Caucasus Business Week #113

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BUSINESS WEEK September 14, 2015 #113



he last three years have recorded a plunge in foreign direct investments (FDI) into the Georgian power sector. FDI inflows to the energy sector marked 9 million USD in the second quarter of 2015, the lowest figure for the last 10 quarters. Pg. 11



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David Kotaria: Belarus Visitors Get Unforgettable Impressions in Georgia



ccording to Wine National Agency, 19 860 452 bottles (0,75 l) of wine were exported from Georgia though 8 months, which is less by 46% comparing to the same period of the previous year. Pg. 11

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eputy Healthcare Minister Valeri Kvaratskhelia and President of the Global Alliance international consulting company Jean-Elie Malkin visited the Family Medicine National Training Center in Tbilisi. Pg. 8

Real Inflation Indicator Surpasses Target Point The annual inflation rate has surpassed the target point. In August the annual inflation indicator made up 5.4% and exceeded the planned target by 0.4%. A major rise in prices was recorded in the sector of alcoholic beverages and tobacco. The inflation rate marked 13.1% in this sector. A 9.3% upturn was registered in the category of furniture, household appliances and housekeeping services. A 9.1% rise was marked in the healthcare field. Food products and nonalcoholic beverages have risen in price by 6.3%. Prices have shrunk in a certain category of products as compared to August 2014. A 0.9% downturn was registered in the segment of clothes and shoes. Transportation expenses have decreased 1.6%. Prices of all other products have slightly increased. A rise in prices of food products and alcoholic beverages has essentially influenced Pg. 5 the general inflation indicator.

Mikheil Ukleba: Many Ukrainian Companies Come to Us

“Georgia Is First Country In Region To Begin Free Trade Negotiations With China” Georgia will be the first country in the region to launch negotiations with China about free trade, said Georgia’s Prime Minister Irakli Garibashvili after meeting his Chinese counterpart Li Keqiang on September 10. The Georgian official was on a working visit to China attending the World Economic Forum in Dalian last week. Many future economic opportunities between Georgia and China were discussed extensively at the forum. The major topics discussed between Garibashvili and Keqiang were the New Silk Road Project initiated by the Chinese government, Georgia’s role in the route that envisaged connecting of Europe and Asia and future investments of the Asian Infrastructure Investment Bank (AIIB) to Georgia. Garibashvili stressed Georgia had already been

the part of the Silk Road in the past and if the route was reinstated Georgia could again play “a crucial role” in connecting Asia with Europe on a more direct route. “We are definitely ready to become the part of the New Silk Road route. Our aim is to use Georgia’s strategic location as best we can,” said Garibashvili. “We want Georgia to be a place of peace, reconciliation and cooperation and not confrontation. This has been a historical mission of Georgia,” he added. The Georgian official noted the New Silk Road Project would be discussed in detail by officials in Tbilisi as well as at the Tbilisi Silk Road Forum, scheduled for September 15-16, where 200 Chinese guests were invited. Pg. 6-7

Irma Qamadadze: We Provide Environment that is Tailored and Acceptable to All of Clients

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Gazprom Plans to Export Electricity to Georgia Gazprom, reduced the price of gas supplied to Armenia by 13%, received guarantees of exports of electricity generated by Razdan thermal power station to Iran and Georgia. In addition, the power plant received sales guarantees for generated power in the country, although transmission lines have not yet completed. Alexander Novak, Minister of Energy of the Russian Federation, and Yervand Zakharyan, Minister of Energy of Armenia, signed a protocol of changes in the intergovernmental agreement on prices for Russian gas reached in 2013. According to the protocol, the base price of gas is reduced from $ 189 to $ 165 per 1 thousand cubic meters. However, the dollar price seems high to Yerevan: yesterday, Armenian President Serzh Sargsyan at the meeting with Vladimir Putin said that “during the crisis currency fluctuations very Pg. 11 painfully affect the rates.”

The Poor Class to Increase by 10-12% in Georgia

Batumi 2015 Investment Forum to Gather Over 250 Business Decision Makers

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The GEL devaluation and a rise in prices on products, electricity and other services are shaking the solvency of Georgia citizens. If prices keep rising and the inflation rate hits 10%, the quantity of impoverished people in Georgia will extremely increase instantly. In this case 10-12% of the middle class will be impoverished, economic

experts assert. Finally, by 2016 the middle class will constitute one sixth of Georgian citizens instead of the existing one fourth portion. The social condition of Georgian citizens is worsening. Amid the GEL depreciation and a rise in electricity tariffs, essential things and products have already increased in prices by 5.4%. Pg. 9

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part from China’s government officials, the Georgian Prime Minister Irakli Garibashvili met with several leading Chinese companies in Dalian to discuss potential new business opportunities and expanding investment in Georgia. The meeting included discussions with Zhuhai Da Heng Qin Company Limited, one of the world’s top ten construction companies, who may embark upon a billion-dollar highway construction project in Georgia. Zhuhai da Heng Qin Company Limited’s portfolio includes the Beijing Olympic Stadium. At the meeting, it was decided that a working group of specialists would visit Tbilisi in two weeks and hold negotiations with the State Administration of Georgia and representatives of the Ministry of Infrastructure and Economy to further discuss the highway project. Prime Minister Garibashvili reiterated Georgia’s interest in the project, noting that is of strategic importance. He also promised full government support to the company’s leadership once the project has been finalized. The Prime Minister also commented on the importance of strengthening relations with China, and noted that Georgia strives to be China’s main partner in the region. The two sides also discussed the Anaklia Port Project, which the China Development Bank’s representative has expressed interest in.



elegation of a large international corporation Mitsubishi will visit Georgia- This statement was made by the chairman of the board of Mitsubishi Yorihiko Kojima with Georgian PM Irakli Garibashvili. At the meeting, Prime Minister Garibashvili discussed the increasingly favorable business environment in Georgia. Chairman Kojima concluded that a delegation from Mitsubishi would visit Georgia in the near future to further discuss potential investment and joint business opportunities. Mitsubishi is the world’s largest corporation, owns businesses in 90 countries and employs 68 thousand people. In 2014, the company’s revenue totaled to $74 billion. It is also the largest global business venture, combining and operating a number of industries in the finance, energy, metal production, machine-building, chemical industry and environment protection fields.



eorgian Prime Minister Irakli Garibashvili met with Prime Minister of Mongolia Saikhanbileg Chimed. During the meeting, the parties have discussed the trade and economic relations between Georgia and Mongolia and the cooperation development prospects. They have emphasized the interest of Mongolia in the agricultural, tourism, transport and logistics sectors of Georgia. The conversation covered the importance of the New Silk Road. The Prime Minister of Mongolia has welcomed the idea of restoration of the historical Silk Road, which will be a shortcut that connects Europe and Asia and reduces the time and costs.



he volume of foreign state debt has amounted to 4,19 billion USD in late August and the figure exceeds by 40 million USD comparing to the previous month. According to the statistics of Ministry of Finance, by late August, 4,16 billion USD out of total debt is the government’s debt towards the international creditors, while the remained 27,514 million USD – is National Bank of Georgia’s debt towards International Monetary Fund. Total debt growth was made at the expense of the government’s debt increase in August, while the debt of NBG is reduced. However, the government owed 4,12 billion USD of the creditors in late July, whereas NBG – 29,289 million USD.

September 14, 2015 #113

caucasus business week



ur main goal is to increase Georgian economy, create more jobs and employee more people with a better salary, - Georgian prime Minister has declared during his

speech at the international conferences held in Tbilisi. The head of the government attended the conference on “Europe’s New Geopolitical Landscape: security, economic opportunity, freedom and human dignity in the frontline countries”. The conference is organized by “McCain Institute for International Leadership” and “Economic Policy Research Center” (EPRC). Irakli Garibashvili thanked to the organizers of the conference for the support of Georgia. As of him, Georgia is the frontline country, as it is at the cutting edge of many big challenges. “Facing the important regional threats and economic obstacles, we are managing the country in the same pragmatic approach and enthusiasm, as our ancestors did in order to the guard and survive through the thousands of years”, - the Premier declares. According to him, he belongs to the new generation of Georgians, who grew up in the amazing changes. “Our generation understands that the country can not afford to repeat the mistakes of the past and we need to double the efforts to ensure a safer, more free and prosperous future”, - Irakli Garibashvili declares. During his speech, Georgian Prime Minister has talked about the achieved success of Georgia in

European future and European integration. “Georgia is a close friend and ally of America and Europe regardless who will head Georgian government. Our interests coincide and our friendship has a deep base. We should continue close relationship in order to ensure peace, stability and democracy in the region”, - the Prime Minister said. Head of Georgian government has provided participants of the conference with information on the reforms carried out in the country and future plans. Georgian government focuses attention on economic development, social welfare and protection of its sovereignty. “We make investments in small business and agriculture sector. We construct better roads, bridges and ports in terms of to make full integration in the global economy. Our government uses Georgia’s unique location to form vitally important area, which links Georgian and Asian markets. We also care to become Georgia more attractive for foreign investments”, - the Premier explains. Georgian President, members of Georgian government and Parliament, political parties, representatives of civil society, Georgia and foreign experts have attended International Conference of Tbilisi.



ine National Agency declares, that the state does not interfere in the establishment of grape price. The institution disseminates special statement linked to the vintage and predicts, that protesting actions held against grape price are artificial. “I highlight once more, that private grape seller and buyer are agreed on the price, amount and quality of the product by themselves. The state will not interfere in the regulation of grape price. Market regulates the costs. We called for the viticulturists not to follow the provocation and gather the harvest in line of agriculture terms”, - the statement says. According to the Agency, 51 companies expressed desire to acquire grape

by this time. The enterprises will purchase grape, while it starts getting ripe. In addition, the state is ready to acquire extra grape in Dedopistskaro and Signagi from September 10, where wine companies pay less attention to the grape procession. The Agency makes explanation linked to the Tsnori enterprise. “The information is disseminated, that Tsnori plant (“Tibaani 2000”) is ready to receive grape from population and the enterprise is waiting to the permit of Coordination Headquarter, this is not true – the country’s processing ability was used by state wine companies in the recent years and company of Tsnori is not registered in the Coordination headquarter of vintage”, - the statement says.



n Georgia, investments in the first quarter of 2015 amounted to $ 354, 7 million, the highest level since 2008 and 82% more than in the same period of 2014, and by 70, 6% more than in the same period of

2013. “ Transport and communications lead among the sectors in attracting investments with $ 207, 4 million - 58, 5% of the total investments. Followed by the financial sector - $ 41, 4 million (11, 7%), processing industry - $ 29, 5 million (8, 3% of the total investment, real

estate - $19. 6 million (5 5%) “- Irma Kavtaradze, Deputy Minister of Economy of Georgia, states. According to her, statistics for 6 months of 2015 is also positive, which reflects the situation in the 1st and 2nd quarters of 2015. “During this period, the volume of investments in Georgia amounted to $ 530 million, which is the best figure since 2008. During this period, 66.7% of investments ($ 353, 7 million) has been invested in transport and communications followed by finance, construction, energy, real estate, agricul-

ture, “- she says. In her words, these investments will have a positive impact on the economic situation in Georgia. “In the 2nd quarter of 2015 the number of jobs increased by 61 000 or 12%. In addition, business turnover increased by 16% and amounted to GEL 1. 8 billion. Output of products and services from businesses increased by 22, 5% and amounted to GEL 1, 7 billion. The average salary in the business sector increased by 10% and amounted to GEL 942 per month, “- she concludes.



ut, wine, honey, tea and berry crops are the agriculture products, which have real chance at the EU market, Otar Danelia, minister of Agriculture regards. As the Minister declared, the list of agriculture products goes further. However, we will be able


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to export homey on the EU market from the next year, as we already have laboratory, where honey diagnosis should be made free of charge for the cooperatives in line of European and international standards. Tea breeding program is carried out by charge of the Premier, which envisages production of cooperation and production of bio-tea.

