Caucasus Business Week #109 by Caucasian Business Week

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July 27, 2015 #109

July 27, 2015, Issue 109

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GEORGIA TBILISI AMONG TOP 10 EUROPEAN DESTINATIONS IN 2015

eorgia’s capital Tbilisi is among the top ten destinations of Europe this year according to an international media outlet Pg. 7 Time Out.

WINEMAKERS PREDICT A DIFFICULT YEAR FOR WINEGROWERS

POSSIBLE CONSEQUENCES OF GEORGIA-CHINA FREE TRADE AGREEMENT

Irakli Kovzanadze: Partnership Fund to Start Construction of Five New Hotels in 2015

Pg. 7

Temur Chkonia: Bona Fide Business is Unlikely Behavior for Goodwill Group Pg. 10

he study showed that a free trade agreement between Georgia and China has great potential. Georgia’s export to China would increase by 9% approximately. Pg. 6

PASHA BANK - GENERAL SPONSOR OF INTERNATIONAL CHESS FESTIVAL “NANA ALEKSANDRIA CUP”

METRO CITY PROJECT IMPLEMENTATION TO END AHEAD OF SCHEDULE

he Metro City complex construction works will end ahead of schedule, JSC Metro Atlas Georgia managers noted at the solemn presentation of the major investment projects sales office in Batumi. Pg. 11

GEORGIA, TURKEY OPEN $220M POWER PLANT

eading Turkish energy company Çalık Enerji has established a combined natural gas cycle power plant in the Georgian city of Gardabani. Pg. 6

ELECTRICITY TARIFFS TO RISE IN GEORGIA

ver one million customers of EnergoPro Georgia power distributor company will see electricity tariff increase by 3.95 tetri (about 1.75 U.S. cents) per kWh starting from August 1, prompting the government to consider subsidies for socially vulnerable households. Energo-Pro Georgia, which is part of the private Czech group Energo-Pro, is the largest electricity distributor in the country with 63% of market share, supplying electricity to customers in the regions, except of Kakheti, Civil.ge reports. The Energy and Water Supply Regulatory Commission approved tariff hike for Energo-Pro at a session on July 23, but the new tariff falls short of the increase requested by the company, which was citing its surging expenses caused by depreciation of the Georgian currency lari. Pg. 2

Pg. 8

Georgian Financial Supervision Bill Raises Investor Concerns

President Giorgi Margvelashvili has indicated that he will veto the bill, which was approved by parliament on July 17, but the ruling Georgia Dream coalition is well placed to override it as it holds a comfortable majority of 86 seats in the legislative body. Only 76 votes are needed to overturn a presidential veto. Pg. 9

Panorama Tbilisi Project Worth 1 Billion GEL Underway

Bachiashvili noted. At this stage, Tbilisi City Hall has issued licenses for only the lower part, not for the upper part, Bachiashvili added. The initial project called for constructing hotels on the Erekle Second Square, beside the business center of Bidzina Ivanishvili and in the place of the former Tsekavshiri building. Pg. 5

EU Countries Take 30% Share in Georgia’s External Trade

ore Georgian products are being enjoyed in Europe and at the same time, Georgia is reducing its imports and using more locally produced goods. Preliminary data from the country’s National Statis-

tics Office, Geostat, revealed Georgia was now becoming less dependent on markets it formerly relied on, particularly markets within the Commonwealth of Independent States (CIS). Geostat data showed in January-June 2015, Georgia’s external trade with the EU amounted to $1,434 million USD Pg. 6

Irakli Shavishvili: Government Hinders Business Sector Development by Introducing Obligatory Labeling

Pg. 10

Ilia Gogichaishvili: Capital Market Development Perspectives in Georgia Pg. 4 GEORGIA RANKS 60TH IN GLOBAL INNOVATIONS INDEX

he Georgian Innovation and Technology Agency (GITA) plans to unveil several innovative laboratories and business laboratories, publabs and techno parks in Tbilisi and Regions. Georgia has moved to the 60th place from 88th in the global innovations index, GITA chief Irakli Qashibadze said. “In 2008 Georgia ranked 88th in the global innovations index, 65th in 2013 and 60th in 2014. This is a quite positive indicator. A special chapter is dedicated to Georgia as an innovative achiever in the index report. In general, I would like to note the Georgian government is taking significant steps in this direction. A total of 8 industrial innovation laboratories will be organized in Georgia by the end of 2015, including in the regions. For the first time in Georgia, a technological park will also open in Okrokana by the initiative of the Georgian Prime Minister. Pg. 7

2 MAIN EVENTS PM MEETS NDI STAFF

eorgia’s Prime Minister Irakli Garibashvili held a meeting today with National Democratic Institute (NDI) board member Howard Dean and the organization’s resident director Laura Thornton. Garibashvili’s meeting with Thornton and Dean – the latter a former US presidential candidate and Vermont state governor – involved discussion of the Georgia-US strategic partnership and ongoing political processes in Georgia. Among the subjects discussed were NDI’s future plans in the country, the Open Government Partnership and the recent developments in Georgia’s occupied territories.

HUGARY GIVES HONOR TO MEMORY OF TBILISI FLOOD SACRIFICES

ungarian people have honoured the memory of the victims of disastrous June 13 flood in Tbilisi, which caused death of 23 people. The ceremony was held within the annual Danube Day in Budapest, which is dedicated to the victims of flood around the world. The event was organised by local non-governmental organisation (NGO). It’s Secretary in General Laszlo Bota delivered a speech on the ceremony and spoke about June 13 tragedy.

US FINANCES GEORGIA’S VOCATIONAL EDUCATION SYSTEM BY $12 MILLION

nited States government has allocated $12 million USD (26,938,853 GEL) to the professional development of Georgia. The Millennium Challenge Corporation (MCC) is ready to give out this money to those who will create new vocational education programs and develop already existing projects for the Industry-led Skills and Workforce Development Project (ISWD). A grant competition has already been announced, which is open for all public or private Technical Vocational Education and Training (TVET) providers and companies, educational establishments such as universities and public or private schools, professional organisations and non-governmental organisations.

INTERIOR MINISTER MOVES TO STATE SECURITY SERVICE

ost of the Interior Minister became informally vacant after Georgia’s Parliament approved Vakhtang Gomelauri, who served as the Interior Minister since January 2015, as the head of the State Security Service for the next six years. Georgian Parliament Members (MPs) have approved Gomelauri with 83 votes in favour, no one voted against as the opposition did not take part in the anonymous voting yesterday. Gomelauri will start his new job on August 1, when he will be officially dismissed from the Interior Minister’s position.

NATO WELCOMES GEORGIA’S REFORM PROGRESS A high-ranking official from the North Atlantic Treaty Organisation (NATO) has commended Georgia for its “considerable” reforms. NATO Deputy Secretary General Alexander Vershbow welcomed Georgia’s Parliament Speaker David Usupashvili to Brussels today and acknowledged the “good progress” the country had made regarding the Substantial NATO-Georgia Package, which aimed to help Georgia strengthen and develop its forces and defence system. Modern convoy vans serve Georgian prisoners A new auto park for prison guards has opened in Georgia’s capital Tbilisi today, allowing Georgian inmates to now be transported between destinations in new convoy vans. The country’s Minister of Corrections and Legal Assistance Giorgi Mgebrishvili personally opened the modern auto park and an office for the guards.

GOVERNMENT NEWS

July 27, 2015 #109

caucasus business week

TUSK PRAISES GEORGIA FOR “RESPONSIBLE” REACTION TO RUSSIA’S “PROVOCATIONS”

uropean Council (EC) President Donald Tusk has praised the Georgian Government for its “responsible” reaction to Russia’s recent “provocations” along the Administrative Boundary Line (ABL) between Georgia’s breakaway region of Tskhinvali (South Ossetia) and the rest of the country. This morning, Tusk visited the ABL and saw “how the infrastructure of separation continues to be put in place along the boundary”. After returning to Tbilisi, Tusk told Prime Minister Irakli Garibashvili he “appreciated” Georgia’s response to the recent developments in the occupation zone. “Let me say Mr. Prime Minister that I really appreciate your very responsible reac-

tion,” Tusk said. “I think it’s very important not only for Georgia, but for the whole region and the whole of Europe to manage this problem responsibly and with cold blood”. The EC President suggested that the goal of the Russian “provocations” was to trigger an “overreacted” response from Georgia. “It is very important for us to be tough but also very responsible,” he said. On July 10, Russian occupation forces installed signposts marking so called border between occupied Tskhinvali and the rest of Georgia. This action saw Russia expend its occupation 2km deeper into Georgian territory. The Georgian Government was criticised by opposition for its

“mild reaction” to this “creeping occupation”. Meanwhile, Tusk and Garibashvili discussed Georgia’s progress in the process of fulfilling its obligations needed for visa free travel to Europe. Tusk said Georgia had made “good progress” in the process of visa liberalisation with the European Union (EU) and “if this progress continues […] I think you will be able to successfully finalise this process in the near future.” The parties also discussed Georgia’s domestic policy. The EC President said: “All parties must do their utmost to avoid politics of extremes. Legal process should be free from political motivation; this matters first place for Georgia but also for our relations.” Meanwhile today Tusk met the Georgian troops deployed under EU Operations in the Central African Republic and thanked them for their service. “The EU highly appreciates your commitment,” Tusk told the soldiers and added he, personally, was “very proud” of what Georgian soldiers had done for world peace. While in Tbilisi, Tusk met members of Georgian opposition parties too. This was his first visit to Georgia as EC President.

ELECTRICITY TARIFFS TO RISE IN GEORGIA

ver one million customers of Energo-Pro Georgia power distributor company will see electricity tariff increase by 3.95 tetri (about 1.75 U.S. cents) per kWh starting from August 1, prompting the government to consider subsidies for socially vulnerable households. Energo-Pro Georgia, which is part of the private Czech group Energo-Pro, is the largest electricity distributor in the country with 63% of market share, supplying electricity to customers in the regions, except of Kakheti, Civil.ge reports. The Energy and Water Supply Regulatory Commission approved tariff hike for Energo-Pro at a session on July 23, but the new tariff falls short of the increase requested by the company, which was citing its surging expenses caused by depreciation of the Georgian currency lari. A Tbilisi electricity distributor Telasi, in which Russia’s state-controlled power trader Inter RAO holds 75.1% of shares, has followed suit and filed a request with the regulator on July 23 also asking for a tariff increase for its customers in the capital city. It too has cited the depreciation of the GEL as the need for the hike. The GEL has lost over 28% of its value against U.S. dollar since November, 2014.

