsiklauri declares. The forum was held with support of TBC Bank, Georgian Energy Development Fund and Italian consulting company Nomisma Energia.



eorgia’s power sector reforms over the past two decades have resulted in a dramatic turnaround in service and efficiency, which has helped support a resurgence of economic growth, says a new Asian Development Bank (ADB) report. “The reforms have restored 24-hour uninterrupted power supply, and ensured nearly every home has electricity, as well as creating an efficient, competitive power industry,” said Kathie Julian, Country Director from ADB’s Georgia Resident Mission. “However there are still vulnerabilities in the sector and the challenge for Georgia’s policymakers will be to continue down the reform path to overcome them.” The country report Assessment of Power Sector Reforms in Georgia, prepared by ADB’s Economic Research and Regional Cooperation Department,

was launched today in the capital, Tbilisi. Since 1995, sweeping reforms have been carried out to the power sector to improve the regulatory environment, to boost efficiency, and to encourage competition. This has paved the way for major physical improvements to state-owned generation, distribution and transmission assets, privatization of distribution companies, and construction of new hydropower plants. Collectively these measures have sharply improved the power system’s efficiency, benefitting the government and industry participants, while households now have reliable power supplies and almost no total blackouts occurred in recent years. The sector reforms, have complemented other economic reforms, and coincided with a substantial rebound in gross domestic product growth since the mid-1990s. The share of average household income spent on power has fallen steadily since 2006, while increases in electricity supply from hydropower and system efficiencies at thermal power plants have reduced CO2 emissions. The report cautions that while these reforms have been crucial for improving services, vulnerabilities still need to be addressed. Georgia’s heavy reliance on hydropower, which supplies up to 90% of its electricity needs, leaves it exposed to droughts, and to external supply shocks and price spikes when it needs to import gas for its thermal plants. Pricing and planning issues still need to be tackled as well.



conomic problems and the depreciation of the national currency caused problems to the banking sector. According to the statistical analysis of the National Bank, as of June 1, 2015 the volume of deposits in commercial banks has reduced as well as the amount of their assets, growth dynamics of their loan portfolios, while the number of non-performing loans and the dollarization index have increased. the NGO “Society and the banks” states. As of June 1, 2015 in comparison with 1 May bank assets decreased by 0.8% (GEL 200 million) and amounted to GEL 23.3 bln. Despite this, the banking sector finished May in profit in the amount of GEL 70.8 million. At the same time profit from currency conversion amounted to GEL 26 mln. The NGOs research has shown that the lari’s fluctuations created unstable environment for the operation of conversion, respectively, banks have lost GEL 3 million in March. However, in AprilMay, a relatively stable exchange rate allowed banks to win back losses. At the same time profit from the sale of foreign currency decreased by 46% in May 2015 in comparison with May 2014. The study shows that in spite of fluctuations in foreign currency, loan portfolio of banks is growing, which means that there is still a demand for money. “Credit portfolio of banks as of May 1, 2015 makes GEL 14, 9 billion which is 37% more than in the same period of 2014. In the comparison with April 2015 , the increase was only GEL 12, 4 million, while in May 2014 growth reached 262 million compared to April of the same year. It




wo of Georgia’s regions are the focus of a development project that will reinvigorate the two regions and grow their tourism potential and local economies. Residents of the Mtskheta-Mtianeti and Samtskhe-Javakheti regions will benefit from improved public and tourism infrastructure thanks to a $60 million USD development loan from the World Bank. Today the World Bank Board of Executive Directors approved an International Bank for Reconstruction and Development (IBRD) loan to Georgia for the Third Regional Development Project. “The goal is to attract private investments, promote public-private partnerships, revitalise local business activity and develop regional tourism circuits. Owing to these improvements, the population of the region is expected to see an improved quality of life,” said World Bank Regional Director for the South Caucasus Henry Kerali.”

The main components of the project are urban regeneration, tourism circuit development and provision of public infrastructure to attract private investments and institutional development. The development loan will have a life-changing impact on the local population but the wider country will also benefit; the state will enjoy increased overall tourism spending and satisfaction, job creation, improved institutional capacity of selected agencies and improved capacity to operate and maintain assets. This was the third regional development project approved by the World Bank for Georgia. The first Regional Development Project for Kakheti ($60 million IBRD loan) was approved by the World Bank in March 2012 and the second Regional Development Project for Imereti ($30 million IBRD loan) was approved by the World Bank in November 2012. The World Bank’s commitments to Georgia since 1992 total approximately $2.39 billion USD.

