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August 1, 2016 #156
August 1, 2016, Issue 156 - www.cbw.ge
Healthcare Pre-election Promises by Political Parties are Populist
Pg. 11
Banking Georgian Banking Sector’s Profits Grow by 19%
Development Orbi Group Project Gains Global Recognition
Pg. 7
Pg. 12
Success of small poultry companies beat bigger ones?
Hualing Group: What Georgian Bank Sector should Expect Hualing Group has started active process of reregistering Bank Republic. The group that had no experience in the banking business before Basisbank acquisition in 2012 has entered the Georgian bank sector. Since Chinese investors have taken bold steps in the Georgian business sector, they need a commercial bank for transactions. We know that Turkish, Arab, Kazakh and Azerbaijani commercial banks also operate to serve investors from the mentioned countries, but these commercial banks are less known. However, Bank Republic is other dimension. This is one of the leading commercial banks and its disappearance from the bank sector will further narrow the competition environment. Pg. 6
E-Cigarettes May Help More Than They Hurt
Pg. 9
The world may be better off with e-cigarettes than without them. Sort of. Although a slew of studies have found the device serves as a gateway to cigarette use, such concerns may be exaggerated, according to a new study. Researchers in the U.S., Australia, and Canada have devised a model showing that, among people born after 1996, the option of using e-cigarettes may end up triggering a 21 percent reduction in smoking-attributable deaths and a 20 percent decrease in lifeyears lost. Companies such as Altria Group Inc. and Reynolds American Inc. turned to vapor products as a solution to a serious problem: Their core product is flaming out. Health concerns have smokers increasingly trying to kick the habit, adding to a broader longterm decline in tobacco sales. And while electronic cigarettes aren’t a panacea, having been linked to decreased immune response and heart disease, they are widely seen as less dangerous than smoking. Pg. 15
Newsroom
2 Government
Finance Minister: We should Foster Dedollarization
Georgian Finance Minister Nodar Khaduri urges Georgian citizens to take loans and place deposits in the currency in which they receive salaries and incomes.
EIB will allocate additional EUR 100 million to Republic of Georgia
During the meeting projects performed based on MDF and EIB last year cooperation were discussed, as well as future goals were set.
economy
June 2016: Georgia’s GDP grows almost 3%
In June 2016 the estimated real Gross Domestic Product (GDP) growth rate reached 2.9 percent year-on-year (y/y), while the estimated real GDP average growth equalled 3.1 percent for the second quarter (Q2) of 2016 y/y.
Georgia Received More than the $ 600 million for Construction of BTC The news which includes data of July 1 is disseminated by SOFAZ. The announcement notes, that 23,2 million USD is allocated for implementation of the project in Q1, 2016.
banking
NBG decreases policy rate 50 basis points to 6.75%
Georgia is starting to move away from its tightened monetary policy set by the NBG in February 2014 – the time when the national currency (Lari/GEL) started to fall against the United States (US) dollar and the Euro.
Credit Portfolio of Commercial Banks Grows in June
In June 2016 the crediting portfolio of commercial banks (including loans issued to nonresident entities) has increased by 1.2 billion GEL (+7.8 month on month).
business
Pistachio in Our Family Project Underway in Georgia
The Georgian Pistachio Association has launched a new project – Pistachio in Our Family. Any citizens are able to join the association and receive three seedlings for planting them in Georgia as part of the project.
GWP to go at the international stock exchange with energy assets
BGEO Group will use experienced model of “Georgian Healthcare Group” for successful placement of “Georgian Water and Power” at London Stock Exchange.
company
Natura Tea Company to Export Georgian Tea to Foreign Markets
Natura Tea Company tea-processing company that appeared on the Georgian market in 2015 plans to launch Georgian tea exports to foreign markets.
New System of Profits Tax to Come into Force in 2017
D
eputy Finance Minister Lasha Khutsishvili has taken part in the round table of the UN top political forum: “Reform of Internal Resources Mobilization in Partner Countries and Role of Addis Abeba Tax Initiative”, where he updated the meeting participants about the Georgian experience in cooperation as part of the initiative. Addis Abeba Tax Initiative was created in 2015 by the Governments of Germany, Netherlands, Great Britain and the USA. It unites more than 40 countries and organizations that have showed readiness to increase efforts in partner countries for fostering mobilization of internal resources in the partner countries. It is worth noting Georgia
was one of the first countries that joined the mentioned initiative. Georgia has been cooperating with this initiative from the very beginning. At the meeting the Deputy Finance Minster talked about introduction of minimal standards on Georgia’s performance under the Base Erosion and Profit Shifting (BEPS) project. He also named the fields where the country needs assistance from the Addis Abeba initiative donor countries. He also emphasized Georgia’s active involvement in the current project in international field such as the inclusive platform developed for BEPS package introduction. Georgia joined this platform in June 2016 and it provides plenipotentiary and
equal involvement in tax evasion prevention efforts jointly with Organization of Economic Cooperation and Development (OECD) and the Big 20 countries, as well as in the BEPS workgroups and in the group of experts of transparency and information exchange global forum. The Deputy Finance Minister updated the forum participants on tax system reforms in Georgia, including the new system of profits tax that will come into force in 2017. The meeting organizers jointly stressed Georgia’s active involvement in international projects and the country’s progress in tax system reformation issues.
The Law on Registration of Land will fully enter into force from August
T
he Law on Registration of Land will fully enter into force starting from August 1. This is an important issue for the local community that will support development of the agriculture industry as well as better organization of the land market, – with these words Prime Minister of Georgia assessed the Law during today’s Government session. Pursuant to Giorgi Kvirikashvili, only 25% of the existing land plots in Georgia are registered. This poses a problem for the private sector, since the population is not able to capitalize their and fully utilize their property for the economic purposes. “It is a welcoming fact that land registration scheme has been simplified. In the process of land registration, state provides substantial support to the population, including through channeling the financial instruments. I consider that after the termination of the project we will have much healthier and fuller picture. This will help development of
BUSINESS WEEK
The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 12 Director: Levan Beglarishvili WWW.CBW.GE
August 1, 2016 #156
caucasus
Mobile phone: +995 591 013936 Email: caucasianbusiness@gmail.com
the agriculture sector on the one hand as well as better management of land market. At the same time, this is a social issue – since more than 50% of the population is involved in the agriculture sector and this is an important project for ensuring that population stays in the rural area,” – Prime Minister state. Following the provisions of the Law, mediation, request of information and other notarial services will be completely free for the society, – articulated the Minister of Justice. According to Tea Tsulukiani, the society will be able to receive the service envisaged by the project during one year. “The question of inaccurate surveying drawings will also be addressed to remove the problems faced by the farmers throughout past several years. The registration of the land plots shall take place during one year. This process was hampered by various problems before,” – Tea Tsulukiani noted. Head of the Government requested the Minister of Justice
to create a mechanism that will eliminate the risks of the abuse of the provisions of the law. “It is crucial to ensure that registration of land plots is conducted via correct and transparent process,” – Prime Minister noted.
www.cbw.ge <<
Turkey Completing Construction of its BTK Railway Section
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A Study Reveals What Georgians Think About Public Services
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KfW Appoints New Director for Eastern Europe, Caucasus and Central Asia Department
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Emzar Jgerenaia: Additional Regulations for Tobacco Control May Hit State Budget
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Sports infrastructure of unparalleled scale to be constructed in Georgia
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Rustaveli Boutique Hotel to Open on August 25 in 2016
Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Reporters: Nino Kuparashvili, Lazare Gvimradze; Shiva Parizad. Designer illustrator: Ilia Chrelashvili. Technical Assistant: Giorgi Kheladze
Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge
August 1, 2016 #156
Conference
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International Conference: Issues and current challenges of Gender Equality policies, Visegrad Countries Experience for EaP Countries Today’s world is facing many challenges that are related to the basic human rights. Among the top agenda of today’s problems are the issues of gender equality. These issues are significant not only from the viewpoint of justice but also from the perspectives of pure economic efficiency. In places and in countries where men and women have equal possibilities of using their abilities and resources are usually better developed countries than others. Such an outcome results in sustainable economic growth and development. This relation and the priority of the question is acknowledged in Georgia and in Ukraine. Gender equality issues are included as the reformation direction in EU association agreement. On 15th of July, 2016 was held the international conference: Issues and current challenges of Gender Equality policies. The conference was held within the project: Gender Policies and EU Integration – Experience of V4 for EaP Countries. Covering the challenges of gender equality policies in Ukraine and in Georgia the main focus, on the side of policy improvement, was made V4 countries experience. Experts from Visegrad courtiers were presented at the conference, namely
the following experts and representatives of the think tanks: • Slovakia - Institute of Sociology, Slovak Academy of Sciences; • Czech Republic - „Gender Studies, o.p.s.“; • Poland - Institute of Sociology, Jagiellonian University; • Hungary - „Hungarian Women’s Lobby“. From Ukraine representatives of Gurt Resource Center have outlined the current situation and challenges of Gender equality in Ukraine. The conference was attended also by the representatives of local foreign embassies and international organizations, independent experts and researchers from academic institutions and think tanks. The main publication of the project covering the EaP reality in gender equality issues and experience of Visegrad countries can be accessed at the following links: http://fwevisegrad.ge/ Project if funded by the International Visegrad Fund (www.visegradfund.org) and implemented by the Fund of Women Entrepreneurs. (Project # 31550123) Fund of Women Entrepreneurs Kutaisi, Mgalobslihvili Street #6 Tel.: (+995 0431) 27 29 02;
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company
August 1, 2016 #156
Why Archi Group?