A three-step electricity tariff scheme is in force in Georgia and rates depend on how much electricity is consumed by customers per month. Georgia’s electricity tariff was last revised in January, 2013, when the rate for some category of households were reduced, which was one of the pre-election campaign promises of the Georgian Dream ruling coalition. After the energy regulator agency’s July 23 decision, the first-step tariff for Energo-Pro customers, applying to households which consume less than 101 kWh electricity per month, will go up from current 9 tetri (about 4 U.S. cents as of July 23) to 12.95 tetri (about 5.75 cents). This firststep tariff also applies to those households, who have no individual meters and are connected to common electricity meters. With this increase the first-step tariff will now go back to its pre-2013 level when it stood 12.98 tetri. The second-step tariff, applying to customers who consume between 101 and 301 kWh electricity per month, will be 16.93 tetri per kWh instead of current 12.98 tetri. The increased tariff is slightly more than pre-2013 tariff of 16.52 tetri. The third-step tariff, applying to customers who consume more than 301 kWh of electricity per month, will increase from current 17.5 to 21.45

tetri per kWh. Tariff decrease did not apply to this category of consumers in 2013. “This is a fair tariff, which will guarantee uninterrupted and reliable electricity supply to customers,” said Irina Milorava, chairperson of the Energy and Water Supply Regulatory Commission. She added that the tariff increase was caused by a hike in distributor company’s expenses for purchasing imported electricity and electricity generated by gas-fired power station, attributed to depreciation of lari. In a separate decision on July 22, the regulatory commission authorized tariff increase on electricity generated by gas-fired power plants, operated by three companies, one of which is Energo-Pro’s subsidiary. Energo-Pro Georgia also operates about dozen of small and medium-sized hydro power plants. Speaking at a government session earlier on July 23, PM Irakli Garibashvili said: “If the tariff is changed and increased, the government will do everything in order to ease burden for the people and there definitely will be subsidies for socially vulnerable families, for those who need it most.” The government has yet to elaborate a detailed scheme on how the increased tariff will be subsidized and how much funding it will require from the state budget.

MOUNTAIN LAW: WHAT SOCIAL BENEFITS WILL LOCALS RECEIVE?

eorgia’s Parliament has adopted a law to encourage people to live and work in the country’s mountainous regions. The Law on Development of Mountainous Regions passed the legislative body at its third hearing and it will see mountain communities in Georgia enjoy greater benefits with the aim of developing mountainous regions. Abandoning mountain areas has been an issue for Georgia for decades. Mountain populations leave their homes and migrate to bigger cities to pursue better job opportunities. According to the 2002 figures, 164 villages in Georgia were deserted and 152 villages were barely inhabited, with ten families or less. The creation of the Mountain Law aimed to curb this. “The project provides social benefits for people living in the mountainous regions and creates incentives for economic activity,” Prime Minister Irakli Garibashvili said while introducing the draft bill earlier this year. “It also envisages allocation of additional funds for infrastructural development of the mountainous areas.” So with the law now adopted, what exactly are the benefits people in Georgia’s

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mountainous areas are going to enjoy? Each family in the country’s mountain regions will receive a monthly financial aid from the state with the amount of GEL 100 during two years for every newborn child. This financial aid increases to GEL 200 for every third, fourth and subsequent children. Mountain residents will enjoy a non-taxable income if their salary is up to GEL 6 000. Individuals and legal entities in mountain regions will be exempted from profit tax for ten years. Those who permanently live in a mountain region will be exempted from property tax for any land they own. State-funded schools and other educational institutions in mountainous regions will enjoy increased vouchers. Doctors in mountain regions will receive supplemental salary twice as high as the state pension, while nurses will receive supplemental salary as high as the state pension. People of mountain regions will enjoy 20 percent higher pensions and social assistance. The Government will partially fund heating expenses for mountain population during winter months. Teachers in mountain regions will enjoy supplemental salary as high as at least 35 percent of

their original salary. Teachers in mountain regions who will participate in programs initiated by the country’s Education Ministry will see their salary increased by 50 percent. Those living in mountainous regions will get 50 percent of their electricity expenses funded by the Government. All of these changes will be implemented step by step until 2017. An area will be considered as mountainous if it is situated 1 500m above the sea level, however in some exceptional cases this number can be reduced to 800m. A Mountain Agency will be established to deal with such issues. Permanent residency of a mountainous region will be offered to people who spend at least nine months of the year in the mountains while temporary residency will be offered to those who spend at least six months of the year there. A number of international experts including professionals from UNDP Georgia and the Governments of Switzerland and Austria have been actively supporting Georgia in preparing the new law through expert consultations, working discussions and study visits abroad.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

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

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July 27, 2015 #109

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4 HEADLINES KAZAKH AVIASTA LAUNCHES BATUMI-AKTAU FLIGHTS

ew flights are being introduced to better connect Georgia’s seaside resort Batumi with Aktau, Kazakhstan’s main seaport on the Caspian Sea. Aviasta, Kazakhstan’s airline company, will begin Astana-Batumi-Aktau flights from July 31, 2015 as part of a joint effort to develop bilateral relations in tourism and increase the number of visitors between the countries. The Astana-Batumi-Aktau flights will be carried out two times per week. Passengers will be able to use Aviasta’s service until September, 2015.

TUSHETI’S UNIQUE VILLAGE RESTORATION UNDERWAY

ne of the most environmentally protected villages in the Caucasus will soon open its doors and welcome tourists to its restored historical infrastructure and private hotels. Dartlo village – located in a picturesque spot in the Tusheti hills of eastern Georgia – is the focus of new restoration work aimed to improve social conditions and make the site more attractive to visitors. Restoration of houses in the village was initiated within a $600,000 (£380,000) cooperation project between the World Bank and the Georgian Government, which first started in 2012 but was later modified after a monitoring report by the World Bank.

CASINO INVESTORS GATHER IN BATUMI TO DISCUSS REGION’S GAMBLING FUTURE

eorgia’s seaside resort Batumi will become a networking haven to over 150 gambling professionals representing upwards of 20 countries to share ideas about current trends in the gambling business. All members of the gambling industry, from investors to operators, software and platform providers, gaming operators and Government representatives, will gather in Batumi on July 31 to attend theCasino Investors Day summit. The summit will also provide insight into the development of gambling in the host country’s global economic territory.

TELASI DEMANDS ELECTRICITY TARIFF GROWTH

upposedly electricity cost will be increased in Tbilisi after tariff growth in the regions. Company “TELASI” has already appealed to National Regulatory Commission with tariff application. According to National Regulatory Commission of Energy and Water Supply, the commission will study the tariff application submitted by JSC “TELASI” within three working days. If the tariff application is completely represented, the commission will start public administrative proceeding on the issue.

INTERVIEW caucasus business week

RECENTLY FOUNDED TBILISI STOCK EXCHANGE (TSE) IS EXPECTED TO INCREASE GEORGIAN MARKET LIQUIDITY Read our interview with Giorgi Loladze, the former manager of the Georgian Stock Exchange

- The Georgian stock exchange (GSE) has founded the Tbilisi Stock Exchange (TSE). What are expectations and the importance of the new stock exchange foundation? - Everything depends on our goals. In general, stock exchanges are created to reach maximum liquidity in the market and ensure impartial pricing. A major part of the developed economies, as a rule, have one stock exchange (except the major markets like the USA) and this fact has a very simple explanation: the more demand-supply applications in the same place, the more liquid the market is, the fairer pricing is and the more optimally are satisfied the interests of investors and issuers. On the contrary, the more fragmented the securities market, the less liquid the market is, the less attractive is to make investments in the securities and the more inalterable bank products become (credits, deposits). The economy is efficiently developed when all investment mechanisms (including bank sector and securities market) are equally developed and they remain in valuable and healthy competition with each other. Therefore, even the developed countries prefer to avoid fragmenting the securities market. On May 8, 2015 the GSE managing body, which is fully staffed by the bank sector representatives (alternative sector to the stock exchange), took an unprecedented step without any substantiation and they founded the Tbilisi Stock Exchange, a competitor body to the Georgian bank sector. - What factors hinder the securities market development in Georgia? - The securities market represents a complicated multicomponent mechanism that will fail if it lacks for one of these components valuably. Consequently, many general and private factors affect this mechanism. A major part of general negative factors have been already removed, in practice. For example, Georgia’s macroeconomic parameters were comparatively stabilized; the shadow economy ratio in the economy has minimized, the criminal situation has settled, property rights infringement from the organized crime or the state sector has been eradicated, in practice. As to the private factors, they often determine the economic policy priorities and implementation of the respective reforms. All these moves, first of all, are

eorgia’s seaside resort Batumi will become a networking haven to over 150 gambling professionals representing upwards of 20 countries to share ideas about current trends in the gambling business. All members of the gambling industry, from investors to operators, software and platform providers, gaming operators and Government representatives, will gather in Batumi on July 31 to attend the Casino Investors Day summit. The summit will also provide insight into the development of gambling in the host country’s global economic territory.

develop this direction and what are the legislative defects in this respect? - Bank deposits in Georgia account for about 14 billion GEL. A Major part of these funds were directed to other investment channels, even more so yields on foreign currency denominated deposits have considerably shrunk compared to the previous years. Thus, the demand potential for attractive financial instruments is high and this demand should be implemented. But what is the obstacle? I have said the operation of a complicated mechanism of the securities market depends on many factors. Various factors have hindered this mechanism since the independence announcement. These factors directly affect the demand-supply balance. In general, a lack of supply of attractive securities creates an illusion as if the there is no demand in the country, but the recent history proves the demand for attractive securities grows after their appearance (For example, 2004-2007 years - an extreme growth in demand for Bank of Georgia shares). - The capital market development and its reform in Georgia – what should we expect from the new reforms and what are the directions that will foster the capital market development in Georgia? - We should deal with all the above-mentioned problems. We should make focus on the necessary steps to form a valuable securities market, namely: 1. Initially, in 2015 we should amend the law on securities market to restore the important norms that were removed in 2007-2008. At the next stage, the legislation should be finally adjusted to the EU instructions and other international standards (2018-2020). 2. The securities market supervisory body independent from the National Bank of Georgia (NBG) should be immediately introduced. 3. The existing asymmetry between the bank mechanisms and the securities market should be removed in the field of legislation and other regulations (For example, tax, currency regulations and so on). 4. The competitor bank sector should be separated from the securities market infrastructure (stock exchange, central depositor). Property diversification mechanism should be introduced to ensure fair playground principle and deserve a full confidence of investors and issuers. 5. The pension system should be reformed to introduce state saving pensions system. A major part of the accumulated funds will be invested in the domestic securities and the domestic economy; 6. State-controlled stakes and bonds in major companies should go to IPO in Georgia or in Georgia and foreign stock exchanges simultaneously. 7. Assistance of international donor organizations: a) further improvement and enhancement of the securities market infrastructure; b) promotion of involvement of this infrastructure in international exchanges and clearing-accounting systems; c) institutional development of brokerage companies, a decisive chain of the securities market.

Securities Market Development in Georgia – Directions to Develop Georgia’s Capital Market Georgia’s securities market is less-developed and an absolute majority of companies are financed through bank loans. Both supply and demand problems are reported on the market, because the quantity of companies are limited, as they draw capitals through issuing securities, and the long-term GEL resources are also deficient in the form of savings. The market also faces liquidity problems. Consequently, major companies have got good historical achievements and the respective corporate management tries to draw capital from foreign markets. First of all, legal and regulatory basis should be improved. The Georgian government is actively working on the issue. Market infrastructure should be also renovated and certain investments should be mobilized to this end. First of all, a due environment and platform should be prepared in Georgia, the infrastructure should be renewed and the companies should move to such standards of accountancy and corporate management that will enable them to draw financial resources through capital markets. To ensure market liquidity, mobilization of domestic savings is of vital importance. At the first stage, the pension system should be reformed and the pension fund should be set up. The Georgian government is actively working on the issue, as well as on the capital market formation issues. ILIA GOGICHAISHVILI A capital market advisor for the Management for Development project of the USAID.

