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August 3, 2015 #110

August 3, 2015, Issue 110

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BE INFORMED, DO BUSINESS

General Overview of the Office Market in Georgia

GEORGIA TEST TRAIN IS OFF ON BAKUTBILISI-KARSI RAILROAD

test train has been launched via the BakuTbilisi-Kars (BTK) railway on the territory of Turkey, Turkish President Recep Tayyip Erdogan said at the Chinese-Turkish business forum in Beijing, TRT Haber TV channel reported July 30. Pg. 6

GEORGE JAPARIDZE Director International Desk, The Caucasus

Ianush Herman: Poti Port’s Importance is Growing for the EU

NATIONAL WINE AGENCY DETERMINES ALTERNATIVE MARKETS

he National Wine Agency of Georgia has found alternative markets for Georgian wine. The Agency’s Chairman explains CBW that the major markets of Russia, Ukraine, Kazakhstan, Belarus are good but unpredictable. Pg. 6

MORE THAN 100 MILLION WILL BE SPENT ON THE DEVELOPMENT OF BAKURIANI AND MITARBI

his should be a new word in the development of Georgian truism. This concept will be based on the high standards, such as we have seen in French Alps, Switzerland, Italy and Austria. Pg. 9

GPI’S UNPRECEDENTED INITIATIVE – FREE NATURAL DISASTER RISKS INSURANCE FOR VEHICLES

PI Holding insurance company has introduced an unprecedented insurance product. The company offers a natural disaster risks insurance package to vehicle owners free of charge. Pg. 11

DEVELOPMENT BUSINESS GETS RECOVERED FROM GEL VOLATILITY AFFECT

BIG CHALLENGES OF SMALL LABOR MARKET

New Pharmaceutical Companies to Operate in Georgia

ew pharmaceutical companies will operate on the Georgian market in the near future,- “ Minister of Health Davit Sergeenko told “Commersant”. According to him, at this stage negotiations are underway, so the Minister refrains from specifying the companies. The Minister notes that the emergence of new players in the market will make it more competitive and transparent. “Negotiations are underway and for this reason I cannot name the companies.” Pg. 6

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Georgia should Receive Visa-Free Travel by 2016

Elmar Brok, visited Georgia last week and were introduced to the current situation and the recent changes implemented in the country. The delegation welcomed the country’s efforts to carry out vast and varied reforms, as well as its implementation of the Association Agreement (AA) and the Visa Liberalisation Action Plan (VLAP). Pg. 2

Kopenbur Deceives Beneficiaries

surance package and competitive tariffs. Nevertheless, the market monitoring has showed the company provides ambiguous and uncertain information to vehicle owners. As a result, in a number of cases beneficiaries turn out cheated or they pay the service tariffs in vain for nothing. Pg. 7

Competition Agency to Keep Examining Major Markets after Exposure of Oil Importers

onopolist companies in the pharmaceutical, wheat, kerosene, gas, coffee and other major markets may be imposed penalty sanctions in the near future. As reported, for the first time in Georgia,

the Competition Agency has exposed a cartel collusion of major oil products importers. The companies have to pay 55 million GEL fines. This decision signifies the government is seriously thinking of curbing the market monopolist companies.

George Tsutskiridze: National Bank and Association of Banks Show Controversial Positions

Gogi Topadze: Construction of Heineken Brewery in Georgia Poses Threat to Domestic Beer Production Pg. 8

Archil Kaikatsishvili: Health System Reforms can Be Appraised only Positively

Pg. 7

Parliament to Discuss Antidumping Bill in Autumn

CLINIC

MEDI

Full span of State of Art Dentistry . . .

52 Kostava str. Tbilisi Tel: 291 00 00

Pg. 4

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GOVERNMENT NEWS

2 MAIN EVENTS GEORGIAN GOV’T REINSTATES ALLOWANCES FOR SINGLE PENSIONERS

PM NEGOTIATES TRADE-ECONOMIC ISSUES WITH CHINESE DELEGATION

rime Minister of Georgia Irakli Garibashvili hosted a delegation from Public Republic of China today with the aim of strengthening bilateral trade. Representatives of the China’s ruling party discussed possibilities of cooperation in various fields with Georgian officials, the chance to restore the historical Silk Road and also touched upon topics related to the Silk Road Forum, initiated by the Georgian Government that is set to take place in Tbilisi on September 15-16, the PM’s press service said. Friendly relations with the People’s Republic of China is very important for us,” said Garibashvili, adding an increase in the number of official visits from China “speaks about the Georgian Government’s efforts to intensify and strengthen relations with the country”. At the end of the meeting the sides exchanged gifts. The Prime Minister received a present designed personally for him – a piece of handcraft named “Horses”. The guests explained that a horse was a symbol of success in China and through the gift they wished success to the Georgian leader. In return PM Garibashvoli offered the Chinese guests handmade Georgian enamel.

he Government of Georgia is looking to reinstate allowances for single pensioners who are not covered by the program covering the socially vulnerable population. This issue is being discussed at today’s Governmental meeting.

REGULATOR TO PASS DECISION ON TELASI’S TARIFF GROWTH REQUEST UNTIL DECEMBER 18

ecember 18, 2015 was set as the deadline for making a decision regarding the Telasi tariff application. This decision was made at the session of the Georgian National Energy and Water Supply Regulatory Commission (GNERC).

ENERGY MINISTER AVOIDS NAMING DEADLINE FOR RETURNING KAZTRANSGAS TBILISI TO KAZAKH MANAGEMENT

ccording to Energy Minister Kakha Kaladze, the Ministries of Finance of Georgia and Kazakhstan are negotiating over the return of the Tbilisi gas distribution company “KazTransGas - Tbilisi” to the Kazakh management. “As far as I know, currently the parties are being negotiated regarding the company’s debt. This is the only problem, there are no other complications, “- the Minister says.

NATO TESTS GEORGIA’S BEST IN TBILISI

he Georgian Armed Forces are fighting shoulder-to-shoulder with militaries from NATO member and partner countries in a special training exercise in Tbilisi. A special YouTube report by Jeff Holden from NATOchannel.tv outlined the mission and detailed the importance of Georgia’s contribution to NATO missions, despite it not being a member nation.

COST OF GEORGIAN VISA DROPS SIGNIFICANTLY

oreigners who need a visa to come to Georgia are needing to fork out less cash to obtain a visa to enter the country. The cost of obtaining a Georgian visa has dropped more than 50 percent, officials announced today. Since September 1, 2014 it cost $50 USD (113 GEL) to obtain a Georgian visa (Georgia’s Consular fee) however this has been amended to $20 USD (45 GEL).

TBILISI 2015 OLYMPIC YOUTH EUROPEAN FESTIVAL IN ‘TWEETS’

bilisi is hosting the 13th European Youth Olympic Festival (EYOF) 2015, one of the most prestigious sporting events in the country’s history. The international competition, which runs from July 27 to August 1, will cover nine sporting codes and involve more than 4,000 athletes from 50 countries.

GEORGIA’S EFFORTS TO RETURN MTSKHETA TO UNESCO WORLD HERITAGE LIST

he Georgian Government has declared a freeze on any type of construction and privatisation in Mtskheta, one of the oldest towns of Georgia, until the end of next year so the town can return to the UNESCO World Heritage List. Country officials said if the organsation’s recommendations were taken into account Mtskheta would “definitely” return to the important list in 2016.

GEORGIA SIGNS DEAL WITH FBI TO JOINTLY FIGHT CRIME, TERRORISM

eorgian and American law enforcement agencies are intensifying their collaboration so the sides can share information and better investigate criminal cases. Georgia’s Ministry of Internal Affairs (MIA) and the United States’ Federal Bureau of Investigation (FBI) signed a new agreement on cooperation in the field of investigation of criminal cases.

August 3, 2015 #110

caucasus business week

PRESIDENT VETOES BILL ON NATIONAL BANK

resident George Margvelashvili has vetoed the bill on the National Bank of Georgia at today’s briefing. The bill, which envisages separation of the supervisory service from the National Bank, was submitted to the Presidential Administration on July 22. The President was

given ten days to present his observations and carrying out consultations. The bill drafted following the President’s instructions proposes that the banking supervision service remain within the National Bank. Representatives of the government and the

parliamentary majority say they cannot see any grounds for the use of veto. They allege the remarks of international organizations were taken into account when debating on the bill, while the notes of the International Monetary Fund (IMF) will be reflected in the bill this September.

GEORGIA USES GERMAN EXPERTS TO CREATE COUNTRY PLAN

eorgia is using international experts to help create a general development plan for the country. The country’s Prime Minister announced Germany would be a leading force in terms of spatial arrangement within the general plan for the country. Members of a Governmental Committee have al-

ready been tasked with studying Germany’s past and learn how it and other leading states developed a similar plan in their home nations. Once this research was complete, a company would be selected to consult with Georgia as it worked to adopt the new development plan. “It is a very significant project that should be settled very shortly [and] that is why we should

observe foreign experience initially and only after this we should launch our efforts,” said PM Irakli Garibashvili. Leading companies in the United States, Denmark and Singapore are offering their consulting services to the Georgian authorities to help the country develop its spatial arrangement plan.