Archi Group is one of the leading companies on the development market. The company plans to expand business in this field. Confidence, loyalty, professional attitude to the business and timely implementation of projects – these are the main principles of business attitude of Archi Group. Trust and professional devotion to the business have preconditioned results of the research work that was conducted among the Buyers.
98 60 55 33 40 %
are very content The research revealed that 98% of the company’s customers are very satisfied with Archi Group’s services. 30% of the customers are content with quality of construction works. 27% are sure that Archi Group is a reliable company; 20% of the customers find apartment prices affordable and payment options attractive, while 19% give preference to the project location.
%
stress the company reliability
%
In response to the question why they have chosen Archi Group, the answers were distributed in following way: 60% of the respondents stressed on the reliability of Archi Group, 29% think Archi Group provides the best payment terms, 9% gave preference to Archi Group by recommendations of relatives and 2% named various reasons.
liked service quality The inquiry also showed that 55% are happy with the service quality provided by Archi Group, 33% of the respondents like payment terms, 8% appreciate everything and 4% are delighted by diversity of projects.
%
like payment terms
mln
Total Investments The company plans to develop 4 new projects by the end of 2016. Total investment value of all 4 projects is 40 million USD. Besides Tbilisi, Archi Group plans to build new hotels and apartment hotels in resorts of Georgia. The company will hold presentation of these new projects in the nearest future.
It should be noted that since 2006 Archi Group has been implementing various large-scale development projects in Tbilisi and regions. The company makes focus on construction and development projects. Archi Group has already completed 6 residential buildings in Tbilisi, 1 commercial project and is implementing 8 ongoing projects.
August 1, 2016 #156
publicity
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H 6
econo-mix
uaLIng Group: What Georgian Bank Sector should Expect Hualing Group has started active process of reregistering Bank Republic. The group that had no experience in the banking business before Basisbank acquisition in 2012 has entered the Georgian bank sector. Since Chinese investors have taken bold steps in the Georgian business sector, they need a commercial bank for transactions. We know that Turkish, Arab, Kazakh and Azerbaijani commercial banks also operate to serve investors from the mentioned countries, but these commercial banks are less known. However, Bank Republic is other dimension. This is one of the leading commercial banks and its disappearance from the bank sector will further narrow the competition environment.
Origins of Hualing Group Hualing Group entered the Georgian market in 2007 and at this stage the company has implemented 8 main investment projects and their total investment value is about 0.5 billion USD. Moreover, in 2014 Hualing Group was Georgia’s major foreign investor. Initially, the company bought a 20-year logging license in 2007 and environmentalists staged serious criticism against the company. Two Chinese timber processing workshops operate in Kutaisi and the village of Lia, the Samegrelo Region. In Kutaisi, Hualing Group also owns furniture manufacturing plant. In 2012 the Chinese Group expanded business activities in Georgia. The investors bought a 20-year construction and facing stone mining license for extracting 2400000 cubic meters of raw materials. By the way, in 2009 Hualing Group purchased the territory of the former automobile building plant in Kutaisi and arranged stone and furniture plants on the mentioned territory. Moreover, in 2012 Hualing Group bought a stake in Basisbank and currently, the Chinese Group holds a 99.8% stake. The deal was aimed at strengthening Basisbank for serving the ongoing and new projects and enhancing ChinaGeorgia economic cooperation. The key function of Basisbank was to ensure money flows. In the same year of 2012, Hualing Group launched implementing its major investment project of Tbilisi Sea New City. Recently, on June 14, 2016, jointly with the government members, Tbilisi Sea Hospital was unveiled. The multiprofile clinic has 100 places. The Chinese Group has also entered the healthcare sector. Moreover, on June 25 jointly with Prime Minister Giorgi Kvirikashvili, the company laid a foundation of a cement plant construction. LLC Black Sea Cement will manufacture 3500 tons of Clinker cement a year.
August 1, 2016 #156
Why Bank Republic? The mentioned projects have evidently demonstrated the objectives of Hualing Group in Georgia. Namely, the company plans to enhance business activities and cover absolutely all sectors in Georgia. It is clear that Hualing Group needed a commercial bank to serve so many projects. However, the question is why Hualing Group needed a major bank, even more so this group does not have experience in the banking sector. Analysts hope that the Chinese group will not transform Bank Republic into a bank for only money flow and will not leave the monopolized bank sector in hands of four commercial banks. «The Chinese company has bought a commercial bank. We can appraise this fact as a positive event, despite the Group does not have experience in bank management. This signifies Chinese businessmen will continue operation and will make serious investments in the Georgian bank sector. All foreign investors that bring big capital to Georgia try to have own commercial banks. Kazakhstan, Turkey follow this policy and naturally, China is taking the same efforts”, Mikheil Tokmazishvili, the former member of the national bank of Georgia (NBG) noted and added that Chinese investors seem to be going to make serious investments in Georgia. The Chinese Group is expected to maintain the segment of Bank Republic and take active steps in the Georgian banking sector like all other fields, Tokmazishvili said. «I do not expect the Chinese investors to change the segment of Bank Republic, which is a successful commercial bank. Therefore, they are expected to expand banking business and we should not expect serious threats in this direction», Tokmazishvili noted. There is no accurate information about what Hualing Group represents in reality and their financial operations are unknown, professor David Aslanishvili said. “When an investor buys a commercial bank, the Georgian legislation requires the company to have experience in banking business and professional management. At the same time, if the National Bank of Georgia (NBG) issues a permission, this signifies Hualing Group satisfies the due requirements”, Aslanishvili noted. It is not ruled out either that Societe Generale wanted to withdraw from the market and the bank was seeking a buyer and the Chinese Group decided not to miss the opportunity, Aslanishvili added. «Before this deal, successful commercial bank Basisbank was bought by one of the major Chinese company. Now the Chinese group has bought Bank Republic, member of Societe Generale, the world’s giant financial institutions and one of the major players in the bank sector. As a result of this deal, Societe Generale will withdraw from Georgia, in practice. This is negative result for the bank sector. The second big bank is about leaving the country, after HSBC bank. The contemporary finance-banking giants cannot find their niche here. Even German ProCredit Bank considerably narrows activities. Our country is disappearing from the Eurozone’s banking interest. The Chinese company remains, but it cannot actually replace those perspectives that were expected from the EU two giant banks», David Aslanishvili noted. Giorgi Tsutskiridze, executive director of the Association of Banks, finds these statements exaggerated. On the contrary, competitive capacity will grow in the banking sector and this is very good for the consumer, he said. «When two banks merge, the capital and assets grow. Therefore, it is natural that this process promotes healthy competition. This new configuration will only make benefits to the consumer», Tsutskiridze noted. In the new Chinese bank that will be set up in several month Societe Generale will hold only 8%, the EBRD will control only 3.9% stake and the Chinese party will own 88.1%. Hualing Group corporation was founded in the city of Urumci, China, in 1988. Key directions of the company activities are as follows: construction, leasing and management of shopping malls and wholesale markets, construction and management of the network of hotels, development of natural resources, energy and cattle-breeding projects. The corporation has also outlined new directions – healthcare and banking sector.