The minister also said, that blue berry is already sold in the Great Britain, while kiwi – in Germany. Approbation process of the markets is implemented. “By the way, export will be grown by 84% in the EU countries after signing of DCFTI. However, everything needs time due to the specifics of agriculture”, - the minister declared.

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PUBLICITY September 14, 2015 #113

caucasus business week




September 14, 2015 #113

caucasus business week

GEORGIAN AMBASSADOR TO BELARUS: BELARUS VISITORS GET UNFORGETTABLE IMPRESSIONS IN GEORGIA “After Belarus President Aleksandre Lukashenko visited Georgia, the Georgia-Belarus relations were taken to a new stage of development. The parties have determined serious plans for cooperation in economic, political and culture fields”, Georgian Ambassador to Belarus David Kotaria told the IPress. The Belarus President’s visit to Georgia has taken the bilateral relations to a higher level, Mr. DAVID KOTARIA added.

- How far were the Georgia-Belarus relations ddeveloped after the Belarus President’s visit to Georgia? What are the main fields you are working on to better represent Georgia in Belarus? - The Belarus President’s visit to Georgia has considerably boosted the formation of valuable relations in the fields of politics, culture, humanitarian and other directions. Both Belarus and Georgian parties have assessed this visit to be of historical importance as the first and unprecedented event in Georgia. I believe these relations were taken to a higher level and status. The Belarus party has assessed that the visit has outlined new approaches and views in the Georgian-Belarus relations. - What priorities have been outlined? - Priorities in our relations are given to economic issues. We have been working on increasing Georgia-Belarus turnover to 200 million USD from current 70 million USD. President Lukashenko has, in practice, given this instruction to the Belarus government members. - What factors have inspired President Lukashenko to give such instructions to the Government members? - The current regional developments have provoked economic difficulties in all countries, including in Belarus. The country has been long trying to diversify markets… Russia is a main partner for Belarus in terms of turnover. Ukraine is the second biggest trade partner for Belarus and so on. The regional developments and tragic situation in Ukraine make it impossible to maintain the existing trade turnover

indicators. Therefore, I believe, Belarus is trying to diversify markets and penetrate several new markets, even more so, these efforts coincide with the foreign policy of Belarus that is called as a multi-vector foreign policy. Georgia is an important partner for Belarus and based on this partnership, we are vitally interested in deepening these bilateral relations. - As to the Georgia-Belarus trade relations perspectives, what main directions are prioritized and what specific projects are being developed? - We are working on developing not only sales and purchase deals, but also establishing joint ventures, jointly employing workforce, diversifying and penetrating markets. Even more so, this context fully fits the opportunities Georgia has received from the EU associated membership agreement in terms of access to the EU market. This opportunity is also very interesting for Belarus. Belarus openly confirms it is interested in creating an enterprise in Georgia that would penetrate the third market with GeorgianBelarus joint products. - Having arrived in Georgia Lukashenko noted Georgia and Belarus should attain mutually beneficial results thanks to Georgia’s associated membership agreement with the EU, on the one hand, and Belarus’ Eurasian Union membership, on the other hand. Mr. President has assured Georgian officials there are good and real preconditions in this direction. Is it expedient to say Georgia has received specific benefits from Belarus, as the Eurasian Union member country? - Naturally, Belarus is able to play certain role regarding Georgian products in the Eurasian Union context, but at this stage, according to my information, Belarus is facing itself certain problems with the Eurasian Union, including in terms of transportation and economic regulations issues. This process goes on. - Have you talked with the President’s administration or with Lukashenko personally about the visit to Georgia? What was the President’s impression? -Our guests have taken magnificent impressions from Georgia. The visit was very successful and very important. This assessment was voiced at all levels. Georgia considers Belarus to be a very interesting country. There are many common factors that connect us. Belarus shows interest in the Georgian reforms and the production opportunities in Georgia. Belarus provides maximum efforts to take the best examples and apply the Georgian experience in the production development. - Is Belarus interested in Georgia as a tourism country and what specific projects are being im-

plemented in this direction? By the way, Georgia’s attitude to Belarus in this segment is also very interesting. -We have performed huge job to valuably represent Georgia in Belarus with the support of the national tourism administration and the Ajara tourism department. We have provided AD campaigns on various levels… In the March to July period we have placed commercials at Belarus media outlets and billboards. The national tourism administration has organized information tours to Georgia for tour operators and media representatives. With the support of the Ajara tourism agency, Belarus media representatives visited the Ajara Region. The information tours made unforgettable impression on the Belarus guests. The interest in Georgia is huge. The Belarus visitors were mostly amused by human warmth, culture, traditions … They perceive our country with particular sense. They observe every details and circumstances. We have taken considerable steps in the tourism sector. We have signed a package of agreements, including an intergovernmental agreement that calls for cooperating in all available directions. This is not a unilateral relation. Belarus is also interested in drawing Georgian tourists. We are also developing additional tourism opportunities in terms of transit to the third country. - Are there many Georgian nationals in Belarus? - According to unofficial indicators, about 5000 ethnic Georgians live in Belarus. Under the official information of the Interior Ministry’s corresponding department, there are 2594 ethnic Georgians in Belarus, but no specific information is provided about their arrival and departure. I suppose part of them will leave for Russia, because the Belarus-Russian border control has been removed… - Last period Minsk has turned into an important center for international negotiations, including on such crucial issues as the Russia-Ukraine relations. Georgia is also presumed in this context. Would you remember any case when Belarus as a host country had played positive role in discussing the Georgia-related issues? -The ongoing developments in Ukraine are of vital importance for Belarus in terms of economic and national security issues. Belarus is interested in regional peace and resolving the Ukrainian crisis through negotiations. Belarus has allocated its own territory for similar negotiations and this process goes on. I Believe Belarus will take more efficient steps, even more so the OSCE special envoy Martin Saidik is a

member of the contact group. His statements have also influenced these relations. In the near future we expect this process to be resolved. We suppose a standing group will be set up in Belarus under the OSCE aegis. This group will work on settling the ongoing developments in Ukraine. This format calls for resolving political, economic, cultural, humanitarian issues… Resolution of political issues is the most difficult thing, but Belarus realizes these complications and confirms the main thing is to cease fire, while the next period must be used for tackling the political challenges. - During Lukashenko’s visit the parties signed a Georgian-Belarus memorandum on agriculture sector development and creating joint enterprises. What specific steps have been taken in this context? -The Georgia and Belarus agriculture Ministries achieved an agreement long ago and the parties have been cooperating as part of this agreement. But now a memorandum was signed by the Georgian Agriculture Ministry and the Belarus Industry Ministry and this cooperation implies multilateral relations. We should express gratitude to the Agriculture Ministry for the cooperation with Belarus colleagues in the fields of processing technologies, creating joint enterprises and renewing agriculture machines such as ploughs, tractors, mini tractors and so on. These machines will perform huge job and we have already received results. A Belarus government delegation of 10 members has recently arrived in Georgia. The delegation was hosted by the Georgian Agriculture Ministry and the Ajara Autonomous Government. Very important meetings were held for not only protocol. These meetings were genuinely efficient for implementing specific decisions. - Which Georgian Products are the bestselling in Belarus? - Georgia exports wines, mineral waters, manganese to Belarus. The latter item is supplied to the metallurgical plant in the certain volume. Moreover, the issue is of creating a joint enterprise for manufacturing, reconstructing elevators. According to my information, negotiations are underway with the Tbilisi State Technical University, Tbilisi City Hall and this direction is very interesting for both Georgian and Belarus parties. Initially, the products will be introduced at showrooms; later the products will be also sold. We may open a joint venture in Georgia. Belarus openly says it is interested in establishing a joint enterprise in Georgia that will export the Georgia-Belarus jointly manufactured products to the third markets.