GEORGIA SHOULD RECEIVE VISA-FREE TRAVEL BY 2016

he Foreign Affairs Committee of the European Parliament (EP) believes Georgia should be granted a visa free regime in 2016, once the country fulfils its obligations and commitments. An eight-member delegation of the Foreign Affairs Committee, led by Chairman Elmar Brok, visited Georgia last week and were introduced to the current situation and the recent changes implemented in the country. The delegation welcomed the country’s efforts to carry out vast and varied reforms, as well as its implementation of the Association Agreement (AA) and the Visa Liberalisation Action Plan (VLAP). A special statement released after the officials’ visit noted the European Parliament supported Georgia as it moved towards Europe. “The [European] Parliament fully supports Georgia in this process, convinced that visa free travel is the tangible short-term example of what the EU can offer to the population. They consider that a visa free regime should be granted in 2016, once the relevant criteria are fulfilled,” read the special statement. While in Georgia the EP Foreign Affairs Committee delegation met Georgia’s President Giorgi Margvelashvili, Prime Minister Irakli Garibashvili, Parliament Speaker David Usupashvili and other members of Parliament, opposition and representatives of civil society. The international delegation also visited the Administrative Border Line (ABL) that divides

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Georgia’s breakaway Tskhinvali (South Ossetia) region and the rest of the country. This experience had a lasting effect on the delegation. “The [Foreign Affairs Committee] members expressed concern about the recent developments along the ABL with South Ossetia. They visited the ABL in the area where the signposts were moved and saw the dramatic impact borderisation has on the livelihoods of people. “The members stressed the importance of fostering people to people contacts to overcome divisions. They reminded the Georgian authorities that democratic developments and strengthening of democratic institutions is the best defence,” the statement read. Furthermore, the delegation reaffirmed its support for the territorial integrity of Georgia and reiterated that the international community will not recognise the recent so-called treaties on alliance and integration signed between Russia and Georgia’s two breakaway regions Abkhazia and Tskhinvali. Condolences were also offered by the delegation to the victims and the affected families of the recent flood in Tbilisi, noting that prompt assistance provided by the European Union (EU) was a sign of the friendship the EU had with Georgia and its people. EUROPEAN PARLIAMENT COMMENDS GEORGIA’S EU-INTEGRATION PROGRESS Members of European Parliament (MEPs) have

recognised Georgia’s reform progress and commended the country’s efforts to move closer to Europe. A MEP delegation, led by chairman of the European Parliament Committee on Foreign Affairs Elmar Brok, is paying a visit to Georgia to appraise the counntry’s reform efforts. “We support Georgia’s territorial integrity and we do not recognise Russia’s occupational policy,” Brok said after a meeting at Georgia’s Foreign Ministry today. The delegation also met Georgia’s President Giorgi Margvelashvili and Prime Minister Irakli Garibashvili. The sides talked about the current tense situation at Georgia’s occupied regions and nearby villages. Brok said his delegation would go to Khurvaleti village this afternoon, which bordered the Russian occupied Georgian region of Tskhinvali (South Ossetia) to learn more about the situation on the ground. Meanwhile, the Prime Minister’s press office said the MEPs welcomed Georgia’s reform progress, especially the Interior Ministry, Prosecutor’s Office and justice reforms. “They also said Georgia had shown great progress in its Euro-integration process,” the press office said. The sides reconfirmed the implementation of Georgia’s Association Agreement with the European Union (EU) was the key priority in GeorgiaEU relations. Agenda.ge

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August 3, 2015 #110

PUBLICITY

caucasus business week

INTERVIEW

August 3, 2015 #110

caucasus business week

HEADLINES GERMAN INVESTMENT SETS UP GEORGIAN CHIPS PRODUCTION

ade in Georgia – cheeps FRIXX produced with local raw materials will be sold on the market from today. Prime Minister Irakli Garibashvili has opened the enterprise founded with investment of 4 million GEL.

GEORGE JAPARIDZE Director International Desk, The Caucasus

OPENNET TO COVER REGIONS BY HIGH-SPEED INTERNET

General Overview of the Office Market in Georgia

PENNET is non-entrepreneur, non-commercial legal entity, which is established under the management of the Agency of Innovation and Technology. According to Irakli Kashibadze, head of the Agency of Innovation and Technology, over 2000 settlements will be able to get high speed internet within the frame of the project.

IFC HELPS GEORGIAN COMPANIES IMPROVE FOOD SAFETY STANDARDS

nternational Finance Corporation (IFC) and Young Scientists’ Union “Intellect” help Georgian companies to improve food safety standards. Within the frame of export increase program, the companies raise awareness of modern food safety practices.

REVENUES OF MARKET-TYPE ENTERPRISES HAVE MADE UP 134,1 MILLION

ccording to “Sakstat”, entities have paid 59,4 million GEL for a permit on trade, which is 44,2% of the revenues of market administration, income from rental of the trading area amounts to 47,7%, while other revenues - 8,1%. In addition, the number of companies, which are engaged in the organization of markets, are grown by 2,8% and the number amounts to 218 units.

ELLINAIR GROWS FLIGHT FREQUENCY

reek air company Ellinair, which launched flights between Thessaloniki and Tbilisi in 2015, grows flight frequency. The air company has already received relevant permit from Civil Aviation Agency.

“UNIFISHGE” PLANS TO MAKE STURGEON EXPORT IN EUROPE

he company produces sturgeon products, including caviar. However, the company is the first plant of this profile in Georgia. “Unifishge” is located in Khelvachauri region. The company has the sturgeon pond farming of 1077 m3 and caviar producing plant. The produced product should be sold at the local market, however, the product will be exported as well.

- How would you evaluate the office market in Tbilisi? - On behalf of Cushman & Wakefield | Veritas Brown company, I can say that the second quarter of 2015 saw a more positive climate on the Georgian office market. Occupational activity levels were reasonably high, although some large transactions skewed the results. Nevertheless, as there are clear signs of more activity mainly fuelled by relocations and deal renegotiations, this should translate into somewhat healthier – although still subdued – take-up volumes over the remainder of the year. There are a couple of small projects that are in a completion stage and will be delivered to the market shortly. Due to the lack of quality office supply the market is mainly active in deal renegotiations rather than relocations. A and B+ class stock is rather short and for this reason most of the wellknown international brands prefer not to relocate. The market continues to suffer from the exchange rate fluctuation, hence with the country’s economy and the real estate market being highly dollarized, the prime rents in Tbilisi as well as the in whole of Georgia came under a downwards pressure over the last period of time. Keeping in mind above mentioned, the large players like Axis, Redix Group, Meidan Group and others

are still constructing new and renovating old properties as office centers. We are waiting for another 10,000 to 15,000 square meters of quality office space to be constructed and delivered to the market in the nearest future. It is obviously a positive sign that will give our occupiers more choices to relocate. - Which specific districts are mostly, favored as office space and why? - It depends what segment of occupiers are we talking about. Obviously most of the International representative offices prefer to lease spaces in central Tbilisi. Areas like Freedom Square, Rustaveli Ave. and Meidan Square are highly demanded, although the supply is very limited and most of the current business centers located in these areas need major refurbishment works to be performed. On the other hand, local companies and medium-sized businesses mainly stay price-oriented and prefer to rent office spaces in Saburtalo, Avlabari and Chugureti districts. - Could you give us general overview of current occupier demand in Tbilisi? - Occupier activity was characterised by increasing levels of activity in Q2, however many adopted a wait-and-see approach. A few deals concluded and the ones of note were the securing of 600 square meters by Oriflame in Meidan Group’s Busi-

An interview with George Tsutskiridze, the Executive Director of the Association of Banks of Georgia

espite the fact that most residents left Tbilisi for vacation, shopping centers still don’t complain about the lack of users. They say in the shopping centers based in the capital that the number of visitors has increased compared to last year.

ith the activation of the holiday season in Georgia, criticism of the low level of service in hotels and restaurants is also intensified. This season a low level of services and high prices are a particular subject of criticism.

SEVERAL BUSINESS GROUPS INTERESTED IN ACQUISITION OF “ENERGO-PRO”

he answer to the question of who will buy “Energo- Pro” company, which distributes electricity in the regions of Georgia, will be known in a few months. According to the company’s Deputy Director General Mikheil Botsvadze, the company is actively searching for a buyer.

need to be precisely planned prior starting the construction. All above mentioned is the explanation to the fact that the demand is present, although the actual transactions are very few. - What in your opinion are investors’ interests, in this respect, for 2015? - Levels of investor interest appear to be improving but this year is yet to transform into actual activity in the investment market. There is evidence of the renewed interest from international investors who are testing the ground and assessing opportunities. The second part of 2015 is expected to be more active from the transaction point of view. Hospitality, logistics and residential markets seem to be more attractive compared to the office field for potential newcomers. The last and the most important factor is the economic stability of the country as well as the currency exchange rate stabilization. - What are your expectations throughout the year? - Having in mind many interesting projects, I would say not very ordinary projects that are in the pipeline of ours, I expect in the nearest future to be more active, especially in the field of hospitality. The positive vibes are here and let’s hope that more international brands as well as the investors will step in to Georgia.