August 1, 2016 #156
Banking Sector
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Banking Sector’s Profits Grow by 19% Bank Republic is Only Major Bank with Slowdown in Profits Merab Janiashvili Economic Analyst
In the first half of 2016 the Georgian bank sector’s net profits made up 290.655 million GEL, up 19.6% compared to the same period of 2015 (242.988 million GEL). In January-June 2016 the banking sector’s revenues made up 1.574 billion GEL and expenditures totaled 1.264 billion GEL, while in the same period of 2015 the mentioned indicators were 1.825 billion GEL and 1.539 billion GEL respectively. As of July 1 revenues of commercial banks made up 1.574 billion GEL, up 303 million GEL compared to the May indicator. Interest return of commercial banks also grow in stable regime and the figure marks 1.154 billion GEL. It should be noted that commercial banks receive major revenues from retail loans – 615.5 million GEL, while revenues from corporate loans made up 416 million GEL. Revenues from securities grow at high paces and this indicator hit 102.3 million GEL in JanuaryJune. In the last year, commercial banks received only 173 million GEL throughout the year. Commission fee revenues made up 132.2 million GEL. Finally, in January-June net profits of commercial banks equaled 290.7 million GEL. Bank Republic is an only major commercial bank with slowdown in profits. It should be noted that Societe Generale has decided to sell Bank Republic to Hualing Group, the owner of Basisbank. According to official statistics of the National Bank of Georgia (NBG), in June, as compared to May, total assets of commercial banks of Georgia (in current prices), rose by 2 billion GEL, that is 8.8% (without the exchange rate effect – by 3.2%) and totaled 25.3 billion GEL. The bank sector’s own funds made up 3.7 billion GEL, 14.6% of total assets of commercial banks. Besides profits, commercial banks have also increased deposits and loans volumes. The crediting volume (including loans issued to nonresidents) rose by 1.2 billion GEL in June 2016, as compared to May (up 7.8%) and made up 16.4 billion GEL as of July 1. In the same period, the GEL denominated loans volume rose by 69.3 million GEL (up 1.2%), while foreign currency denominated loans increased by 1.1 billion GEL (up 11.6%). As of July 2016 commercial banks had issued 1.7 billion GEL corporate loans in the national currency, up 7.3% compared to the previous month, and 5.9 billion GEL corporate loan in foreign currency, up 18.3%. It should be noted that as of July 1 the dollarization coefficient of total loans made up 65.5% that, excluding the exchange rate effect, have increased by 0.26%, compared to the previous month. Similar tendency is reported regarding deposits too. The volume of nonbank deposits placed in the banking sector made up 14.3 billion GEL as of July 1, 2016, up 849.5 million GEL (+6.3%) compared to the June 1 indicators. The deposits dollarization coefficient made up 67.25% as of July 1, up 0.32% compared to June 1. The USD ratio in foreign currency denominated loans made up 82.6%, while the EUR ratio totaled 14.6%. It should be noted the NBG president made a special speech about high dollarization coefficient in the Georgian economy. In the coming years the NBG will prioritize to enhance dedollarization tendencies. In the country with low inflation rate, bilateral fluctuation of the exchange rates and financial development paces, as a rule, the dollarization indicator should not be so high. Georgia is an evident sample of how difficult is to get rid of this disease, the NBG President Gvenetadze noted. “Reasons should be found in our past, at the beginning of 1990s. Amid heavy socialeconomic situation the Coupon quickly lost purchasing value and the US Dollar became an only currency for payments and saving money in Georgia. Our country has not overcome this bitter experience, We have to perform much job in this direction, both the national bank and the Authorities. If the dollarization coefficient is kept on low level, then the exchange rate volatility will bring less negative results. Our citizens should be accustomed to living without USD and we should prioritize our Georgian national currency. The dedollarization process is not a simple process and we should take active steps in this direction”, the NBG President Koba Gvenetadze said. Thus, the Georgian banking sector follows the tradition and, contrary to the remaining part of the state economy, it does not lack for assets and revenues. Commercial banks make a record volume of profits every year. In 2015 the Georgian banking sector’s profits exceeded 0.5 billion GEL and this was a record figure. Therefore, the January-June indicators give ground to conclude that the banking sector’s profits in 2016 will increase compared to the previous year.
Logistics
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- When was your company established? What is the scope and key direction of your activities? - We founded the company jointly with Latvian partners in 2016. The company head office is located in Tbilisi, Georgia. Key objective of the company establishment was to popularize products made in Georgia and boost exports volume. At this stage, we are taking efforts to take roots on the market through shipping business. However, we have other serious plans and I will unveil them in details later. The team of professionals of Carry company provides a full package of transportation services, including trade-expedition services, international sea and air freight, railage, land transit. We enable our clients to carry out import and export operations of any products without visiting our office. However, this business is not our key direction. We have many other plans for the future and we will not be oriented only on transportation services. - How much was the foundation investment and have you borrowed this capital or put your own capital? - We have put significant investments in the company. Each partner has invested their own personal capitals. At this stage, the company does not have loan liabilities, however, we plan to draw additional investments for the service expansion in the future. - Why have you decided to take efforts in transportation-shipping business? Is it attractive and profitable? - Transportation business is genuinely profitable business, and interesting, at the same time. We learn new things every day. At the same time, it is much adrenaline to offer the best price to the clients on specific direction and perform the assumed obligations excellently. - Which directions have you prioritized and why? - Our company operates all over the world, but we offer the best conditions for sea container freight from China. A major part of Armenia’s cargoes enter the Poti and Batumi seaports. Therefore, We have prioritized this direction. We offer best tariffs on the market in this direction. We can mobilize any quantity of trucks. - What are the nearest plans of the company? - The nearest plans of the company include the trade network expansion in the Georgia-Azerbaijan and Armenia-Georgia directions. We are developing the project to export Georgian products to the neighboring countries and offer desirable products at desirable prices, ensure exports of Georgian products. Georgian products are less exported to Armenia and Azerbaijan. These countries mainly carry out imports from Europe and Russia. In the future, we plan to provide the following services: • Search of desirable products in Georgia • Market Analysis, offering the best alternative • Quality inspection, sending samples by mail • Making orders • Monitoring of fulfillment of Contract conditions • Registration of a brand • Rebranding • Tackling a number of issues with problematic suppliers • Preparing cargo documentation and monitoring of loading • Further transportation For those, who want to pay business visits to Tbilisi, we will provide the following services: • Planning visits; • Providing consultations and assistance in preparing visas and other necessary documentation, if necessary; • Booking a hotel suite; • Meeting at airport; • Excursion to enterprises jointly with translators. • Attendance at exhibitions jointly with professionals. - How sharp and valuable is the competition in the sector? What is your advantage as compared to your competitor companies? - There is valuable competition in the sector. There are companies that hold comparatively more market ratio, but everything depends on the company size and resources. This process proceeds in natural way and nobody is able to artificially manage them. Consequently, any company is able to enter the market and find a niche on the market. We do not have direct competitor in the trade mediation field. This is a new field and no company provides similar services yet. There are several organizations that provide the same services for Georgian importers in China. Our advantage is that we have our own transport and contractor drivers. We maximally try not to apply to other transportation companies for assistance, because in similar cases service tariffs reach unreal indicators and it becomes difficult to find the due vehicle. - According to my information, the company business has been insured by one of the leading insurance companies of Georgia. Would you name your partner insurance company? - The company responsibility has been insured at Ardi company. We frequently receive offers for hazardous and perishable cargoes. Consequently, we have individual insurance packages on cargoes.
International Shipping Company
Entrance into Market is Natural Process without Artificial Efforts
Interview with Anamaria Bobokhidze, Head of Carry international shipping company
August 1, 2016 #156
farming
August 1, 2016 #156
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Success of small poultry companies beat bigger ones?