GEORGIAN AMBASSADOR TO UKRAINE: MANY UKRAINIAN COMPANIES COME TO US An interview with Georgia’s Ambassador to Ukraine Mikheil Ukleba

- The government’s desire to strengthen the economic aspect of diplomacy was named the main reason for the appointment of former Minister of Economy of Georgia Giorgi Kvirikashvili as the head the Foreign Ministry. New Economy Minister Dmitry Kumsiashvili said that ambassadors in various countries should help Georgia in attract-

ing investments. Do you have a specific plan at this point? What do you intend to take? - The economic dimension plays an important role in the activities of the Ministry of Foreign Affairs of Georgia. As known, Ukraine is one of our major partners, despite the difficult situation in the country, it occupies the 5th place in the list of trading partners. In addition, Ukraine is of great significance for Georgia in terms of attracting tourists - in this index, it also occupies the 5th place after Azerbaijan, Armenia, Turkey and Russia - and this is despite the fact that Georgia and Ukraine have no land border. For 7 months of 2015, Georgia was visited by 75 000 tourists from Ukraine. In 2014, the number of tourists from Ukraine amounted to 143 thousand, in 2013 - 126 000 - that is, we are talking about annual growth dynamics. Of course, today the purchasing power of the population in Ukraine has declined due to the almost 3-fold devaluation of the hryvnia. At the time, the loss of the Crimea has increased interest in Georgia as a friendly country. Therefore, despite the economic difficulties we still hope that the number of Ukrainian tourists will not be less than last year. With regard to trade with Ukraine, it has declined - in 7 months of 2015 turnover amounted to $ 290 million, while in 2014 - 870 million, in 2013 - $ 780 million. This year the trade turnover has declined substantially in the backdrop of the current situa-

tion. You cannot name me any country whose trade turnover with Ukraine has not decreased. Despite all this, we are conducting a very active policy of attracting investment, developing tourism and investment. For example, banner advertising Georgia as a tourist destination hang around Kiev. By the way, this is also a merit of travel agencies. Banners hang not only in Kiev, but also all over the country in all major cities. In addition, we often hold presentations of various tourist destinations, for example, Batumi- Kiev business forum was held last year where tourist potential of Adjara was presented. In addition, the real estate market at the Black Sea coast of Georgia was presented - this topic is of great interest here, as many Ukrainians are buying housing in Batumi and other cities of the coast. With regard to investments, in spite of the difficult economic situation, the Ukrainian business is actively interested in the Georgian market. For example, the company “Redko” acquired the building of the University of Technology in Batumi the object was purchased for $ 25 million, including the investment commitments worth $ 15 million. Ukrainian investments are made in agriculture and the hospitality industry. So, in spite of everything the process is still going on, and we are actively working in this direction.

- What else do you plan to do in this regard? - We are actively working with the media, organize a variety of events, including days of Georgia in large shopping centers of the country. - Do Georgian businessmen apply to you because of a decreased export to Ukraine? - No one addressed us on this issue. There is a problem, and it is that our export products are calculated in US dollars, respectively, it is too expensive for the population of Ukraine, which purchasing power has sharply reduced. This factor certainly exists and now everything depends on the flexibility of the exporting companies. In general, the activity of the Georgian business in Ukraine has decreased due to fragile economic situation that scares investors. - What is the image of Georgia in Ukraine? - Very positive. Georgia is regarded as a country that has managed to conduct successful reforms that is a big plus. We passed many stages in the construction of the state and democratic institutions, and it is a great advantage in the eyes of Ukrainians. When we present all this, Ukrainian public perceives it very positively. Many Ukrainian companies are asking us to help them find partners in Georgia. We send the corresponding request to the Ministry of Economics, from there we get a list of potential partners with whom Ukrainian businessmen could cooperate.

September 14, 2015 #113

INFLATION caucasus business week




he annual inflation rate has surpassed the target point. In August the annual inflation indicator made up 5.4% and exceeded the planned target by 0.4%. A major rise in prices was recorded in the sector of alcoholic beverages and tobacco. The inflation rate marked 13.1% in this sector. A 9.3% upturn was registered in the category of furniture, household appliances and housekeeping services. A 9.1% rise was marked in the healthcare field. Food products and nonalcoholic beverages have risen in price by 6.3%. Prices have shrunk in a certain category of products as compared to August 2014. A 0.9% downturn was registered in the segment of clothes and shoes. Transportation expenses have decreased 1.6%. Prices of all other products have slightly increased. A rise in prices of food products and alcoholic beverages has essentially influenced the general inflation indicator. The sector’s ratio marked 1.86% in the reported 5.4% general inflation rate. The official inflation indicator is based on assessment of 295 products and services. The price growth pace in August 2015 was as follows: -Prices increased on 237 products and services; -Prices have not changed on 13 items; -Prices shrank on 43 products and services; -Prices increased on 67 items of 80 food products, including an over 10% growth was registered on 30 items and an 15% upturn was recorded on 20 items; -Prices decreased on 45 products and services, including less than 5% downturn was recorded on 31items, 5-10% contraction was registered on 9 items and 5 items cheapened by over 10%’ -Over 5% growth in prices was recorded on 148 items and services; -Over 10% rise in prices was registered on 85 products and services. -Over 20% rise in prices was marked on 24 products;

CONTROL OF PRICES – HOW EFFICIENTLY THE NATIONAL BANK ACTS Every time when criticism is staged on the National Bank of Georgia (NBG) regarding the GEL exchange rate, it is stressed the NBG’s objective is to control the inflation process and to this end it applies various instruments. Therefore, it is interesting how efficiently the NBG controls the inflation process. Low-level inflation was reported in Georgia since December 2011. Sometimes, the statistics has recorded even deflation process. In this situation the NBG was smoothing the monetary policy. The Georgian central bank used to carry out the smoothest monetary policy in the history of independent Georgia. The NBG continues the same policy till today. -Refinancing rate is one of the lowest one; -The volume of certificate deposits is also very low; -The volume of refinancing loans sees historical maximum; - Indebtedness of commercial banks to the NBG sees the historical maximum and the figure reaches 800 million GEL, while the situation was always opposite. Similar monetary policy is absolutely appropriate amid the low inflation indicator, but amid the GEL rate volatility similar approaches will additionally affect the national currency. The NBG seems to have shown less attention to the GEL devaluation process and deepened the currency crisis through referring to only the inflation control mechanism. However, the GEL depreciation has affected the inflation process too and in August the real inflation indicators surpassed the target point. We remember the NBG statements that the inflation rate would equalize to the target indicator by the end of 2015, but this prognosis has failed 4 months earlier before 2016. Moreover, currently there are no grounds to expect the inflation rate return to the target 5% point. There are several

factors for the worse prognosis: -The GEL depreciation has raised tariffs on energy carriers. As a result, prices will increase on many other products and services; - The GEL exchange rate has dropped 35%. The excessive imports ratio in the economy will raise prices on imported products; Thus, as a result of the smooth monetary policy the NBG has failed to curb the inflation process within the target level and struck a blow to the GEL exchange rate. The missed target inflation indicator and the GEL depreciation have brought the following outcomes: -80% of business companies have to pay 35% higher interest rates on bank loans. The dollarization coefficient in corporate business sector exceeds 80%; -A half part of physical bodies have to pay 35% higher interest rates for bank loans -Energy carriers have risen in price; -Imports tariffs have increased; -Companies have increased prices on their products and services as a result of increased payments on bank loans; -Aggravated burden of bank loans have led borrowers to cut demand for other products and services and this additionally hits the economy. In this situation it is ridiculous to talk about positive effects of the GEL depreciation. Negative outcomes have fully neutralized all available positive effects that the GEL depreciation could bring. Domestic production and exports are developed when the output level is high and the dollarization coefficient is low. Georgia satisfies neither of these criteria. Consequently, the GEL devaluation process has brought only negative results to the economy. Thus, all arguments have been neutralized. The NBG’s smooth monetary policy was justified by only the low inflation rate before August. The issue whether the inflation rate is low or not is a separate aspect and it generates many questions.



he consumer basket that includes 295 goods and services has risen in price by 80%. The growth was higher or lower for different items. An over 5% growth was recorded for 148 items, while 14 items cheapened by less than 5%. Is the 5.4% rise in averaged price realistic? In this situation we should pose a question: How does the reported inflation rate reflect the reality? There are several factors that cast doubts on the adequacy of the inflation indicator: 1) A low ratio of food products in the consumer basket; 2) Exclusion of the bank loan factor from the inflation indicator after the GEL rate devaluation. “The consumer basket is a basis for calculating the consumer prices index. It represents a list of the most consumed goods and services in the country and it reflects the structure of the averaged consumer in the country”, the website of GeoStat, the national statistics office of Georgia, reads. The ratio of food products in the consumer basket makes up 30%. We can assess whether the people around us spend only 30% ratio of their expenditures on food products. According to the GeoStat, an averaged salary in Georgia makes up 773 GEL. According to the GeoStat structure of the consumer basket, an averaged Georgian spends the salary in the following portions: -FOOD AND NONALCOHOLIC BEVERAGES – 238 GEL; -ALCOHOLIC BEVERAGES AND TOBACCO – 40 GEL; -CLOTHES AND SHOES – 22 GEL; -HOME, WATER, ELECTRICITY, GAS AND OTHER HEATING MEANS – 65 GEL; -FURNITURE, HOUSEHOLD THINGS AND ACCESSORIES, RESIDENTIAL PLACE REPAIRS AND ARRANGEMENT – 50 GEL; -HEALTHCARE – 73 GEL; -TRANSPORTATION COSTS – 91 GEL; -COMMUNICATION – 28 GEL; -RECREATION, VACATION AND CULTURE – 55 GEL; -EDUCATION – 39 GEL; -HOTELS, CAFES AND RESTAURANTS - 37 GEL; -OTHER GOODS AND SERVICES – 35 GEL; The food product and healthcare expenses are higher in the averaged consumer’s basket. Therefore, if the ratio were higher in the consumer basket, the inflation indicator would be over 5.4%. At the same time, the common growth in prices does not reflect the increased value of USD dominated loans. As a result of the GEL devaluation, bank loans have risen in price by 35% and this surge brings the same effect as in case of bread, potato or any other products. Thus, the government has reported lower inflation rate, while the reality suggests the higher indicator. As a result, the National Bank of Georgia (NBG) has not timely toughened the monetary policy to the required extent. As a result, the inflation rate has surpassed the target indicator and the pressure on the already devaluated GEL has further increased.



September 14, 2015 #113

caucasus business week

The Economic Forum Dalian 2015

Strengthens Georgian-Chinese Cooperation Asian Infrastructure Investment Bank will Start Operating in Georgia


nother subject raised at the Forum was the Asian Infrastructure Investment Bank (AIIB) – at the September 11 meeting the AIIB president Jin Liqun stated that Georgia will be among the first countries that the newly established AIIB will start making operations. Jin Liqun said he had visited Georgia twice. According to him, the country has made a significant progress in the past period. “The Asian Infrastructure Investment Bank is interested in Georgia’s transport, logistics and energy sectors,” he said. Irakli Garibashvili in his turn stressed Georgia’s strategic geographic location, its amicable business environment, and the Free Trade Agreement with Europe.

It was noted at the meeting that Georgia has many attractive aspects to offer to China economically. These include but are not limited to the logistics, renewable energy opportunities, entrepreneurship, tourism and healthcare. Georgia represents one of the founder countries of the Asian Infrastructure and Investment Bank, having signed the agreement in advance on June 29, 2015, in Beijing. Georgia is the 45th country that joined the Bank and the first country to have made the Bank’s ratification in advance. It is expected for the AIIB to start operating by the end of 2015. Obtaining membership of the Asian Investment and Infrastructure Bank will help Georgia in raising finances and implementing its infrastructure projects, such as the new port that the PM stressed at the Dalian Forum.