CASINO INVESTORS DISCUSS AJARA REGION’S GAMBLING FUTURE

reflected in the legislation. Unfortunately, no previous Authorities have prioritized the securities market development. Nevertheless, with a support of the USAID and leading American experts, Georgia developed and adopted a law on Securities Market. That law was recognized as one of the best documents in the PostSoviet space. This law has laid a serious foundation of the securities market development in Georgia. The law has separated the securities industry from its natural competitor bank sector in order to enable the new mechanism for independent development. This separation was reflected in a number of aspects: commercial banks were banned to take part immediately in the market (only through subsidiary brokerage companies); the stock exchange owners could not hold an over 10% stake in the exchange, while the bank sector’s total ratio could not exceed 50%; The Georgian Securities National Commission, an independent regulator, was to supervise the securities market and its participants. Besides supervision, this body was to foster this industry development. Thanks to this legislation, Georgia’s securities market was strengthening step by step. In 2007-2008 the United National Movement party’s policy turned out a powerful private factor, as well as the related major bank’s interests. As we have noted above, no previous governments in Georgia were interested in the securities market development. Hence, everything depends on a political decision whether the preference is given to separate political groups and related bank monopolies or the state development interests. The history of the developed countries show us which way we should follow. - Does the securities market development foster the GEL rate stabilization? - To strengthen the national currency exchange rate, foreign currency supply to the market should be intensified (or the demand should fall) and the national currency supply should be reduced (or the demand should increase). The developed domestic securities market will grow foreign portfolio of investments. This signifies: a)foreign investors will grow foreign currency supply to the currency market and investing of the purchased GEL in Georgian securities (that is foreign currency supply grows to the currency market and the demand for GEL also increases) and b) domestic investors will have attractive investment instruments (Georgian securities – shares, bonds) and instead of pressure on the currency market, the GEL stream will be directed to those securities, that is, to the state economy (as a result, the GEL supply to the currency market will fall and the demand for foreign currency will decrease). The above-mentioned proves the securities market development is an important precondition for the national currency strength. - Are the market and domestic investors ready to make investments in the securities? What should be done to

CAPITAL MARKET DEVELOPMENT PERSPECTIVES IN GEORGIA

BITCOIN DONATION OF $64 000 IS MOBILIZED IN ORDER TO HELP DISASTER VICTIMS OF JUNE 13 ompany BitFury and Georgian Co-investment Fund have started campaign of Bitcoin donation jointly with “Georgian Technology Park”. A special, global account is opened for Bitcoin donation, giving an opportunity to bitcoin community around the world to support the flood victims and make donation. Donation process has been publicly available and totally transparent by the assistance of Blockchain technologies. To note, 230 transactions have been implemented, which value amounts to 64 000 USD.

July 27, 2015 #109

- Are Georgia-based investors ready to invest their property in securities? What should be done to develop this direction? - The capital market development implies a wide participation of the society in the processes, but, at this stage, the retail segment is not ready for wide participation. At the initial phase, this should be carried out in an organized form, namely, through the pension fund at the head of experienced managers. The awareness will grow periodically, required specific financial education will appear in the society and the society will be widely involved in the securities deals. - Does the capital market development ensure the national currency stability? - Correlation between the capital market development and the national currency stability is very significant. The developed capital market ensures drawing foreign capital and makes positive influence on the national currency. At the same time, domestic savings should be

mobilized for the capital market development. Today Georgia lacks for long-term resources in the national currency. This is one of the factors for excessive dollarization volume in the economy and external shocks make important affect on the economy. The last period’s depreciation of the GEL exchange rate has proved this consideration. The capital market development and long-term GEL resources will stabilize the national currency. - What legislative aspects should be improved in this respect? What do the EU reforms imply that must be implemented until 2018? - The Georgian capital market workgroup has issued the Georgian capital market diagnostic research that was prepared with a support of the Asian Development Bank (ADB) and the management for development project of the USAID. The last project is implemented by Deloittee Consulting. The research includes 43 specific recommendations on various themes, including

on improving the legal framework. The first package of legislative amendments will be carried out until December 2016 and current legislative defects will be improved. The second package will be implemented until December 2018 to adjust the Georgian legislation with the EU standards and 22 EU directives on the securities market. - Which model most fits the Georgian interests in terms of the stock exchange development? - We should share the international practice and adjust it to the Georgian realities. Amid the current economic volume in the long-term perspective, Georgia should make focus on financing small and medium-sized companies. Consequently, we are interested in Warsaw NewConnect, Euronext/Alternext and London’s alternative investment market (AIM) that makes focus on small and medium companies founded with a venture capital. They have huge growth potential and they finance smaller established companies too.

July 27, 2015 #109

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PANORAMA TBILISI PROJECT WORTH 1 BILLION GEL UNDERWAY

Construction Licenses Issued in line with Legislation

anorama Tbilisi project implementation is underway and construction works are being carried out on Freedom Square, Giorgi Bachiashvili, an executive director for the Co-Investment Fund, said. “As to the part of Sololaki, certain licensing works should be still performed”, Bachiashvili noted. At this stage, Tbilisi City Hall has issued licenses for only the lower part, not for the upper part, Bachiashvili added. The initial project called for constructing hotels on the Erekle Second Square, beside the business center of Bidzina Ivanishvili and in the place of the former Tsekavshiri building. Ropeways and inclined elevators were to connect the hotels. Later the investor company specified only Freedom Square and Sololaki hotels would be connected with ropeways. Under the official information, a total investments value of the project is 1 billion GEL. The Panorama Tbilisi project calls for constructing a network of hotels in Tbilisi for conducting international conferences and promoting the tourism business sector. Bidzina Ivanishvili is one of the initiators of the project. A part of the NGO sector and a group of citizens object to the project implementation. The opponents assert the project violates the cultural heritage protection principles.

The Georgian Economy Ministry Agency for Technical and Construction Supervision has made comments on issuance of construction licenses for Panorama Tbilisi assets. The agency refuses the circulating considerations as if the project construction permissions were issued secretly. All licenses have been issued in line with the Georgian government’s March 24, 2009 resolution N57 on Regulations and Permission Terms for Issuing Construction Licenses. Corresponding banners were placed on the construction sites with indications that administrative proceedings for issuing construction licenses are underway. Moreover, on December 31, 2014 Tbilisi City Ltd submitted a statement to the Economy Ministry Agency for Technical and Construction Supervision on approval of regulations for a use of the land plot as a construction site. A group of citizens have also submitted a collective writing statement to the agency for their involvement into administrative proceedings. The statement was signed by Tsira Elisashvili from Tbilisi Hamqar, the Association of Young Lawyers of Georgia (GYLA) and the Green Alternative NGO. Each of the signatories received separate letters notifying construction licenses are issued in line with simple administrative proceedings of the 6th chapter of the administrative code and that the legislation does not determine

the obligation for involving interested party in the administrative proceedings. Tbilisi City Hall has taken part in all stages of issuing construction licenses. According to the legislation, due documentation for all three assets has been forwarded to Tbilisi City Hall on both first and second phases. Tbilisi City Hall has given due answers to the agency. The legislation does not determine an involvement of Tbilisi Council in the licensing procedures. The Economy Ministry started issuing V-class licenses in 2005. The characteristics, under which the Panorama Tbilisi project was added to the V class, was enacted after the N 57 resolution en-

forcement, starting March 24, 2009. As to the licenses the Technical and Construction Supervision Agency has issued to Panorama Tbilisi assets: 1. The first asset – a multifunctional hotel complex in the place of former Tsekavshiri building. The license was issued on April 20, 2015. Applicant: Tbilisi City Ltd. 2. The second asset – Sololaki Gardens. The license was issued on May 18.2015.Applicant: Sololaki Hills. 3. 3. The third asset –Sololaki Rise. Multifunctional hotel complex. The license was issued on June 8, 2015. Applicant: Sololaki Rise.

MANANA NACHKEBIA: EVERY URBAN AREA SHOULD HAVE PRIMARY HEALTHCARE FACILITIES CBW spoke with the secretary of New Rights Party on the subject of the primary healthcare reform.

- Mrs. Manana, Why did primary healthcare reform become so essential? How necessary is the reform for the healthcare system or population? - There is no need to prove the urgent need of this reform. Primary health care represents a basis for the healthcare system. In Georgia, every government has tried to launch a healthcare reform, but they all were and are defective, because the necessary component of primary healthcare reform was never implemented. Healthcare reform initiated by the previous gov-

ernment, was built on PR only. That is why it totally damaged primary healthcare. Georgian Dream was had no choice but to fulfill its preelection promises, so they immediately started implementing universal healthcare. Consequently, there was no time and no financial recources left for the primary healthcare reform. It’s good that the government is taking into account healthcare reform’s shortcomings. First of all – in terms of financial expenses. Neglecting Primary healthcare leads to growth in expenses. It is known that primary health care is not only significantly reducing national health care costs, but it also cuts each individual’s healthcare expenses Preventing diseases is easier and cheaper than their treatment, expensive surgeries and subsequent costs. Primary health care is vital in particular since it’s important to detect chronic disease symptoms early on in order to treat or prevent them on time. Moreover, if the government fails to provide primary healthcare system reform, the state budget would not be able afford the enormous costs of

universal health care. - What factors should the Ministry take into consideration in regard with this reform? - Today, the primary health care is structurally, functionally and financially inept. First of all the situation of primary healthcare infrastructure should be assessed. Also, it is important to raise the qualifications of the medical personnel. It is necessary to improve geographic access to basic medical care for the population. The country should be organized so that every urban area has primary health care facilities, which will provide primary health services to the population. - What are the main challenges the Ministry will face during the reform? - We, the “New Right” believe that it is essential for the Georgian population’s health to be protected arising from catastrophic financial risks, but the government should find other ways to provide for the affluent. In particular, it is necessary to develop a funding model based on private health insurance, which will protect the citizens from morbidity related to the financial risks and ensure effective functioning of the medical sec-

tor. We still keep our position that it is necessary to introduce an insurance system for the entire employed population, while the disabled and the unemployed individuals should have compulsory insurance subsidized by the government. We have a very interesting model that is outlined on our website. The program does not put the state budget under risk and it frees funds for other areas at the same time. For example, the education of boys and is more progressive than the current system. I do not think the state can endure such costs for much longer, so right now we need to implement this model, or any other more effective one. Primary health care reform, universal health care and the elimination of hepatitis C programs will be implemented simultaneously. This level of health care reform will be done with assistance from the government contractor, an international consulting company “Global Alliance” which has a long-term agreement with the Georgian government. This joint work will enhance the effectiveness of the health care system and the program as a whole.

MINISTRIES AND LEGAL ENTITIES OF PUBLIC LAW SPEND OVER 1 MILLION GEL ON ADS - TRANSPARENCY INTERNATIONAL GEORGIA

pparently, ministries and legal entities of public law under their jurisdiction spent more than one million GEL on television commercials in January-May of 2015, as stated by Transparency International – Georgia on the basis of information obtained from the state agencies and the electronic platform of state procurements. According to the organization, the Ministry of Economy and Sustainable Development, as well as the Ministry of Justice, did not respond to letters requesting public information. According to the survey, a total of 199 521 GEL was spent on making commercials, while 902 559 GEL was spent on circulating them. In addition, the majority of advertisements by ministries

and legal entities of public law were not run free of charge under the social ad status. Commercial TV networks ran only two commercials for free – the one about Health Ministry’s Hepatitis C elimination program and the video about fines by the Ministry of Environment Protection. Transparency International – Georgia claims the most expensive advertising campaign was carried out by the Ministry of Finance. In particular, preparing a commercial about the European Bank for Reconstruction and Development (EBRD) Business Forum cost 43 000 GEL, while its circulation by TV networks cost 463 352 GEL. The Enterprise Development Agency spent 52 000 GEL on two promotional videos about the program Produce in Georgia, circulation of which cost 185 667 GEL. The Ministry of Education

spent 8 870 GEL to produce a video describing the situation in the field of education and 124 495 GEL on its circulation. It is noteworthy that the majority of ministries and the legal entities of public law purchased the advertising service without competitive bidding, through simplified procurement. The organization also says that the most income from commercials by state agencies - 376 155 GEL - was received by Rustavi 2 TV. It is followed by Imedi TV with 308 472 GEL, Maestro TV with 105 051, GDS with 64 339, regional broadcasters with 29 388, and Kavkasia TV with 17 182 GEL. In addition, the income received from commercials by state agencies does not represent any significant share in large television broadcasters’ overall income.