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ver the past years alarming and heavy problems have appeared in the poultry sector of Georgia, experts assert. Despite serious difficulties, the number of small poultry enterprises has increased on the market. The Caucasus Business Week (CBW) has inquired what reasons have preconditioned this process. Sabudara Poultry Enterprise Sabudara poultry plant is located in Gardabani, the Kvemo Kartli Region. The company head Tamaz Tsiskarishvili noted that the company received 535 000 USD as part of the preferential agro credits stateprogram in 2014. Thanks to this financial support, the company plans to expand the existing production. Namely, the company has arranged a new refrigerator, increased the output of incubator. Today the company produces monthly 600 000 incubation eggs of various species. The company sells eggs on domestic and foreign exports markets, including in Armenia and Azerbaijan, he said. I have entered this business because of the state policy. Without preferential loans, small enterprises could not develop their business, Tsiskarishvili noted and emphasized the existing problems too that, to his words, may suspend development plans. The company planned to expand the production, but the recent depreciation of the national currency has changed investment plans, he said. The GEL devaluation started a year ago. Several months ago the exchange rate showed stabilization signs and we set new plans, but the GEL exchange rate has worsened again several days ago and I think about suspending my plans for indefinite periods, Tsiskarishvili noted. The company bears huge losses because of the national currency devaluation. Total losses exceed 290 000 GEL, he noted. LLC Paster In November 2016 Varia company will introduce chicken products on the Georgian market. The company also plans to produce eggs. Mirian Chitadze, head of Paster company, noted that only pref-
erential agro credits program has enabled him to launch this business. Paster company is located in the village of Chala, the Sackhere District, the Imereti Region. The company has taken part in the agro credits program in May 2015 and obtained financial component of 66 000 USD. There was another reason for entering the market – the segment of fried chicken was unemployed, Chitadze said. «This segment is not used because of labor-intensive and longterm process. Chicken of our company reaches the production level in 3 months, while other poultry companies grow chickens only up to 1.5 months. I prefer to wait 3 months and produce high quality chicken», Chitadze said. Currently, the company supplies products to big restaurant networks such as Taghlaura, Tsiskvili and so on. The company sells chicken in Sachkhere and Chiatura too. As to plans, the company will launch eggs production in 2-3 months to supply them to Sachkhere and Chiatura districts. Georgian Poultry Development Association Zurab Uchumbegashvili, head of the Georgian Poultry Development Association (GPDA), says that small enterprises launched business thanks to only state support programs. At the same
The situation on the market is quite complicated in this respect. As a result, companies bear losses, as small companies compete with major ones
time, this state policy stages pressure on major companies. The problem arose after the New Authorities came to power, when the state programs of Produce in Georgia and United Agro Credits Program were inaugurated, he said. The Government is promoting small entrepreneurship, while major business cannot make use of this situation, because many small enterprises have appeared because of the state policy, he noted. The problem is serious. In due time the new Authorities issued cheap credits without calculation of expected results. These enterprises do not pass veterinary certification process and phyto-sanitation examination, Uchumbegashvili noted. Plants spend huge funds on protection of phyto-sanitation and veterinary safety norms, especially those wishing to take ISO certificate, while small companies are not obliged to do the same, Uchumbegashvili said. “Small companies do not have even a wish to arrange their production due to civilized and European-standard requirements and to protect even the minimal safety conditions. As to national food agency, under the legislation, it only examines similar companies, but gives only recommendations. The law does not entitle the national food safety agency to impose a fine on similar companies or suspend their licenses”, Uchumbegashvili noted.
The situation on the market is quite complicated in this respect, he said. As a result, companies bear losses, as small companies compete with major ones, Uchumbegashvili noted. “If we do not mention other things, it is categorically banned to use secondhand packing materials. We spend 6-7 GEL on high quality packing of each box, while the same packing is sold for 1 GEL on the secondhand market. They save 5-6 GEL. Major plants have taken 12% interest rate loans, while small companies serve 3% interest rate loans. This signify they pay low interest rates, they do not have obligations nearly, do not pay extra charges and the prime cost of the product is low naturally. As a result, they manage to compete with us”, Uchumbegashvili noted. The existing situation has led several major companies to closure, including Algeti Poultry plant, Sachkhere plant. Noste company has slowed down production, because a new company launched operation in neighborhood with far lower liabilities and far cheaper loan. Kumisi company has also reduced production. Since 2013 the company has not produced hens and currently, produces only eggs. Despite heavy situation on the market, absence of the law on domestic products protection also hinders business activities of major companies. The parliament has not adopted even one law that would alleviate business operation to poultry and egg production companies. The issue is of anti-dumping legislation, Uchumbegashvili said. «Only one company BiuBiu manages to expand business on the market, because huge funds were invested in the company. An entirely new production cycle was created and this is a very good and encouraging fact. The company has managed to make success thanks to huge financial resources. Booths, permissions need money. Initially, BiuBiu set low prices on hen. That price was equal to our prime cost. We would need 10-12 million investments to arrange similar cycle. Regretfully, we do not have similar resources», Uchumbegashvili noted. There is only solution – the Agriculture Ministry must be managed by the field specialist, the GPDA President noted.
business
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August 1, 2016 #156
Products of Dugladze Wine Company will be sold at E-SilkRoad
Products of Dugladze Wine Company will be the first, which should be put in the online-platform “E-SilkRoad” chain, - corresponding agreement is already signed between Georgian company and Chinese biggest state media portal “Sinhua Nets”. Platform “E-SilkRoad” enables to sell Georgian wine online. The platform is opened by the joint partnership of “Sinhua Nets” and Silk Road Chamber of International Commerce. According to Dimitri Kumsishvili, Georgia is interested in deepening political, economical and cultural relations with People’s Republic of China. He noted, that Georgian government announces full support to those companies and business projects, which will assist improvement of trade-economic relation between two countries. The second memorandum will be signed within the frame of the event, which envisages arrangement of Georgian wine national corner in the Free Trade Zone of Shanghai.
Technology
Silk TV in Computer, Smartphone and iPad!
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ilknet company has developed Silkt TV Application that is an analogue to the television broadcasting. TV channels may be activated in mobile phones, iPads and personal computers. Favorite programs, films, news and sports matches may be watched thanks to reverse-pause regime. Broadcasting through topquality application makes TV broadcasting comfortable in any time and place. The application may be downloaded on Android or Smartphone devices in both Georgia and abroad free of charge from the following links:
https://play.google. com/store/apps/ details?id=com.qarva. ottplayer&hl=en; https:// itunes.apple.com/US/app/ id911759740 It is also attainable on www.silktv.ge website for personal computers without downloading the application. Simple interface, diverse channels, own sports or entertainment content – these advantages make the Silknet application special and attractive. Subscribers can watch sports events on Silk Sport HD 1, Silk Sport HD 2, Silk Sport HD 3, and popular films on Silk Movie Hollywood and Silk movie
news
Hotel
Liberty Bank Unveils Renovated Regional Branch in Kutaisi The new branch will provide a full package of banking services for more than 15 000 clients a month. There are ATMs and quick payment terminals at the renovated regional branch and clients are able to receive bank services without applying to the branch operators. Clients are able to take loans, pay loans, place money on accounts, carry out money transfer and other transactions.
Media Hub The First Broadcaster of Social Networks IMEDIA HUB is the first broadcaster in Georgia created by IHUB Tbilisi andDEVI.GE. The founders of Media Group are 38-year-old professor George Zautashvili and 25-year-old Ilya Ghlonti. They talked about the essence of IMEDIA HUB and the projects they have in general. IMEDIA HUB is Georgia’s first social networking publisher and the unification of the various forms of media and people having marketing experiences.
collection. Even more so, both channels update new films on daily basis, Silk Kids channel for children also broadcasts various animated films. Cartoons budded in Georgian are adjusted to the interests of all categories of children. The minimum monthly fee of Silknet application is 2 GEL for subscribers and 4 GEL for any other categories of users. The 24-hour hotline 2 100 100 operates for detailed information, where the operator provides additional information on application, subscription packages and so on. Silknet innovative applica-
A New Premium-Class Hotel Griff Inn Bazaleti to be Opened on the Bazaleti Lake Shore A new premium-class hotel – Griff Inn Bazaleti – located on the shores of Bazaleti lake in Dusheti, able to satisfy the different needs of its guests with comfort and first rate services. The hotel is situated approximately 40 km from the capital city of Tbilisi (Georgia) at 879 meters above sea level. In addition, Griff in Bazaleti features a swimming pool, open and closed bars, a beautiful terrace with a lake view and a restaurant offering great dining experience (Georgian and European cuisine). Griff Inn Bazaleti is the right choice for visitors who are searching for a combination of charm, peace and quiet, and a convenient place to enjoy beautiful landscape and healing abilities of the lake water, due to this fact, this spot has always been frequently visited by tourists and vacationers. Thanks to curative effects of algae, growing in the lake, gives the water distinctive remedial abilities. The waters discharged from the bowels of the earth undergo self-cleaning and self-filling processes which makes it excellent for treating dermatological and gynecological diseases, as well as rheumatic and bone pathologies. The hotel is arranged on one floor where you can find the reception and a comfortable lounge to sit and drink tea, or just relax and read. There is also a splendid terrace, where, you can relax and get pleasure with the atmosphere of Bazaletian fresh air, which is beneficial for cardiovascular and ischemic diseases. You may also lounge by the pool and enjoy the beautiful skyline. The hotel provides an internet point, and a Wi-Fi service. All rooms are air conditioned and equipped with a private bathroom with a shower, a toilet, a fan, TV, seating area, a wardrobe and a telephone. The hotel entertainment team will make sure to keep your children active, occupied and happy while you may relax and enjoy your holiday as you please. 800 000 USD dollars have been invested in the hotel construction by “BEST GROUP”. The price per night (per person) ranges from 130 GEL to 240 GEL.