should also be noted that the growth in the portfolio was caused by the increased lending in the lari, which grew by 18 5 million (0, 4%), while loans in dollars fell by 0.1% (6, 1 million) “- a “Society and the banks” report says. According to the organization, the volume of overdue loans is growing along with the loan portfolio grows which in May rose by 3%, during the year a 27%- growth was observed. “This year the growth of non-performing loans is associated with the increased payments on loans in dollars by citizens with incomes in the national currency, which declined markedly because of the devaluation of the lari. This creates additional challenges to banks “- the document says. As of 1 June, amount of deposits in Georgian banks decreased by 1, 35 % or GEL 1749 million. The average interest on deposits is 5.3%, including in the national currency - 7, 2%, in foreign currency - 4, 2%. Among the foreign currency deposits, deposits in dollars account for 81, 7%, in euro - 15, 5%. According to the research, high level of dollarization in Georgia still remains a problem - for example, deposits in US dollars account for 66% of the total deposits placed in banks. “The deterioration of the situation can be attributed to many factors, and a currency crisis is the most important of them,” - believe in the organization. It is noted that despite this, the banking sector remains one of the most developed and stable sectors of Georgia’s economy, which suffered many crises, and accordingly, the current problems will not have a significant negative impact on banks “- the study says.

he Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on July 1, 2015 and decided to increase the refinancing rate by 50 basis points to 5.5 percent. According to the National Bank of Georgia, the monetary policy decision is based on the macroeconomic forecast, which shows increase in the inflation expectations as well as in the domestic and external risks affecting the forecast inflation. In line with the existing forecast the Monetary Policy Committee considers necessary to increase the monetary policy rate gradually to 6.5 percent by the end of the year. According to the Bank, the domestic demand remains weak. As per the preliminary information, in May the economic activity grew by 2.1%. The recovery of the demand is furthermore hindered by the decline in the loan growth in the recent months. The significant decrease in import also indicates the weakened demand. “The inflation rate has been increasing during the recent months with the annual decrease in fuel prices partially offsetting the inflation rise.

The deterioration in economic trends in our main trade partners continues to affect negatively Georgian economy. Goods export, and remittances have decreased, while the growth rate in tourism inflows is low. At the same time the pressure on the policy of the National Bank pushes up the long-term interest rates, reduces the efficiency of the monetary policy transmission and drives up the inflation expectations. The changes in the exchange rate have already affected the import demand, which in turn ensures the adjustment of external imbalance. According to current forecast the inflation will reach its target value in the second half of 2015”, - says the Bank. The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal to ensure price stability. The dynamics of further changes in monetary policy will depend on the dynamics of expected inflation, tendencies in economic growth, global and regional economic environment. The next meeting of the Monetary Policy Committee will be held on August 12, 2015.



otal output of the commercial bank has been on the year’s maximum. According to “Sakstat’s” preliminary data, total output of the commercial banks has been 109 million GEL, which exceeds by 21,9 million GEL comparing to April. As for the National Bank of Georgia’s output, it has been 4 million GEL in May. If compared to

April, the figure exceeds by 100 000. As a result, the sector’s output has been 113 million. As of 5 months’ data, the highest volume of banking sector’s output has been fixed in March. However, the sector’s total output has amounted to 118,3 million GEL, at that commercial banks’ output has been 107,3 million, while NBG’s – 11 million GEL.



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oldova and Georgia are often viewed together on the spectrum of comparative policy analysis. Both countries are former Soviet Republics that have disputed autonomous regions with Russia (Transdnistria in Modlova, South Ossetia and Abkhazia in Georgia). Both Countries have demonstrated their aspiration to join the Eastern Partnership by signing the EU’s Association and Agreement (AA) and its accompanying Deep and Comprehensive Free Trade Agreement (DCFTA). Tbilisi-based PMC Research Center with the support of International Visegrad Fund, organized a two-day experience-sharing workshop between Georgian and Moldovan government and business representatives to share their experience of approaching the Association Agreement standards required by EU legislation. Prospects and challenges within DCFTA, Export, Competition and Intellectual Property Rights, Agriculture and Food Safety and SME’s were discussed on the forum. Most emphasis was placed on the importance of supporting small and medium-sized business, as well as the food security regulations that are nec-