NATIONAL BANK AND ASSOCIATION OF BANKS SHOW CONTROVERSIAL POSITIONS

SHOPPING MALLS REGISTER YEAR ON YEAR GROWTH IN CLIENTS

RESORT HOTELS UNREADY TO INTRODUCE SERVICE QUALITY STANDARDS

ness Center on Agmashenebeli, and the new entry of European Investment Bank occupying 150 sq.m in Tabidze 1. On the supply side, there were limited new or refurbished schemes delivered in the second quarter, with only 1,400 square meters added to the office stock corresponding to the business center on Pekini Str. Occupancy levels were relatively stable over the quarter supported by demand rising from the Q1 figures, as well as limited new speculative deliveries. Considering the magnitude of ongoing negotiations in the Central Business centers of Tbilisi the increasing scarcity of supply should continue in H2, until the Freedom Square and Tarkhnishvili Developments hit the market in Q4 bringing additional 10,000 sq.m leasable space to the office supply. If we focus on the international occupiers, it is worth mentioning that most of these companies have their internal regulations as well as the international standards that new locations/business centers must foresee and meet. Unfortunately, Georgian developers rarely understand this and very often find themselves in the position when they need to invest more funds in order to meet criteria and rent the spaces to wellknown and respective brands. Features like HVAC systems; fire regulation standards, internal fit-out materials, parking lots, wiring etc.

- President of the National Bank says that the bill that envisions stripping the National Bank of Georgia (NBG) of its banking supervisory functions will have negative consequences for the banking system and investment climate in general. What is your opinion on this matter? - Judging by the statement of the President of the National Bank, it turns out that he opposes in principle to the creation of an independent supervision service so he will be against every configuration, providing such solution. So there is nothing special in this position. Many experts expressed their opinion on this occasion but we have not heard from them any argument against the adoption of such a law even on the example of other countries. - President of the National Bank says that the adoption of such a law causes damage to investors putting them on a standby mode. Do you see

such a danger? - A standby mode is created by statements of the central bank’s President and the decision of the Georgian presidential administration who intends to introduce his own version of the law and does not exclude the veto on the decision of the parliament. The sooner the new law comes into force, the better for everyone. The new structure should start working, and first of all choose qualified staff in the banking supervision service. If all happens in due time, it will contribute to the growth of economic activity. This should be a major concern, not artificial deceleration of the process. I cannot understand what do you mean? What functions should the monitoring service have to restrict the independence of the National Bank? - What is the global trend in this matter? What is preferred - banking supervision as part of central banks, or theirindependence? - Banking supervision as a separate entity was actively formed from 1993 to 2006, and it mainly concerns the countries of Eastern Europe, as well as a similar system operates in Austria. Until 2008 the view prevailed that monetary and

supervisory functions under one umbrella created a risk of conflict between monetary and financial stability. To be fair, the way it is, because globalization and the integration of financial markets create new conglomerates that are better regulated by freestanding structures. However, after the 2008 crisis, the view prevailed about preference of monetary and supervisory functions under one roof. But this is not imperative. In some developed countries, including European, a separate system is functioning quite successfully. Thus, Parliament chose a separate model, work on which lasted 2 months and today we have a completely different law compared with the original version. It takes into account the comments of international organizations, banks, and experts. We are talking about 70 amendments. We must learn how to bring to an end the adopted decision if we want to be called the state. This applies to almost anything, even if it is decided to combine under one roof not only the banking supervision but insurance monitoring and control over pension funds. That is the European experience.

INFOGRAPHICS

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caucasus business week

TBILISI-MESTIA FLIGHT – PRICES AND TIME

estia is reported among Georgia’s tourism destinations that are much popular among both foreign and domestic visitors. Many foreign editions have been writing about peculiarity of this resort, including the world’s influential ElitDaily has named Mestia among the world’s 50 best destinations that should be visited. The edition suggests its audience to visit this region of Georgia. IPress publishes the list of transport that will deliver you from Tbilisi to Mestia. The fastest transport is an airplane and the flight takes 50 minutes. The civil aviation agency director Guram Jalaghonia told IPress the Mestia flight is performed from the Natakhtari airdrome by Service Air airline that has obtained the right to perform the flight by tender. The Georgian company performs the flight in partnership with the Czech party. Averaged price of a single ticket is 65 GEL. Bus transportation from Tbilisi to Mestia takes 9 hours and 30 GEL. The minibus service price is 30 GEL too, but in this case passengers will spare 1 hour and arrive in Mestia in 8 hours. It should be also noted visitors are able to travel to Mestia by train, but the train stops in Zugdidi and a bus or minibus will convey you from Zugdidi to Mestia. Georgian Railway offers various category carriages and the ticket prices range from 11 GEL to 30 GEL. The transportation takes 6 hours. A bus or minibus gets to Mestia in 3 hours from Zugdidi. The service price is 12 GEL. This signifies train passengers will have to travel over 9 hours and spend 23 to 42 GEL.

YOUNG BARRISTERS: HEALTH SYSTEM REFORMS CAN BE APPRAISED ONLY POSITIVELY

oung Barristers” makes public statement regarding Primary Health Care reform and talks about its importance to the country and to the society. “Young Barristers” believes, that now, it can safely claimed, that Health Care System has developed significantly within such a short period of time as a result of government’s efforts and its policy. HCV Elimination Program and Universal Health Care Program, launched and implemented in Georgia, should only be appraised positively. Along with these programs, the Ministry of Health has declared Primary Health Care as its priority as well. “Young Barristers” considers Primary Health Care reform vitally important for the development and effective

functioning of Health Care System in the country. The experience in this field reveals, that Primary Health Care in Georgia was ignored and the main focus was only on the hospital treatment. In the frameworks of Universal Health Care Program, most of the money, allocated from the State Budget, was spent for surgeries and other kinds of high-tech medical interventions. Obviously, such a trend will become a heavy burden for the state budget in a near future and accordingly it is here, where Primary Health Care Program is going to help to achieve maximum cost-effectiveness within the system. Primary Health Care is actually the primary stage, where the diseases are discovered, subsequently treated and pre-

vented. However, Primary Health Care program can’t be effective, without Universal Health Care Program. These are reforms to be implemented together. It is in the interests of the State, that fewer people needed hospital interventions. “Young Barristers” would like to talk about the importance of HCV Elimination Program as well. This is very useful and important program for the country and especially for those, infected. These people can get sufficient medical treatment without any charge, while in the past, they would have to pay lots of money for the same treatment. Everyone has a right to life and health and the Government is obliged to protect these right. Therefore, current changes in the Health Care Sector can be appraised positively.

ECONOMY

caucasus business week

August 3, 2015 #110

PARLIAMENT TO DISCUSS ANTIDUMPING BILL IN AUTUMN

W NATIONAL WINE AGENCY DETERMINES ALTERNATIVE MARKETS

he National Wine Agency of Georgia has found alternative markets for Georgian wine. The Agency’s Chairman explains “Commersant” that the major markets of Russia, Ukraine, Kazakhstan, Belarus are good but unpredictable, as it is difficult to predict how things will develop in political and economic direction. George Samanishvili says that they focused on diversifying to expand the list of countries and

not to be dependent on one region. In Samanishvili’s words, currently four regions have been chosen - China, USA, UK, Japan, as well as Poland and the Baltic countries where Georgian wine has great opportunities. Samanishvili explains that in 6 months export decreased 49% compared to last year and the trend is likely to continue until the year end. Samanishvili notes that this year’s export rate exceeds the data for 2012 and 2013.

GEORGIA’S CAR IMPORTS TO AZERBAIJAN DROPS

ome 2 207 cars worth $41.4 million were exported from Georgia to Azerbaijan in January-June 2015 or 5.4 times less than in the same period of 2014, the Georgian National Statistics Service says in its foreign trade report as of January-June 2015. The share of this category of goods in the total volume of Georgia’s export to Azerbaijan hit 31.66 percent during the reporting period. Azerbaijan’s share in the total export of this category of goods from Georgia equaled 41.61 percent. The car export from Georgia to Azerbaijan decreased by 3.6 times in terms of value and 9 750 units in terms of quantity compared to the same period of 2014.

For comparison, some 11 960 cars worth $147.48 million were exported from Georgia to Azerbaijan in January-June 2014. The decline in the volume of car exports to the country is the result of Azerbaijan’s transition to Euro-4 ecological standard, the use of which began from April 1, 2014. The adoption of Euro-4 standard significantly restricts the import of used cars, which account for the major part of vehicles exported from Georgia to Azerbaijan. The cars are delivered to Georgia from abroad. The Euro-4 ecological standard has been applied to the imported and manufactured vehicles to reduce the emission of pollutants by vehicles and improve the environmental situation in the country.

NEW PHARMACEUTICAL COMPANIES TO OPERATE IN GEORGIA

Minister stresses. In his words, 200 basic medicines are planned to become cheaper in the autumn. “There are several ways. First is subsidizing, but it is the wrong way, besides the government has no such money. The second is the establishment of an artificial limit on the price that is also a gross interference in private business, and ultimately will not result in to anything good. The third - is to ensure a high level of competition. We’re just going to follow this way. an effective system of control over drugs is needed to ensure transparency and competition, otherwise cheap but at the same substandard medicines containing threats to public health will appear in the market. We are going towards the creation of the effective system of сontrol,”- the Minister concludes.