tion has made TV broadcasting into a high-technology and convenient service and its popularity grows on daily basis. Besides the application, SilkTV services are applicable in standard way – through switching into optical and DSL networks in Tbilisi and regions (subscription fee starts from 9 GEL a month), while Silk Optima product is installed for users of other networks (monthly subscription fee is 15 GEL) onto the existing Internet network.
invention
Georgian Students Create Smart Home Application to Manage Home Situation Georgian students have developed a prototype of Smart Home application. The Android system will enable to manage situation at home. Nodar Tchumbadze has been working on the project for several months jointly with friends. The idea arose several years ago after appearance of Evrika TV show. This film inspired him to develop a real application for managing home situation. The Smart Home application will enable to manage light bulbs, doors, windows. “The application is managed from any Android device, telephone, TV set, eyeglass. Almost all components of a house are managed by this device, including light bulbs, windows, doors. The application is also able to detect gas leakage. Alarm system may be also included in the system to send message about undesirable persons”, Nodar Tchumbadze told the Business Contact. The Google voice signal is also usable to manage the application, but only in English language, he said. In the future the application will be added to the Apple and Windows systems.
August 1, 2016 #156
Healthcare
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Price of Cardiology Group Medications Slips by 33.19% in June Jointly with the Association of Young Financiers and Businessmen (AYFB), the Healthcare Platform nongovernmental organization continues examining price of the cardiology group medications as part of the Panaskerteli Pharma Monitor project. The organization has explored dynamics of change in prices of 19 medications in the month of June. According to the report, in June the price of the cardiology group medications declined by 33.19% (-9.75 points) compared to May. The research has showed that the price of a majority of the cardiology group medications has declined compared to the previous month, while the price of three medications has not changed. In the reporting period, the following medications were examined and the change in prices in May and June are as follows: 1. Trimetazidine (Trimetazidine dihydrochloride) / Trimecor MR 35 mg tablet covered by modified relief cover (60 units) 22.95 GEL 2. Amlodipine / Adipin 5mg; (30 pills)6.29 GEL 3. Amlodipine / Liprimari 10mg; (100 pills); 120.71 GEL; 4. Bisoprolol / Concor 5mg (30 pills)- 7.65 GEL; 5. Diosmin + Hesperidin / Detralex 500 mg (60 pills)-26.75 GEL; 6. Enalapril / Berlipril 5mg (30 pills)- 3.49 GEL; 7. Perindopril arginine / Prestarium 5mg (30 pills)-17.29 GEL; 8. Perindopril Arginine + Indapamide / Noliprel Arginin (2.5 mg+0.625 mg;30 pills)-18.20 GEL; 9. Perindopril Arginine + Indapamide / Noliprel Forte Arginin 5 mg+1.25mg 30 pills; -26.40 GEL; 10. Rosuvastatin / Crestor ( 10mg; 28
Shota Gulbani
President of the Association of Young Financiers and Businessmen – AYFB
Pre-election Promises by Political Parties are Populist The parliamentary elections are coming and political parties are giving numerous pre-election promises. Healthcare and social protection issues are priority directions for a major part of our society. How do our political parties plan to better regulate the mentioned issues and how feasible are promises for the healthcare component in the pre-election promises? On the mentioned issues we have interviewed Shota Gulbani, president of the Association of Young Financiers and Businessmen – AYFB. - Do you think political parties are giving realistic pre-election promises for the healthcare sector development? - Our political parties follow the certain tradition to give numerous populist pre-election promises. The coming elections could not be an exception. We have to listen to unreal and unreasonable promises at TV sets in everyday regime, including on the healthcare issues. It is an indisputable fact that healthcare policy issues are very important for a major part of our population. Political parties also realize this factor. Despite this, the healthcare component in their programs does not respond to the current challenges that exist before the poor families in Georgia. The quantity of similar families reaches 500 000. This is a catastrophic indicator in the country with 3.7 million residents. This statistics proves that the Authorities must take active steps for the pharmaceutical sector regulation. The healthcare issues must be prioritized in the state budget every year. At this stage, all the mentioned requirements are protected. I could not catch any mechanism in promises of any political parties that would enable to improve access to medications, which is the major challenge in the country. For example, Girchi new political center prioritizes that the government should not interfere in the medical business and ensure competition, but we have seen that the policy of noninterference for many years have led the country to excessive prices, expensive laboratory services, when private companies grow prices and make fortune at the expense of the poor residents. The Girchi gives no remedy for this problem. It just promulgates the necessity of boosting competition and criticizes the existing state insurance, while their financial component for state insurance of 501.600 million GEL is considerably lower compared to the universal healthcare program’s financial component determined by the 2016 state budget. As to promises by Free Democrats, the Authorities have been working actively on all directions that they have named. Their program only reads what they plan to do in the future, but not what they have worked on and what innovations they will introduce to the society. They use abstract phrases without specific details – Improving Medical Service Quality,
Cheapening Medications and Quality Control, Promoting Establishment of Healthy Lifestyle and so on. These phrases are very famous and outdated sentences through which politicians have been trying to entice electors for many years. Pre-election programs of the Paata Burchuladze’s party and the United National Movement are almost identical. Both programs promulgate that the rich party of our society should not use the universal healthcare program and the saved finances should be directed to funding the target segment that require state support. In theory, this is a good approach to ensure effective spending of the state budget, but there is a slightly different situation in our country – we do not have the so-called middle class. Only a small group of the rich and a majority of the poor exist in our country. Therefore, considerations to strip the poor of these opportunities and give them to the poor is only populism and is not based on any calculations. For example, what part of the rich has used the universal healthcare program? How much money has the government spent on their services? How can the saved funds resolve social problems to poor families, including access to medications? It is also interesting how the United National Movement plans to reduce taxes and at the same time increase social expenditures. I do not have answers to this question. - What about programs of the Alliance of Patriots and Georgian Dream? - It is evident that the Allinace of Patriots has honorable intentions saying that municipal clinics and hospitals should serve the population free of charge. Moreover, they think that the poor family should receive food, clothes and transport services free of charge. These promises look very attractive for the poor, but their statements would be more persuasive if they had specified sources and resources for mobilizing the required huge funds. As to Georgian Dream, they have not published the program yet, but we know their policy in relation to the Healthcare Sector very well. It would be excellent if they expand medications components in the universal healthcare program and pay more attention to the pricing policy on the pharmaceutical market.
“
I could not catch any mechanism in promises of any political parties that would enable to improve access to medications, which is the major challenge in the country
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pills)-44.98 GEL 11. Valsartan / Valtan (80 mg; 14 pills)10.37 GEL 12. Valsartan + amlodipine / Exforge (10mg+160 mg)-27.03 GEL 13. Valsartan + hydrochlorothiazide / CoValtan (80 mg+12.5 mg; 14 pills)-10.20 GEL; 14. Clopidogrel / Plavix (75mg;28 )-26.35 GEL; 15. Perindopril Arginine + Amlodipine / Prestarium Combi with Arginin (5MG+5MG, 30 pills)-26.95 GEL 16. Valsartan / Diovan (160 MG, 14 pills)11.90 GEL Prices have not changed on the following medications: 1. Trimethazidine / Preductal (MR 35mg, 60 pills) – 27.80 GEL 2. Trimetazidine / Preductal MR (35mg with modified relief cover,60 pills) -22.80 GEL 3. Indapamide / Arifon Retard (1.5mg, 30 pills)-18.51 GEL The report on prices of medications shows that in June, as compared to May, prices of 16 medications declined, while prices of 3 medications have not changed. The Healthcare Platform and AYFB continue exploring growth and downturn tendencies of medication prices in various groups. We remind you that because of high public interest and the existing social conditions in the country, the Healthcare Platform and AYFB launched monitoring of medication prices in August 2015. Pharmaceutical market prices are always a relevant issue. Therefore, the economic index of Panaskerteli Index was created. The index enables to make the dynamics of change in prices more transparent and accessible to everybody by carrying out monthly monitoring on the most indemand specific groups of medications.