ECONOMY

caucasus business week

July 27, 2015 #109

GEORGIA TO CONTROL IMPORTS OF GENETICALLY MODIFIED FOOD POSSIBLE CONSEQUENCES OF GEORGIA-CHINA FREE TRADE AGREEMENT

he study showed that a free trade agreement between Georgia and China has great potential. Georgia’s export to China would increase by 9% approximately, in the short-term period including significant growth of wine exports (28.5%) and non-alcoholic drinks (36.7%). On the other hand, imports from China would increase by 1.7%. The study has crucial importance, as further negotiations between the two countries about the agreement will be based on its results. The comparative analysis of Georgia’s foreign trade and trade with China shows that a free trade agreement may increase export of goods and services in new directions as well. It would also provide numerous opportunities to increase the trade flow in services, in terms of transport and logistics, and tourism. Growth in Chinese investments, including in infrastructure projects that

will facilitate an increase in Asia-Europe trade flow and in the medical and financial sectors, under the framework of the new policy of the Chinese government would be expected. In addition to increased investments, free trade agreement will enhance investment attractiveness of Georgia in general. Considering Georgia’s trade policy liberalization, it will not affect local producers and the growth of import. Taking into account all the effects, we can say that trade liberalization with China will contribute to the development of Georgia’s economy”, explained Lasha Chochua, Economist at PMC RC. The study was prepared by PMC Research Center with the experts of China’s University of International Business and Economics (UIBE) and in collaboration with the Ministry of Economy and Sustainable Development of Georgia and Ministry of Commerce of the People’s Republic of China.

GEORGIA, TURKEY OPEN $220M POWER PLANT

eading Turkish energy company Çalık Enerji has established a combined natural gas cycle power plant in the Georgian city of Gardabani. Having been completed in less than two years, the 230-megawatt capacity power plant constitutes 8 percent of the country’s total installed capacity. The $220 million facility is located 39 kilometers south of Georgia’s capital Tbilisi. A total of 920 staff both from Turkey and Georgia were deployed during the construction phase of the project. The power plant, which is expected to satisfy 15 percent of Georgia’s electricity requirement on its own, is one of the most environmentally friendly projects in the world and uses the most advanced technology. Moreover, the Çalık group is continuing its investments in the country in the fields of hydroelectric and wind energy so that in times of energy shortages, the plant will be ready to replenish the system with electricity in a short time. Speaking at the inauguration ceremony of the

power plant held in Gardabani yesterday, Energy and Natural Resources Minister Taner Yıldız described the project as a “true success story” that will constitute the cornerstone of cooperation with Georgia in the future. Such projects consolidate our cooperation and set an example to the whole world, he added. In reference to the fact that Turkey and Georgia are two neighboring countries functioning as energy bridges in the region because of their geographical positions, Yıldız underlined that the energy sector is one of the most important instruments that will facilitate friendly relations between the two countries in the future. Such major projects make the region a center of attraction, he stressed. Georgian Prime Minister Irakli Garibashvili said the power plant will greatly contribute to the country’s energy market and energy independence, describing the project as the greatest energy project that has been actualized in Georgia since the country achieved its independence. “With this project,” he added, “a new era has started in Georgia’s energy life.”

eorgia is setting import regulations and customs duties on genetically modified food, announced Georgia’s Finance Ministry. A new law to prohibit importing genetically modified food into Georgia without customs control has entered into force. From now on genetically modified food will be processed under customs control. Authorised officer from the Revenue Service will control the documents of the imported genetically modified food and will determine whether it meets the labeling rules or not. Georgia has already set a new law on labeling the genetically modified food which entered into force on July 1, 2013. According to the new law all products that contain genetically modified components must have proper labels informing consumers and allowing them freedom of choice. If the genetically modified food does not have the labeling it must have the supporting document

that proves the products are in compliance with the setting requirements. But if the document does not include this information the special services will make a laboratory research. Until the laboratory research result is known, the product importing process will be suspended. Those who break the law will be fined 5,000 GEL. If the wrongdoing repeats the fine will increase to 10,000 GEL. However, the importer will be able to fix the problem [label the product] within 30 days period of time.

GEORGIA BOLSTERS HAZELNUT PRODUCTION

eorgia is fostering hazelnut production by launching a dedicated hazelnut sector development programme. The programme aimed to grow the production of hazelnuts in Georgia along with the simultaneously decreasing cost price of hazelnuts and increasing export possibilities. The programme was initiated by the Georgian Government and implemented by the Ministry of Agriculture through the Agriculture Cooperatives Development Agency, using European Union (EU) budget support. Last year Georgia’s export volume of nuts exceeded the export volume of wine for the first time, meaning nuts became Georgia’s main agricultural export product, according to data from the country’s Agricultural Ministry. Georgia’s Minister of Agriculture Otar Danelia believed hazelnuts had created a new perspective for Georgia’s agriculture sector. Within the framework of the project, the Agriculture Ministry has begun constructing the facilities for a hazelnut-in-shell drier and storage business in the village of Darcheli, in Zugdidi Municipality. Upon completion, the business will have the capacity to dry over 24 tonnes and store over 500 tonnes of hazelnuts. Due to be completed by the end of August 2015, Darcheli’s hazelnut industry will then be handed over to a 500-member strong hazelnut cooperative. As the Agriculture Ministry will ensure interna-

tional food security standards are implemented, the Darcheli hazelnut cooperative will be obliged to implement Good Agricultural Practices (Global GAP) by September 2018, and Hazard Analysis and Critical Control Points (HACCP) by June 2019. Nut producing has been supported by the Government, especially with VAT free taxation. This has allowed the price of Georgian nuts in the global market to become more competitive. The cost of nuts is increasing worldwide because of higher demand. In recent years the average price per kilogram of shelled nuts was four GEL while in 2014 this price had increased to eightnine GEL as a result of international market trends. Last year Turkey, the world leading nut exporter, lost half of its harvest due to freezing weather so the global price of nuts increased and turned into a beneficial situation for Georgian entrepreneurs.

EU COUNTRIES TAKE 30% SHARE IN GEORGIA’S EXTERNAL TRADE

ore Georgian products are being enjoyed in Europe and at the same time, Georgia is reducing its imports and using more locally produced goods. Preliminary data from the country’s National Statistics Office, Geostat, revealed Georgia was now becoming less dependent on markets it formerly relied on, particularly markets within the Commonwealth of Independent States (CIS). Geostat data showed in January-June 2015, Georgia’s external trade with the EU amounted to $1,434 million USD, up by two percent compared to the same time of last year. Exports amounted to $293 million USD, while imports amounted to $1,141 million USD. The share of these countries in the external trade of Georgia amounted to 30 percent; 27 percent in exports and 31 percent in imports. The value of Georgia’s External Merchandise Trade (export and imports) was on a downward trend, noted Geostat. In January –June 2015, external merchandise trade (excluding non-organised trade) in Georgia amounted to $4,761 million USD, which was a 13 percent decreased year–on–year (y/y). Georgia’s exports equalled $1,082 million USD

(24 percent lower), while imports stood at $3,680 million USD (nine percent lower). The negative trade balance was $2,598 million USD in the first six months of 2015 and its share in external trade turnover constituted 55 percent. A third (33 percent) of the trade deficit came to EU countries, while this was 31 percent in January-June 2014. Meanwhile, the external trade of Georgia with CIS countries (Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan and Uzbekistan) dropped 21 percent compared to January-March 2014. In January-June 2015 Georgia’s external trade with the CIS countries totalled $1,356 million. Exports stood at $417 million (45 percent lower), while imports equalled $939 million (two percent lower). CIS countries had a 28 percent share in the total external trade of Georgia; 39 percent in exports and 26 percent in imports. In January-June 2015 the share of the top ten trading partners in the total external trade turnover of Georgia amounted to 64 percent. Georgia’s top trading partners by turnover for the first part of the year were Turkey ($756 million), Azerbaijan ($409 million) and China ($371 million). Copper ores and concentrates reclaimed the first place as top export items, equalling $130 million,

or 12 percent of total exports. Exports of Ferroalloys totalled $110 million, and its share in total exports amounted to 10 percent. Motor cars occupied third place. Exports of this commodity group stood at $99 million and nine percent of total exports. The top import commodity in January-June 2015

was petroleum and petroleum oils, imports of which amounted to $305 million and eight percent of the total imports. Medication was the next biggest commodity imported with $298 million, or eight percent of imports. Motor cars came third with $ 244 million (seven percent of imports).

July 27, 2015 #109

BUSINESS

caucasus business week

IRAKLI QASHIBADZE: GEORGIA RANKS PARTNERSHIP FUND TO START 60TH IN GLOBAL INNOVATIONS INDEX CONSTRUCTION OF FIVE NEW computer graphics and visual effects laboratory at GIPA. Memorandums were also signed with HOTELS IN 2015 the Komarov School, Mziuri education center,

OMedia, the Black Sea University, Singular company and so on”, Qashibadze noted. The agency provides special marathons for students at innovations laboratories for starting business activities. They can also use publabs for creating their own startups, Qashibadze said. “Technological development in Georgia proceeds dynamically. Specialized marathons are to shape teams in a short period to work on specific products. New-style beginner enterprises and beginner business startups are organized at industrial innovations laboratories and publabs. We have conducted a contest and 15 teams of 20 ones continue working and receiving orders. Students earn about 300 GEL a month and this is not a bad result for them”, Qashibadze added. The agency plans to open technological laboratories in regions too, Qashibadze noted. Public innovation centers will open in Choporti, Ambrolauri and Kharagauli, he added. “The agency launched operation about a year ago. We plan to reach regions too and open similar industrial innovations laboratory in Gori, Kutaisi, Batumi. With our support programming courses are being held in Ozurgeti. Public innovations centers will also open in Choporti, Ambrolauri and Kharagauli. The problem is that we have to pick up much knowledge and skills. We should make focus on practical studies, practical projects. We have already started working in this direction. This is a joint project and it needs huge efforts and financial resources. To develop business activities and startups among students, our Labs will operate in both the state sector and private universities. We also want to organize our techno parks on the territory of universities. A techno park is an integrated space for innovators, program engineers and inventors, where, along with various modern equipment, they will have access to developing logotypes, conducting tests and working on innovative products”, Irakli Qashibadze said.