essary to be met for the products to be exported to the EU market. Key stakeholders from Georgia, Moldova and Visegrad countries, such as government agencies, business associations, experts, international organisations and donors (EBRD, EIB, WB, IFC, USAD, EU and others) are taking part in the event. “Czech SME’s were not that developed at that time. In 2004, we had only about 14-15 years of free market experience. The companies were not motivated to expand and sophisticate their business,” – Ms Pavla Breckova from the Czech Association of Small and Medium-Sized Enterprises told her Moldovan and Georgian counterparts. “A huge campaign of communication between the public and private sectors was created in order to push for the support of SME’s,” Ms Breckova said. “We are not a government-affiliated entity and that helped us a lot to gain authority in the face of the businesses,” she added. “Slovakia’s experience proved that dialog between private and public sector is essential to get the most of benefits of EU economic integration and to provide successful reforms and changes that increase economic growth and convergence,” said Mr. Ivan Miklos, former Vice Prime Minister

and Minister of Finance of Slovakia. Another important issue raised at the forum was the food safety measures for the products that are to be exported to the EU. Matti Lampi from the National Food Agency of Georgia shared his work’s experience with the panelists. He emphasized that the food safety measures in Georgia need to be addressed. “Currently there are not many people dying of food poisoning in Georgia. That is only the case because the food production chain in Georgia is very small still. If the country wants to meet the EU standards, that chain will definitely increase, leading to higher chances of food poison deaths, if necessary safety regulations are not implemented,” Mr Lampi said. Maia Tevzadze from the IFC in Georgia shared her experience of working closely with the private sector in implementing these safety standards. “These companies often don’t understand that they cannot rely fully on an outside consulting companies to achieve these higher standards. What I suggest is to lead from the top of the organization, start from the basics and focus on lowcost measures in the beginning. This is a step-bystep process,” she said.

The EU market has keen competition as well as high food safety standards, topped with demanding customers. That is why support of not-so-competitive SME’s and increase of food safety measures represent one of the priorities for Georgia as well as Moldova to be able to export their businesses and products to the EU. The panelists were comforted to discover that a lot of the issues that arise in the government and private sphere dialogue are the same for Georgia and Moldova. These two countries do indeed have a very similar physiognomy as well as similar aspirations in the near future. “Dialogue facilitation will support the government to implement the policy that will help SME’s to be competitive on the European market. For larger businesses introduction of new standards is not as great of a challenge,” Nino Samvelidze, Project Manager of PMC RC said. The dialogue between Moldovan and Georgian representatives and Visegrad and Central European countries was aimed at giving aspiring Eastern Partnership countries an opportunity to obtain detailed information about the opportunities offered by the Association Agreement.

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COMPANY NEWS caucasus business week



new 4-star Mercure hotel Tbilisi Old Town was officially opened on June 30. The new hotel, which is owned by Accor Group, the world’s leading hotel operator and market leader in Europe, is located in the very heart of the city, at Gorgasali Street #9. It is noteworthy that Mercure is the first and yet only one hotel by Accor in Tbilisi. The event was attended by the high officials of the Georgian government, such as Prime Minister Irakli Gharibashhvili, Minister of Economy Giorgi Kvirikashvili and Mayor of Tbilisi Davit Narmania, as well as representatives of Accor Group, investors and members of Diplomatic Corps. As Irakli Gharibashvili claimed, the company has spent about 16 million USD on this project: “I would like to say that investors are currently carrying out a much bigger project in Tbilisi called “Green Budapest”. Nearly 100 million GEL will be spent on the new residential area that will be finished in July of 2016. We are extremely pleased that famous brands such as Accord Ho-

tels and Mercure have entered Georgia, because this is an expression of trust toward our country. It also means that tourism is developing in Georgia. Since we came into power, about 100 hotels were opened throughout the country,” remarked the Prime Minister. According to Davit Narmania, the hotel holds a lot of significance for the city, since many people will be employed here: “This is a group that loves our country. I want to express my gratitude toward this company for their support after the disaster that took place on June 13. The hotel has sheltered 38 victims of the flood and provided them with all necessary medication,” said the Mayor. When commenting on the opening of the new hotel, Alexis Delaroff, the COO of Accor Hotel Services stated the following: “This is the 29th hotel in this region. We had to put in a lot of effort to enter this market, but thanks to our friends, we succeeded. France and Georgia have great historical ties, be it our friendship, history or cuisine. Personally, I discovered that my great-grandfather Ivane Markozashvili was born in Tbilisi and I am extremely pleased that today I am opening a hotel in this city”. The hotel has 108 rooms, including 22 Privilege Deluxe suites, 2 rooms for disabled guests, 37 Superior, 1 Executive suite and one conference room with 50 seats. All rooms offer a comfortable atmosphere and splendid service. Moreover, during their stay guests will have the opportunity to work on their fitness as well as enjoy a sauna. The hotel’s restaurant offers its visitors a perfect combination of international and Georgian cuisine.



