Caucasus Business Week #163

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October 3, 2016 #163

October 3, 2016, Issue 163 - www.cbw.ge

NGO Correct PR Campaign, not Restrictions will Lower Smoking Level Pg. 7

Business Unusual Concept Hostel Fabrika Opens in Tbilisi

Bank TBC Banked moved to London Stock Exchange’s Premium Segment Pg. 10

Pg. 10

Competitive Capacity of Georgian Economy Grows

Real Estate Sales Surge

Georgia has occupied 59th position with 4.32 point among 138 countries in the 2016-20167 Global Competitiveness Rating published by the World Economic Forum (WEF). The country has improved positions by 7 places as compared to the 2015-2016 rating. According to the Global Competitiveness Rating, in Eurasian Region, major advancement was made by Georgia and Tajikistan.

“Both countries have increased GDP by more than 2.5%. This is less than average indicator over the 10 years, but it is higher compared to other countries of Eurasia”, the report reads.

Tajikistan ranks 77th in the rating.

The country has advanced by 5 positions compared to the previous year.

According to the Global Competitiveness Rating, Georgia’s major challenges for doing business consists in unqualified workforce, access to finances, inflation, inefficient state bureaucracy, insufficient supply of infrastructure.

Pg. 4

White Elephants on the Silk Road

Georg i advan a has c the ra ed in ti 6 pos ng by itions

Pg. 7 Pg. 6

The ruler of Siam (that is the king of ancient Thailand) could make, when falling into a bad mood, a “royal present” to his courtier: he would give him a white elephant which would ruin the unfortunate official due to the necessity of feeding the animal. It was not possible of making the sacred animal do any work, while the albino elephant required a lot of food, since it had to be constantly well-fed with varied fodder.

One can find many of such ”white elephants” when reviewing the economy of many countries. They are insanely expensive projects and infrastructure facilities that did not find any use: empty airports and railway stations, unused stadiums, or factories and plants that were abandoned due to absence of demand for their production. There are examples of this in any countries, especially in those where the role of the state in Pg. 9 the economy is too big.

2 GOVERNMENT

NEWSROOM One million customers supplied with natural gas in Georgia Natural gas is now available to one million people in Georgia thanks to the Government’s efforts to ensure everyone in the country has reliable access to gas.

New Soil Recovery Technology is Developed in Enterprise Geofert Prime Minister of Georgia Giorgi Kvirikashvili visited hightech microbiology enterprise.

Geofert is a venture that manufactures environmentally friendly bacterial, humic, organic and mineral fertilizers.

ECONOMY

Georgia’s economy grows almost 3% in August In August 2016, Georgia’s estimated real Gross Domestic Product (GDP) growth rate reached 2.9 percent year-onyear (y/y), while the estimated real GDP growth for the first eight months of 2016 reached 2.7 percent y/y.

October 3, 2016 #163

Georgia-Iran to jointly build oil refinery in Supsa, Black Sea

A

n oil refinery complex will be built in Supsa, a Black Sea port village in western Georgia.

The project’s investor, GeorgianIranian company GEOPARS, was gifted state-owned land in Supsa to build the new oil refinery. Georgia’s National Agency for State Property Management and GEOPARS signed a privatisation agreement today at a presentation of the new Supsa Oil Refinery Complex.

Georgia’s Prime Minister Giorgi Kvirikashvili promised the Government would fully support investors to build the new facility.

I am glad to see 800 people will be employed [within the project’s

implementation]. This means there will be 800 families better off in Georgia,” he said.

“I believe this project will be carried out successfully and its results will be reflected in the development of Georgia’s economy,” said PM Kvirikashvili.

Georgia’s PM said building the oil refinery was important for cementing Georgia’s role as a transit country that offered Asian countries the shortest route to Europe.

This project not only raises Georgia’s role as a transit country but also puts Georgia on the map as a producer-industrial country. Furthermore, having and Association Agreement (AA) and its Deep and

Comprehensive Free Trade Area (DCFTA) deal with the European Union (EU), makes Georgia attractive for regional countries, and in this case for Iran, to create industrial zones and export the production to the EU,” said Kvirikashvili.