TEST TRAIN IS OFF ON BAKUTBILISI-KARSI RAILROAD

test train has been launched via the Baku-Tbilisi-Kars (BTK) railway on the territory of Turkey, Turkish President Recep Tayyip Erdogan said at the Chinese-Turkish business forum in Beijing, TRT Haber TV channel reported July 30. President Erdogan also stressed the importance of the BTK project in the field of cargo transportation. Earlier it was reported that the railway construction project is planned to be implemented in 2015. The State Oil Fund of the Republic of Azerbaijan (SOFAZ) finances the project in accordance with the Azerbaijani president’s decree ‘On the imple-

mentation of the Baku-Tbilisi-Kars project activities’ dated February 21, 2007. A new 105-kilometer branch of the railroad is being constructed as part of the Baku-Tbilisi-Kars project. In addition, the railway’s Akhalkalaki-Marabda-Tbilisi section is under reconstruction in Georgia that will increase its capacity to 15 million metric tons of cargo per year. A post is under construction in Akhalkalaki for the transition of trains from the existing tracks in Georgia to the European ones. The peak capacity of the corridor will be 17 million metric tons of cargo per year. At the initial stage, this figure will be equal to one million passengers and 6.5 million metric tons of cargo.

ork on the antidumping bill has been suspended at the Economy Ministry. Parliament is waiting for the answer from the Ministry. The law prohibits the importers to set dramatically lower prices on products compared to the prices on the domestic market, since the purpose of these actions, in many cases, is to oust the local companies. According to Temur Maisuradze, Deputy Chairman of the Sector Economy and Economic Policy Committee, Parliament has sent the bill to the government, received a reply from the Ministry of Agriculture but is still waiting for an answer from the Ministry of Economy. “This law has not been submitted and work has been suspended for this reason . Most likely, in the next one week, 10 days, they promise to hand over the law from the Economy Ministry “, Maisuradze says. The MP suggests that the antidumping law will be discussed at Parliament’s autumn session. Zurab Tkemaladze, Chairman of the Sector Economy and Economic Policy Committee told “Commersant” in May that they were waiting a response from the Ministry.

Minister of Economy George Kvirikashvili stated in January that the aim of the law is to protect the local industry from unfair competition. Deputy Prime Minister said that the legislation would not be acceptable to everyone, and may be inappropriate for importers but significant for local manufacturers. “There are cases when a company enters the market with dumping prices, kills local entrepreneurs, becomes a monopolist and then begins to assert itself in the local market with absolutely other prices “, - George Kvirikashvili noted. Georgian experts who are working in the World Trade Organization were involved in the development of the anti-dumping law.

JUNE RECORDS ECONOMIC GROWTH ACCELERATION

n June, Georgian economy increased by 3,1% year-over-year. According to the consolidated data of the first 6 months, economic growth amounts to 2,6%. As of “Sakstat”, average real growth of GDP of Q2, 2015 has totaled to 2,1%. It should be noted, that the lowest growth has

been fixed in April through Q2 of this year – 0,9% y-o-y. GDP growth has made up 2,1% in May, while 3,1% in June. According to the forecast of the government and international organizations, GDP will be grown merely by 2% instead of 5% in Georgia through this year , envisaging the current conditions in the region.

IFAD-FINANCED AGRICULTURE SUPPORT PROJECT (ASP) ENDS, NEW PLANS ON THE HORIZON

oday the Ministry of Agriculture of Georgia summarized its progress and accomplishments within the Agriculture Support Project (ASP), financed by the International Fund for Agricultural Development (IFAD) The Deputy Minister of Agriculture Nodar Kereselidze, IFAD Project Manager Ms Durmishidze and Ministry’s Head of Reclamation Department Valerian Mchedlidze presented the outcomes of ASP’s to the press. ASP is a long-term project that started back in 2010 and will be completed by the end of September of this year. The Project is aimed at resolving infrastructural problems for farmers in Georgia. One of ASP’s main directions was the rehabilitation of irrigation systems and eliminating water irrigation-related issues throughout Georgia. 6,325 kilometers of irrigation lines have been rehabilitated; 14,400 families have been provided with irrigation water. 11,000 hectares of farming lands have been irrigated directly as the result of ASP, the Ministry representatives stated, emphasizing the climate change gains of this endeavor. IFAD’s Project Manager in Georgia, Lali Durmishidze, presented the Agriculture Support Project’s summary report. “Areas of activity included Inner Kartli, Mtskheta-Mtianeti, and Samtskhe-Javakheti municipalities, where 6 irrigation systems were successfully

rehabilitated,” Durmishidze stated. IFAD’s next project will be Agriculture Modernization, Market Access and Resilience (AMMAR). The project’s goal is to improve farmers’ knowledge and implement new technologies. With a budget of approximately $19 million, the project will also include grant handouts, both small – $5000-$10,000 – and large-sized sums, at around $70,000. “We plan to continue our cooperation with IFAD in the future as well. The new project will be oriented not only at rehabilitating the irrigation system in Georgia, but also creating an agricultural infrastructure aimed at implementing environmentally friendly farming in Georgia,” the Deputy Minister of Agriculture Nodar Kereselidze stated. The International Fund for Agriculture Development (IFAD) is one of the most generous donors in the agriculture sector, and has been financing various projects in Georgia since 1998.

August 3, 2015 #110

ECONOMIX

caucasus business week

KOPENBUR DECEIVES BENEFICIARIES Zero Deductable Car Insurance is Useless. The Company Sells Nonexistent Service

openbur insurance company is considered a new player in the Georgian insurance sector. Besides life and health insurance products, the company also provides a wide spectrum of insurance services with a focus on a vehicle insurance package and competitive tariffs. Nevertheless, the market monitoring has showed the company provides ambiguous and uncertain information to vehicle owners. As a result, in a number of cases beneficiaries turn out cheated or they pay the service tariffs in vain for nothing. The Kopenbur’s zero deductable car insurance service does not work to a certain extent. In general, the zero deductable car insurance service calls for compensating even minimal losses. This is a very practical service and it is widely approbated by other insurance companies too. As to Kopenbur, the company obliges beneficiaries to call the traffic police in case of road accidents despite the scale. This signifies the traffic police will compose a protocol and if the beneficiary is found guilty they, he will pay a 250 GEL fine, including, in case of single-vehicle crash, when no third party is involved in the accident. This signifies beneficiaries have to abstain from applying to the insurance company if the losses do not exceed 250 GEL to avoid the traffic police’s protocol. This signifies beneficiaries pay money for the zero deductable care insurance service in vain. It should be also noted in 99% of single-vehicle crash cases the losses do not exceed 250 GEL. The traffic police must issue a protocol on the car accident. Therefore, beneficiaries have no interest in applying to the insurance company and this signifies Kopenbur sells nonexistent services. The Georgian insurance market is oversaturated by various services and there is sharp competition in the insurance sector. Therefore, it is surprising a certain part of clients accepts these terms of

Kopenbur. One of the beneficiaries of Kopenbur thinks he has been cheated. This beneficiary has published a due statement in the social network and reaffirmed the same statement in his interview. Nevertheless, the respondent prefers to remain an incognito. The company agent has deceived me prior to signing the contract agreement and given forged information on traffic police fines, the respondent noted. “Under the contract agreement, I am a zero deductable car insurance service beneficiary. Prior to signing the agreement, the agent told me traffic police would issue only the so-called dry protocol in case of single-vehicle crash. I did not show interest in the contract details and I signed it. After a certain period, I turned out in a single-vehicle road accident and I called my insurance company. They told me it was necessary that the traffic police compose a protocol and issue a 250 GEL fine to me. After this case, I turned out in another road accident. My vehicle was not damaged in practice, but the vehicle of the third party was seriously damaged and I applied to my insurance

company. The agent came to the road accident place and requested from me to call the traffic police. After I called the traffic police, the agent told me the police would fine me, while total losses of both vehicles did not exceed 200 GEL”, a Kopenbur beneficiary said. Another beneficiary of Kopenbur insurance company has also published his story in the social network. This story is related to the June 13 natural disaster outcomes. The disaster has damaged his vehicle. He applied to Kopenbur for compensation. The company representatives told the beneficiary he had abandoned the place and did not call the traffic police and the losses could not be remunerated. Both beneficiaries plan to sue against Kopenbur to the court. We have contacted the Kopenbur’s office to verify this information. The company representatives dismissed a certain part of the accusations, but refused the responsibility for another part of the accusations. “Kopenbur offers various car insurance packag-

es, including a package for remunerating losses in the amount of 12% of the insured sum without a traffic police protocol. Consequently, a beneficiary takes a decision on purchase of a desirable package that enables him/her not to call the traffic police in case of car accidents. As to the June 13 natural disaster victim beneficiaries, the company has fully compensated losses we were to do under the agreement. As to the amount of the expected fines, this issue is not the competence of our insurance company and similar decisions are made by authorized representatives of the traffic police”, Kopenbur representatives noted. Giorgi Gigolashvili, a head of the Georgian Insurance Institute, refers to the European practice and says similar unimportant damages are remunerated without involvement of law enforcers. “If we rule out deliberate damages, in all other cases, the insurance companies remunerate losses without problem. I can recall the Swedish experience, where insurance companies compensate even 25 USD losses immediately. By the way, similar packages is long practiced in Georgia too”, Gigolashvili said.

COMPETITION AGENCY TO KEEP EXAMINING MAJOR MARKETS AFTER EXPOSURE OF OIL IMPORTERS

onopolist companies in the pharmaceutical, wheat, kerosene, gas, coffee and other major markets may be imposed penalty sanctions in the near

future. As reported, for the first time in Georgia, the Competition Agency has exposed a cartel collusion of major oil products importers. The companies have to pay 55 million GEL fines. This decision signifies the government is seriously thinking of curbing the market monopolist companies. The competition agency is expected to make order in the pharmaceutical and wheat markets too. Besides the oil products market, the competition agency is also examining several other sectors, namely, kerosene market, alleged cartel collusion between members of the wheat and pastry products association of GlobalAgro and the Black Sea Port oil terminal.