n June, an average of 5% of tourists wishing to visit Georgia have cancelled their reservations. These are the results of a study conducted by the School of Business of Ilia State University which aimed to establish an impact of the June 13 natural disaster on the tourism business. The survey was conducted across the country where 40 hotels were interviewed. 35% of respondents refused to answer. But those who participated in the survey say that in June on average five percent of the visitors have cancelled their reservations. 73% of those who canceled the reservations were tourists, while 27% - business visitors. The majority of visitors (64%) who cancelled reservations were from the CIS countries, mainly Russia and Ukraine, 14% from Europe, 14% from Asia, and 8% from the United States. The interviewed hotels say they are suffering a 12% revenues slump because of the cancelled reservations. The study says that Georgia is ranked 71st in the Travel and Tourism Competitiveness Index in 2015. In the same ranking it was 73rd in 2011,

and in 2013- 66th . It indicates the changeable situation in the country in terms of tourism. However, according to the National Statistics Office, the total share of tourism in GDP has increased steadily over the years. The number of visits to Georgia by foreign citizens has increased steadily before the first quarter of 2015. In the first three months of 2015, 2.4% less foreign citizens visited Georgia compared with the first quarter of 2014 that can be caused by strict regulations imposed in the country. It should also be noted that despite the reduced visits, in the first quarter of 2015 tourism share of gross domestic product increased by 10% compared with the same period of 2014 most likely due to the lari depreciation, “- say researchers. They say, in April-May 2015 8 % more foreigners entered the country than in the same period of 2014. Researchers estimate that during AprilMay the number of foreign citizens visited the country was promising if not the natural disaster on June 13. In a few days after the flood it became clear that online reservations were canceling in Georgia.




n July 2-3 Tbilisi School of Political Studies held another series of seminars in Borjomi. The event is supported by Council of Europe, The Embassy of United States of America, Turkish Embassy in Georgia and Friedrich Ebert Foundation. The topic of the seminar was “A choice in favor of democratic culture”. Along with the participants, following experts took part in the discussion: Mr. Guenther Beachler, Ambassador Extraordinary and Plenipotentiary of Switzerland to Georgia; Mr. Mustafa Aydin, Rector of the Kadir Has Uni-

versity (Turkey); Mr. Azim Sadikov, IMF Resident Representative in Georgia; Mr. David Usupashvili, Chairman of the Parliament of Georgia; Mr. Levan Gigineishvili, Professor at Ilia University; Mr. Andro Dgebuadze, Consultant at the World Bank; Mr. David Paichadze, Journalist of the Public Radio. This time the seminar was dedicated to the 90th anniversary of the Georgian Evgeni Mikeladze State Philarmonic Orchestra.



ompany “Wissol” plans construction of another service complex on the highway. The new complex will be located on the right side of the road near Terjola crossing. “Wissol” has been the sole company which participated in the interest expression announced by the Road Department. As the Road Department explains, “Wissol’s” proposal is already sent to the government. The agreement is not signed yet, but preparation works are already carried out. The management of “Wissol” does not specifies exact amount of investment, but declares that the project is rather expensive. According to them, all subsidiary companies of “Wissol” will represented in the complex and the tourism meaning of this road should be envisaged as well. As of the terms and conditions of the contest,

the company must take commitment to run the complex within 30 years after the taking right of operating the object. To remind, same type of complexes are located on the road section of Gori – the object locating on the right side of the road is owned by “Wissol”, while on the left side – by “Socar”. The new complex on the left side of the road near Terjola crossing will be constructed as well. Submission term of the proposals in the interest expression expires at 12.00 p.m. on July 1.



argebeli Tskali” (Healthy Water) produced by “Nabeglavi” company has entered the Chinese and Arab markets this year . According to a representative of the company, the company’s products are exported to China for several months and represents an interesting direction for the company. Levan Chikovani says that China is a big country and it will take time to develop exports to it. At this stage, the company exports its products to 28 countries worldwide. Along with the CIS

countries, the company is working on diversification of the export portfolio in order to maintain a growth rate in 2015. According to the company’s Director Avtandil Svimonishvili, despite the exchange rate risks, the company is still investing in modern technology. In his words, they are actively working to diversify the markets in order to build monetary reserves. Svimonishvili claims that the lari devaluation adversely affected the company’s financial performance, however, these processes had a positive effect on some financial parameters.




s of the decision of legal entity Civil Aviation Agency to Ministry of Economy and Sustainable Development, air company TRANSAERO will perform regular flights on Moscow-Batumi rout from July, 2015. The flights will be performed twice in a week. Besides, that the number of lights have been increased on Batumi rout from Minsk as well. Air company Belavia has grown flight frequencies between Minsk and Batumi and 5 flights will be performed against of 3 flights in a week.