Georgia’s high official recalled his visit to Iran last year, where he attended an Economic Cooperation Committee meeting – the first time it was held in several years.

Kvirikashvili said the purpose of the meeting was to deepen economic cooperation between Georgia and Iran and results of that meeting were already “obvious”, referring to the joint cooperation to build the new oil refinery complex.

ADB Increased Georgian Economic Growth Forecast

BANKING

According to the new report, the bank expects Georgian economic growth of 3% this year; the previous forecast has been 2, 5%. However, GDP growth forecast is grown from 3, 5% to 4% by the next year.

Construction of Anaklia Deep Sea Port to begin this year

Bad Loans Ratio in Bank Sector Remains Low

G

The ratio of bad loans in the bank sector remains at low level, around 4%. The amount of nonperforming loans accounts for 669 million GEL. Loans (nonstandard, suspicious, bad) are regulated by 30%, 40% and 100% reserve requirements.

Deposits Placed in the Banking Sector are Reduced by 235 Mln The deposit volume totals to 14, 6 billion GEL (-1,6% m-o-m) at the expense of demand deposit decline. Term deposits are grown by 5.2 million GEL, demand deposits are reduced by 240 million GEL.

BUSINESS

Two New Tanks Added at Kulevi Oil Terminal According to SOCAR, within the visit Abdullayev together with Georgian Ministers for Economy and for Energy Ilya Eloshvili participated in the commissioning of storage tanks #5 and #6 in the Black Sea Terminal (BST Ltd) in Kulevi port.

Rustavi-based Enterprise of Sandwich Panels to Launch Exports Rustavi-based enterprise manufactures roof insulation materials, wall panels and sandwich panels. The company supplies products to the domestic market, but plans to export 15% of products to foreign markets.

COMPANY

German chemical company seeks office in Georgia BASF, one of the world’s largest chemical manufacturers headquartered in Germany is looking to open a representative office in Georgia.

eorgia is one step closer to creating a new, faster maritime corridor between China and Europe, helping to restore the historic Silk Road by building the Anaklia Deep Sea Port.

After two years of discussions, the company responsible for developing the mixed-cargo deep sea port signed an investment agreement with the Government of Georgia.

The Anaklia Development Consortium will develop the Port on a build, operate and transfer basis, allowing larger ships to enter Georgian waters for the first time, thus expanding the country’s export potential and ability to act as a transport corridor.

A statement released by the Prime Minister’s press office announced the Anaklia Deep Sea Port project will start before the end of 2016.

The project has many phases but the important thing is that in three years the Port will start functioning and will employ thousands of people,” said PM Giorgi Kvirikashvili.

Through the deal that was signed yesterday, the Anaklia Development Consortium – jointly established by TBC Holding and Conti International of the United States – will invest $2.5 billion USD in the Anaklia Deep Sea Port project.

Just over $580 million will be invested in the first phase of the project. This amount was confirmed in yesterday’s agreement so phase one would definitely go ahead, said the PM. Find out more about the Anaklia Deep Sea Port project in the article ‘Project of the Century: Georgia starts to build Anaklia Deep Sea Port’

by Mariam Papidze on Agenda.ge.

Transforming the current port

BUSINESS WEEK caucasus

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in Anaklia into a deep sea port was a mammoth task and the development will be separated into nine phases.

Firstly, within the next three years the Anaklia Development Consortium must reach its first milestone whereby the Port must be able to handle seven million tonnes of cargo per year and start official operations.

Fast forward through the next phases and by the end of phase nine, Anaklia Deep Sea Port must be able to handle 100 million tonnes of cargo per year.

The investor is obliged to create a training centre for local people who later will be employed at the Port. The investor also has to create whole infrastructure, including a kindergarten, business centre and playgrounds. $586 million will be invested in phase one alone and we can definitely say the project is being launched,” said PM Kvirikashvili.

We believe this project is an important part of our spatial arrangement plan and will completely change the transit potential and economic landscape of Georgia.”

Why is Anaklia Deep Sea Port important for Georgia?

Once built, Anaklia Deep Sea Port will be the largest port in the country. Anaklia is located in northwest Georgia, on the Black Sea coast near breakaway Abkhazia region.