Cottage Medicine Kit Value Declined by 1 GEL in June The Healthcare Platform nongovernmental organization has published the June indicators for the last group of the Panaskerteli Pharmacy. The organization has examined the minimum list of medications of the cottage medicine kit and verified their prices in the four leading pharmacy networks. The exploration work has showed that in June, as compared to May, the value of medications of the mentioned group has declined only by 1 GEL. Cottage vacationers could replenish the cottage medicine kit for 84 GEL in May and for 83 GEL in June. Prices have de-
clined on several medications slightly, while total value on accessories and antiseptics of this group has not changed. Detailed information on the list and prices of medications of the cottage medicine kit is available in the chart: We remind you that the cottage medicine kit comprises such medications as: antiseptics, drugs against burn and venom, antipyretic drug, analgesics, cardiology drugs, sun and insects repellent drugs. The platform continues supervision over prices of medications of the Panaskerteli Pharmacy and updating interested persons.
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development
August 1, 2016 #156
Orbi Group Project Gains Global Recognition - Orbi Twin Tower is a globally important project. What significance does building the world’s 6th largest hotel complex have? The list of world’s ten largest hotels is as follows: 1. The Palazzo Resort Hotel & Casino, Las Vegas (8,108 rooms) 2. The Izmailovo Gamma Hotel, Moscow (7,500) 3. The Signature Hotel at MGM Grand, Las Vegas (6,772) 4. The First World Hotel, Genting Highlands, Malaysia (6,118) 5. The Encore Las Vegas, Las Vegas (4,570)
6. The ORBI Twin Tower, Batumi (4,500) 7. The Luxor Hotel & Casino, Las Vegas (4,400) 8. The Mandalay Bay Hotel, Las Vegas (4,337) 9. The Ambassador City Jomtien Hotel, Pattaya, Thailand (4,210) 10. The Venetian Hotel, Las Vegas (4,027) Building the sicth largest hotel complex in the world in terms of number of rooms is a matter of pride for The Orbi Group. This project goes beyond merely regional importance and gives global dimensions to the company and the tourist city of Batumi. Further details about the Orbi Twin Tower can be found at the following webpage: www.orbigroup.net. - You have just returned from Panama, where the Orbi Twin Tower project gained worldwide recognition. How significant is the FIABCI Prix d’Excellence for the country? - Good question. Our complex being recognized as the best investment project worldwide is obviously a great victory not only for our company but the entire country. The FIABCI Prix d’Excellence is a very prestigious prize. There is none more important - it is the same as an Oscar. FIABCI is the international real estate federation, which was founded in Paris in 1948 by leading European and American developers and real estate professionals. In 1954 FIABCI was granted the status of official consultant to the United Nations Economic and Social Council. This is the only real estate organisation which can speak from the UN tribune. Global projects such as the Trump Tower in New York, the Guggenheim Museum in Bilbao, the Petronas Towers in Kuala Lumpur, Disneyland in Paris, Millennium Park in Chicago, Republic Plaza in Singapore, The Palace in Taiwan, Sinar Mas Land Plaza in Indonesia, Norwest Business Park in Sidney and many other famous architectural projects have won the Prix d’Excellence at various times. It is so important that it is has ensured the advancement of the companies which have won it. Orbi Group is the first company in the postSoviet space to win this award. We were competing against huge companies from the United States of America, China, Singapore, Dubai, Malaysia, Japan and Europe, whose budgets are 15 or 20 times larger than Georgia’s, let alone our company’s. The 70-member jury of internationallyrecognised experts from over 40 countries assessed our project alongside those
The Orbi Twin Tower, a new 4,500 room hotel complex, is being built on the Black Sea Coast in Batumi. It is the world’s sixth largest hotel in terms of number of rooms and has been awarded the FIABCI Prix d’Excellence 2016, the prestigious “Real Estate Oscar,” in the category of World’s Best Investment Project. Here the Director General of Orbi Group, Irakli Kverghelidze, tells us about the project itself and the awards it has won.
presented by these huge companies over a period of six months. It unanimously declared Orbi Twin Tower to be the world’s best investment project for 2016. Never before in FIABCI’s history has the jury taken a unanimous decision, and this was emphasized by the FIABCI president at the award ceremony. - Orbi Group is selling apartments in Orbi Twin Tower. What makes an apartment different from a flat? - Just like a flat, an apartment is the private property of the customer. The right to the property is registered in the public registry, and there is no substantial legal difference between a flat and an apartment in terms of property rights. The difference is that these apartments are part of a multifunctional hotel complex with a 5 star hotel infrastructure and high class services such as a reception, concierge service, room service, security guards, technical services, a casino,
spa centre, outdoor and indoor pools, cafes, restaurants, shopping zones, children’s playgrounds, a medical centre and so on. The owner of the apartment is not limited to living in it themselves: it is up to them to decide whether to use the apartment for residential purposes, for relaxing or even for renting. If the owner wishes, the Orbi Group can offer the apartment for rent and the owner will gain a regular income from this rental. It is worth noting that the multifunctional hotel complex, with 5 star infrastructure and services, has created increasing demand for these apartments, giving them a high rental value. - How can an interested person purchase an apartment in Orbi Twin Tower? What are the terms, and what kind of benefits would they receive? - Orbi Twin Tower has a unique architecture and location, being only 50 metres from the sea in the vicinity of the dancing fountains. Each apartment also has a magnificent sea view. We are conducting a promotional campaign for Orbi Twin Tower, as our company traditionally does for each new project. During this, apartments are available at the best prices. They can be purchased for only 17,500 US Dollars up to September 1st, 2016, with an initial payment of 1,700 US Dollars and monthly payments of 250 US Dollars. The apartments have Italian furniture and European standard fictures and fittings. The complex includes both standard and higher class apartments. Certain types of apartment will be sold for five hundred thousand, one million or even one and a half million US Dollars. As for the benefits, I would like to underline that there are two key factors when purchasing or investing in real estate: 1. What kind of income could the property bring if it was rented out? 2. How much can its value increase over time? The annual income from a standard rented apartment will be 5-6,000 US Dollars. The value of the property will at least double when the project is fully constructed. The full construction will take another 24 months. - These are rather attractive terms, and I think there will be great interest. How many Georgian citizens are buying apartments from you and what kind of sales dynamic do you have outside the country? - Orbi Group has created a product which should be attractive for both citizens of Georgia and people living abroad. Orbi
Group has around 30 offices in 7 countries, and 50 more branches will be opened by the end of 2016. Our apartments are not just a real estate but a business and a source of regular income. We offer very simple and flexible payment terms for Orbi Group apartments, therefore people living in Georgia who can afford an initial 1,700 US Dollar and 250 US Dollars a month thereafter can easily buy an apartment from Orbi Group. Given the abovementioned, our citizens are very interested in this project and we have many clients from both the cities and different regions of Georgia. There are also many cases of Georgian citizens living abroad buying apartments for their parents, or other family members living in Georgia, in order to give them a stable source of income. They also take a rest in these apartments on their vacations. Apartments are available for professionals (for instance: lawyers, accountants, auditors, doctors etc.), who do not have the opportunity to go into business independently; they buy them under a flexible payment system, which yields them an additional income without disrupting their professional activities. As I have already mentioned, the apartments are rented out and managed by Orbi Group and the customer receives the rental money monthly in their bank account. There is high interest in the apartments from foreign countries such as Germany, Poland, Russia, Ukraine, Latvia, Lithuania, Kazakhstan, Belarus, Israel, America, Dubai, Qatar and so forth. At present we have customers from 35 countries. Now Orbi Twin Tower has been named the world’s best investment project for 2016, overseas interest will only grow. - Can you outline Orbi Group’s future plans? - Orbi Group will launch a large-scale project in Tbilisi in the near future. It is also due to be the first Georgian development company to undertake projects outside the country, and several of these will be implemented. The company plans to develop many other new projects and lines. - Once again I would like to congratulate you on the global recognition of Orbi Twin Tower, thank you for this interview and wish you success. How can a stakeholder contact the company and buy an apartment? - Tel: 0 800 100 115; call is free; +995 555 33 00 00, +995 555 32 00 00, +995 555 35 00 00; Web-page: www.orbigroup.net, e-mail: - batumi@orbi.ge
August 1, 2016 #156
business - week in review
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Shanghai Major Corporation CEFC China to Open Regional Office in Georgia
Kumsishvili Submitted Projects of 7 bln to the big Corporations of China
imitri Qumsishvili, First vice prime minister and Minister of Economy and Sustainable Development of Georgia, has met with CEFC China chairman Ye Jianming as part of his working visit to China. The meeting was held at the head office of the Chinese corporation in Shanghai. At the meeting the Georgian first vice prime minister talked about Georgia’s business and investment environment and made focus on considerable growth in Chinese investors’ interest in the Georgian economy’s various sectors. Chinese companies successfully operate in such sectors as housing sector, roads and infrastructure, power system, banking sector and so on. China ranks fourth among Georgia’s major trade partner countries. China ranks second among Georgia’s export markets with 9% ratio in total exports of Georgia. The parties also discussed the Chinese corporation’s interests in the Georgian economy. CEFC China showed readiness to open a regional office in Georgia to cover the region and Eastern Europe. Moreover, CEFC China is interested in making investments in the banking sector, power system and tourism business of Georgia. At the meeting the parties also discussed Georgian wines exports to China that constantly grows year to year. According to official statistics, in January-June 2016, China advanced to the 3rd position from 4th place among Georgian wine exporter countries and surpasses such countries as Russia and Ukraine. In the first half of 2016 Georgia exported 1.9 million bottles of wines (0.75 liter) to China. The year on year growth marked 148%. It should be also noted that Georgia should be valuably represented at the Shanghai Region’s wine market, which is one of the major wine consumption markets.