According to the statistics of Economy Ministry, travelers transfer by Tbilisi-Moscow rout is grown by 66% through January-June, 2015 comparing to the same period of the previous year. As of the reporting period of 2015, totally 11 864 travelers are transferred by both countries’ air companies, whereas the figure exceeds by 66% comparing to the same period of 2014 (67 422 travelers). It should be noted, that passenger stream growth is expected on the mentioned rout during the summer season.

he Board of Directors of the corporation AFK “System” published on its website the new board: one of the key senior managers, a former first vice president Levan Vasadze returned after 9 years. He will take the post of Vice-President, head of the investment portfolio. At the same time the first Vice-President Anton Abugov, who managed the group’s interests in telecommunication, left the Sistema’s Management Board. Later, he will engage in his own projects, the press service of the “ System” reports. Why Vasadze returned to the company, the press service did not comment, saying that the company “did not disclose details of the internal structure.” According to President of the corporation AFK “System” Mikhail Shamolin, range of assets Vasadze will manage has not been determined, so it can’t be said that he will replace Abugov. Vasadze was chosen by AFK because of his competences in the field of investments - before retiring from the “System”, he was responsible for strategy and the search for new assets and investment opportunities that will be required of him now, he says. After leaving AFK, Vasadze continued to engage in investment activities

as a private investor, says Shamolin. Vasadze worked in the “System” from 1998 to 2006, he was responsible for strategic development, prepared for an initial public offering (IPO) of MTS, Sistema itself, “Comstar” and “Sistema-Hals”. Nine years ago, in April 2006, he led the insurance company “Rosno”, which was a co-owner of AFK the “System”. In February 2007, partner of the AFK, the insurer Allianz, bought the share of the “Systems” in “Rosno” and Vasadze left the post of CEO. After Vasadze left the “System”, Abugov became the company’s Vice President for Strategy and Development.



caucasus business week



ig enterprises’ turnover is grown by 7,3% year-over year. As of “Saskast’s” preliminary data, annual growth of VAT tax payers’ turnover has been accelerated in

May. VAT tax payers’ turnover has amounted to 4,190 billion GEL and this index exceeds by 7,3% to the rate of May, 2014.

As for the other months of the year, VAT taxpayers’ turnover growth has merely made up 4,9% in April, 13,1% - in February and 1,9% - in January. The data of newly registered enterprises are positive as well, namely their number is grown by 51,4% comparing to May of the previous year and 5809 new enterprises have been founded. It should be noted, that data of newly founded enterprises were reduced by 12,9% year-over-year.



evenue Service declares, that the sum has been hand out on 447 215 citizens, money refund process has been carried out in the shortest period. The department explains, that all private individuals, who have registered in the base of revenue base, the mentioned sum has been already returned. According to the electronic declaration, the sum has been returned to the private individuals within 2 days after submission of declaration.

“Instant and effective allocation of the fund has been carried out with a special plan and it has not made a negative impact on the state budget fulfillment. Moreover, revenues of state budget are increases in surplus amount”, - the Revenue Service says. To remind, untaxed minimum is returned to all citizens, whose joint income does not exceed 6 000 GEL in 2014. It should be noted, that untaxed minimum of calendar year 2013 might be returned as well.



art of 6 months’ budget revenue is fulfill with surplus of 252 million GEL, while tax revenues – 76,9 million GEL, - Tsotne Kavlashvili, deputy minister of Finance has submitted 6 month’s preliminary data at the government session on Friday. Part of budget revenues is fulfilled with a surplus of 5,9%, while the sum has amounted to 4 billion

787 million GEL. Part of tax revenues exceeds by 2% as of 6 months’ plan, 47% - towards the annual plan. Whereas, 48,4% towards the initiated plan in the parliament. Part of budget expenditure is fulfilled by 96% towards the plan, which is 46% of the annual rate, while it exceeds by 3% to the potential index of the previous years.



eorgian Rico, has been the sole financial intuition in Greece, which interrupted the operations after all, - Lasha Nikolaishvili, general director of “Rico Group” has declared to GBC from Athens. Nikolaishvili declares, that the company’s branch in Greece has continued to operate under its own risk before the decree announced by the Central Bank of Greece on June 29, which has banned operations to all banking and credit organizations. Banks and credit institutions are closed down in Greece from Monday until the end of this week. Nikolaishvili notes, that the group has allocated final instance credit for Greek branch not to hamper the operations, but the mentioned resource has not been mastered.