Georgia’s Role in New Silk Road Project

PM Invites Leading Chinese Experts to Tbilisi Silk Road Forum on October 15-16


eorgia has proven that we are a reliable transit country. Georgia’s economy is growing, we are building and strengthening the democratic institutions, and providing for the business and media freedom,” Georgia’s PM stated at the “New Silk Road” Session held within the World Economic Forum in Dalian. The leader of the Georgian Government actively participated in the discussion of New Silk Road concept. Irakli Garibashvili explained that Georgia is strongly supporting the idea of the New Silk Road. In addition, he spoke with the discussion participants about Georgia’s crucial role as a transit hub in the Silk Road concept. “When it comes to the New Silk Road and Georgia’s role as a transit country, it can be interesting in many senses. One aspect I would like to underline is that we have proven that we are reliable transit country for the energy and transport. We have an ambition to transform our country into a logistics hub in the entire region. We would like to build a new port, the new deepsea water port with 100 million tons per year. This port will be built in seven phases. There is a strong interest from the Chinese companies, who want to be part of this project. We have launched the negotiations about the infrastructural projects: construction of roads, bridges, etc. We are talking about a several billion dollar investment in Georgia,” the PM noted. According to Irakli Garibashvili’s information, there is a great interest from both, American and Chinese companies in the new deep water port. The Prime Minister believes that Georgia will be the major transit country for the transportation of Chinese products.


eorgia is preparing to host hundreds of high level officials from China and the surrounding region at the upcoming Tbilisi Silk Road Forum on October 15 -16, where global leaders will discuss how to reinstate the ancient Silk Road route between Europe and Asia. The Silk Road Fund, with a $40 billion USD bud-

get, focused on exploring new trade-economic benefits and opportunities to connect European and Asian economic markets, is among the invited guests. Earlier it was claimed more than 400 Chinese representatives will attend the Tbilisi Silk Road Forum to study and discuss the benefits of the New Silk Road route initiated by the Chinese

government. The aim of the route is to connect Europe and Asia via the easiest and fastest directions “We have already received the first trade train from China that reached Georgia in nine days. The same route through the sea requires 45-60 days,” Garibashvili said. “We are ready to be the part of the route,” Garibashvili added.

Global Software Manufacturing Giant SAP to Open in Georgia, Stimulate Business Environment


ne of the world’s leading independent software manufacturers is ready to be represented in the Georgia to help the country’s businesses operate more effectively. Georgian officials met with officials from the China branch of SAP – a German multinational software corporation that makes enterprise software to allow businesses to operate seamlessly and reach more clients – at the World Economic

Forum in China today. SAP is regarded as the world’s third largest independent software manufacturer. The deal was solidified at the World Economic Forum in China’s main port city Dalian today, after Georgia’s Minister of Economy Dimitri Kumsishvili met with corporation leadership of the China branch. Opening the [SAP Labs China] representation in Georgia will be beneficial for both sides,” Kum-

sishvili said, implying the deal will greatly benefit Georgia’s business environment. SAP has more than 293,500 customers in 190 countries. The company employed 74,400 employees in braches in 130 nations and earns an annual revenue (IFRS) of about €17.56 billion (46 billion GEL). The company is listed under the symbol SAP on global stock exchanges, including the Frankfurt Exchange and the New York Stock Exchange.


September 14, 2015 #113

Dongfang Electric Invests $200m in Georgia’s Tkibuli Thermal Power Plant


Georgia Begins Exporting Wine to China’s Major Port City Dalian


eorgia will soon begin exporting wine to one of China’s major port cities, Dalian. Georgian Wine Company (GWC) signed a Memorandum with Dalian Free Trade Zone today to solidify the deal. Garibashvili said Georgia already enjoyed positive relations with China but he hoped to forge deeper cooperation in the future, stated the Prime Minister’s press service. The volume of Georgian wine to be exported to Dalian was not specified.


caucasus business week

ne of China’s largest enterprises has expressed its interest to invest almost $200 million USD in Georgia’s energy sector. State-owned enterprise Dongfang Electric has pledged to contribute about $180$200 million for construction of a 150 megawatt Thermal Power Plant (TPP) in Georgia’s western Tkibuli region. Dongfang Electric is one of China’s most influential corporations that engage in the manufacturing of power generators and the contracts of power station projects locally and around the world. The generous investment offer was made at a meeting between Georgia’s Prime Minister Irakli Garibashvili and Dongfang representatives today, in the frame of the World Economic Forum in China. The corporation said it was prepared to invest $180-200 million USD in the TPP, which project was drafted by Georgia’s Industrial Group. The TPP is understood to operate using coal energy and produce one billion kilowatts of energy annually.

Memorandum of Cooperation Signed Between Dalian and Ajara


eorgian delegation led by the Prime Minister of Georgia Irakli Gharibashvili is paying a working meeting in Dalian, China. Chairman of Ajara AR Government Archil Khabadze is among the 50-member delegation. Memorandum of Cooperation was signed in the frames of the working visit on September 10. It was signed by the Chairman of Ajara AR Government Archil Khabadze and Mayor of Dalian Xiao Shengfeng. The agreement provides equality, cooperation and sharing knowledge and experience based on

mutual benefit in economic, agriculture, health care, tourism, culture, education, transport, environment protection, service industry, city planning and other fields. Working on this initiative started after the last visit of the Prime Minister and the Chairman of Ajara AR Government in Dalian. The parties are determined to establish friendly and cooperative relations with Ajara Autonomous Republic and Municipalities of Dalian. Cooperation between sides and sharing experience will be provided by regular relations of senior officials and relevant agencies.

“Georgian Industrial Group” and Chinese Dongfang Electric to Construct Thermal Power Plant


ne of the biggest Chinese company Dongfang Electric is engaged in the construction of thermal power plant of 150 mgwt in Tkibuli – the meeting was held between Georgian prime Minister Irakli Garibashvili and General Director of the Company Si Zefu in Dalian on Thursday. The importance of Georgian thermal power plant has been underlined at the meeting, which envisages growth of energy safety quality of the country, development of local coal mining industry and increase potential of electricity export. The project, which is implemented by “Georgian Industrial Group” and Chinese Dongfang Electric, envisages construction of coal-fired thermal power plant. The plant’s installed capacity is 150 mgwt, annual output – 1 billion kwt. Total value

Georgian-Chinese Locomotive and its Manufacturing Plant to be Built in Georgia


he Georgian-Chinese venture to manufacture the locomotives with asynchronous engines and their spare parts will be built in Georgia, according to the Memorandum of Cooperation signed in Dalian. From the Georgian side, the Memorandum was signed by the Director of JSC “Vagonmshenebeli,” Badri Tsilosani, whereas, the signatory from the Chinese side was the President of Dalian Locomotive and Carriage Building Plan, Min Xing. Before the signing ceremony, the Prime Minister of Georgia had met with the leadership of Dalian Locomotive and Carriage Building Plant. The Head of Government had expressed his hope that the cooperation will develop in the future. Min Xing took Irakli Garibashvili for a tour around the Carriage Building Plant. The Memorandum of Cooperation is intended to establish a joint company in Georgia, which will manufacture not only the electric locomotives

with asynchronous engine, but also the diesel engine locomotives, subway trains, electric trains, diesel engines, diesel generators, as well as serve and repair the mentioned products, according to the market demand. The joint company will be focused not only on the Georgian market, but also the markets outside Georgia, including the post-soviet states, Iran, Turkey, European market, etc. Dalian Locomotive & Rolling Stock Co., Ltd. CRRC Group is the biggest producer of locomotives in China. The products manufactured by DLoco include: the diesel locomotives, electric locomotives and diesel engines of urban railway and subway trains. The company’s annual turnover exceeded 1.7 billion dollars in the last 5 years. The company had produced 3,000 units of HXD3 AC-AC asynchronous motor locomotives, which is 50% of the Chinese market. The company has vast experience and has established advanced technologies in the production.

of the project is 180-200 million USD. Dongfang Electric is the biggest Chinese holding, which is under the subordination of central government. The company has a history of half a century. Dongfang Electric is specialized in production and exporting of power generation equipment. The company plays an important role in the Chinese economy. Dongfang Electric holds 1/3 of Chinese electricity market and 2/5 of hydro energy market. The company also participates in different branches: heavy industry, manufacturing and installation of power transmission lines, industrial control equipment, a high-voltage frequency converters, chemical installations. Dongfang Electric holds leading positions as international contractor of China and makes export in more than 30 countries.

Georgian PM Awarded Title of “Honorary Professor” of the Beijing’s International University of Business and Economy Within the framework of the World Economic Forum, Garibashvili gave a speech at Beijing’s International University of Business and Economy, where he was awarded the title of “Honorary Professor” of the University. Garibashvili shared his emotions over the new title on his official Twitter account: Thanks to Beijing University of International Business&Economics for the title of Honorary Professor #GeorgiaChina



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September 14, 2015 #113

RECORD SALES OF METRO CITY PROJECT Irma Qamadadze: We Provide Environment that is Tailored and Acceptable to All of Clients

IRMA QAMADADZE Metro Atlas Georgia Sales Department Head

- Metro Atlas Georgia appeared on the market in 2012. This is a small while for the company. Nevertheless, the company is a success. Our society has got thorough information on your project of Metro City. What factors have provided respect and confidence in your company? - Transparency of our performance has brought confidence and respect to our company. The main objective is to provide high-level construction works, high-quality services thanks to skilful and experienced employees. Each of our clients are confident that all their requirements and needs are taken into account completely. We provide the environment that is tailored and acceptable to all categories of our clients. The construction works started in February 2015 and the major part of these works has been almost finished. We build quickly and valuably in line with all modern and international standards. Our company applies high-quality and ecologically clean construction materials. - What are the Metro City advantages? Would you provide more details on the project implementation? - Metro City is a special project. Customers are able to buy apartments for recreation purposes

nearby the coastline. We offer a full infrastructure on a footstep way from the beach, a conference hall for 1500 persons, an outdoor swimming pool

for the complex clients, closed coastline with golden sands, casino and shopping mall. Metro city is a small city in the city. - We know 50% of the apartments, that is, over 300 apartments have been already sold. This is a genuinely record figure. What factors have preconditioned such a success? - Several financial proposals and the best contractual terms have boosted this process. The document provides detailed description of rights and duties of customers and this factor rules out any misunderstanding in the deal. We provide maximally open and transparent relations with our clients. Our schedules are optimal and real and the project is a unique and major one. - How competitive prices do you offer to your clients? Have you introduced an internal installment payment scheme? If so, which commercial bank have you chosen for cooperation and what are specific offers in this respect? - We offer an internal installment payment scheme to our clients. In case of a 10% deposit, the maturity period is 36 months, a 25% deposit ensures a 60 month maturity period. - What are future plans of Metro Holding, a founder of Metro Atlas Georgia?