ice-Premier talked about Georgian economic environment, favorable investment climate and ongoing reforms at the business forum held in Shanghais, which had been attended by authorities of big corporations. “We will represent investment projects of 7 billion at our business forum and I am sure that it would have a respond”, – Dimitri Kumsisihvili has declared to the representatives of media before the beginning of the forum. The first Vice-Premier has introduced macro economic indexes to the participants of the forum. According to him, Georgian economy has the best result of economic growth despite the slow down of economic increase pace. He also declares, that Georgia has direct foreign growth pace. He talked about trade development, investment growth and Chinese companies in Georgia, new Silk Road Project and its development. He noted about the negotiations of free trade expansion, which should be finished before the end of 2016. Dimitri Kumsishvili has also talked about another meeting of Georgia-China and a result, joint trade and investment council will be formed. According to the agreement, secretaries of the council will be established and representatives of private and state sector should be invited. The main aim of the mentioned structure will change information on the entrepreneurs, investment attraction, trade development and arrangement of all problems, which might be created to this direction. After presentation, B2B meetings were held at the business forum after the presentations and representatives of business circles of Georgia and China have discussed issues of future cooperation.
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Mastercard Grants Cardholders Business Lounge Access for Airports in Batumi and Tbilisi The World’s Largest Steel Manufacturer to Invest $ 500 Mln in Georgia Georgian Deputy Foreign Minister David Jalagonia has met the Korean steel manufacturer POSCO company’s first vice-president. POSCO is one of the largest companies is the Republic of Korea and is included in the top five of the world’s largest steel manufacturers. The company wants to build an ultra-modern metallurgical plant in Georgia and is going to invest $ 500 million for this purpose.
Free access to the business lounges of two Georgia airports is now available to holders of Mastercard Platinum® and MasterCard World Elite® cards issued by Georgian banks. Mastercard is granting access to the business lounges at two airports in Georgia – the Tbilisi Shota Rustaveli International Airport and Batumi International Airport for premium cardholders. From now on, holders of Mastercard Platinum® and Mastercard World Elite® cards, issued by Georgian banks, can enjoy the business lounge services. The business lounge offers maximal comfort for spending time before one’s departure. Visitors can take advantage of a wide selection of snacks, alcoholic and non-alcoholic beverages. They can also enjoy the latest press, TV and Internet access. In addition, the business lounge of the Tbilisi airport is also equipped with a designated smoking area and an electronic display with flight information.
Georgia Offers 5 Real Estate, Tourist Projects to Egypt Iinvestors BGEO to Direct Attracted $350 mln in the Investment Projects BGEO Group will directed attracted $350 million from the bond placement in the development of investment projects. Irakli Gilauri, general director of the Group declares, that the sum will be directed in the subsidiary companies, including development of energy projects. “It is important, that it is a longterm capital issued by holding company”, – CEO of BGEO noted. Girauri declares, that the group has much work to do and they do not plan acquisition of new company, but he does not excludes. To remind, BGEO made refinancing of notes with 7-year maturity.
Georgia is offering Egyptian investors five mega real estate and tourist projects in the capital city Tbilisi, according to the economic adviser to the Embassy of Georgia in Egypt, Gocha Kereselidze. He told Daily News Egypt that the embassy is going to submit a presentation of the projects to PM Sherif Ismail, to encourage investors to visit Georgia and explore the real estate investment opportunities. He added that his country is interested in having Egyptian real estate developers invest in Georgia, as it has a lot of potential and facilitates investment. The projects range from hotels and hospitality projects, to housing projects for luxury, middle-income, and low-income housing, according to Kereselidze. He noted that half of Georgia’s real estate projects are developed by foreign investors. Investments of the UAE in Georgia are estimated at $1bn, while Egyptians have not greatly contributed to real estate projects there.
Russia Hopes for Better Trade with Georgia Following the announcement that Georgia had supported the extension of EU sanctions against the Crimea and Sevastopol on July 20, a member of the Foreign Affairs Committee in the State Duma of the Russian Federation, Yan Zelinsky, spoke of the necessity to introduce a ban on imports of Georgian wine and mineral water to Russia (read more:Russian deputies demand for new Georgian wine embargo; Abashidze is skeptical). However, both the Georgian and Russian sides later refuted this statement, highlighting that the countries remain important trade partners.
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georgian wine
August 1, 2016 #156
Exclusive Saperavi From Ghvardzelashvilis Marani
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hvardzelashvilis Marani Prod uce Exclusive wine Products The demand and the confidence of small wine companies in the Georgian market constantly growing. One of them is Ghvardzelashvilis Marani, which took the 3rd place among the Saperavi wines from Kvevri at a recent wine fair in Expo Georgia, stayed behind only grandees of the market. Wines of Marani, also known as the wine for steak, contain a very large amount of alcohol – 15 degrees with the unique taste, which is revealed only after 20 minutes. “It is all about the ground where the grapes are growing,” said founder of Ghvardzelashvilis Marani, Giorgi Ghvardzelashvili. Homeland of this wine is the
village Kondoli, Tsinandali region, Kakheti – mainly this place is known as birthplace of Georgian wines. Giorgi Ghvardzelashvili stated that the quality of wine depends on the age of the vineyard. With his own 46-year-old vineyard, a great love and devotion to the traditions of Georgian winemaking, he was able to produce a unique product. While decided to enter the market in 2014, Ghvardzelashvili declined modern technologies and decided that only native Georgian tradition can convey the taste of the wine. Therefore, one of the most popular Saperavi wine is made in ancient clay jugs – Kvevri that is buried in the ground, and where the wine continued aging. Moreover, Ghvardzelashvilis Marani’s wine is made from only
natural products; in care of the wine is used Bordeaux mixture. “It is pure bio mixture. You can even eat grapes with it and nothing wrong will happen to you. It does not penetrate inside the fruit, only protects from external bacteria and diseases,” said Ghvardzelashvili. Production of the wine itself is limited – Ghvardzelashvili family owned just 2 hectares of vineyards, which produced 1200 bottles in first year. “I was pleasantly surprised of the first year’s results. At this moment, I have quite a few bottles left, while ahead is the peak of tourist season. The wine was in highly demand the whole year only in the wine bars of Tbilisi,” said Ghvardzelashvili. This success prompted Ghvardzelashvili to
Giorgi Ghvardzelashvili founder of Ghvardzelashvilis Marani expand the product range. “Famous varieties of Georgian wines like Saperavi and Rkatsiteli already well known not only in Georgia, but abroad as well, so it is natural that the market requires more unique products. Thus, I decided to bring back to life a few already forgotten wines such as Kisi, which has gradually mastered in Georgia, as well as Khikhvi, which is completely new one for modern market,” he said. Additionally, Ghvardzelashvilis Marani will produce Chacha, which is also aging in Kvevri. As Ghvardzelashvili said, this is one of the oldest Georgian technology, which is unused by
majority of companies. “Local tasters were delighted and highly appreciated our Chacha, so it will already appear at the Georgian market for the first time already this year,” he added. Wine tourism is one of the leading areas in Georgia. Foreigners are given the opportunity to follow the process of wine making, as well as to ensure about its naturalness. Taking into account the demand, Ghvardzelashvili equips infrastructure of his family business and soon will be able to receive guests, to talk about the unique wines and the history of his family, after which his company was named.