When complete it will have the ability to receive large vessels with a 10, 000 container capacity. Once fully operational the Port will be able to receive Panamax and post-Panamax ships – the largest ships able to pass through a canal with a cargo capacity of up to 40,000 tonnes.

Anaklia Deep Sea Port is one of

the infrastructural projects Georgia planned to implement to restore the historic Silk Road route and revive the country’s role as a transit nation connecting East and West.

The new Port will reduce the time need to transport cargo from China to Europe by about two weeks. The Port will develop the local economy not only in Samegrelo-Zemo Svaneti [the region where the Port will be located] but also in the whole country. It will also deepen trade and economic relations between Europe and Asia,” said Kvirikashvili.

In addition to building the Anaklia Deep Sea Port, development of logistics and industry zones and constructing an airport and liquid gas terminal are also planned for the region.

The Government also planned to announce a free economic zone on the territory of Anaklia Port.

www.cbw.ge <<

Gazelle Finance Fund Starts to Invest in Georgia

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First Advanced Oil Refinery in Georgia

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Georgia’s Position is Worsened by 14 Points in Terms of Transport Infrastructure in the Global Competitiveness Index

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New Enterprise Producing the Fruit Spirits is Opened in Agara

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

October 3, 2016 #163

3

ELECTION 2016

David Songhulashvili: Tourists will Be Able to Travel from Batumi to Gurjaani by Train

G

urjaani possesses much potential and resources for development, to overcome unemployment and resolve the unemployment problem thanks to quick economic advancement. This concept is one of the components of our election program. We have made accents on this direction during the whole election campaign by use of various instruments”, David Songhulashvili, majoritarian candidate of Georgian Dream from Gurjaani, noted.

“For example, 50 000 new job places will be created in 2017 by implementing various state programs. These programs are “Produce in Georgia”, “Host in Georgia”, “Plant the Future”, and so on. Moreover, scales of infrastructural projects is also growing. Consequently, in 2017 only these projects will create 40 000 new job places. One infrastructural space creates economic development ground that will ensure steadiness of job places.

As to our region, Kakheti, naturally,

agriculture sector development is our priority direction, as well as exports promotion. However, I would talk about tourism development perspectives in Kakheti Region. We consider the whole Region as a joint tourism space and we consider tourism development issues in complex way. We have already launched working in this respect and we have implemented many projects, but more will be done for the following 4 years.

I can name all those projects that will be implemented in tourism sector of Kakheti Region: Funicular construction on Tsivi Mountain in Telavi, Akhtala resort rehabilitation that will become a center for health recovery tourism. The International Wine Festival will be held in Gurjaani that will become of traditional character. We plan to restore Velistsikhe historical center that has the potential to become a new city museum.

It is also very important to develop household wine cellars, where exclusive

“

It is also very important to develop household wine cellars, where exclusive wines will be stored for not only tourism purposes, but it will add new life stimulus to agriculture sector and finally, the networks of small hotels and guesthouses will be developed jointly with the wine route

”

wines will be stored for not only tourism purposes, but it will add new life stimulus to agriculture sector and finally, the networks of small hotels and guesthouses will be developed jointly with the wine route.

“As you know, Tbilisi-BakurtsikheLagodekhi highway will be constructed by 2018. Gurjaani bypass road will be constructed from Telavi to Bakurtsikhe, Tusheti road will be rehabilitated, Telavi and Omalo airports will be restored and this is also very important for the tourism sector development.

Finally, all these projects will be crowned by rehabilitation of the Kakheti railway network. Our region will join the whole network and our citizens will be able to travel to Gurjaani from Batumi by train in several hours. State projects, agriculture and tourism sectors will create main sources of employment in Kakheti Region for the next 4 years”, David Songhulashvili said.

4

ECONO-MIX

Competitive Capacity of Georgian Economy Grows

Bruno Balvanera Regional Director of the EBRD

Estonian Model Provides a Range of Opportunities, But it Carries Risks as Well

W

ith the exclusive support of PASHA Bank the meetings of “Business Café” – the project initiated by consulting company “Insource” - continues. On Sept. 29th the sixth meeting hosted representatives from top management of the leading businesses. The meeting was moderated by Lado Gurgenidze, former Prime Minister of Georgia, an executive chairman of the supervisory board of Liberty Bank. The topic he presented for discussion was “Thoughts about management and leadership”.