On the ground of appeals the competition agency is exploring illegal activities in the gas, grains and wheat commodity markets. The agency is also examining an appeal of LLC Litex-Service accusing TbilService Group of having infringed the law on competition. The agency is also investigating alleged infringement of the competition law’s 10th entry on state procurement, namely, a violation of regualtions for purchase of special equipment by local selfgovernments (Khashuri, Aspindza, Abasha and Terjola municipalities). The suitable appeal was submitted by LLC Inter Technics. The agency is also examining the appeal by LLC Georgian Trans Expedition accusing TransCaucasus Terminals Ltd, a subsidiary of Georgian Railway, of a misuse of dominant positions on the market. Moreover, the competition agency is examining an appeal by the Evex medical corporation against the Ingorokva Clinic that has allegedly

bought a 50% of shares. The agency is also monitoring the coffee commodity market. Specialists point to several other directions, including, the communication sector, especially, internet providers and, naturally, the pharmaceutical sector. The wheat and grains market monitoring will end in the near future, namely, in October. The deadline was rescheduled from July to October. On July 17 the association of grain growers received a notification that the exploration works would last to October 12. The competition agency started the wheat market examination about 6 months ago. Namely, Georgian grain growers were complaining against Azerbaijani company Karat Holding for infringing the state legislation. The appeal submitted to the agency reads in 2013-2014 the company was operating with unfair prices and misusing dominant positions on the market. The legislation calls for submitting the research in 3 months. At the same time, the agency is entitled to prolong the exploration period for additional one year because, Levan Silagava, a head of the association of grain growers, said. At the same time, after the competition agency started the wheat market examination, Azerbaijani company Karat Holding became law-abiding, Silagava added. The situation has settled. New companies have opened, including GeoMill company in Lilo. Moreover, contrary to previous years, grains are imported from Russia, not from Kazakhstan and the market has been redistributed, he added. “Karat Holding company possesses elevators in eastern Georgia, while the Russian grains are delivered to the Poti Seaport. This factor has also balanced the situation. Previously, the Azerbaijani company used to control 70% of the market, today the ratio has halved to 35%”, Levan Silagava noted. Healthy competition tendencies are strengthening

on the market. Despite the recovery, the Azerbaijani company may be called to account anyway in line with the legislation, he added. Thanks to the competition efforts, the government will introduce regulations to ensure free competition in the country, economic expert Levan Kalandadze noted. Previously, the agency used to publish reports on small-sized business activities, but oil importers, pharmaceutical and wheat markets were closed for similar research works, Kalandadze noted. “The Authorities seemed to be lobbying deliberately these sectors, but the oil products market monitoring has ultimately dismissed similar doubts. The most important and necessary thing is to fully complete this research and execute specific problematic cases at the level of legal mechanisms. The precedent will become an exemplar for other fields and the competition agency will not enable someone to misuse the dominant positions on the market. Naturally, the oil products market research reports will dissolve cartel collusion and oil products prices will be regulated on the domestic market. At the same time, in theory, the western experience shows the process may be developed in the opposite direction and the business sector may artificially increase prices in protest. This issue will not be confined with exploring only one case. We will permanently monitor and control all sectors and directions”, Kalandadze said. The expert has also overviewed the future plans of the competition agency. Since now, the agency will also examine the pharmaceutical and wheat markets. “There are certain demands, orders and expectations in the Georgian society. There are many problematic cases in Georgia and oil products, pharmaceutical and wheat markets are the most problematic directions”, Kalandadze noted.

ANALITYCS

caucasus business week

“Poti Port’s Importance is Growing for the EU”

IANUSH HERMAN EU Ambassador to Georgia Minister of Finance Nodar Khadouri and the European Union’s Ambassador to Georgia Ianush Herman visited the Poti section of Finance’s Ministry’s customs department last week. Container Control Unit has been operating since 2012 in Poti; European Union is one of its main donors. As the Ambassador of the European Union to Georgia said, the Poti Port’s importance

is increasing. According to him, the port plays a significant role in terms of regional trade. “It was very important for me to get to know better the working principle of the Poti customs clearance zone. We are fully aware that Poti Port is an important link in international transit and export-import, which plays a major role in the context of regional trade. Poti Port is a key point for turnover between East and West - Europe and Asia. We are developing the idea of a free trade with the EU. Georgia is an integral part of the free trade area. Thus, the growing importance of the Poti Port for the European Union. I was very impressed with the quality of customs clearance. It is undoubtedly impressive. As for the Container Control Programme - the EU has allocated half a million Euros for its support. We express our satisfaction with the results achieved to date under this program. The EU has invited experts for the program, the training of the personnel took place, acquisition of necessary equipment and machinery took place. During the visit, I received information on how the program is progressing and what its priorities for the future are,” the ambassador said.

August 3, 2015 #110

TRANSACTION ANALYSIS | 2013, 2014 VS. 2015

TBILISI

“Construction of Heineken Brewery in Georgia Poses Threat to Domestic Beer Production”

GOGI TOPADZE Kazbegi Beer Founder Some Georgian beer producers see a threat in the building of a Heineken factory in Georgia. Among them is prominent Kazbegi Beer founder,

Gogi Topadze. Kazbegi founder Gogi Topadze notes that a total of four large beer companies are operating on the Georgian market. They are: Kazbegi, Natakhtari, Zedazeni and Castel. Any from these two companies can fully cover Georgia’s demand for the beer. Therefore, Topadze cannot contain why it became necessary to bring a foreign company to the Georgian market and thereby limit the domestic production of beer. “In Georgia, 22 liters of beer are brewed per capita, while in Germany –120 liters. But Germany is a different culture there, it is not a wine culture, whereas we have a wine country. From October, when wine is available for sale, beer sales in Georgia usually halve,” Topadze told CBW. According to the businessman, Heineken’s entry will dramatically decrease the domestic market’s output.

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• APARTMENT FOR RENT M2 Tamarashvili str - Hippodrome NOT FURNISHED. Living room, bedroom, toilet, Kitchen Total space 54m2 500$ PER MONTH

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Number of development land transactions in Tbilisi in the first half of 2014 increased by 20% compared to 2013 H1, however the total number of transactions in 2014 declined by 0.4% compared to the same figure in 2013. In the first half of 2015 there was a slight increase of 2.8% in the number of development land transactions compared to the 2014 figure. Despite the increase in number of transactions volume of land transactions declined by 37% and 21% in 2014 and 2015 respectively. Such a big volume in 2013 was caused by several land plot sales of very high volume.

August 3, 2015 #110

BANKING NEWS

caucasus business week

MORE THAN 100 MILLION WILL BE SPENT ON THE DEVELOPMENT OF BAKURIANI AND MITARBI

his should be a new word in the development of Georgian truism. This concept will be based on the high standards, such as we have seen in French Alps, Switzerland, Italy and Austria”, - Mamuka Khazaradze, chairman of Supervisory Board of “TBC Bank” says. The infrastructural rehabilitation of mountain resorts is envisaged by memorandum sighed on Tuesday among Georgian government, “State Property Agency”, “Mountain Resorts Development Company” and LLC “Akhali Mitarbi”, member company of “GRDC Holding”. The project should be carried out with active cooperation of state and private business. According to Minister of Economy, the state should spent 48 million GEL for infrastructural works, while the

private company - 70 million GEL. According to Economy Ministry, new ropeway will be mounted with intermediate-stations on the “Kokhta Mountain” in Bakuriani, which construction will be finished late in 2015. Tourism infrastructure with 500 beds will be built on the near-by area. The infrastructure will include hotel-type apartments, cottages, fast-food and entertainment objects. However, two rope-ways and hiking rope, the so called Biegel should be installed on the mountain “Kokha-2” in Mitarbi, their construction should be finished late in 2016. However, tourist infrastructure for 300 beds will be built at the nearby area. One of the leading Austrian company “Doppelmayr” will carry out construction of the rope-way.

ADB: NEW METRO STATION WILL BRING SUSTAINABLE URBAN DEVELOPMENT-RELATED BENEFITS

etro station “University” will bring sustainable real estate and urban development-related benefits”, regards Bertrand Goalou, Senior Urban Development Specialist at ADB and notes, that the completion of the metro line 2 extension will increase mobility and reduces load on the urban transport”. Representatives from the Asian Development Bank (ADB) have attended inauguration

ceremony today to mark the start of construction on the next phase of the capital’s metro rail expansion. The new phase will involve rehabilitating tunnel between Vazha Pshavela and University stations and opening of a new station. The project is being financed under ADB’s Sustainable Urban Transport Investment Program. “The project will improve the efficiency and reliability of the urban transport network, create economic and job opportunities, and pave the way for a more sustainable environment in Tbilisi,” said Kathie Julian, Country Director in ADB’s Georgia Resident Mission. To remind, ADB has supported Georgia since 2007. As of end 2014, ADB-approved cumulative assistance to Georgia totaled more than $1.6 billion, including $259 million in approved loans and technical assistance grants in 2014 alone.