- We plan to implement other projects that will be introduced to the society in the near future. - How would you appraise the current situation in Georgia’s housing and hotel sectors? How intense competition is recorded in these directions? - The competition is quite intense. You know many foreign companies launch business activities in Georgia. Our company appeared in Georgia only 3 years ago, but I can openly say we have provided sharp competition on the market to other companies. - What is your opinion on Georgia’s business environment? - Georgia provides very favorable environment. The current stable situation in the country fosters the economic development and an influx of investments. - What is your opinion on Georgia’s tourism sector development? What potential and preconditions exist in Georgia to further boost this field? - The tourism business a priority direction in our region. The region’s tourism potential should be more promoted. The infrastructure should be arranged and the ski resort tourism should be also boosted.



eorgia is ready to host another successful investment forum. Cushman & Wakefield | Veritas Brown together with the Georgian National Investment Agency and the Autonomous Republic of Ajara are planning to organize “Investment Forum, Batumi 2015” at the Hilton Hotel Batumi. Local and foreign investors, regional and central government representatives and business organizations will gather at the forum to discuss various topics, including Investment Projects, Proposals, Investment Climate Characteristics and Expanding the Real Estate and Hotel Development Sector that has proved to be in demand for years in Georgia. If you are a businessman or an investor who is interested in various assets and investment opportunities in the region, then “Investment Forum Batumi 2015” is the must attend event of the year. The aim of this forum is to provide an intensive dialogue between international investors and their Georgian counterparts. The Autonomous Republic of Ajara is engaged in

all organizational matters of the event and is making every effort for the forum to be held in the highest of standards. Ajara is on track to become the best business destination in South Caucasus. The schedule of the event is updated and is available on the forum’s website, the event will be opened by welcoming speeches from the Prime Minister of Georgia, the Minister of Economy and Sustainable Development of Georgia, the Chairman of Government of Ajara A.R. and the Minister of Finance and Economy of Ajara A.R. Georgian government officials will hold presentations about different investment opportunities in the country. EBRD and Georgian Co-investment Fund, Partnership Fund and Produce in Georgia will hold presentations on access to finances. Apart from that, different leading companies of the country will share their Success Stories. On the second day of the forum the participants will be invited to tour the proposed investment projects upon their request. After the economic crisis in the region, 2014 proved to be successful in terms of investments outweighing the 2013 figure. According to the

preliminary assessments 2015 is deemed to show an even better growth tendency. Meanwhile the government remains open to investment offers and meets with both small and large-scale investors who are interested to invest in the region. “On behalf of Cushman & Wakefield | Veritas Brown we fully support the initiatives to bring additional investments to Georgia and look forward to the successful business forum on September 18th.” “Attracting Foreign Direct Investment (FDI) is one of the main priorities for Georgia. Thus a flexible investment environment, tax and legislative benefits, simplified company registration procedures, liberalized manufactured regulations and positive approach to foreign investors, is the big step forward for drawing FDI in Georgia.” Steve Brown the Managing Partner at Cushman & Wakefield | Veritas Brown has remarked. A similar forum was organized in London in May 2015, by CW|VB and the Georgian National Investment Agency. The event showed reported success, as Georgia demonstrated itself to be an opportunistic market for investment and gained further international recognition. It is obvious that this specific and other similar investment forums, will lead Georgia to further economic success, and undoubtedly will assist the global investors to enter the Georgian market. This will correspodingly increase the demand on various real estate properties, form new enterprises and hospitality related services, also the implementation of large-scale infrastructure

projects. All of these will lead Georgia towards a progressive development and vast economic success. “Georgia has fair, transparent and secure investment environment, a vast untapped potential in different sectors of the economy, excellent geographic location and free trade agreements with strategically important countries. But, still to this day, one of the main challenges for Georgia is raising awareness about the country on the international level. This is why, large-scale business events inside and outside the country are very important for attracting more companies to Georgia.” “With the help of “Batumi 2015” forum we aim to bring a closer attention to the advantages and business opportunities in our Country,” Giorgi Pertaia, Director of the Georgian National Investment Agency, said. According to Mr. Pertaia the Forum will bring together up to 250 business decision makers and investors from the region. “They will have direct access to the government representatives, consulting companies and organizations providing access to finance and will be a productive platform for engaging investors from the wider region into some large and medium-sized commercial projects in Georgia,” Pertaia said. One thing that is clear is that Georgia has demonstrated repeated readiness to serve, as a positive investment environment, therefore, September 18th is a significant date in Georgian investment climate.

September 14, 2015 #113



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he GEL devaluation and a rise in prices on products, electricity and other services are shaking the solvency of Georgia citizens. If prices keep rising and the inflation rate hits 10%, the quantity of impoverished people in Georgia will extremely increase instantly. In this case 10-12% of the middle class will be impoverished, economic experts assert. Finally, by 2016 the middle class will constitute one sixth of Georgian citizens instead of the existing one fourth portion. The social condition of Georgian citizens is worsening. Amid the GEL depreciation and a rise in electricity tariffs, essential things and products have already increased in prices by 5.4%. Finally, the GEL depreciation will grow annual expenses of an ordinary family by 300 GEL. It should be noted the ratio of surged electricity tariffs is very high in total expenses of Georgia citizens. In Tbilisi a monthly electricity taxes will increase by about 30-40 GEL in an ordinary Georgian family, economic experts assert. Electricity consumption extremely grows in winter period and ordinary families in Georgia will bear serious losses, statistician Soso Archvadze said. Hiked electricity tariffs will not hit only socially vulnerable citizens, because the government plans to alleviate their taxation burden for only this category. The government has ignored all other categories again. Family expenses will increase by 25% on average by 2016, a part of economists assert. According to economic indicators, in 2014 the averaged expenses of a family were 956.2 GEL. Amid 25% (240 GEL) upturn, the averaged monthly expenses of a family will rise to 1196 GEL from 956.2 GEL. The families that have taken bank loans in foreign currency will have to pay higher amounts. In this case, monthly expenses may exceed 500 GEL. In this situation, the middle class may further shrink and the poor category may further increase.

Under the official statistics, the poverty level in Georgia was fixed at 9-10% for the last years. Namely, the registered ratio of the poor population in 2011 was 9.2%, in 2012-2013 – 9.7%. In 2014 this indicator increased and made up 11.6%. Meanwhile, unofficial reports assert the poor category constitutes more than 50% of the Georgian population. The rich class constitutes about 20% of the Georgian population, the middle class makes up 25% and the remaining part is registered in the poor category, statistician Soso Archvadze said. If the prices keep rising, at the end of 2015 the middle class will considerably shrink and the poor category will increase by 10-12%. “The issue of how many citizens will be impoverished depends on two factors: 1) the size of the middle class; 2) inflation rates. We possess no legalized statistics on the middle class sizes, but we have expertise calculations, under which the middle class constitutes 23-25% in the population. If the inflation rate hits 10%, 10-12% of our citizens will leave the middle class and move to the poor category. Finally, if the middle class constitutes

one fourth of Georgian citizens, this correlation will shrink to one sixth portion”, Soso Archvadze told the Business Resonance. Sociologist Nodar Kapanadze finds it difficult to assess how many citizens will move to the poor category from the middle class. He confirms the GEL depreciation and increased electricity tariffs will make extremely negative impact on the public welfare. “Under the classical stratification, the middle class in Georgia is very small. Increased electricity tariffs will make less impact on this category. This segment will bear more losses from higher bank loan payments after the GEL depreciation. Surge in electricity tariffs and consumer prices will essentially shake the poor category and this segment will be further impoverished. If the government decides and prepares some poverty reduction measures, a hike in electricity tariffs and the GEL devaluation will not become a heavy burden on the population. To this end the Government should develop a strategy and take reasonable steps. I do not mean a compound of toasts in the strategy. Without this document, the living

condition of our citizens will be deteriorated”, Nodar Kapanadze noted. In general, poverty signifies a lack of welfare. Its size depends on the methodology of assessment in this or that country. Accessibility Component is a basis for calculating the poverty indicator in western Europe (how accessible the desirable education, high-quality healthcare, safe food products and so on are accessible to a citizen), but in Georgia this methodology is based on only minimum consumer basket jointly with minimum nonfood expenses. The Gini Coefficient also proves there is a heavy social situation in Georgia. According to GeoStat, the national statistics office of Georgia, the Gini Coefficient makes up 0.48 in our country, based on the total money expenses. When the Gini Coefficient exceeds 0.40 point, this signifies incomes and property misbalance in huge, specialists noted. In not only Europe, but also in the Post-soviet countries, Georgia is a sole country, where the difference between incomes is enormous. The Resonance



n September 8 Deputy Healthcare Minister Valeri Kvaratskhelia and President of the Global Alliance international consulting company Jean-Elie Malkin visited the Family Medicine National Training Center in Tbilisi to get acquainted with operation of one of the leading primary healthcare assets in Tbilisi. The Family Medicine National Training Center is a good instance of how the primary healthcare asset should function, Valeri Kvaratskhelia noted. “Primary healthcare sector is a fundament of the healthcare system. Several years ago the force-

majeure situation made us instituting reforms in other sectors. Fortunately, we have returned to the main issue, without which the healthcare system cannot function. When thinking of the healthcare reforms, naturally, we implied an implementation of infrastructural projects. We were thinking of the type of infrastructure and management. Today we have seen the asset, where all these aspects have been valuably resolved. Consequently, we will easier repeat this experience in other assets, as we have gained a very good and important example. As to the future plans, we will operate very fast.