Business Café meetings were initiated in October, 2015 and since then the project has significantly grown in popularity due to its unique format that provides a venue for an interactive discussion with industry leaders, exchange of ideas on recent trends in various industries and the economy as a whole.

Among the past speakers and presented topics of the previous Business Café meetings were: Giorgi Kadagidze, former president of National Bank of Georgia, with the topic “Innovation management”, David Gogichaishvili, general manager of Night Show Studio - „Management of human resources”, Alexander Jejelava (now Minister of Education of Georgia) - „Organizational corporate culture“, Andro Dgebuadze, business advisor – ”Management 3.0 or MBA books in mirror” and Papuna Toliashvili, founder and managing partner of Synergy Group - „Circular Organizational Structures“. Till the end of the year Insource and PASHA Bank plan to hold two more meetings. „Business Café serves as a popular platform for the managers of the leading businesses to meet and socialize. Each moderator shares own profound, unique experience and achievements followed by a highly interactive discussion. The format had been received extremely well by the diverse groups of participants. We are more than happy that Insource is running this project with the exclusive support of PASHA Bank, as it is a good opportunity for us to contribute, to the development of the business, and market economy of our country.” - said Anano Korkia, Head of PR and Marketing Department at PASHA Bank.

Merab Janiashvili Economic Analyst

However, there are many problematic issues, including attainability of finances that remains one of the major problems in the Georgian economy, as well as adequate education level of workforce and so on

Over the past 5 years Georgia has moved to 59th position from 88th place in Rating of Global Competitiveness

G

eorgia has occupied 59th position with 4.32 point among 138 countries in the 2016-20167 Global Competitiveness Rating published by the World Economic Forum (WEF). The country has improved positions by 7 places as compared to the 20152016 rating.

According to the Global Competitiveness Rating, in Eurasian Region, major advancement was made by Georgia and Tajikistan.

“Both countries have increased GDP by more than 2.5%. This is less than average indicator over the 10 years, but it is higher compared to other countries of Eurasia”, the report reads.

Tajikistan ranks 77th in the rating. The country has advanced by 5 positions compared to the previous year.

According to the Global Competitiveness Rating, Georgia’s major challenges for doing business consists in unqualified workforce, access to finances, inflation, inefficient state bureaucracy, insufficient supply of infrastructure.

The WEF is a Swiss non-commerce foundation that has been publishing annual reports since 1979. The report reflects competitive capacity of countries and business environment analysis. Every new report is based on indicators of the previous year.

For example, the 2016-2017 report is based on the 2015 indicators.

The competitiveness ratings are based on 12 main criteria and many other sub-criteria, including: state institutions, infrastructure, macroeconomic environment, commodity market efficiency, labor market efficiency, technological readiness and so on.

The lowest indicators are reported in innovations and refined business criteria.

A part of these criteria is based on official statistics of the government. Information on such criteria as court independence, level of criminal situation and education is based on inquiry of small, medium and major enterprises. About 200 companies are inquired in Georgia every year.

‘‘

Business Café meets up for a sixth time

‘‘

E

uropean Bank for Reconstruction and Development (EBRD) approves the process of tax liberalization in Georgia, but indicates to the risks as well.

Regional Director of the Bank Bruno Balvanera noted with “Business Contact”, that the so-called “Estonian Model”, which introduction is planned in Georgia, gives the economy a range of opportunities, but it carries risks as well, which are related to the reduction of budget revenues. Balvanera noted, that tax burden is low in Georgia, however, further simplification of the system, will be more effective and give benefits to the economy, which will be positive.

Balvanera noted, that they are observing the process; as they are interested in the effect of the model in the long-term period.

Balvanera announced the new forecast of economic growth in November. He noted, that positive trend was noted during the summer, including tourism number growth.

To remind, EBRD predicts economic growth of 3, 4% in Georgia this year.