Nikolaishvili is in Greece by now and expects improvement of the conditions, but he cannot say anything hopeful. He has a fear, that the money might be moved on the “black market” in order to find alternative ways of transfer – supposedly Georgian labor migrants will sent money to their family members by travel bus, the process should be prolonged in time. Nikolaishvili declares, that 45% of transfers from Greece accounts for “Rico Gram”. Average daily volume amounts to 0,5 million GEL, week-ends have been the most active days. However, now all week days are not merely passive but frozen as well. According to the statistics of National Bank of Georgia, 15, 345 million USD are transferred from Greece to Georgia (05/2014 - $17,759 million).

ast week’s optimistic US details, mainly in the form of Core Durable Goods Orders and housing market numbers, again fuelled speculations that the Fed’s interest rate hike could be anytime near September, supporting the US Dollar Index to complete its first weekly gain in previous four. Moreover, the Final reading of Q1 2015 GDP matched forecast of -0.2% against its initial estimations of -0.7%, providing additional strength to the USD bulls. The Greece finally failed to agree with its international creditors during weekend talks and imposed capital controls on its banking system to avoid more damages from considerable fund withdrawals. The ECB froze funding support to the Greek banks after the Greek PM announced for a July 5 referendum on spending cuts that he initially has rejected and called for additional trouble to the nation’s economy ahead of its $1.7 billion scheduled IMF payment on June 30. Including early days of the July month, current week’s economic calendar offers many important events to fuel the Forex market liquidity. Amongst them, the US labor market details, Flash reading of Euro-zone CPI and PMIs from China, UK and US are some of the crucial details to determine near-term market moves. Moreover, UK GDP and some of the Australian details, coupled with the updates from the Euro-zone, are additional information that market players should take care off. Let’s discuss each one of them in detail. Even if monthly reading of US labor market numbers would gain considerable attention of market players, consumer confidence, factory orders and various manufacturing PMIs, namely the ISM and Chicago PMI, could also offer important details to determine the chances of Fed’s September rate hike, that in-turn helps foresee near-term USD moves. US labor market details start commanding the economic calendar from Wednesday’s ADP NonFarm Employment Change, which is expected to print 216K against its 201K prior, signaling an improvement in US job market and supporting the immediate up-move by the greenback. However, the headline Non-farm Payrolls (NFP) and Unemployment Rate, scheduled for release on Thursday, are showing mixed signals as the NFP is expected to witness mild pullback from its three month high of 280K to 231K while the Unemployment Rate could again print 5.4% rate as compared to its 5.5% reading during previous month. Moreover, the Average Earnings are also likely to print a bit slower growth, to 0.2% from 0.3%, and could derail the optimism on matching the consensus. Other than the labor market numbers, Manufacturing PMIs, namely Chicago PMI & ISM Manufacturing PMI, scheduled for Tuesday and Wednesday respectively, coupled with the Thursday’s Factory Orders, are likely important details to help understand US manufacturing sector. While the Chicago PMI is expected to retest above 50 zone, coupled with the five month high of ISM Manufacturing PMI to 53.2 from 52.8, the Factory Orders can drag the US Dollar down as the consensus supports the print of -0.5%, five month low, as compared to prior -0.4%. Moreover, Monday’s Pending Home Sales m/m and the monthly reading of CB Consumer Confi-

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A WEEK FULL OF TOP-TIER ECONOMIC RELEASES dence, scheduled for Tuesday, could also become important data points to better forecast the US Dollar trend. Barring the recent developments in housing market, Pending Home Sales is expected to register slower growth of 1.3% as compared to its prior 3.4% number while the official reading of Consumer Confidence is likely printing a three month high figure of 97.1 as against 95.4 registered during previous month. With the headline numbers signaling an unclear picture of US economy, weaker labor market numbers, less than 200K NFP, could pullback the recent USD strength while upbeat readings of the Consumer Confidence and PMIs, coupled with better growth of Factory Orders, may help extending the greenback’s upward trajectory. Also, developments at Greece could play an important role in determining US Dollar moves as a surprise agreement between the European authorities to help the troubled nation could provide considerable strength to the Euro, providing counter weakness to the USD. Also, Flash reading of Euro-zone CPI, scheduled for release on Tuesday, may direct nearterm Euro moves. The number is expected to print 0.2% reading against its previous 0.3% mark and could provide additional weakness to the Euro. With the absence of major economics, the UK currency trimmed some of its recent gains during last week. However, final reading of UK Q1 2015 GDP and Current Account details, scheduled for Tuesday, in addition to the Manufacturing and Construction PMIs, scheduled for Wednesday and Thursday respectively, are likely to strengthen near-term GBP moves. The GDP number is expected to print a bit of upbeat number, to 0.4% as compared to its interim estimates of 0.3%, while the Current Account can register a lower deficit to -23.7B against its prior reading of -25.3B. Moreover, the Manufacturing and Construction PMIs bears the consensus of showing three month high figures of 52.6 and 56.6 respectively against their previous marks of 52.0 and 55.9. With each positive reading from UK, chances of the BoE getting closer to interest rate hike become stronger, supporting the GBP up-move. Official reading of Chinese Manufacturing PMI, coupled with the Final reading of HSBC Manufacturing PMI, scheduled for Wednesday release, can provide important insights to determine moves of commodity currencies, namely AUD, NZD and CAD. Moreover, Australian details, namely Wednesday’s Building Approvals, Thursday’s Trade Balance and the Retail Sales m/m scheduled for Friday announcement, could offer additional information to better determine the AUD moves. While the official Manufacturing PMI from China is expected to test 2015 high by registering 50.3 mark, against its 50.2 prior, the final reading of HSBC PMI may remain stagnant near 49.6. Should both these numbers reveal an expansionary reading above 50, commodity currencies and industrial world could have a reason to rally. The Australian Building Approvals is expected to reverse its previous decline of -4.4% by registering 1.1% advance and the Trade Balance can show a decline in deficit to -2.21B comparing its -3.89B prior while the expectations concerning Retail Sales growth to 0.5% comparing its earlier 0.0% mark, also support an AUD up-move. adimralmarketsgeorgia/