SOCIETY AND BANKS: GROWTH PACE OF BANK SECTOR’S KEY INDICATORS DROPS

conomic crisis and devaluation of national currency has created several problems to the banking sector”, - organization “Society and Banks” declares. The organization has prepared review on banking sector relaying the statistics of July 1. “Despite the fact, that banks’ total assets are slightly increased, deposit number and credit portfolio is dropped. Many key indicators which define stability of banking sector is worsened by July 1. If we should review the previous year, deposits and net asset volume is characterized with a grow-

ing trend. It should be noted, that credit portfolio has been reduced for the first time through the last year. Overall, we can say, that growth pace of key indicators is slowed down and moreover, decline is noticed in several cases, which create a threat to the banking sector”, - the organization notes. In addition, the organization regards, that the fixed problems can not make a significant impact on the stability of banking sector at this stage, as the sector is one of the welldeveloped industry and it has overcome more strong crisis.

BLACK SEA TRADE & DEVELOPMENT BANK DONATES $50,000 TO TBILISI FLOOD RECOVERY

he Black Sea Trade & Development Bank (BSTDB) has donated $50,000 to the Tbilisi flood relief fund to help Tbilisi Zoo and the affected residential area recover from the devastating flood on June 13. Last month’s flood demolished much of Tbilisi Zoo and many of the animals died in the flood or were buried by the debris. Additionally, 19 people were killed in the disaster and several are still missing. Dozens of houses were destroyed and many were left homeless. Officials estimated the overall damage exceeded 100 million GEL. BSTDB president Ihsan Ugur Delikanli sent an official letter to the head of the National Bank of Georgia (NBG) Giorgi Kadagidze to inform him

of BSTDB’s financial contribution to the Tbilisi flood relief fund. “Mr. Kadagidze I am pleased to inform you that following our discussion in Tbilisi, the Black Sea Trade & Development Bank decided to contribute to the recovery efforts to tackle the consequences of the disastrous flood happened in Tbilisi in June. On this note BSTDB has donated $50,000 to the Tbilisi Zoo Fund,” Delikanli wrote in his letter, revealed today by NBG. BSTDB is an international financial institution that supports economic development and regional cooperation by providing loans, credit lines, equity and guarantees for projects and trade financing in the public and private sectors. On June 19-21, 2015 Georgia hosted the 17th Annual Meeting of BSTBD Board of Governors.

TBC BANK WINS MULTIPLE AWARDS FOR CORPORATE AND CONSUMER DIGITAL BANKING IN CENTRAL & EASTERN EUROPE AND GEORGIA

BC Bank has been recognized by Global Finance Magazine with the fourth consecutive Best Consumer and Corporate Digital Bank in Georgia awards in 2015. The Bank’s consumer digital banking has also been recognized for the Best SMS/Text Banking 2015 in the Central & Eastern European (CEE) region. According to the publication’s press release, winners were chosen based on the “strength of strategy for attracting and servicing digital customers, success in getting clients to use digital offerings, growth of digital customers, breadth of product offerings, evidence of tangible benefits gained from digital initiatives, and web/mobile site design and functionality.” Award winners were evaluated by Infosys, a global leader in consulting, technology and outsourcing, with the final

selections for the first round of winners made by the Global Finance editors. Commenting on the news, Vakhtang Butskhrikidze, TBC Bank’s Chief Executive Officer said: “We are proud to receive this recognition for our consistent commitment to provide our customers with the world-class digital banking services. This win solidifies TBC Bank’s as a leader in consumer and corporate digital banking in Georgia and in the region.” This is the 16th year Global Finance has named the World’s Best Digital Banks and details on all First Round winners will be published in our September issue. The overall Regional and Global winners, and Global Sub-Category winners, will be revealed on 27th October at Global Finance’s Best Digital Bank Awards dinner in London.

IMF OFFICIAL: NATIONAL BANK SHOULD NOT BE STRIPPED OF SUPERVISORY FUNCTIONS HASTILY

tripping the National Bank of its banking supervisory functions should happen gradually, without haste – a permanent representative of the International Monetary Fund (IMF) in Georgia Azim Sadikov states. According to him, the Parliament took into account many comments that have been expressed by international organizations, including the IMF, with respect to this document, but some significant questions remain open. “The IMF sent Parliament a lot of recommendations concerning the banking supervision. Some of them were taken into account and put in the final version of the law. But some fundamental issues remained unresolved - such as the right to an unconditional dismissal of the head of the Supervision Service. In addition, it is important that decision-making was carried out in a reasonable time. The separation of the supervisory function should not occur at an accelerated pace. Those terms that are specified in the new law are unrealistic low. To summarize, we can say that many of our recommendations are taken into account, many are not, “- the IMF representative notes. According to him, the International Monetary

Fund has always believed and believes that for Georgia it is better the bank control remained in the jurisdiction of the National Bank. “Of course, in the world there are a lot of different models, and ultimately it depends on each country which option to chose. But any solution must comply with accepted international principles. However, the extension of the transition period would help protect against errors. If these two conditions are not met, if the supervision service is not completely independent and the National Bank’s separation takes place urgently, the macroeconomic stability of the country could be in jeopardy, “- Sadykov says. In his words , the IMF representation provided the Presidential Administration its position on the new law. “The presidential administration has requested technical comments on the adoption of the law. We are ready to continue cooperation on this issue not only with the president but also with all interested parties,”- Sadykov explains. He says the international financial organizations justified their position in their appeal to the Prime Minister as to why it would be better for Georgia not to strip the central bank of its supervisory function.

BANK SECTOR’S OUTPUT MARKED 109.5 MILLION GEL IN JUNE

ccording to the preliminary data of “Sakastat”, commercial banks’ output is reduced by 3,6% comparing to May and the figure amounts to 105,4 million GEL, while National Bank of Georgia’s output is grown by 100 000 GEL – up to 4,1 million.

As of 6 months’ data, the greatest volume of banking sector’s total output has been fixed in March. However, the sector’s total output has amounted to 118,3 million GEL, at that 107,3 million – commercial bank’s output and 11 million GEL – National Bank of Georgia.

ast week’s lighter US economic calendar, featuring upbeat existing home sales data and a surprisingly multi-decade low jobless claims but disappointment from data pertaining to new home sales, restricted market participants from taking big bets in the Forex market. Various factors moved the greenback in opposite direction against other major currencies. Commodities sell-off supported the buck against commodity currencies like AUD and CAD while weak UK monthly retail sales data dragged GBP lower. Meanwhile, despite an interest rate cut by RBNZ, NZD rebounded from multi-year lows to finish the week higher against the dollar. Also, lighter but mixed US economic data triggered some USD profit taking move against EUR and JPY. Summing the US Dollar performance against a basket of major currencies, the overall US Dollar Index (I.USDX) finished the week with a loss of 0.65%. Moving forward, investors will now focus on the FOMC decision and second-quarter GDP readings from the US and UK, which are likely to dominate this week’s economic calendar, along with some other economic releases in order to determine the near-term direction in the Forex market. Let’s have a brief overview of some important economic events lined up during the course of the week that could also provide the required momentum in the Forex market. The US economic calendar begins with the release of data pertaining to durable goods orders, which will be watched keenly to support the optimistic views of a steady US economic recovery. Durable and core durable goods orders data for the month of June are scheduled for release on Monday. Following a sharper than expected drop in durable goods orders in May, economists are expecting a sharp recovery with consensus fore-

CURRENCY caucasus business week

August 3, 2015 #110

FOMC AND GDP RELEASES TO DETERMINE NEAR-TERM DIRECTION casting the orders to have risen by 3.2%. Meanwhile, core durable goods orders, which excludes transportation items, is also predicted to register a modest growth of 0.4%. Outcome of the Federal Reserve’s two-day monetary policy meeting, starting Tuesday, happens to be this week’s most awaited event for the Forex market. Although, the FOMC is not expected to announce any major policy changes from this week’s meeting, scheduled on Wednesday. However, given the central bank’s projection to start normalizing its monetary policy in 2015, market participants expect the Fed to sound optimistic in its monetary policy statement, which would further strengthen the expectations of an eventual interest rate hike in its September meeting. Meanwhile, the government is scheduled to release the first estimate of US economic growth for the second-quarter of 2015 on Thursday. Following a lacklustre growth of a mere 0.2% in the first-quarter of 2015, which was further revised to show a contraction of 0.2%, economists are expecting the growth momentum to resume with consensus estimating the advance estimates to show US economy growing by 2.6% in the second-quarter. Other important economic data featuring this week’s US economic calendar also include Conference Board’s consumer confidence index, a leading indicator of consumer spending, for the month of July and is scheduled for release on Tuesday. Also watch-out for a forward-looking indicator of the US housing market, pending home sales, for the month of June, scheduled for release on Wednesday and Chicago PMI data for the month of July, scheduled for release on Friday. Stronger US GDP print accompanied with this week’s positive economic data will add to the expectations of continuing the strong economic

growth momentum in the second half of 2015. This would add on to the speculations that the Federal Reserve could be moving closer to the first rate-hike in over six-years, resulting into a strong US Dollar for medium to long-term. From UK, market players will be looking for the first reading of GDP growth rate for the secondquarter of 2015. The data, which is scheduled for release on Tuesday, is expected to show UK economy regaining momentum after two quarters of softer-than-expected readings. For the secondquarter of 2015, UK economy is expected to have registered a growth of 0.7%. Also in the list of GDP releases is the Canadian GDP data, which is released on monthly basis rather than on quarterly basis, and is scheduled for release on Friday. The Canadian economy contracted for two consecutive months and this time too, falling commodity prices, especially a sharp fall in crude-oil prices, is expected to weigh on the growth number, which is expected to print a negative number showing yet another month of contraction in the economy. Elsewhere, investors will closely scrutinize this

week’s preliminary Euro-zone CPI data for the month of July and unemployment rate for the month of June, both scheduled for release on Friday. The flash version of Euro-zone CPI is expected to remain subdued at 0.2% in July while unemployment rate for June, although register a marginal drop, but is expected to remain elevated at 11.0%. In addition to this, traders will also watch for Gfk German consumer climate index, scheduled for release on Wednesday. Meanwhile, the official Chinese Manufacturing PMI data for July is scheduled for release on Saturday. Chinese manufacturing PMI data helps investors to gauge economic health of the world’s second-largest economy and being World’s largest consumer of commodities, Chinese economic data is always in focus for any material impact on commodity currencies, especially the Australian Dollar (AUD). Summing it all, hawkish Fed accompanied with positive US economic data and (or) disappointing data elsewhere has the potential produce a kneejerk reaction in the Forex market and spark a renewed investor interest to buy the US Dollar.