An interview with the head of the Partnership Fund Irakli Kovzanadze

- As it is known, one of the main projects that is going to be implemented by the Partnership Fund concerns a giant Neskra HPP. When will the construction work begin? - We started work on this project still half a year ago, and now all the preparations have been completed. In the near future we’ll formalize a contract with a strategic investor – South Korean state company. This is a huge state-owned company, whose assets exceed $ 20 billion with annual turnover of more than 2 billion. It also has a great experience and is one of the so-called “Asian tigers”. As for the financial side of the issue, the loan is allocated by the European Bank for Reconstruction and Development(EBRD), Asian Development Bank (ADB), and the South Korean Eximbank. An international tender was also held to identify a company that will directly build the hydroelectric power station. The Italian giant Salini Impregilo won which has built more than 200 hydropower plants worldwide. Regarding the timing, we already have a scheme , graphs, and we assume that the construction work will begin in late August. Before that, we intend to answer all the questions in connection with the construction, in particular with respect to the environmental aspects of the project. The investment cost of the project amounts to $ 850 million. - At what stage are other projects of the Partnership Fund? - We have completed the construction of Gardabani thermal power plant with a capacity of 230 megawatts. This is one of the major projects we’ve carried out. We also begin construction of a plant producing aircraft parts of composite materials. The project cost is $ 20 million, our partner is the Israeli company that produces components for “Airbus” and “Bombardier”. This project is very important for Georgia, both in terms of job creation and training of our engineers. We also carried out a project to create a farm growing blue currants. It has already exported almost 95% of the crop, the products are sold in a network of supermarkets “Wal-Mart” in England, moreover, they are exported to Armenia, Sweden and Russia. Demand is very large, so our goal is

to increase the plantation up to 120 hectares. With regard to tourism, this year we have completed the construction of a 5-star hotel “Rixos” in the resort village of Likani, and this year we will start the construction of 6 new hotels, both in the regions and in Tbilisi. - You are also involved in the creation of Export Promotion Agency. When it starts to work? - This is a joint project of the Partnership Fund and the Ministry of Economy. Its goal is to create an agency that will assist in the financing of exports. Structurally, it will be the Fund’s subsidiary but will function independently. In this regard, we are advised by the Italian agency “Sace” and a few days ago, work on the structure of the new institute was completed. We expect that the maximum efficiency of the agency will be reached in about 3 years. The development will be gradual, but the foundation has been laid.

MINERAL WATER EXPORTS SLIPS BY 37%, WINE EXPORTS DROP BY 53%

W TBILISI AMONG TOP 10 EUROPEAN DESTINATIONS IN 2015 Georgia’s capital Tbilisi is among the top ten destinations of Europe this year according to an international media outlet Time Out. “Straddling the border between historical empires, Georgia’s capital is an alluring hybrid of architecture, customs and traditions, whose enduring anonymity on the tourism scene makes it all the more special for those who do visit,” reads the article published by the Time Out editors. Tbilisi marked 6th out of the ten European cities that made through the list, topping such popular destinations as Lisbon in Portugal, Stuttgart in Germany, Costa Brava in Spain, and Krakow in Poland. “Georgia may not technically be in Europe (though that doesn’t stop it from competing in Eurovision, as Australians are well aware) – but you wouldn’t know it from a stroll through Tbilisi’s Old Town, whose quaint Orthodox churches and dusty Art Deco edifices speak to the city’s Christian heritage and Western orientation. “On its fringes, on-trend bars and cafés sprout like hairs in a hipster’s beard, drawing in the city’s

burgeoning student population. Then you turn a corner, and another world intrudes: a Zoroastrian temple founded millennia ago by Persians, or a complex of sulphuric baths framed by minarets. “As Tbilisi sloughs off its Soviet veneer and reopens itself to the West, its cultural riches are once again becoming accessible to the adventurous traveller. There’s never been a better time to go,” the article read. Other cities that made to the top five were Copenhagen in Denmark and Malmö in Sweden, Split in Croatia, Riga in Latvia, Gozo in Malta, and Reykjavik in Iceland. “Paris and Barcelona are all well and good, but for a sense of ‘deep Europe’ (as we’re calling it), we suggest heading for the destinations that blend beauty, charisma and room to breathe in exactly the right quantities. “And, as well as being amazing holiday spots in their own right, each of these cities offers an experience that is distinctly European. Proper, authentic, locally-sourced Europe: sample it in 2015 – while you still can…” the article noted.

ine and mineral export, which growth was related to the opening of Russian market in summer, 2013, is sharply dropped. According to “Sakstat”, mineral waters of 45,645 million USD and wine of 39, 86 million USD has been exported from Georgia to abroad through

January-June of this year. Mineral water export is declined by 37% comparing to 6 months of the previous year, while wine – 53%. Mineral water has been 4.2% of the Georgia’s total export through 6 months in this year, while wine – 3, 7%. However, export is reduced by 24% comparing to the last year.

DECISION TO INCREASE EXCISE TAXES ON BEER MAY BE REVISED

he government’s decision to increase excise taxes on beer may be revised - it was said at the meeting of the Georgian brewers and business ombudsman. According to corporate director at “Natakhtari” Nikoloz Hundzakishvili, representatives of the business sector acquainted the business ombudsman with the problems they are facing. The meeting primary touched on the issue of the introduction of labeling for soft drinks, which on the Prime Minister’s initiative has been rescheduled for November. “We agreed that the next meeting will be held with the participation of the Ministry of Finance, and then with the Prime Minister. Prior to this, the decision on labeling will not be revised, so we have time for consultations until November, “- he says. “Natakhtari” representative notes that the nega-

tive results of the growth of the excise tax on beer were also discussed at the meeting. “We were assured that after the completion of the beer season in late September a meeting will be held with the participation of the brewers and members of the government to analyze how right was an increase in excise duty. With high probability, arguments will be given that will allow to abolish the decision to increase the excise tax, “- Nikoloz Hundzakishvili believes. A possibility of lifting the ban on drinking beer in public places is also considered. In his words, the business ombudsman’s office in every way tried to convince the government that this provision needs to be mitigating, but authorities have not yet come to this. “We hope that in September a comprehensive solution will be made - both for excise duty and on the prohibition” - the representative of the company “Natakhtari” adds.

OTHER

caucasus business week

July 27, 2015 #109

WINEMAKERS PREDICT A DIFFICULT YEAR FOR WINEGROWERS

R WHO IS BEHIND TBILISI OLYMPIC VILLAGE?

hinese investor Mi Enhua, the president of Hualing Group, has become Georgia’s largest investor after investing $500 million USD to implement the Tbilisi Olympic Village project. Today at the Olympic Village opening ceremony Georgia’s Prime Minister Irakli Garibashvili thanked Enhua for the investments that the Chinese investor had spent in Georgia and called him a “distinguished investor”. Since 2007 Mi Enkhua has spent $500 million USD in Georgia. This is the most important investment in our country. Last year, he was the largest investor of Georgia,” said Garibashvili. The PM also thanked Enhua for building the Olympic village, which he called a “wonderful complex”. The village is a sprawling complex of nine apartment buildings, a five-star hotel, sport centre and recreational zone over 50 square kilometres. In recent years Enhua has been honoured with different titles in his home country. He has been honoured with titles of ‘Excellent China Characteristic Socialism Builder of NoPublic Owners’ by the United Front Work Department of CCCPC, the National Development

and Reform Commission, Ministry of Personnel and China’s Administration for Industry and Commerce. Meanwhile, China’s charity State Council awarded him with the ‘Patriot’ Award and Enhua occupied an honored place among 100 PRC’s Philanthropists. In 2005, he was named as a ‘role model of labour relationships’. Enhua was also awarded the ‘Honorary Charity Award’ for outstanding charity activities and contribution to his homeland. Today PM Garibashvili expressed readiness to support the Chinese investor’s activities in Georgia and promote implementation of other projects as well. In return, Enhua spoke about the preferential investment environment of Georgia and thanked the country’s PM for supporting his investment projects. Meanwhile, Alexi Akhvlediani from the Youth Olympic Festival Tbilisi 2015 Organising Committee believed the Festival would bring five times more income to Georgia. It will cost $46 million USD to run the event and by our calculations, we are expecting a return of $212 million USD,” Akhvlediani said. The Festival is set to commence in Tbilisi on July 26 and involve nine sporting codes including judo, tennis, cycling and basketball.

epresentatives of wineries believe that the current year will be very difficult for winegrowers. As “Commersant” was stated by CEO of “Shuhman Wines” Nutsa Abramishvili, due to lower sales, wine companies have large stocks of unsold wine. “In addition, all companies have their own vineyards, respectively, this year the demand for grapes will be significantly lower than last year when there was a real boom. The price of grapes was very high, and in recent years has reached a maximum due to the opening of the Russian market. On the one hand, it is certainly good, since winegrowing regions have received tens of millions. But on the other hand, the price of the product has risen , the cost has increased that is very bad for the competitiveness of Georgian wine. So we have both positive and negative result, “- she said. A similar opinion is shared by the founder of “Telavi Wine Cellar” Zurab Ramazashvili. According to him, his company this year is not going to buy grapes from farmers in large numbers. “ A situation with export remains unfavorable, although in recent months a dramatic deterioration has not been observed. Export of our company in this year decreased by 30%. In order to balance the situation we are entering new markets, such as South Korea and Mongolia. This is a new market with little tradition of wine consumption. It is very difficult to predict whether the Asian markets will be able to replace Russia and Ukraine. However, some hope we have, “- Zurab Ramazashvili explains. Nutsa Abramishvili, CEO of “Shuhman Wines”, recognizes serious problems with the export in the first half of 2015 due to the crisis in Russia and Ukriane. “However, these factors do not have a big impact on sales of our products, as we have always been focused on the diversification of markets. Of course, exports to Russia declined, many Russian partners importing Georgian wine faces a problem with the payment for already delivered products. Although, it did not affect us, since we work with prepayment. As for Ukraine, our sales there

were down, but not dramatically - by about 1015%. But we balance these losses by other markets - for example, our representative in Europe maximizes our presence in Eastern Europe. We are also actively working in the United States, China, and other CIS countries, “- she notes. According to her, it is a long-term process, as Georgian wine has to compete with international brands, which have long been known to all. “We are talking about brands that are known around the world for centuries. Wines from Italy, France, Spain, Australia enjoy a very high degree of recognition among consumers. Therefore, the state must be involved in the process, which together with the private sector should actively work on advertising Georgian wine on new markets. When using the right marketing technologies, we can operate successfully in other, much more stable markets, “- she says. During the first half of 2015 the volume of export of Georgian wine has fallen by 49% compared to the same period last year, the Georgian National Agency of Wine reports. About 13.2 million bottles of Georgian wine (0.75 liters) worth more than $ 39.4 million were exported to 33 countries in six months. In January-June 2015 a decrease is observed only in comparison with the same period of year 2014 (22 779 153 bottles) when boom was recorded in terms of the export due to a peak of wine exports to the Russian market. Decline in exports was due to political and economic developments in Russia and Ukraine, which resulted in exports decline to Russia by 63%, while to Ukraine – by 60%, “- the National Wine Agency states. At the same time, exports increased in strategically important markets such as China - by 23%, Japan - 21%, Canada - 159%, Latvia - 20%, Estonia - 16%, USA - 61%, Hong Kong - 230% UK - 33% and others. Despite this, Russia which accounts for 6 555 183 bottles of wine is still the main export market. It is followed by Kazakhstan (2 275 722 bottles), Ukraine (1 257 918 bottles), Poland (796 076 bottles) and China (759 969 bottles).

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“AGRICULTURE SUPPORT PROJECT” ENDS SUCCESSFULLY IN GEORGIA

he “Agriculture Support Project (ASP)”, which has been in development in Georgia for five years, is successfully entering its completion stage. Regarding the ending of the project, at the end of the month the International Fund for Agricultural Development (IFAD) and the Ministry of Agriculture of Georgia will share details of the project’s goings-on and results with media representatives, as well as speak about future plans in the country. The Georgian Government has been carrying out the Agriculture Support Project (ASP) with the financial aid of the International Fund for Agriculture Development since 2010. The project’s goals are to resolve the infrastructural issue and contribute in economically strengthening the farmers. An important aspect of the project is to rehabilitate irrigation systems and solve irrigation water issues in various Georgian regions, which will significantly promote local agriculture development.