World news
August 1, 2016 #156
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Quotes
“ Foreign companies that work with the Azerbaijani government have little resort when it comes to accessing their funds at state-owned banks
Azerbaijan’s largest bank unable to repay Israeli company’s deposits
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sraeli company B.S.D. Crown has placed a request to withdraw its $13.6mn worth of deposits in Azerbaijan’s largest bank, International Bank of Azerbaijan (IBA), according to Meydan TV. IBA reportedly offered the Israeli management an option to retrieve its assets in instalments in the next 12 months, but the depositor rejected the option, citing the fact that IBA is owned by the Azerbaijani government and can tap into state funds if it has liquidity problems. Bne IntelliNews has learned about the case of another foreign company, an European investor, that was also unable to retrieve its deposits at IBA. Foreign companies that work with the Azerbaijani government have little resort when it comes to accessing their funds at state-owned banks. If they file official complaints, they run the risk of losing lucrative contracts.
IBA defaulted in 2015 in what became the largest banking scandal in Azerbaijan, revealing questionable practices and the uncomfortably close relations between politics and finance. The bank’s former chairman Jihangir Hajivev has since been detained and is on trial for embezzlement, and dozens of managers from the bank have been dismissed. Baku injected some AZN2bn (€1.7bn) into the bank in 2015, but it appears that the institution is still not able to meet some of its financial obligations. Conversely, the Israeli depositor has been accused of using Azerbaijani and Austrian banks to evade taxes in Israel. A subsidiary of investment company BGI, B.S.D. Crown used to be owned by the Odessa-based oligarch Alexander Granovsky, who ostensibly sold it to its new owner Grigori Gurotovoy. The two businessman are reportedly business partners.
Iran Plans First Tender to Draw $12 Billion Green Investment
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ran is planning its first tender for utility-scale renewable-energy projects by year end as it begins a green power build out that could draw $12 billion of investment by the time it’s complete. The nation wants to install 5 gigawatts of renewable energy in the next five years and an additional 2.5 gigawatts by 2030, Iran’s energy minister Hamid Chitchian said Thursday in an interview in London. The Persian Gulf nation, re-opened to investors following last year’s nuclear deal, has been courted by international green power investors at the same time it boosts oil production for export. “We’re not going to use the money from oil in that sector at all,” Chitchian said. “All the investment will be done by the private sector, including local and foreign companies.”
At least 150 trade delegations from around the globe have visited Tehran in the six months since economic sanctions were dropped. While businesses and diplomats have clamored to tap the market of 78 million people, deals have been slow to materialize as banks and financial institutions exert caution to ensure the nuclear accord sticks. Western powers accused Iran of seeking nuclear weapons, a charge Iran always denied. Tehran’s government is seeking commerce with countries and companies offering the best financial terms rather than prioritizing political and historical ties. The energy ministry is already in talks with some of the world’s largest renewable-energy players including Vestas Wind Systems A/S and Siemens Wind Power Ltd., Chitchian said.
This world of ours... must avoid becoming a community of dreadful fear and hate, and be, instead, a proud confederation of mutual trust and respect
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Dwight D. Eisenhower
Russia’s Recession Shows Signs It May Be Nearing Its End Russia’s economic contraction eased in the second quarter -- a signal that the recession of the world’s largest energy exporter may be coming to an end. Still, President Vladimir Putin has warned of stagnation if new growth drivers aren’t found. The economy expanded 7 percent on average in Putin’s first eight years as leader, while the International Monetary Fund forecasts it growing 1 percent in 2017 after a drop of 1.2 percent this year.
Global companies vow to keep up investments in Turkey after coup attempt A number of multinational companies have pledged to continue making investments in Turkey despite the recent failed coup attempt in the country. “We greatly regret the loss of lives. What has happened was clearly an illegal attack on the democratic institutions of the country,” said Vittorio Colao, the chief executive of Vodafone, as quoted by the Times on July 26. Colao vowed that Vodafone would continue to invest in the country, which he described as “an important market. There is a lot of growth there.” Vodafone’s network, alongside all mobile phone companies in the country, was used during the recent coup attempt to send a text message from the government that “resistance and the guard of democracy continue, to teach traitors and terrorists a lesson.” Hüseyin Geliş, chairman of the board of Siemens Turkey, also expressed his condolences to those who died in the coup attempt of July 15, stressing that it would not damage Siemens’ investments in the country, state-run Anadolu Agency reported on July 26. Siemens, which has been operating in Turkey for 160 years, has survived many political crises and coups over the years, noted Geliş.
Although deemed a gateway to tobacco and risky in its own right, vaping will prompt more smokers to quit or cut down, a study says.
E-Cigarettes May Help More Than They Hurt
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he world may be better off with e-cigarettes than without them. Sort of. Although a slew of studies have found the device serves as a gateway to cigarette use, such concerns may be exaggerated, according to a new study. Researchers in the U.S., Australia, and Canada have devised a model showing that, among people born after 1996, the option of using e-cigarettes may end up triggering a 21 percent reduction in smoking-attributable deaths and a 20 percent decrease in lifeyears lost. Companies such as Altria Group Inc. and Reynolds American Inc. turned to vapor products as a solution to a serious problem: Their core product is flaming out. Health concerns have smokers increasingly trying to kick the habit, adding to a broader longterm decline in tobacco sales. And while electronic cigarettes aren’t a panacea, having been linked to decreased immune response and heart disease, they are widely seen as less dangerous than smoking. With that in mind, the study published Thursday in the journal Nicotine & Tobacco Research states that the number of traditional smokers who will quit, smoke less, or never start outweigh the fact that, for some, vaping leads to smoking and dual use. The journal, which says it’s one of the world’s few peer-reviewed journals devoted exclusively to the study of nicotine and tobacco, is funded by the Society for Research on Nicotine & Tobacco and published by Oxford University Press. Despite the study’s projections for the future, e-cigarettes have yet to do the trick for most people trying to quit the real thing. About three-quarters of adult e-cigarette users also smoke regular cigarettes, Brian King, a spokesman for the Centers for Disease Control and Prevention, said in November. And a recent study led by Terry Pechacek, a professor of health management and policy at the University of Minnesota, found e-cigarettes to be an ineffective alternative to cigarettes for most smokers. More than three-quarters of study participants didn’t find e-cigarettes as satisfying as combustible cigarettes and stopped using the electronic version. Of those people, 95 percent rated e-cigarettes as less enjoyable than combustible cigarettes. (Tobacco companies are racing to create a more popular delivery mechanism.)
Even so, the study shows that combining vapor and combustible cigarettes may be better than smoking cigarettes alone. Using data from the National Health Interview Surveys administered by the U.S. Census Bureau from 1965 to 2012, the researchers applied projected rates for people to start and quit smoking. In doing so, they estimated the prevalence of long-term ecigarette and cigarette smoking through the year 2083 to create their mathematical model. E-cigarettes first went on the American market in 2007, so their long-term effects have been a mystery. One of the main differences between the new study and previous research is a focus on long-term e-cigarette use and the transition from not smoking to long-term smoking habits, said David Levy, lead author of the study and professor of oncology at Georgetown’s Lombardi Comprehensive Cancer Center. “What we try to do is we look at more prolonged, established use, and we look at the studies and incorporate that into a model,’’ he said. “We find that that makes a great deal of difference, so much so that the gateway hypothesis loses credence.” Some aren’t as positive about the rise of ecigarettes. Thomas Wills, a professor of cancer epidemiology at the University of Hawaii Cancer Center, said Levy and his team may have overestimated the positive effects of e-cigarettes in helping people quit smoking. Wills has authored studies finding that e-cigarettes make adolescents more likely to start smoking cigarettes. Levy and his team argue their assumptions were actually conservative, since they would expect the relative risk of e-cigarettes to decrease over time because of new products and regulations. The rate at which smokers switch to e-cigarettes is just one of many hurdles facing the $5.2 billion industry. The U.S. Food and Drug Administration began regulating ecigarettes in May. FDA rules prohibit sales to minors, ban free samples, require package warning labels, and call for makers of products released after 2007 to seek FDA permission to remain on store shelves. Levy said the rush to regulate e-cigarettes closely may strangle their ability to supplant tobacco cigarettes in the marketplace. “They’re going to make it difficult for certain producers of e-cigarettes to stay on the market,” Levy said.
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August 1, 2016 #156