October 3, 2016 #163

It should be noted that, over the past years, Georgia has been improving positions in the Global Competitiveness Rating year by year. Over the past 5 years, the country moved to 59th position from 88th place. It should be also noted that Georgia’s indicators have especially improved in terms of property rights protection issues. For example, in 2011-2013 reports, Georgia deserved low rating in terms of property rights protection and ranked 120th because of private property rights violation for many years. In the 2016-2017 Georgia has advanced by 4 positions to the 54th place. However, in this respect the previous report recorded a significant advancement, when Georgia improved 27 positions and occupied 58th place in terms of property rights protection.

As noted above, the Global Competitiveness Rating of WEF is based on more than 100 characteristics. Each country earns score due to each criteria, for example: in certain categories Georgia is leader: state regulations easiness on economy, small taxes, low customs tariffs, simplicity of business registration and so on.

However, there are many problematic issues, including attainability of finances that remains one of the major problems in the Georgian economy, as well as adequate education level of workforce and so on.

As to other countries, in the Global Competitiveness Index (according to the 20162017 report), Armenia ranks 79th, Azerbaijan is 37th, Turkey is 55th, Russia is 43rd, Ukraine is 85th, Moldova is 100th. In the rating the first place is occupied by Switzerland, Singapore is second, the USA is third.

The Global Competitiveness report clearly demonstrates strong and weak sides of a country and assists governments to properly identify priorities and implement corresponding reforms. At the same time, the Global Competitiveness Rating is a significant information for investors. Therefore, Georgia’s advancement in the rating will make positive influence on the investment environment of our country.

According to the report, Georgia improved its position in economic, social and business areas, its macroeconomic environment, healthcare and primary education sectors, goods market efficiency, technological readiness level, diversification of business and innovation Giorgi Kvirikashvili Georgia’s Prime Minister

October 3, 2016 #163

PUBLICITY

5

6

REAL ESTATE

October 3, 2016 #163

Real Estate Sales Surge MARIAM KOPALIANI

D

evelopment companies prove that real estate sales are growing. Representatives of development companies assert that in the previous year, when the national currency rate collapsed, they started sales of apartments in GEL or in fixed exchange rate.

In that period, sales strategy revision brought certain results.

It turned out that the development companies inquired by the Caucasus Business Week (CBW) sell apartments in USD and very successfully.

Nino Kuprashvili, head of DIRSI company marketing department, noted that in September 2015 the company started sales of apartments in GEL after the national currency depreciation.

The process lasted 3-4 months.

This temporary campaign justified in that period and brought real results.

However, the company has bought building materials and attracted investments in USD. Therefore, the company faced serious difficulties and finished the campaign, Kuprashvili said.

Sales of new apartments have increased and 50% of all exposed blocks of DIRSI complex have been already sold, Kuprashvili added.

Bezhan Tsakadze, head of G&G development company, said that the company had sold apartments in GEL, when sales significantly declined amid the GEL depreciation period. Starting spring 2016 sales increased, but now the sales indicators have reached its peak.

At this stage, the company has started constructing a new residential complex on Oniashvili street. 75% of the spaces have been already sold despite the complex construction works have not been finished, Tsakadze said.

Sales rose because solvency of our citizens has improved and development companies have lowered apartment prices, Tsakadze said. The price of one

square meter declined by 1015% as compared to the previous year, he said.

“Moreover, loan issuance procedures were simplified, interest rates have declined. I did not expect similar activation and prices have declined after new companies entered the market”, Tsakadze pointed out.

What has preconditioned growth in sales in development companies?! The field specialists have provided different answers to this question.

Irakli Rostomashvili, head of Association of Developers of Georgia, says that the sales have genuinely increased. As a rule, real estate sales grow in the country, where people have stable living conditions, he noted.

“Seemingly, the society has acquired the sense of stability and collected financial resources. Everything is comparative, but the situation has improved as compared to the previous years, especially compared to the regime of Saakashvili, when people were afraid of showing money. If somebody would buy apartments and new property

would be registered, Adeishvili’s office would visit them. Our society feels difference in this respect and the result is evident.

Today, the sales of apartments have increased”, Rostomashvili noted.

Tornike Abuladze, director general for ARCI development company and representative of Association of Developers of Georgia, says that, currently, the real estate market genuinely registers upturn in demand.