We plan to hold a big conference on the primary healthcare issues on October 4-5. We will talk about specific issues and introduce main directions about how many healthcare assets will be necessary in Tbilisi, how many assets will be necessary in districts, what kind of healthcare assets should be arranged in rural areas. All these efforts will enable us to make the universal healthcare project more efficient. This project requires considerable financial resources and the primary health system enables to cut the expenditures and, at the same time, to receive high-quality services for our population”, Valeri Kvaratskhelia said. Having seen the Family Medicine Center and received information about its operation, we can boldly declare this is a wonderful instance of how the primary healthcare asset should be, Global Alliance president Jean-Elie Malkin said. “The Family Medicine Center is the place, where people bring their problems and they are met with warm and care. Professionalism, devotion of the staff and their services are really astonishing. I would like to congratulate the staff and directors on this success.” The primary healthcare sector is a necessary and urgent service in the whole system. Currently, we are assisting the Georgian government in improving all components of the health system. Our objective is to make the Family Medicine National Training Center a magnificent instance of improved and successful primary healthcare system in not only Tbilisi, but across the country. We back the Government in improving the system. We will multiply similar wonderful instances by arranging similar centers to further develop the healthcare system of Georgia”, Jean-Elie Malkin said.

The center operates under the principle of districts. As part of the overall health program, the center serves more than 45 000 beneficiaries in mainly the Didube-Chughureti District, Beka Ioseliani, the Family Medicine National Training Center medicinal director noted. “We make focus on statistical processing of information to employ it for further analysis of automatic systems. This is a very important moment for planning the company’s future strategy. Various automatic systems efficiently operate at the center such as quality-oriented payment system and prevention-oriented services. Family doctors, managers, practitioner doctors of the center were trained in Great Britain. The center staff is trying to take active part in the professional development schemes to permanently update and replenish their own skills and knowledge”, Beka Ioseliani said. The Georgian Health Ministry has announced the primary health reform a priority direction that will be implemented jointly with Hepatitis C and the universal healthcare programs. Preparatory works for the project implementation are underway and specific action plan will be completed by November. The reform aims at expanding the role of the preventive medicine, broadening accessibility to medical services on geographical level, arranging outpatient and inpatient clinics, especially in region, in terms of infrastructure and providing them with valuable equipment, ensuring valuable salaries to doctors and nurses in the primary health system and developing efficient system for their professional training. Global Alliance assists the Georgian Health Ministry in planning and implementing the reforms.



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September 14, 2015 #113


“Commercial Banks should not Increase Interest Rates and Fines to Borrowers in exchange for Loan Restructuring”

GIORGI KADAGIDZE The NBG President The Government, especially, the economic team Ministers should express their position over the refinancing instrument and the monetary policy, in general, the NBG President Giorgi Kadagidze noted. For the last year the Georgian economy has lost one billion USD in the form of foreign currency transfers to Georgia and this is a real reason for the GEL depreciation, Giorgi Kadagidze told reporters. “Consequently, the exchange rate contraction has also cut the imports in the same volume. As a result, the incomes part was reflected in the imports

contraction. Therefore, no exchange rate pressure is expected from this direction. I would like to stress this factor includes other negative factors, but in relation to the exchange rate we can note the fundamental factors were eradicated. What does this signify on the level of ordinary citizens? We are ready to carry out more aggressive monetary policy in various directions, if necessary. At the same time, the market players should be confident in our instruments as a main precondition to achieve the success. It is of crucial importance that the government, especially the economic team Ministers, express their position toward the refinancing instrument and in general, toward the monetary policy to finally put an end to this issue. As soon as we settle this issue, we will be able to take more active steps. There is nothing surprising and strange a part of our population has to serve more expensive loans, especially, those who had taken loans in USD. Consequently, those who are facing serious problems should apply to commercial banks for restructuring their credit agreements. On the other hand, commercial banks should show maximum of flexibility and they should not impose increased interest rates and extra fines in exchange for restructuring. Even more so, any threats of including clients in the so-called Black List and so on are entirely unacceptable”, Giorgi Kadagidze said.

“Don’t Pour out GEL So Desperately…”

MIKHEIL DUNDUA Expert for the 2030 Society The National Bank of Georgia (NBG) has deliberately devaluated the GEL exchange rate. Starting last Thursday the NBG has increased net debts of commercial banks by 18 million GEL to 590 million GEL through refinancing loans and certificates of deposits. “The national bank has spoiled the exchange rate again! Starting last Thursday the NBG expanded net debts of commercial banks by 18 million GEL

to 590 million GEL through refinancing loans and certificates of deposits. In 2014 this indicator constituted minus 105 million GEL. This signifies the NBG had taken 105 million GEL from commercial banks. Before the currency fluctuations, in 2014 the IMF was instructing the NBG to supply USD dominated loans to commercial banks in order to support the liquidity. Naturally, this is a difficult task, but very important, the recommendations read. Amid the currency volatility, the NBG supplies 1 billion GEL to commercial banks in the form of a refinancing loan and issues no penny in foreign currency. Meanwhile, in parallel regime, the NBG has placed 458 million USD from the currency reserves at foreign commercial banks. What is happening?! Our currency reserves serve the welfare of other countries, whilst problems should be tackled in the Georgian bank sector. When you supply 1 billion GEL to the Georgiabased commercial banks, it is clear this money will be exchanged into USD and the exchange rate will be spoiled. Do not spend and do not sell currency reserves! Do not spend even a penny! But we have placed reserves at foreign commercial banks and we should supply these resources to Georgian banks.



n September 7, at the award ceremony held in Chateau of Mukhranbatoni the winners of year 2015 of the annual literary competition Saba were revealed. Best books and authors of the year were revealed in the following nominations: Best literary debut – Giorgi Tsiklauri, Translation of Peter Ackroyd’s London (publishing house Azri); Best literary critique – Malkhaz kharbedia, Text and Truth, (publishing house Azri); Best essay and documentary prose – Irakli Makharadze, The Great Dumb (Bakur Sulakauri Publishing); Best translation – Khatuna Tskhadadze – Umbreto Eco, The Prague Cemetery (publishing house Diogene); Lela Dumbadze - Virginia Woolf, To The Lighthouse (Bakur Sulakauri Publishing); Best play – the jury decided not to grant a prize in this nomination in 2015. With their decision, the prize devoted for the “best play” nomination was not canceled, instead two winners were revealed in the “best translation” nomination; Best collection of short stories – Gogi Chagelishvili, Painter (publishing house Intellect); Best collection of poems – Paata Shamugia Schizociety (publishing house Intellect); Best novel – Abo Iashagashvili, „Royal Merry” (publishing house Diogene); Best foreign translation of Georgian literary work – Christine Lichtenfield, Novel by Otar Chiladze, A Man on the Road, translation into

German language. Prize for special contribution to the development of literature - Besik Kharanauli. The winners were awarded with Saba prizes and solid monetary prizes. This year’s Saba Award Ceremony was held in historic Chateau of Mukhranbatoni, located in Mtskheta region, in Mukhrani village. The names of the jury members were also revealed at the ceremony. This information was traditionally kept confidential during the competition. 5-member jury changes annually and it includes literature specialists, writers, winners of previous Saba competitions. The members of this year’s jury were: Zurab Kiknadze, Kety Kantaria, Levan Berdzenishvili, Zviad Ratiani, and Davit Turashvili. 315 works of different authors were submitted to this year’s competition. 46 of them were selected for the final stage by the jury. Winners were revealed from this latter list at the award ceremony. Saba award ceremony was aired live on Imedi TV. Musical support of the event was provided by Tbilisi Symphonic Orchestra headed by Vato Kakhidze. Famous young Georgian soloists participated in the special musical program. Literary prize Saba 2003 was founded by TBC Bank and Pen Centre in 2003. In 13 competitions held up to now, 115 monetary prizes - totaling almost GEL 450 000 -were awarded. Among other authors, the laureates of Saba are Tchabua Amirejibi, Anna Kalandadze, Vakhushti Kotetishvili, Guram Dochanashvil and others.

“Turkish Lira Depreciation to Hit Georgian Business”

EMZAR JGERENAIA The Economic Expert The Turkish Lira keeps dropping. The domestic media agencies report the Lira exchange rate against USD has slipped to the 3.00 point. The current political unrest and the US labor market’s unclear statistics are presumed behind the Lira devaluation, economic experts assert. Turkey deliberately depreciates the Lira to maintain the economic growth pace and make influence on its trade partners. The Lira depreciation

has already affected the Georgian exports, economic expert Emzar Jgerenaia noted. “For the last weeks the Turkish Lira is seeing the critical minimum. Amid the region’s ongoing developments, Turkey is seriously depreciating the Lira to give preferential condition to Turkish enterprisers and exporters. Turkey is a mighty exporter country. The country carries out exports to the Central Asia and Europe. Therefore, the Lira depreciation is one of the mechanisms for maintaining the economic growth rates. Amid the 2007-2008 crisis Turkey maintained the economic growth pace through the Lira devaluation. Another factor is related to the pre-election period in the country. Therefore, the national currency devaluation is a certain physiological pressure on the market. Thanks to these steps Turkey surpasses its trade partners. Naturally, these moves create serious problems to the Georgian business and exporters. The Georgian business will bear heavy losses. Georgia’s exports may also drop”, Emzar Jgerenaia told the IPress news agency. Turkey is Georgia’s major trade partner. In 1H15 Georgia’s foreign trade turnover with Turkey marked 870 million USD.



he Israeli-based hotel brand, owned and operated by the Kass Boutique Hotel Group, is scheduled to open in 2017 on Gergeti St, near the city centre. The group will invest $25 million USD (about 60 million GEL) to build the five-star facility. Additionally, the Kass Boutique Hotel Group will fund the establishment of the Art Hotel, Rustaveli Boutique Hotel and Rixos Tbilisi, with a total investment of $100 million USD. About 200 people will be employed during the construction phase of the Gergeti Boutique Hotel and once the new hotel begins to operate. Tbilisi Mayor David Narmania attended a press conference today with Kass Boutique Hotel Group founder Khanokh Kass, the company’s

executive director Klaus Bodo Hand, member of the Israel Labour Party Yehiel Bar and president of the Israel-Georgia Chamber of Business Itsik Moshe. Last month Narmania visited Israel and met the Mayor of Jerusalem Nir Barkat and other business sector representatives. The Israeli side is planning to invest up to $100 million USD for development plans in our country. We initiated a series of reforms in order to strengthen our economy with the support of local and international business representatives,” said Narmania at today’s press conference. At the end of today’s duties, Narmania and the foreign investors buried a symbolic capsule into the foundations of the Gergeti Boutique Hotel building.