July 6, 2015 #106



caucasus business week



ot summer days cannot be imagined without ice-cream. High competition on the Georgian market of ice-cream is probably noticeable for everyone. Local as well as foreign distributors offer consumers a variety of tastes and types of ice-cream. ACT studied whether Tbilisi residents cool themselves down with ice-cream on summer’s hot days and if so, what kind of ice-cream they prefer. According to the research, half of the Tbilisi population (49%) consumes ice-cream activelyseveral times a week or more often. In this respect, ¼ of the capital’s population (24%) is especially active – on a hot season’s days they cannot do without ice-cream even for a day and enjoy this refreshing product every day. Though, as it has been revealed, 1/5 of Tbilisi population (20%) do not eat ice-cream even on hot summer’s days. DURING THE LAST MONTH, IN WHAT FREQUENCY HAVE YOU BEEN CONSUMING ICE-CREAM?


Russians’ Attitude to Caucasus Changes for Better


ccording to a survey conducted by the Levada Center, Russians’ attitude to the situation in the North Caucasus has changed for the better. The poll was held on June 19-22. Only 16% of the respondents agreed that spending budget money in the North Caucasus Federal District is less efficient than in other regions. 15% of the respondents said that this money wad stolen. Two years ago, in 2013, 47% said this. 37% of respondents said that the funds are used as effectively (22%) or more effectively (15%) than in other regions (in 2013 it was a total of 27%). 28% were undecided (in 2013 it was 21%). 4% of respondents stated about a higher cost efficiency than in other regions. The first and foremost by a change of the informational background – the famous slogan ‘Stop feeding the Caucasus’ has disappeared. “The second reason is the effectiveness of the authorities in the Caucasus. The North Caucasus is one of ten or twenty of the most successful regions in investment attractiveness, the use of budget funds and fulfillment of social obligations to its citizens,” Yevkurov said.

Azerbaijan, WB interested in environmental projects

According to the research, consumers of ice-cream in Tbilisi eat it at home (90%), although ¼ (23%) in the street, and 15 % in cafes and bars. As for the different kinds of ice-cream, the most popular one in Tbilisi turned out to be ice-cream in waffle bowls – half of the consumers (51%) consume it most frequently. 1/5 of Tbilisi population (22%) prefer escimo ice-cream on a stick and 1/10 consumes family ice-cream packs most frequently. PLEASE TELL US, WHICH KIND OF ICE-CREAM DO YOU CONSUME MOST FREQUENTLY?


zerbaijan is interested in expanding cooperation with the World Bank in various environmental projects. This preceding statement was issued by Economy and Industry Minister Shahin Mustafayev at a meeting with a delegation headed by World Bank Regional Director for the South Caucasus Henry Kerali, the Ministry reported on June 2. The minister noted that the environmental projects include monitoring the ecological state of the lakes in Baku and especially the cleaning of Boyukshor Lake. The restoration of Boyukshor, the largest lake in Absheron, is underway and expected to be completed by 2020. Mustafayev also noted the possibility of cooperation with the World Bank in industrial parks in Balakhani, Sumgayit, Mingachevir and the industrial area in Neftchala.