August 3, 2015 #110

COMPANY NEWS caucasus business week

DEVELOPMENT BUSINESS GETS RECOVERED FROM GEL VOLATILITY AFFECT

ccording to Ilya Tsulaia, a founder of “Arci Group”, the depreciation of the lari has had a certain impact on the real estate market, sales declined, but recent statistics show an increase in demand. “For example, our sales increased compared to the previous month by 50%. We do not expect growth in demand in August, but most likely, we will be able to maintain the current level, “- he says. “Arci” is going to start several new projects in residential districts of Tbilisi, including 150 -room hotels. “We are currently negotiating with a major international brand, which does not work in Georgia and most likely, they will soon be successfully

concluded,” - Ilya Tsulaia notes. According to the founder of “GDG Group” Bezhan Tsakadze, demand for real estate in the central districts of Tbilisi traditionally grows in summer. In the words of the head of the sales department at “Epic Development” company Dodo Shengelia, during the active devaluation of the lari sales decreased by 5-8%, but now the management expects that sales will grow, including at the expense of people from Georgia living abroad – they become especially active mainly August and September. “All spaces in completed projects have been sold. Based on this, we begin new projects, in particular, two multi-storey housing near the center of the city, “- she said.

BIG CHALLENGES OF SMALL LABOR MARKET

n a country like Georgia, any changes in the economy will inevitably affect the labor market - in particular, the devaluation of the national currency already demonstrates a new dimension of human resources policy. EY Georgia conducted a study on the state of wages in the labor market of the country, which also covers the period prior to the devaluation of the national currency, but even at that time the impact of the economic downturn is evident. Namely, at the beginning of 2015, far fewer companies are planning to increase the salaries of employees. The study affected 43 companies, most of which are representative offices of large international companies, occupying a considerable place in the market. Of these, 24% are operating in the banking sector, 24% - are engaged in consumer goods selling, 11% - in trade, 8% - in energy, 8% - in heavy industry, 5% - in pharmaceuticals, 3% - in insurance. It was found that 77% of the company’s employees salaries are denominated in the national currency, 23% get salaries in dollars. The dollarization is more common in the banking sector - 33% of employees receive salaries in foreign currency, which is significantly higher than, for example in consumer goods selling 9%. It is not surprising that top management mainly receives wages in dollars that means they are more protected from the devaluation of GEL when you consider that in 2015 during the Georgian national currency has lost 32% of its value, it is quite important. In addition to the exchange rate , inflation also greatly influences on wages - a factor is taken into account by 53% of the companies. In 2014, according to Georgian Statistics Service, inflation was 3.1%, however, often a feeling with respect to the real purchasing power of the salary recipients is slightly different from the statistics.

Recently, frequency of revision of wages by companies has become more frequent . If in 2013 45% of the companies reviewed wages in average once a year, now the figure totaled 55%. 68% of the survey participants increased salaries by 10% in 2014, the remaining 32%- left the salary unchanged. This is lower than the 2013 figure , when wages were increased by 76% of companies but above the planned for 2015, when only 55% of companies plan to increase revenues for personnel. According to the Georgian Statistics Service, the unemployment rate in the country is 12, 4%, which is 2, 2% less than last year. According to the study EY Georgia, 42% of the surveyed companies intend to recruit new staff in 2014, whereas in 2015 only 27% of companies have such plans. A turnover of staff is also an important factor which in 2014 was 7%. Based on the business specifics, this figure varies - for example, turnover of staff is high in retail and call centers, but it is much smaller in sectors requiring specialized knowledge and skills. Especially in a situation when the country is experiencing a shortage of qualified technical personnel. In Georgia, mostly people over 40 are employed at enterprises, which is also a major challenge for the country in need of urbanization. The unpopularity of technical professions among young people is probably due to the idea of low wages in this sector. When companies have to rely on technical specialists of older age, who often cannot master new technologies, they have to hire specialists from abroad, which is much more expensive than hiring the appropriate Georgian specialists. Against this background, based on the dynamics of supply and demand, the growth of wages in the technical field is inevitable. The study found that wages of technical directors are not less than the more popular CFOs.

ANTIQUES MARKET LOSING ITS RELEVANCE

he antique market in Georgia is not profitable - owners of antique shops say in one voice. In particular, according to one of them, sales were down 25%, and demand began to decline after the devaluation of the national currency. “Foreign tourists are not interested in old things, but the local do not have enough money to buy expensive things. If something is sold, as a rule, they are dishes and silver. In general, profitability has decreased greatly, the revenues we receive are only enough to cover the administrative costs and rent premises. If this continues, we will have to close down. We hope that over time the economic situation will improve, and the demand for antiques will grow as well, “- say the owner of an antique shop. They say in “Old things” salon that there is a problem of another kind - the lack of truly valu-

able things in Georgia. “The crisis in antiques trade is deepened by a fact that most of the really valuable things have already been taken out of Georgia, and now almost nothing interest is left in Georgia. Maybe some families still have some very old and valuable things, but in general they are in deficit,”say in the salon. The antique shop “Kidobani” also talks of a decrease in sales nearly by half . “Our customers are mainly citizens of Russia, the republics of the North Caucasus and other countries. Basically, they bought the old stuff. Now they do not have such a possibility because of the financial crisis. So if we gain l2-3 GEL a day, we are satisfied. Overall, this business is unprofitable, although there is a category of people who are interested in antiques, so we still hope that the situation will improve, “- say in “Kidobani”.

GPI’S UNPRECEDENTED INITIATIVE – FREE NATURAL DISASTER RISKS INSURANCE FOR VEHICLES

PI Holding insurance company has introduced an unprecedented insurance product. The company offers a natural disaster risks insurance package to vehicle owners free of charge. The company held in the product’s presentation at the Tbilisi Zoo territory, one of the most damaged placed after the June 13 natural disaster. Starting August 3 all vehicles will be insured as part of the natural disaster risks insurance package, GPI Holding risks management director Irakli Dvali noted. According to the package terms, the insurance value is determined by the market value of a vehicle. The program covers the whole territory of Georgia and refers to private vehicles. The insurance policy is valid for a year. Beneficiaries are able to get registered until December 31, 2015. The package calls for insuring the following risks: flood, landslip, heavy snow, earthquake and hurricane. “I believe it is our social responsibility to develop and spread insurance mechanisms all over the country to bolster the establishment of risks management mechanisms and minimize financial losses of our beneficiaries. Therefore, we have introduced free natural disaster risks insurance package and created sensible precedent to guarantee financial protection of thousands of our citizens during natural disasters. The project is to thoroughly meet the existing challenges and spread insurance protection mechanisms against natural disaster outcomes.

The international experience suggests the private property should be insured and only the state sector should not bear this burden. One the one hand, we want to create protected financial future to vehicle owners and, on the other hand, we want to take further steps for the insurance culture enhancement. The June 13 natural disaster outcomes have led us to creating this product. We should establish efficient mechanisms for risks management and financial losses prevention and this is the major challenge before our country today. “Insurance mechanisms are one of the important parts in this plan and we rely on the experience of developed economies in this respect. We have seen the state sector and taxpayers have to bear the burden of compensation of losses. The insurance industry is a support of social and economic systems in the developed countries”, Irakli Dvali said. GPI Holding has introduced a genuine social responsibility project in the best traditions of the developed countries, Kakha Maghradze, a senior partner for GEPRA consulting company, a founder and board member of the Social Responsibility Club, said. “The company has no legislative obligations, but the company has decided to response to the public needs and challenges anyway. As a result, GPI will thoroughly insure natural disaster risks of vehicle owners and ensure their stable financial environment. The idea in itself is of crucial importance in terms of social responsibility and I hope other insurance companies will also take similar bold decisions”, Kakha Maghradze noted.

HUALING COVERS ECONOMY MINISTRY BUILDING PRIVATIZATION PRICE

ualing International Special Economic Zone has become the official holder of Economy Ministry’s building. The company has already paid privatization cost of 9,45 million USD in the budget and is registered as a holder of the building in the Public Registry. However, Ministry of Economy will utilize this building free of charge until December 31, 2015, despite the change of the holder. This has been included in the auction terms. According to the auction, high-class hotel will be arranged in the building. International operator of the hotel is not known yet.