In order to inform more regarding the rehabilitation activities and specify all the benefits to farmers during the project’s execution, various workshops were held with local farmers across Georgia. The workshops were led by Irma Inashvili, an expert from the Georgian University. The International Fund for Agriculture Development (IFAD) is one of the most generous donors in the agriculture sector. It has been financing various projects in Georgia since 1998. Areas of activities are the Inner Kartli, Mtskheta-Mtianeti, and Samtskhe-Javakheti municipalities, where 6 irrigation systems were rehabilitated.

July 27, 2015 #109

BANKING NEWS

caucasus business week

BNE INTELLINEWS: GEORGIAN FINANCIAL SUPERVISION BILL RAISES INVESTOR CONCERNS

controversial bill stripping Georgia’s central bank of its financial supervision functions and transferring them to a separate agency is raising concerns among investors over the independence of the country’s financial regulators. President Giorgi Margvelashvili has indicated that he will veto the bill, which was approved by parliament on July 17, but the ruling Georgia Dream coalition is well placed to override it as it holds a comfortable majority of 86 seats in the legislative body. Only 76 votes are needed to overturn a presidential veto. According to the bill, the planned Financial Supervisory Agency (FSA) will be governed by a seven-member board. The National Bank of Georgia (NBG) governor and one more member of the central bank’s board will take two seats; five other seats will be occupied by candidates nominated by the government and confirmed by the parliament, which will also endorse the governor indicated by the board members. On June 24 in a joint letter to Prime Minister Irakli Garibashvili and Parliamentary Speaker Davit Usupashvili, the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), and the World Bank have called for keeping banking supervision inside the central bank. According to the IFIs, the amended regulation “would weaken the independence and quality of banking supervision in Georgia, threaten banking sector stability, and undermine prospects for sustained growth”. They said their concerns are heightened “by the hasty manner in which the new draft [was] tabled, without consultations of key stakeholders or outside experts”. “In 2015-2016, Georgian banks may need to raise capital to strengthen their balance sheets,” the letter reads. “Uncertainty created by legislative changes and upheaval of banking supervision could jeopardise investors’ trust and thus complicate this task. Banks would then have to deleverage, which would hurt credit and growth.” Usupashvili said on July 16 that the new regulation had been amended and put in line with the IFIs’ recommendations. However the key principle of removing banking supervision from the NBG remained unchanged. “It looks a strange decision as the central bank seems to be highly competent,” London-based financial analyst Bruce Packard told bne IntelliNews. “It did not succumb to pressure ahead of the financial crisis to let banks reduce the equity funding of their balance sheets, something that is now being widely adopted by regulators such as the Bank of England.” Packard, who was part of the team who in 2012 advised Bank of Georgia ahead of its listing on the London Stock Exchange, adds that “given the stresses the Georgian banks faced in 2008, and how they came through such an extreme crisis with depositors confidence still intact, it looks like the NBG would be best placed to keep supervising the banks”. Critics of the bill, including the country’s busi-

ness associations, claim it is politically, rather than economically-motivated, as one of the initiator, Georgia Dream deputy Tamaz Mechiauri, chairman of the parliamentary committee for finance and the budget, stated that the central bank’s board members “do not reflect at all interests of those forces which are currently in power”. Current governor Giorgi Kadagidze, whose seven-year mandate expires in February 2016, is the last high-ranking representative appointed by the previous government under then President Mikheil Saakashvili. Prime Minister Irakli Garibashvili has rejected the criticism, stating that “[the government’s] goal is not to politicise the National Bank of Georgia, on the contrary, our goal is to depoliticise it”.

WEAK LARI, STRONG BANKS

The central bank has been blamed for the sharp devaluation of the national currency, the lari, resulting from the strengthening of the dollar and the decline of external earnings, namely through reduced exports and remittances. Kadagidze opted for safeguarding the NBG’s reserves rather than using them up fighting to maintain the lari’s value – a policy supported by the IMF. “Experience [in other countries] shows that any central bank going against market fundamentals is not going to end well,” he explained to bne IntelliNews in an interview in April. “Spending reserves to cover up the fundamental shortages will not help at all – it would only postpone the problem.” The lari was mostly stable for about a month till mid-July, hovering around 2.25 per greenback, about 28% weaker than in November 2014, when the devaluation started. Packard argues that “no expert of modern financial ecosystem would blame the central bank for the weakness in the lari”. While the lari showed weakness, the banking sector re-affirmed itself as the country’s success story. Bruno Balvanera, EBRD’s representative for the Caucasus, labelled Georgia’s banking system “a jewel,” and said its financial system was ready to move onto a new level with more sophisticated capital markets. As of July 1, 20 commercial banks operate in Georgia, including 16 foreign-controlled banks and two branches of non-resident banks. The five banks with the largest assets constituted about 77% of the total share of assets in the banking sector. The two main players, TBC Bank and Bank of Georgia, are both listed on the London Stock Exchange and accounted for about 57% of total assets. “The system is safe and stable,” maintains London-based David Nangle, head of equity research at Renaissance Capital “although we are looking at a GDP slowdown and asset quality deterioration evolution as a result of the depreciating lari. That will affect banks’ growth and their profitability, but not their stability”. BNE Intellinews/Monica Ellena

IN APRIL-JUNE, NUMBER OF REGISTRATION TRANSACTIONS INCREASED BY 4.5%

ccording to official data of the National Agency of Public Registry , in April-June the number of registration transactions increased by 4.5% compared with the previous year’s same period and amounted to 133 205 (25 905 primary and 107 300 secondary transactions). In the second quarter of 2015, primary market transactions accounted for 19.4% of the total number of transactions, secondary -80.6% of the total transactions. A similar trend was observed in the second quarter of the previous year: 18.8%the primary market transactions and 81.2% - the

secondary market transactions. It is obvious that compared with the same period of the previous year, the number of primary market transactions increased by 8.2% in the second quarter while the number of secondary market transactions - by 3.7%. The increase in the number of transactions was recorded compared to the previous quarter: the number of primary market transactions increased 16.8%, and secondary market transactions – by 0.6%. During the same period the total number of transactions increased by 3.4% compared with the first quarter.

PASHA BANK - GENERAL SPONSOR OF INTERNATIONAL CHESS FESTIVAL “NANA ALEKSANDRIA CUP”

oti hosted 10th International Chess Festival with General Sponsorship of PASHA Bank. The festival is held annually under the auspices of Ms. Nana Aleksandria, a world chess legend, two times world vice-champion, 12 times winner of world chess Olympics. PASHA Bank has been sponsoring the chess festival for two years in a row. The festival has been organized since 2006 by Poti Local Municipality. It consists of tournaments in 10 different categories between juniors as well as adult professional chess players. The festival is the biggest in Caucasus by volume and the most important one considering the caliber participants - many top rated male and female chess players. The festival is listed in the annual calendar of world chess federation FIDE.

The chess games are transmitted live via internet enabling chess aficionados world-wide to watch them in real time. “One of the main characteristics of our business approach is the fact that we are oriented on longterm partnerships. PASHA Bank has been operating in Georgia since 2013 and it is the second year in row that we are the General Sponsor of the chess festival. This sport has always been popular in Georgia and there are world-class Georgian chess players who have achieved international recognition and ultimate success. We hope that this tradition will continue and festivals like this will encourage and motivate young people to develop their skills in chess and beyond,” commented the CEO of PASHA Bank, Mr. Shahin Mammadov.

BANK SECTOR’S 1H15 PROFITS MARK 243 MILLION GEL

anking sector finished January-June with a net profit of 243 million GEL (01.07.14 – 192,4 million). However, the growth has made up 26,6% year-over-year (01.06.2015– 35%, 01.07.2014 -25,5%). According to NBG’s statistics, the sector’s net profit is up to 71 million GEL, the figure exceeds 4 times comparing to May (17,7 million) of the previous year, which is the maximum of all times.

CENTRAL BANK’S POWERS SIGNIFICANTLY REDUCED

ccording to the permanent representative of the International Monetary Fund (IMF) in Georgia Azim Sadykov, amid uncertainty caused by stripping the central bank of a supervisory role , commercial banks may face problems with the capitalization. Parliament adopted amendments to the Law on the National Bank that envisage stripping the National Bank of its banking supervisory functions and transferring them to a separate agency. During consideration of the draft document, a number of items have been changed, in particular in terms of the appointment of board members and its leadership. On the whole, the project developed by the Budget and Finance Committee of Parliament caused a negative reaction both from representatives of the banking sector and international organizations. The Speaker of the Parliament Davit Usupashvili said that the comments were taken into account in the 2nd and 3rd reading of the draft.

“Moreover, when the project was ready for adoption, we delayed its approval for a few more days to once again discuss the claims and comments. We held constructive consultations with representatives of international organizations, particularly with the IMF, and the majority of their comments have been taken into account in the final version of the bill, “- said the Speaker of the Parliament. According to the MP Tamaz Mechiauri involved in the work on the law, changes in the law on the National Bank will make its activities more transparent, which will allow it to enjoy a greater degree of confidence than it is now. The central bank President himself has criticized the amendments saying that the weakening of the National Bank’s independence creates a risk for the economy as a whole. “The developers of the law do not hide they are guided by political motives and seek to control the banking sector,”- he says. At the same time, ex-Finance Minister Mirian Gogiashvili sees no danger in the creation of a separate bank supervision department.

ANALITYCS caucasus business week

QUOTES

“Bona Fide Business is Unlikely Behavior for Goodwill Group”

TEMUR CHKONIA Founder of Coca-Cola Bottlers Georgia ona fide business is strange for Goodwill Group; to deceive the partner is their signature, they so understand doing business this way. The company has been carrying out such business for years. They will never realize the impending collapse, which is inevitable. As the wanton activity sooner or later will

end,” businessman Temur Chkonia told news agency GBC. Goodwill owes a debt of 1 million GEL to Chkonia’s business. The founder of Coca-Cola Bottlers Georgia regards that all creditors of Goodwill, whose number amounts to 492, are deceived. The businessman declares that they all deserve such attitude except him, as they have not accepted his offer to act with joint forces. “This is such a category, which might be temporarily deceived, because they behave in the same way every time and they will never act otherwise.” Goodwill’s secured creditor, TBC Bank has already received an early repayment of 8 million out of 16 million. In addition, Italian majoritary (60%) Milano Investment has left the chartered capital of Goodwill (within 11 month after the entrance) and according to the official information (as of the amendments registered in the Public Registry), Gogi Shevardnadze, founder of Goodwill, has increased his share in the company up to 90%. The creditors are afraid that the remaining 24 million will never be paid and shareholders will lead Goodwill to bankruptcy, as they have nothing to lose. Part of the property is owned by TBC Bank and other shares are taken from Wissol and other companies by leasing.

“No Need to Examine the Pharmaceutical Business”

KAKHA OKRIASHVILI PSP Founder umors have emerged that the Georgian Competition Agency has set out to examine the pharmaceutical business in the country. Allegedly, the Agency is after eradicating monopoly and “secret cartel deals” on the market. The founder of the company PSP Kakha Okriashvili, does not expect that the Competition Agency will launch a study of the pharmaceutical market;

Okriashvili sees no need of studying the pharmaceutical business: “There is no monopoly in the pharmaceutical market, accordingly, there is no need to study it. And if such a study is conducted, I will regard it as an attempt to free up the market for other players the authorities intend to bring into the Georgian market. As far as I know, we are talking about foreign companies. But as a rule, the so-called “foreign” companies, in fact, are not foreign and the local investors are behind them,” Kakha Okriashvili says. In his words, he will no longer make any investment in Georgia if the pharmaceutical business is shown such mistrust. The then Prime Minister Bidzina Ivanishvili spoke about the existence of cartels in the pharmaceutical market of Georgia in late 2012, during a meeting with Georgian businessmen. In response to the Premier’s accusations, Paata Kurtanidze, the head of the pharmaceutical company Aversi, said that no one was restricted in possibilities of doing business in Georgia. But the Prime Minister did not agree with his opinion, and continued to insist that large pharmaceutical companies systematically stifled the competition.