Kazakhstan attracts over $30 bln FDI in industrialization program

K There were interesting differences in respect of age: as the research has shown, the people from old generation (55 years old and more) eat only 3 kinds of ice-cream – ice-cream in waffle bowls (63%), escimo (24%) and family packs (10%), while young people of 18-34 years old, with the already mentioned 3 kinds of ice-cream, intensively consume other types as well (Ice cream sold by weight, ice-cream on tap, sandwich etc).

azakhstan has attracted about $33 billion foreign direct investment during the period of the first five-year plan of industrialization, half of which was invested in a program for the industrial-innovative development of the country. The president noted the second five-year plan of industrialization has a clear focus. “We have identified six priority sectors-oil refining and metallurgy complex, food, and chemical industries, industrial equipment and construction materials. It is based on the cluster approach. We tried to take into account the accumulated experience of the first five-year plan in the new program,” he added.

Baku 2015 contributes to tourist flow in Azerbaijan

T The survey has been conducted on 405 adults from Tbilisi, in June 2015. The statistical error of the data does not exceed 4.9%.

he first European Games have significantly contributed to the development of the tourism sector in Azerbaijan, the Tourism Ministry said. Ministry official Vugar Shikhamedov said the inaugural Games in Baku have been the biggest promotion for Azerbaijan’s tourism industry thus far. “The opening ceremony of the European Games was broadcasted in 93 countries, it was watched by over one billion people,” he noted. He said that 33 million people received information about Azerbaijan through Google searches in the past year. Approximately 70 percent of the views were made one month before the Baku 2015.


Bloomberg: These 10 Economies Will Be the World’s Worst Performers


ccording to forcasts of Bloomberg ecnomist, Ukraine will finish 2015 as the biggest loser in global growth. The conflict-battered eastern European nation will see its gross domestic product contract 4 percent in the fourth quarter from the same time in 2014, the worst of 47 economies polled by Bloomberg in April through June. The ill fortune will be shared by neighboring Russia, where GDP will shrink 3.5 percent by year-end amid international sanctions and depressed oil revenue. Here’s how those two stack up among the 10 biggest GDP losers:

Global Food Prices Drop to a Five-Year Low


nternational food prices decreased by 14% between August 2014 and May 2015, dropping to a five-year low, according to the latest edition of Food Price Watch. Cheap oil contributed to abundant global supplies of food in 2014 and prospects of a bumper crop for wheat, maize and rice in 2015—factors that are driving the sharp decline in international food prices. The agriculture and food sector continue to benefit from less expensive chemical fertilizer, fuel and transportation costs brought on by the previous year’s oil price declines, with food prices holding steady despite recent oil price hikes.

China Ratifies Creation of BRICS Bank


hina has officially ratified the agreement on creating New Development Bank (NDB), formerly referred to as the BICS Development Bank, today, July 1. State news agency Xinhua reported the news today. NDB represents a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China, and South Africa). The Bank is widely considered as an alternative to Western financial institutions such as the World Bank. The agreement on creating the Bank took place on July 15 of last year. The initial capital of the NDB was agreed at $50 billion, with the prospective increase to $100 billion. Today’s ratification agreement was sealed by China’s Standing Committee of the National People’s Congress. China has pledged to contribute a total of $41 billion to the Bank, giving it the largest voting right at 39.5 percent, Al Jazeera reports.

Ferrero to Buy UK Chocolate Maker Thorntons for 112 Million Pounds


he Italian firm behind Ferrero Rocher chocolates and Nutella spread has agreed to buy British chocolate retailer Thorntons for 112 million pounds, striking a rare deal to expand in Europe’s biggest confectionery market. The deal is the first by family-owned Ferrero International since the death earlier this year of patriarch Michele Ferrero, who was Italy’s wealthiest man and largely shied away from acquisitions as he built up a business that also spans Kinder Surprise eggs and Tic Tac mints. Ferrero said on Monday it would pay 145 pence a share in cash for the 104-year-old Thorntons, a 43 percent premium to the British firm’s closing stock price on Friday. Thorntons’ management said it backed the deal.



caucasus business week

July 6, 2015 #106

July 6, 2015 #106

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail:; United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: Web-site: 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: Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: 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: Web-sait: 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: 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: 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: Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail:; 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: 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: 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: Web: 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: Romania Embassy



caucasus business week

7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Web-site: Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: 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: United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: Web-site: International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: Web-site: Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail:; Web-site: World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: 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: 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: 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:

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: Website: 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: Website:

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 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:

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: 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




caucasus business week

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.


STARTING PRICE IS FROM 1425 $ Address: Leh and Maria Kachinsky Str.1, Batumi Tel: +995 577 14 17 14

July 6, 2015 #106

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