“Hualing Group” already holds hotel “Hotels & Preference Hualing Tbilisi” in Tbilisi, which is located in the Olympic village. Chinese company operates in Georgia in the sphere of real state, finance (basis Bank), forestry processing business and in Kutaisi Free Industrial Zone as well. “Hualing Group” and Tamaz Maziashvili, representative of the company, had two competitors, so the tender has been carried in the furious competition. Initial price of the auction ($6 million) has been increased by 690 bids ($5 thousand). The purchaser is obligatory to arrange 100-room hotel within 36 months and put under the exploitation from January 1, 2016.

INTERNATIONAL BRAND HOTEL TO BE BUILT IN POTI

and plot of 1 9595 square m and basement of the building, locating in Rustaveli Rkali str.26, Poti, is brought at the auction. The initial price of the real estate is 995 000 GEL , while the bid amounts to 2000 GEL. The auction will be finished on August 10 at 17:00 p.m. The purchaser should pay privatization cost within 30 days and the company must build 4-star hotel with 50 rooms through 2-year term, which will get under the exploitation with the name of

international hotel. The investor should put investment of 1,6 million USD in the hotel construction.

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RESEARCH

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EXTERNAL TRADE - I Q, 2015 Economic Outlook and Indicators

NEIGHBORHOOD

Russia’s Putin, Turkey’s Erdogan to Discuss TurkStream this Autumn: Kremlin

ussian President Vladimir Putin will meet Turkish President Tayyip Erdogan this autumn and the two will discuss the TurkStream natural gas pipeline project, Kremlin spokesman Dmitry Peskov told reporters on Friday. Turkey’s ambassador to Moscow told RIA news agency separately on Friday that talks on the pipeline that would carry Russian gas to Europe via Turkey were ongoing. That came after Turkish officials told Reuters on Thursday the talks had been suspended after Moscow failed to sign off on a key gas price discount agreement.

BTK to Increase Importance of Azerbaijan Railways, says Fitch

he commissioning of Baku-Tbilisi-Kars (BTK) railway will further increase the importance of Azerbaijan Railways CJSC and Georgian Railway JSC in freight transportation within the region and will enhance their business profiles, said Fitch Ratings July 30. Fitch said that the freight rail transportation volumes continued to decline in most former Soviet Union (FSU) countries over the first five months of 2015 and it is expected that the rail volumes are to remain weak in the second half of this year on the back of lower GDP growth across the region. “FSU rail transport companies that are reliant on crude oil transportation are also under competitive pressure as crude oil traffic continues to switch to pipelines from rail,” said the ratings agency.

Oil Price Rout Set To Inflict Real Pain On Russia

ussia may have though it was out of the woods this past spring when oil prices started to rise, but the onset of another bear market for oil presents serious economic and financial threats for the country. Russia is facing a mounting fiscal crisis as the combination of low oil prices and western sanctions continue to take their toll. For a country that gets about 50 percent of its budget revenues from oil and gas, the sudden collapse of oil prices since June – Brent is now trading at $55 per barrel – threatens to drag the Russian economy down to lower depths. The drop in oil prices since June is not entirely unrelated to Russian actions. which contributed to the fall in oil prices as markets expect new Iranian crude to be forthcoming over the next few months and into next year. Although the cooperation amounts to a self-inflicted wound, it also pushes several strategic objectives forward for Russia. A disarmed Iran removes the justification for a U.S.-backed missile defense program in Europe, a plan vociferously opposed by Russia.

Armenia Plays Down Departure Of International Businesses

he Armenian government is downplaying the importance of recent decisions by several leading international companies to close business operations in the South Caucasus country. Companies come and go every day, said Economy Minister Karen Chshmaritian. “We should regard it as normal,” he said. “Different companies may work in different countries for a certain period of time and then move out.” Among the best known companies that have already left or are going to leave the Armenian market soon are Etihad Airways, an airline based in the United Arab Emirates, South Korea’s electronics giant Samsung, and France’s Orange telecom company.

WORLD NEWS

Facebook Now Used by Half of World’s Online Users

alf of the world’s estimated online population now check in to the social networking giant Facebook at least once a month. Facebook said the number of people who use it at least monthly grew 13% to 1.49 billion in the three months to the end of June. The number is equal to half of the estimated three billion people who use the internet worldwide. Of those users, it said well over half, 65%, were now accessing Facebook daily. The rise in monthly active users helped drive second quarter revenue up 39% year-on-year to $4.04bn (£2.6bn). Mobile advertising revenue was the biggest factor, accounting for more than three quarters of the total. In the US, the company said people were now spending more than one out of every five minutes on their smartphones on Facebook.

Spain’s Economy Enjoyed Another Growth Spurt

pain’s economy had another solid quarter between April and June, with a 1% growth spurt, according to figures just released. That’s bang on what analysts were expecting, and it means the economy has grown 3.1% since the same period last year. That’s the best figure for the country since 2007, before both the financial crisis in 2008 and the euro crisis that began in 2010. Growth of 3.1% may not seem like all that much, but in the context of the eurozone, that’s pretty rapid. It is what has made Spain, a former crisis country in which unemployment is still eye-wateringly high, Europe’s star performer. Its growth rate is better even than the United Kingdom’s.

Samsung Seriously Messed Up With the Galaxy S6

amsung has posted another set of disappointing quarterly earnings, with the launch of its newest flagship smartphone, the Galaxy S6, failing to bolster its business. The South Korean electronics company released its earnings report for Q2 on Wednesday. Profits dropped 8% year-on-year — its fifth consecutive decline. Sales, meanwhile, dropped from 52.35 trillion won in Q2 2014 to 48.54 trillion won. Samsung concedes that the impact of the launch of the S6 “was quite marginal due to low smartphone shipments and an increase in marketing expenses for new product launches.” Samsung didn’t break out sales figures, but the research company Strategy Analytics estimates that Samsung’s smartphone shipments have dropped from 95.3 million units in 2014 to 89 million in 2015. And The Wall Street Journal points out that operating profits for Samsung’s mobile division have dropped 37.6% year-on-year.

President Barack Obama Has Ordered US Engineers to Build the World’s Fastest Computer

resident Obama issued an executive order Wednesday for the United States to build the world’s fastest computer over the next decade. Mr. Obama has created the National Strategic Computing Initiative to help the country lead in the development of High-Performance Computing (HPC) systems. Competitiveness in this field remains “essential to economic competitiveness, scientific discovery and national security,” the White House announced Wednesday. The initiative includes two key goals. First: to increase the speed of calculations to one exaflop (1018 arithmetic operations per second). This is about 30 times quicker than today’s fastest machines, according to Wired. Second: to “efficiently manipulate vast and rapidly increasing quantities of both numerical and non-numerical data.

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August 3, 2015 #110

International Network “Aesthetic Medical Clinics Group” – Prague, St.Peterburg, Tbilisi

CLINIC MEDI

Full span of State of Art Dentistry . . .

Diagnosis and treatment at CLINIC MEDI are carried out in all major areas of dentistry: therapy, orthopedics, micro, maxillofacial surgery and implants, periodontics, orthodontics, pediatric dentistry, as well as X-ray diagnostics with the ability to receive a 3D-image. All kinds of dental work performed using innovative materials and modern equipment that ensures a high level of quality of care, can achieve the most accurate and efficient results. All dental procedures are conducted by qualified experts with considerable experience, unique knowledge and clinical skills. The system of clinics MEDI identified Level 2 clinics, depending on the volume and complexity of services: the elite and business class. COMPUTER 3D-DIAGNOSTICS - 3D-tomography - a digital three-dimensional image of dental systems, obtained by X-ray diagnostic study, which was made possible by a fundamentally new diagnostic equipment - dental 3D-computer tomography. Doctors of MEDI are able to work with more accurate, more detailed threedimensional images, which greatly enhances and improves the efficiency of dental treatment. DENTAL TREATMENT - Treatment of caries and aesthetic restoration, Root canal treatment. At the final stage of the channel using the cream with hot gutta-percha - a plastic material that provides tightness without undue pressure on the walls of the root MICROPROSTHETICS - inlays, onlays, crowns and veneers in only one appointment! Dental Robot with the most precise computer technology!!!! PEDIATRIC DENTISTRY - including all modern technologies of therapy, surgery orthodonty; Teeth Whitening - Clinical whitening, Laser whitening TREATMENT OF GUMS (periodontics)- full span of paradontology PROSTHETICS TOOTH - Prosthetics zirconia, Prosthetics on noble alloys, Prosthetics on Metal Ceramics, Prosthetics on ceramics, partial denture SURGERY AND DENTAL IMPLANTS Implantation Exodontia

SURGICAL TREATMENT Surgical preparation for dental implants

50% Discount For Consulting and Professional Oral Hygiene

ORTHODONTICS Installation of aesthetic bracket systems Installation of metal braces Installing lingual braces Installing lingual braces Incognito Installing lingual braces WIN Installation of orthodontic appliances Orthodontic appliances Service PROFESSIONAL ORAL HYGIENE Professional hygiene for adults Professional hygiene for children

Clinic MEDI 52 Kostava str. Tbilisi 291 00 00

ABSOLUTE SAFETY OF PATIENT = ONLINE ANTI-VIRUS, ANTI-SPID PROGRAM Clinic MEDI 52 Kostava str. Tbilisi 291 00 00

August 3, 2015 #110

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

TBILISI GUIDE

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

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

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

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

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

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

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

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

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

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

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

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

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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

August 3, 2015 #110