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he price of grapes could exceed one lari. CBW was told by George Samanishvili, Chief of Vintage Coordination Headquarter Office. According to him, the final price of grapes will be determined after grape ripens and the harvest enters an active phase. Starting from 10 September, the state begins grapes purchase in Dedoplistskaro and Signaki districts. The state will pay 25 tetri for 1 kg of ripe (conditional) rkatsiteli, which price amounts to 60 tetri, including the subsidies. The state will pay 60 tetri for 1 kg of saperavi grape, the price of which will reach 75 tetri including subsidies. State Company Ltd. Gruzvinprom and 4 wineries will purchase grapes. Other districts of Kakheti region will be gradually involved in Rtveli. George Samanishvili says that after the end of the 2015 vintage, all will be satisfied, and the Kakhetian farmers’ threats to cut down the vine-

yards and destroy the grapes , in his opinion, were uttered in anger. In the words of Samanishvili, the Ministry officials hold meeting with farmers on a daily basis. As for the farmers’ protest over low prices, Samanishvili notes that each year before the beginning of the harvest of grapes, some farmers began to talk about the price. In some regions of eastern Georgia farmers held a protest against lower purchase prices of grapes. “Before the election, we were told that the price of 1 GEL per one kilo of grapes is low, but now it is even lower. Wineries buy grapes for 35 tetri per kg, moreover, they have not yet begun to accept, and if that continues, the whole crop will be spoiled,” say farmers. Kakhetian farmers ask the government for help saying that the price of rkatsiteli grape, which as of today makes 70 tetri, including subsidies, should reach at least one lari in order the farmers will be able to repay the costs.



ccording to Wine National Agency, 19 860 452 bottles (0,75 l) of wine were exported from Georgia though 8 months, which is less by 46% comparing to the same period of the previous year. Export reduction in Russia and Ukraine has made the basic impact on the export volume of 8 months: Georgian wine export is reduced by 5% in Russia, while 63% in Ukraine year-over-year. It should be noted, that Georgian wine is sold at the markets of 37 countries, at that growth is fixed on the following markets y-o-y: Kazakhstan - 2% (2 936 256 bottles), China - 60% (1

185 821), Poland - 1% (1 020 394), Latvia - 2% (709 602), Lithuania - 1% (363 678), Estonia 37% (297 432), Germany - 27% (188 528), the US - 26% (155 744), Canada - 89% (120 180), Japan - 7% (90 194), Kyrgyzstan - 23% (79 080), Korea - 221% (24 054). Top-5 of the exporting countries are as follows: Russia - 10 111 948 bottles, Kazakhstan - 2 936 256, Ukraine - 1 739 438, China - 1185 821 and Poland 1 020 394. As for the other alcohol beverages, 3 677 415 bottles (0,5 l) of brand were exported in 16 countries and 75 036 bottles(0,5 l) of chacha through January-August.



wo leading Japanese environmental companies are pledging to help Georgia address its rubbish and recycling problem. Japanese firms Carbon Free Consulting and Global System Co Ltd confirmed they planned to launch new project in Georgia concerning waste management, initially in capital Tbilisi and in nearby Rustavi. In the first stage of the project, waste recycling factories will be constructed in the two cities. Representatives from the two Japanese companies were part of a Japanese delegation who are currently in Georgia to meet local officials and

explore ways to develop the projects. Today the delegation met with Georgia’s Minister of Environment Protection Gigla Agulashvili and other agency officials. While here the Japanese sides have been conducting a survey about the waste management situation in Georgia, and the results will be finalised by April 2016, the Ministry stated after the meeting. In particular the Japanese side was interested in Georgia’s legal procedures regarding waste management and the current strategy and planned reforms of the Ministry of Environment Protection.



ccording to preliminary data, foreign direct investment increased by 81% in the second quarter of 2015, compared to the same period of the previous year and amounted to $ 355 million. Which companies invested the biggest investment in Georgia in April-June? Data provided by the statistics agency shows that among the top five biggest investors are BP, Black Sea Terminal, Geocell, CBD Development, IDS Borjomi, however, the amount of implemented investments is not specified. British BP is one of the largest energy companies in the world. In Georgia, it has been working since 1996. Its core business is safe transportation and delivery of energy. The company oper-


caucasus business week

ates the three major oil and gas pipelines passing through Georgia. Purpose of Kulevi Black Sea Terminal owned by “SOCAR” is designated for transhipment and storage of oil and oil products to the West. “Geocell” is a member of the Swedish TeliaSonera Group. In the second quarter the largest FDI investor countries are: Azerbaijan ($160 million) , the Netherlands ($ 68 million), Turkey ($ 41 million), followed by the United Kingdom, Luxembourg, Cyprus, France. China, Kazakhstan. The distribution of FDI in sectors is as follows: Transport and communications -207 million, the financial sector - 41 million , manufacturing- 30 million, the construction- 25 million, real estate - 20 million , energy- 9 million , agriculture, fishing- 7 million , mining - one million.



he last three years have recorded a plunge in foreign direct investments (FDI) into the Georgian power sector. FDI inflows to the energy sector marked 9 million USD in the second quarter of 2015, the lowest figure for the last 10 quarters. The FDI inflows to the energy sector made up 11 million USD in the first quarter of 2015, 37 million USD – in the fourth quarter of 2014, 51million USD in the third quarter of 2014, 79 million USD in the second quarter of 2014 and 23 million USD in the first quarter of 2014. As to the year of 2013, the FDI influx to the Georgian power sector constituted 52million USD in the first quarter, 71 million USD in the second quarter, 79 million USD in the third quarter and 48 million USD in the fourth quarter. The Georgian power sector ranks seventh in the FDI portfolio in the second quarter of 2015. The sectors of hotels, restaurants, real estate, housing, processing industry, as well as financial sector, transportation and communications fields are ahead of the power sector. All these directions recorded a growing tendency in terms of FDI inflow in the second quarter of 2015. The ratio of three major sectors made up 78% in the reporting period. A bulk of FDI inflows was directed to the transportation and communica-

tions sector and the figure made up 207 million USD, a 58% ratio in total FDI portfolio. The financial sector is second with 41million USD and the processing industry is third with 30 million USD. According to a preliminary report, total FDI inflows in the reporting period made up 355million USD, up 81% compared to the official report for the second quarter of 2014. According to GeoStat, the national statistics office of Georgia, the diagram N2 mirrors a percentage structure of FDI donor countries. Azerbaijan ranks first with a 45% ratio, the Netherlands is second with 19% and Turkey is third with 12%.



azprom, reduced the price of gas supplied to Armenia by 13%, received guarantees of exports of electricity generated by Razdan thermal power station to Iran and Georgia. In addition, the power plant received sales guarantees for generated power in the country, although transmission lines have not yet completed. Yesterday, Alexander Novak, Minister of Energy of the Russian Federation, and Yervand Zakharyan, Minister of Energy of Armenia, signed a protocol of changes in the intergovernmental agreement on prices for Russian gas reached in 2013. According to the protocol, the base price of gas is reduced from $ 189 to $ 165 per 1 thousand cubic meters. However, the dollar price seems high to Yerevan: yesterday, Armenian President Serzh Sargsyan at the meeting with Vladimir Putin said that “during the crisis currency fluctuations very painfully affect the rates.” But reduced the price “Gazprom” managed to get guarantees of its energy assets efficiency in the country. The protocol on the terms of sale of shares of “Gazprom Armenia” (100% owned by “Gazprom”) signed in 2013 has been amended, on which the company will receive priority access to access to 400 kV “Armenia – Georgia” power transmission line after its commissioning. But before the transmission line is commissioned, Yerevan guarantees “Gazprom Armenia” sales of at least 1 billion kilowatt hours per year, including 500 million kilowatt-hours on the domestic market. The Ar-

menian government approved this amendment on August 18. Gazprom in 2013 completed construction of the fifth unit of the 480 MW Hrazdan thermal power station. However, the internal energy market in Armenia is not so attractive – primarily due to difficulties with the tariffs. The government’s attempt in the early summer to raise electricity prices by 6.93 drams ($ 0,015) per 1 kWh provoked spontaneous demonstrations in Yerevan and put the country on the brink of a political crisis. The government had to promise to compensate for the difference between the new and old rates. Now the tariff for electricity generated by the fifth unit of Razdan TPP is 40,1 drams ($ 0.083) per 1 kWh. While exports to neighboring countries for the local generation is hindered: electrical power is delivered only to Iran, but in the framework of a barter agreement. Yerevan TPP working on Iranian gas, sells energy to Iran at the rate of 3 kWh per 1 cubic meter, in 2014 in total 1.16 billion kWh was exported. The thermal power station sells excess electricity at a very low price in the domestic market. At the same time, in 2014 consumption in Georgia increased by 6.2% to 10.77 billion kWh, but the local energy system is based on hydroelectric power stations, so the country is experiencing power shortages as well as excess . Now “Inter RAO” earns from exports: in 2014 a total of 627 million kWh was exported to Georgia from the Russian Federation, while imports amounted to 160 million kWh.



nvestment of 85 million USD should be made in the construction of new plant, which will located at the near-by area of Tbilisi International Airport. “Partnership Fund’s” co-partnership in the project will amount to 40 million USD. Construction of the enterprise has officially started on Monday. Georgian Prime Minister took part in the groundbreaking ceremony. The Premier noted, that he was glad by return of ELBIT System in Georgia, which is expression of trust towards the acting government. According to Garibashvili, problems were created to the company of Israel during the previous

government and the company left the country. However, it became necessary to compensate. To note, parts of civil aircrafts will be produced by composite materials in the new enterprise. The production will be totally exported. The investors declare, that over 300 persons should be employed in the enterprise. The Premier hosted Bezhalel Machlis, president of ELBIT Systems-Cyclone (Company of Israel) in the government administration. The head of the government has called the project most important for the development of country’s economy and hoped that, the project should be carried out successfully.



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ow, we really had the weather fit for beer in August! Beer beckoned us itself, as they say. September is going to be like this as well, promising many new friendships. You do remember that beer is a surefire way of forging friendships, don’t you? Read on to find out more interesting traits this wonderful beverage is rich with. 1. Beer is a natural product. It can’t not be natural, since intake would be otherwise impossible. Beer may even be more natural than milk or fruit juice that we buy every day. 2. Beer improves your inner rhythm. The inner rhythm being, of course, our heartbeat. According to recent studies, a measured intake of beer positively affects the heart muscle and helps its functioning. 3. Drinking beer will give your mind a workout. Let’s first agree on the fact that beer won’t turn you into Einstein, but it will contribute in stimulating your brain if drank systematically and in good measures. In a study that involved 40 people made to solve verbal tests while watching a movie, those whose blood contained 0.75 alcohol performed better in the assignment.