“Government Hinders Business Sector Development by Introducing Obligatory Labeling”

IRAKLI SHAVISHVILI Auditor ast week the Georgian Prime Minister instructed the Finance Minister to postpone the introduction of obligatory labeling of soft drinks. The decision will be enacted on September 1. Despite the Prime Minister’s statement, soft drinks manufacturers protest against the obligatory labeling and demand to meet with PM Irakli Gharibashvili. “Introduction of soft drinks obligatory electronic labeling is inadmissible, unjust and irrational. This decision contradicts the business and state

interests and has no precedent in the world”, soft drink manufacturers assert. Auditor Irakli Shavishvili finds this decision unacceptable. An only goal of the obligatory labeling is to increase control mechanisms on entrepreneurs. “Entrepreneurs have clear positions – soft drinks are not excise-taxed products. I do not understand why this product must be labeled?! Initially, the government will pay the sum, but after this period entrepreneurs will have to cover this sum and it is unclear why the production should become more expensive. If the government is facing accounting problems, other leverages should be employed; it should enter and audit the business entities. But imposing control on everything is absolutely unacceptable as the business sector development is hindered,” Shavishvili told IPress. Obligatory labeling will increase production costs and budget fiscal affect will be also negative, he added. “If the government suspects entrepreneurs of concealing something, alternative leverages exist, including the tax inspection. We pay money to foreign companies and why do we pay this money?! Maybe, some members of the government follow their own personal interests,” Shavishvili said.

July 27, 2015 #109

FEWER BUT MEANINGFUL RELEASES TO FUEL THE FOREX MARKET

ith the German parliamentary approval to Greece bailout, receding tensions of Grexit helped shifting market attention from Euro-zone crisis to the divergent monetary policies of global leaders. Last week, during the semiannual testimony on monetary policy, the Fed Chair cited strengthening of the US economic recovery momentum as a cause to raise interest in 2015, fueling the US Dollar Index (I.USDX) to three month high while hawkish comments from the Bank of England (BoE) Governor, Mark Carney, that UK interest rates could rise sooner than expected, helped the GBP test highest level since 2007 against its European counterpart. Commodity currencies, namely AUD, CAD and NZD, witnessed considerable downsides as weakness in commodity prices, coupled with surprise rate cut by the Bank of Canada (BoC), fueled concerns that the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) will follow the same suit soon. Moreover, the Bank of Japan (BoJ), by downgrading inflation and growth forecasts in its recent monetary policy, eroded some of the recent JPY gains. Looking ahead, this week’s lighter US economic calendar, including monthly details of existing and new home sales, may restrict big moves but can keep supporting positive sentiment for the US Dollar. However, important releases from other global economies, including monetary policy meeting of the RBNZ and the minutes of recent BoE and RBA meetings, UK Retail Sales, Australian CPI and PMI

retail sales may disturb a little bit of GBP upward trajectory. Fading tensions of Grexit now shifts the market players’ focus towards fundamental data points of the troubled region wherein the details of Manufacturing and Services PMIs for EU and Germany, scheduled for release on Friday, could help determine near-term Euro moves. Both, manufacturing and services PMI numbers, pertaining to EU and Germany, are expected to print above 50 mark, indicating expansion in the overall business activity in the Euro-zone. Even if the PMIs are favorable to economic expansion of the region, supporting shortterm EUR up-move, fears emanating from Greece’s inability to sustain the international creditors’ demand, coupled with broader economic weakness and ultra lose monetary policy, can continue hurting the regional currency. Plunge in commodities’ market, coupled with unexpected rate cut by the BoC, triggered considerable decline of the commodity currencies, including AUD; however, flash version of Manufacturing PMI from China, Australia’s largest consumer, minutes from RBA’s latest monetary policy meeting and quarterly CPI data, are some of the important details that could help determine near-term AUD moves. Minutes of the July RBA meeting, wherein the central bank left its benchmark interest-rate unchanged at 2.0% but has left the doors open for further interest-rate cut action, if needed, is scheduled for release during early Tuesday. Even if the central banker didn’t alter its monetary policy, it didn’t retreat from

releases from EU and China, might provide momentum in the Forex market. Let’s briefly discuss each of these market moving events scheduled during the current week. Having witnessed impressive figures of housing starts and building permits during last week, details of Existing and New Home Sales could provide additional information to determine strength of the US housing market. Existing Home Sales, scheduled for release on Wednesday, is expected to register one more strong number, 5.40M compared to 5.35M prior, testing the highest level since September 2013 while figures relating to New Home Sales, scheduled for Friday release, can register a small slide in June to a seasonally adjusted annual rate of 543K against previously reported 546K. Comments from the Fed Chair rejuvenated USD bulls that are to gain momentum with improving housing market details, discrepancies in actual numbers, if any, can only trigger pullback into the broader USD upward trajectory unless the figures are drastically negative. Recent comments from the BoE Governor highlights importance of BoE meeting minutes, generally considered to be a non-event, while Retail Sales, contributing major portion of the UK GDP, can also provide meaningful signals to determine the strength of the economy and chances of nearterm interest rate hike by the central bank. Retail Sales, which remains supportive pillar of UK’s economic recovery, did mark the year’s highest growth, by revised 0.9% mark, in its April release; however, in the month of May, the figure witnessed a bit of pullback by registering 0.2% growth. Consensus forecast retail sales for June, which is scheduled for release on Thursday, to have advanced by 0.4% on a month-on-month basis. Moreover, minutes from BoE’s latest policy meeting, scheduled for release on Wednesday, is unlikely to show any change in the number of MPC members votes’ to either alter benchmark interest rates or asset purchase facility. However, with recent hawkish comments from the BoE Governor, the minutes may help determine determining the timing of a rate-hike announcement by the central bank. Improvement in the UK economics, coupled with hawkish tone of the MPC members, could continue paving way for stronger GBP; however, weaker than expected

signaling need of further rate-cuts. Should the minutes signal the same, the AUD is likely to witness further downside. Meanwhile, the quarterly release of CPI, scheduled for Wednesday release, remained unchanged at the two-year low of 0.2% in the first quarter of 2015 and is expected to have surged in the second-quarter to 0.8% providing a halt to recent AUD decline. Moreover, the Flash version of Chinese Manufacturing PMI, for the month of July, is scheduled for release on Friday. The figure is likely to continue registering its run below 50 level, signaling contraction in manufacturing activity. However, the forecast is near to 50 region, 49.8, and by surpassing 50 level, deterioration in Chinese manufacturing activity is likely to fade, helping the demand for commodity currencies, especially the Australian counterpart (AUD), China’s largest trading partners. After witnessing surprise rate cut by the BoC, all eyes have turned on the monetary policy decision from the RBNZ, scheduled for Wednesday. In its June policy meeting, the RBNZ announced a surprise 25 bps cut to its benchmark interest rates, giving less room for consecutive rate-cuts. However, plunge in dairy incomes and lackluster inflation led by renewed weakness in crude oil prices, creates divide amongst market players on the possibilities of a yet another rate-cut. Hence, the monetary policy action by the RBNZ would be decisive even if it doesn’t alter current monetary policy as market players will keep analyzing the rate statement to determine chances of another rate-cut. Also watchout for New-Zealand’s monthly Trade Balance data, which is scheduled for release on Friday wherein the trade surplus is expected to have shrunk to lowest in four month to 100M from its previous 350M figure. Moreover, figures relating to Canadian Wholesale and Retail Sales, scheduled for release on Monday and Thursday respectively, can provide meaningful information to determine near-term CAD moves after the recent BoC action triggered considerable CAD downside. With the Monday’s Wholesale Sales registering the lowest figure in four months, to -1.0%, Retail Sales, expected to mark a reversal of its previous -0.1% reading by a 0.4% growth figure, could help the CAD by providing a pullback in its broader downward trajectory.

July 27, 2015 #109

COMPANY NEWS

METRO CITY PROJECT IMPLEMENTATION TO END AHEAD OF SCHEDULE

he Metro City complex construction works will end ahead of schedule, JSC Metro Atlas Georgia managers noted at the solemn presentation of the major investment projects sales office in Batumi, the Autonomous Republic of Ajara. JSC Metro Atlas Georgia director Onur Tanriverdi noted the construction of hotel buildings, two 420-apartment complexes and a casino will be finished in the near future. Metro City, a 12-floor hotel complex with at least 203 suites will hold one of the major conference halls in the South Caucasus for 1500 attendants. The complex will also include a shopping mall, a

VIP residential suite, a casino and other assets. “The project implementation is being carried out without obstacles and the works meet the schedule. It is one of the successful projects. The complex will include apartments, hotel suites, an entertainment center, a shopping mall, arranged inside and outside infrastructure. The hotel will launch operation in 2016 and additional beautiful asset will appear in Batumi in the next season”, the Ajara government chairman Archil Khabadze said. The project has drawn over 90 million USD investments to the Region and will employ 600 to 1500 individuals. The project implementation will end two years earlier ahead of schedule, at the end of 2017.

POTI INDUSTRIAL ZONE ATTRACTS LARGE COMPANIES

akia Georgia”, the operator of Poti industrial zone, changes its concept. According to the company’s Director Guga Tsanava, the company focuses on attraction of large companies in small quantities and not hundreds of small enterprises. At the same time, Guga Tsanava says that “Rakia” started investing in infrastructure development in the Poti Industrial Zone and several million dollars are spent for this purpose. “The infrastructure works are being carried out

quite intensively. Investments will be spent in several stages. Now, a few million dollars are being invested in infrastructure - roads, lighting, and security systems. This type of work has not been carried out for a long time”, - says Tsanava. In his words, the interest in Poti Industrial Zone exists and talks are underway with different companies. Tsanava notes that after a new manager came to the FIZ, the outflow of companies from the industrial zone has drastically reduced that earlier had created a lot of problems.

ITALIAN COMPANY WINS $1 BILLION NENSKRA HPP PROJECT IN GEORGIA

talian industrial group Salini Impregilo is being offered the chance to handle a hydroelectric project in Georgia and contribute in developing the country’s energy sector. The group won the tender organised by the Korea Water Resources Corporation (K Water) to build the Nenskra Hydro-Electric Power Plant (HPP) earmarked for the upper Svaneti region. The project is worth $1 billion USD. Nenskra HPP will be jointly financed by the stateowned shareholding company Partnership Fund (PF) and K Water. The two companies stepped up to finance Nenskra HPP constructions last year by signing an agreement to launch the development and construction works at the 280 megawatt power station. Salini Impregilo will start construction works at the end of this summer. The Italian company has built more than 230 dams worldwide but this

caucasus business week

will be its first in Georgia. Operating in over 50 countries with 34,400 employees, a turnover of around € 4.2 billion and a backlog of € 32.4 billion, Salini Impregilo is a global player in the construction sector. Nenskra HPP will be constructed on the Nenskra River in Upper Svaneti, a mountain region of Georgia. The HPP is expected to annually produce 1.2 billion kilowatts of electricity per hour. The project is planned to be completed in 2021, however the HPP will start producing the electricity in four years. Earlier the European Bank for Reconstruction and Development (EBRD) teamed up with PF to provide $200 million USD financial support to the Nenskra HPP project. Global development institution International Finance Corporation (IFC), which is a member of the World Bank Group, has also assisted the PF to create an investment project of the Nenskra HPP.