4. Measured intake of beer lowers the risk of type 2 diabetes. It took years and studying the health of 38 000 people for Danish scientists to confirm this. Those with a moderate affinity to beer exhibited much less signs of type 2 diabetes. The main point here was a moderated and regular intake of beer, which always helps. 5. Beer commands taste. This beverage has a unique feature, which is being an impeccable taste diluter, which means it goes really well with lots of dishes. Be it vegetables, bakery or meat meals, beer holds a secret by which instead of taking away from their taste, it enhances and enriches it with more taste. Meaning beer will help you fall in love with food. 6. And lastly, beer is the medicine for self-confidence. A study was conducted in Great Britain where people were asked to make speeches, after which they had to evaluate their own performance and appearance. Here too, regular beer aficionados confessed to have being more self-confident. So that is that, friends; beer is medicine if used in careful doses. Mevlud likes beer and loves you, which is why in subsequent posts we’ll talk about more interesting topics regarding the beverage that we all love.

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ruvox International, a leading supplier of commercial and industrial floorcare machines, held a masterclass at the Clean World on September 8. Truvox exports manager for Europe Max Chupis visited the Clean World’s studying center and updated the employees on how to use modern machines. The aim of the masterclass was to introduce Truvox technology to Georgian specialists. At the end of the presentation, the Clean World employees tested the Truvox latest equipment themselves. Truvox International is proud of being the world’s leader in the design and production of innovative floorcare machines, as well as in demonstrating thorough attention to quality standards. Truvox is a BSI Registered Company (BS EN ISO 9001:2008). The masterclass helped the company’s employees to learn about the specifications of the equipment. This masterclass has improved professional skills of our specialists. “I am very content with this event. Many interested people gathered in a friendly environment

and we have achieved our main objective. As planned, we have shown the theory and practice of how to use Truvox’s machines. I have answered many questions. The reaction of these employees was really strong. They seemed to be interested in every details of the technology. I felt the interest from the very beginning. It was clear that employees came to really learn and get as much information as possible”, Truvox exports manager for Europe Max Chupis said. “It is our obligation to offer highest-standard services to our customers. We are working in this direction every day. Truvox technology manufactures multifunctional equipments. With its help it is possible to work quickly and increase output. The training helped our cleaning specialists to learn about the equipment specifications and I’m sure it has enhanced their professional skills. They had the opportunity to test their abilities and see how technology really works. After the masterclass they cleaned the soft and hard floor and carpet. We have an ability to properly respond to our customer demands and needs”, the Clean World PR department head Khatia Alpaidze said.


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nder the new circumstances and following the Vienna Agreement [clinched between Iran and six world powers over Tehran’s Nuclear Program], Tehran welcomes the presence of foreign investors and entrepreneurs in the country, and Spanish companies can enter the Iranian market as well,”said Rouhani in a meeting with the Spanish Foreign Minister Jose Manuel Garcia-Margallo in Tehran on, Press TV reported. In another press conference, the spokesman of Iran’s Judiciary says the judicial system of the Islamic Republic supports foreign investment in the country and is ready to remove obstacles to facilitate such investment. Mohseni-Ejei said, “We have been following up on this issue for a number of years and we are cooperating with the [Iranian] administration in this regard right now.” The official added that the Iranian administration is bent on eliminating all existing obstacles to investment and production, especially within the state-run organs. “Naturally, the Judiciary will help in this regard wherever it will be able to do so, and there will be no difference between domestic and foreign investors,” he said. According to a report released by the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) in late June, the Islamic Republic attracted a total of USD 3 billion in foreign direct investment (FDI) during the first quarter of the current Iranian calendar year (started March 21, 2015).

iPad Pro

As expected, Apple is making a bigger, faster iPad. The iPad Pro is 12.9 inches. It’s the same height as the iPad Air, so you can run iPad Air apps side by side. The screen has 5.6 million pixels -- more than a 15-inch MacBook Pro with a Retina display. The iPad Pro starts at $799. Inside it’s much faster. The iPad Pro has a new A9X 64-bit chip. It’s 1.8 times faster than the previous iPad’s CPU (“desktop class” according to Apple executive Phil Schiller). It is powerful enough to edit three streams of 4K video at a time. It has a 10-hour battery life, is super thin and weighs just over 1.5 pounds. “Why make an iPad with a bigger display?” asked Schiller. Good question! Games and movies look better on a bigger screen, he said. It’s big enough to have a full-size keyboard on the screen. If you don’t want to type on the screen, Apple has made a new smart keyboard that doubles as a cover, Microsoft (MSFT, Tech30) Surface-style. The keyboard is coated with a thin fabric.

pple CEO Tim Cook has unveiled two new iPhones as well as the new Apple TV, iPad Pro and Apple Watches. The new iGadgets were unveiled during a press event Wednesday at San Francisco’s Bill Graham Civic Auditorium. “While they may look familiar, we have changed everything about these new iPhones,” said Tim Cook. Apple has updated its two smartphones. The new iPhone 6S and iPhone 6S Plus are available in four colors: silver, gold, space gray and rose gold. The devices are now made from 7000 series aluminum, which is an aircraft-grade material. It’s stronger than the previous phone aluminum and is unlikely to bend. The devices’ biggest addition is a 3D touch screen, a feature introduced on Apple trackpads and the Apple Watch, that was previously known as Force Touch. The technology recognizes new gestures like pressing and holding. It vibrates slightly to let you know it’s been pressed. The new iPhones also come with a 12 megapixel

iSight rear camera, with 50% more pixels than the iPhone 6. The front-facing camera is now 5 megapixels (for sharper selfies). A kooky new photography feature called “Live Photos” combines photos and videos. When you take a photo with the Live Photo setting on, it records a second-and-a-half video before and after the clip to make a tiny little video. Press and hold on your photo and it will play. The phones also have the new A9 processor and faster fingerprint sensors. There are new charging docks to match the colors of the iPhones as well as new covers. The phones will cost the same as the last version (starting at $650 and $750 for the 6S Plus). The previous versions (iPhone 6 and 6 Plus) will each drop $100. A new iPhone Upgrade program lets you lease an iPhone for $32 a month and get a new version every year. The new iPhones will go on pre-sale on September 12 and will hit stores on September 25. IOS 9 will be available on September 16 for anyone with an iPhone as old as an iPhone 4S.

The company is also making its own stylus, but with the usual over-the-top design and marketing. Yes, it’s the Apple Pencil, a low latency stylus that feels like a real pencil. It even got its own Jony Ive narrated videos. It “feels like a true writing or drawing instrument,” said Ive. As the name implies, the iPad Pro’s real target audience is business users. To show that it’s serious, Apple brought out a very unexpected partner to demo the iPad Pro: Microsoft’s Kirk Konenigsbauer. He demonstrated Microsoft Office for iPad Pro using the Apple Pencil. Adobe (ADBE) also demoed its iPad Pro apps including a new product called Photoshop Fix, a retouching tool. Using the iPad Pro and new stylus, Adobe’s Eric Snowden did some realtime edits including the odd choice of changing a photo of a model to make her smile more. (It was the first woman on stage during the presentation.) For the final demo, Irene Walsh from 3D4Medical showed off her startup’s 3D medical app that shows 3D interactive anatomy images for medical students and patients. The company also announced a new iPad Mini 4.

The device will start shipping in October and cost $149 for the 32 GB version and $199 for 64 GB. The new black remote features a glass touch surface on the top half, so you can navigate the

Apple TV

“We believe the future of television is apps,” said Tim Cook before introducing the expected new Apple TV. The latest Apple TV features a thirdparty App Store, a new remote, Siri controls and a completely overhauled operating system. The TV now runs on tvOS, which is based on iOS and “built for the living room,” according to Apple’s Eddie Cue.



ccording to the Works Bank, the new Regional Director will be effective from October 1, 2015. She will oversee the Bank’s program in the three countries – Armenia, Azerbaijan, Georgia. “Mr. Mercy Tembon will lead the development and implementation of the Bank’s Country Partnership Strategies in these countries, as well as continue the dialogue with civil society and development partners. Ms. Tembon will be based in Tbilisi, which hosts the Bank’s Regional Office for the South Caucasus”, the Works Bank’s statement says. It should be noted, that Ms. Tembon, a Cameroonian national, joined the Bank in 2000 as an Education Specialist in the Human Development Department in the Africa Region. According to the Works Bank, in her new position, Ms. Tembon’s top three priorities will be: lead the country team to deliver knowledge, convening and financing services that respond to client demands and needs, and contribute to achieving the Bank’s twin goals of ending extreme poverty and boosting shared prosperity; To oversee the implementation of the existing portfolio and guide the future direction of the program, and work with IFC and MIGA to strengthen the World Bank Group delivery. To remind, Ms. Tembon will take over from Mr. Henry Kerali, who was appointed as the Country Director for Ghana, Liberia and Sierra Leone, based in Accra.

Another app by Gilt lets you shop directly from the Apple TV. MLB has an Apple TV app for watching multiple live games at a time with popup notifications and interactive stats.

Apple Watch

The company kicked off the event with an update about the Apple Watch. Fashionistas now have more band options. The biggest addition is a wrap-around brown leather Hermés band, which will be available in October. The watch itself now comes in gold and rose gold, and there are new sports band options as well. The smart device was released in April. There Apple TV with swipes and other gestures. The Bluetooth remote has volume controls for the TV and a built-in accelerometer and gyroscope. It can last three months on one charge. It recharges using a Lightning connector. Too lazy to swipe? Tell Siri what you want, like, “Siri, show me a New Girl episode with Jamie Lee Curtis in it.” If you miss something, say, “Siri, what did she say?” and the episode will rewind a few seconds and turn on captions. Don’t know what you want to watch, Siri can make movie and TV suggestions based on things like genre. Siri searches across all apps, so you don’t have to jump between HBO Go and Netflix to find something specific. The biggest boost for the device is opening it up to third-party developers. You can use the device to play multiplayer games. Apple demoed a few examples, including Harmonix’s Beat Sports and Hipster Whale’s Crossy Road.

are now more than 10,000 watch apps, including a few new important additions. Facebook Messenger’s app will let you send text, audio and location messages. GoPro’s app acts as a viewfinder for your camera. iTranslate lets you speak a word and get a translation and AirStrip is a tool for medical professionals. It’s also adding transit directions to the included Maps app.


PUBLICITY caucasus business week

September 14, 2015 #113

September 14, 2015 #113

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail:; United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: Web-site: Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: Web-sait: Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail:; Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: Address: 8, M. Abashidze str. Batumi, Georgia; tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: Web: Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: Romania Embassy



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

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

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

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

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

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

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

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

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

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

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




caucasus business week

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


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

September 14, 2015 #113

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