TBILISI THEATRE FESTIVAL TO FEATURE “UNPRECEDENTED” VISITING AUDIENCE Tbilisi will be hosting “unprecedented” number of visiting producers, reporters and critics for the seventh installment of its annual international Festival of Theatre this coming autumn. The festival is set to include productions in international and Georgian segments as well as exhibitions, workshops and seminars. The full program of the cultural event – available at the Festival website – will feature the international segment followed by the Georgian section, traditionally the key part of the festival. Proceedings of the Festival’s opening event on

September 22 will be transferred to the charity fund Solidarity while the entire program’s proceedings are set to be contributed to the fund for supporting victims of the June 13 flooding in Tbilisi that killed 19 people and destroyed the capital’s zoo. The Tbilisi International Festival of Theatre was established in 2009 by mayor of the city and the Culture Ministry. Over the last six years the event has hosted companies from roughly twenty countries. The 2015 Festival will conclude on October 8.

“EUROPE-BET” CREATED UNIQUE PRODUCT FOR GEORGIA AND SOUTH CAUCASUS

urope-Bet” has brought new product on the market – stock market betting for the customers, and “Europe-Bet holds the whole service in gambling filed by this offer”, - the company

declares. “Stock market betting is an interesting product not merely for gamblers, even for those who are not active payers and do not have good experience. However, such clients can make prognosis on the base analysis, currency rate, materials and etc. Binary options of the product are various, customers have the freedom to maneuver, and they get results in the shortest period of time for determination of the period or assets. There is no need for accuracy; the main thing is that customer must guess whether the market value of the asset will increase or fall, during the period determined by the customers”, - the press-release disseminated by the company says. Product binary options are as follows: -Digital; Turbo; - Touch; -One Touch; -Range. This unique product is provided with a flexible and dynamic interface. The product is focused in

three languages: English, Georgian and Russian; it also has a wide range of features, tools and options types. “Experience shows that these financial instruments are the most effective among the traders and provides a wide variety of investment strategies”, - “Europe-Bet” considers. The stock market bets are the most complete and reliable product which is conditioned due to its supplier, which is the global leader of the financial trading technology industry and enjoys unrivaled reputation. “Europe-Bet” has entered among the worlds’ biggest companies by this product, such are: 888.com and Bet365; which apply the same supplier’s products. “Europe-Bet” has become the leading independent online gambling organization form the very first day in Georgia. The company offers wide range of online gambling products to the customers, such as: Sportbetting, Live Casino, the so called – roulette, blackjack, video slots and classic games. The brand keeps leaders positions in Georgia and permanently cares on the development of their payer’s gambling experience.

RAKIA HANDED OVER MANAGEMENT OF TBILISI MALL TO EASTERN EUROPEAN COMPANY

bilisi Mall management has been handed over to the Eastern European company TriGranit Group. Rakia Georgia which owns Tbilisi Mall has already signed a relevant agreement. According to the company’s Director Guga Tsanava, the company manages hundreds of malls in Europe, has good contacts and TriGranit Group will also work on new brands attraction. At the same time, Tsanava notes that Rakia Georgia has changed the concept in relation to Tbilisi Mall and decided to allocate 40% of the space for brands, 60% - for entertainment spaces. In this direction, Rakia has already launched projects and opened a movie theater in Tbilisi Mall.

“Work is underway to add entertainment components, such as the bowling. Technical work is almost finished, cosmetic repairs are going on which will be carried out every year. In fact, the entire effort is focused on filling the unoccupied spaces located on the third floor, “- says Tsanava.

PUBLICITY

caucasus business week

July 27, 2015 #109

RESEARCH

caucasus business week

GDP BY CATEGORIES OF USE - I QUARTER, 2015 Economic Outlook and Indicators

NEIGHBORHOOD

Fitch: Turkish banks to keep access to capital markets

nternational credit rating agency Fitch Ratings expects Turkish banks to keep accessing to capital markets, Fitch Financial Institutions director Lindsey Liddell said on Friday. Evaluating the Turkish banks’ outlook ahead of potential U.S. FED rate hikes, Liddell said they could impact the margins of Turkish banks, given their high dependence on U.S. dollar funding. But Liddell believes that Turkey has the means to overcome the hardships and risks linked to the potential rate hike. “Turkish banks will continue to enjoy good market access and be able to roll over foreign debt, while their available foreign currency liquidity should make them well-placed to cope with a short-lived market closure,” Liddell said. “However, a sharp and prolonged market closure could give rise to refinancing risks.”

Russia and China strengthen stock exchange ties

ussia’s key trading floor the Moscow Exchange (MOEX) and the China Financial Futures Exchange (CFFEX) have signed an agreement that’ll help further develop financial ties between the countries. “The signing of this MoU (memorandum of understanding – ed.) will further cement the relationship between CFFEX and Micex, generating new opportunities for the two exchanges to step up cooperation in the common pursuit for development,” said Shenfeng Zhang, Chairman of CFFEX Thursday at the signing ceremony.

Caspian Sea Oil and Gas Week due in Baku

aku will host the 3rd annual Azerbaijan and Caspian Sea Oil and Gas Week at the luxurious Four Seasons Hotel in Baku on September 28-30. The event will be organized by Oliver Kinross, an internationally renowned business research organization. The forum will bring together international exhibitors, more than 250 delegates and 30 top level expert speakers. The aim of the forum is to provide a platform in which oil & gas corporations, government officials, solution & service providers and global oil and gas experts who will be able to invest the abundance of new business opportunities in one of the world’s most exciting markets. The event will feature post conference workshops, exhibition space showcasing the latest industry technologies and services etc.

European Commission unlocks first tranche of €1.8bn package to Kiev

n Wednesday, the European Commission transferred its first tranche of €600 million to Kiev as part of the third MacroFinancial Assistance package worth €1.8 billion. Another two similar tranches are expected later in 2015-2016, provided Ukraine makes structural and economic reforms. The IMF board of directors will hold a meeting to discuss the Ukraine crisis on July 31, TASS reports. In the second half of this year, Ukraine had to make payments on its external public debt worth about $5 billion at the current hryvnia/USD exchange rate, according to TASS.

Armenia to get $300 million loan from Eurasian anti-crisis fund

urasian Fund for Stabilization and Development will allocate a loan of $300 million to Armenia, Russian Deputy Finance Minister Sergey Storchak said. The experts of the Fund are working with the Armenian officials, but a political decision has been made, he added. The loan will be provided in three tranches with intermediate discussions of lending goals, RIA Novosti reported.

WORLD NEWS

Countries With the Highest levels of Well-being

anama emerges as the country with the highest level of well-being in the 2014 Country Well-Being Rankings report, which surveys citizens in 145 countries and territories on five elements of well-being – purpose, social, financial, community and physical – and ranks countries based on the proportion of the population who say they are “thriving” in three or more of them. Panama has 53% of people believing they are thriving in at least three of the categories. Other countries in the Americas dominate the top of the rankings, with Costa Rica and Puerto Rico in second and third places respectively. The 10 countries with the highest levels of well-being 1. Panama 53.0% 2. Costa Rica 47.6% 3. Puerto Rico 45.8% 4. Switzerland 39.4% 5. Belize 38.9% 6. Chile 38.7% 7. Denmark 37.0% 8. Guatemala 36.3% 9. Austria 35.6% 10. Mexico 35.6% The 10 countries with the lowest levels of well-being 136. Ghana 5.6% 137. Haiti 5.3% 138. Benin 4.8% 139. Ivory Coast 4.5% 140. DR Congo 4.1% 141. Tunisia 4.0% 142. Togo 3.9% 143. Cameroon 3.1% 144. Bhutan 3.0% 145. Afghanistan 0.0%

Japan’s Nikkei to Buy Financial Times Group for $1.3 bln

inancial Times Group is not a major revenue generating business for the holding. More than 70% of the proceeds media holding Pearson brings an educational segment. And the strategy of further development of the company requires a focus on this area. Executive Director John Pearson Fallon said that amid the rapid growth of mobile and social resources, “the best way to ensure journalistic and commercial success FT – is to make it part of a global digital news company,” reports the words of one of Fallon’s main competitors FT – US business publication The Wall Street Journal.

Mark Zuckerberg is Now the Ninth Richest Person in the World

acebook has become one of the highestvalued companies in the world after a stock surge saw it leapfrog General Electric to join the ranks of the top ten companies on the S&P stock market index. And quietly, in the process, its founder Mark Zuckerberg has become the ninth richest person in the world. Zuckerberg leap-frogged Ingvar Kamprad, the founder of Ikea and Sweden’s richest man and his steady ascent of Bloomberg’s list of the world’s richest continues apace. Just a few weeks ago, he slipped past four members of the Walton family to become the world’s 11th richest man.

Apple Shares Fall by Nearly 7 Percent

pple Inc (AAPL.O) shares slumped nearly 7 percent in after-hours trading as its fourth-quarter revenue forecast fell short of estimates and it missed some targets for iPhone sales. The shares dropped to $121 after the company released its results on Tuesday, from $130.75 at the close. The forecast overshadowed Apple’s strong sales in China, which more than doubled to $13.23 billion from a year earlier.

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July 27, 2015 #109

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy

TBILISI GUIDE

caucasus business week

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

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia ; Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge Embassy of the Slovak Republic Address: Chancery: 85 Irakli Abashidze St. Tbilisi, 0162 Georgia Consular Office: 38 Nino Chkheidze St. Tbilisi, 0102 Georgia Phone: 2 222 4437, 2 296 1913 e-mail: emb.tbilisi@mzv.sk

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi; Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30

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

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

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89

Real Estate International Real Estate Company (IREC) Tbilisi. 9 P. Aslanidi St. Tel: +995 32 238 058 Mob: 599 95 76 71 Email: Info@irec.ge www.irec.ge

GSS Car rental offers a convenient service for those who are interested in renting car in Georgia. Rental fleet mainly consist of Japanese made SUV’s, the company has various models of cars including sedans and minivans which are in good technical condition. Contact information: Email: info@gsservices.ge. Address: Shalva Dadiani 10

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

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

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

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Two residential complexes include 464 apartments with parking, green area, outdoor swimming pool and playground for children. ”Metrocity” is unique with its special maintenance services. “Metrocity” integrates two five star hotels, private school and residences with private swimming pool, panoramic terrace restaurants, casinos, Spa, shopping center including 100 brand stores, sport club, cinema, bowling center, playground for children, gold sand beach and the biggest conference hall in Transcaucasia for 1500 guests.”MetroCity” can be found just 2 km from Batumi International Airport and 500m from the city center. The complex with its location is harmoniously mixed with mountains and sea views. The project implementation has begun in February 2015 and will be successfully completed in April 2017. Residences from 38 m2 to 300 m2 are available.

10% Deposit 36 MONTH INTERNAL CREDIT 25% Deposit 60 MONTH INTERNAL CREDIT

STARTING PRICE IS FROM 1425 $ Address: Leh and Maria Kachinsky Str.1, Batumi Tel: +995 577 14 17 14 sales@metrocity.ge www.facebook.com/MetroCity.GE

www.metrocity.ge

July 27, 2015 #109