“The year of 2014 was one of the most important periods in terms of sales. Even the year of 2007 cannot be compared to it. Apartments of 1 billion USD were sold in 2014. It is also interesting that in the midst of 2015, amid the GEL depreciation period, the sales indicators declined by only 13%. After this, in NovemberDecember 2015 sales indicators considerably increased”, Abuladze noted.

Several factors have increased sales and the GEL exchange rate stabilization is main factor, he said and refused considerations as if the GEL exchange rate has not been stabilized. The national currency has found a new sta-

bilization point. As a result, our citizens have acquire the sense of stability, he said.

Another factor that has grown sales is related to the initiative of Association of Developers that calls for lowering revenues from rental by 5%, Abuladze said.

The third reason is related to considerable deposits volume at commercial banks. Interest rates have declined and the population prefers to invest money in real estate.

It is also important that a half part of sold apartments were bought by mortgage loans and another half – by cash. This signifies our citizens have money, Abuladze noted.

“Moreover, the GEL depreciation has considerably cheapened building and apartments.

Construction process has cheapened by about 70-100 USD. Therefore, development companies lower prices. There is another important detail – people think that investing in real estate is a more favorable and stable deal”, Abuladze noted.

Economic expert Eka Gegeshidze explains that the development business is an only

sector today, where investments may be made simply to easily receive dividends from there. This is business that cannot be lost easily and that does not require special mental requirements to make money, she added.

“That’s why this field is in demand. There are no alternative means. There are no stock companies and organized market systems in our country, where people would easily place their savings and buy shares. Today, regretfully, our citizens lack for due ideas to launch business activities and develop new innovative products, because only 90% of our citizens hold entrepreneurial skills and creative mind”, Gegeshidze noted.

Meanwhile, expert Niko Kakhetelidze does not agree that real estate sales have increased. I do not know on what information these statements are based, as if the demand for real estate had increased in the country.

“I think similar statements are part of marketing campaigns. I have heard this information, but I think these statements are ungrounded”, Kakhetelidze noted.

October 3, 2016 #163

Paata Bairakhtari, analyst for Association of Young Financiers and Businessmen (AYFB), has held a briefing and appraised the Tobacco Control bill. He noted that the bill requires fundamental revision and also overviewed the state strategy in this respect.

This year the Tobacco Control bill was initiated at the Georgian Parliament. The bill calls for correcting the existing legislation and introducing various restrictions and licenses for sellers.

The bill has caused tensed discussions upon submission to the Parliament. As a result, the bill authors have already extracted a number of planned changes, despite even the first hearing has not been held yet.

It should be noted that in 2013 the Government developed a tobacco control strategy with detailed description of steps to be taken annually to lower the smoking level in the country. The strategy set various restrictions, growth in excise tax rate and PR campaigns with educational accents. Regretfully, the fully approved bill was forgotten and since them only fragmented steps are taken. For example, the current bill raises excise tax rate without substantiation, despite this mechanism brings no results. Almost every year, the price of cigarette grows. This year, even the new bill was initiated at the Parliament, but it entirely misses the strategy-determined objectives.

The restrictions embodied in the new tobacco control bill calls for full prohibition of smoking at public zones, full restriction of outdoor advertisements and prohibition of sales of tobacco and tobacco products and their accessories directly transport passengers.

All these restrictions will come into force on January 1, 2017. Everybody agrees that outdoor advertisement of tobacco products must be banned, but it is inadmissible to discuss the bill in autumn and introduce restrictions in a month. Even more so, we should take into account that the ratio of tobacco products in revenues of outdoor advertisement companies accounts for 55%. This signifies these companies should be given one-year period to complete the existing contracts and not to have to throw away the existing infrastructure.

As to tobacco stores nearby motorways, restrictions will just make them close and even this sector should be given a certain period to operate in liquidation regime and move to other places.

Thus, full enforcement of the bill regulations upon adoption will only damage the sector enterprises and many employees in the sector.

Therefore, introduction of all regulations should be accompanied by a certain period for adaptation to new rules of games.

The same may be said on the bill-determined regulations for restaurants and hotels. According to the bill, restaurants and cafes are obliged to organize special isolated smoking zones of no less than 20% of total space. The isolated nonsmoking zones must have special windows outgoing to the street and air-conditioning system.

Naturally, creating similar infrastructure requires additional expenditures and entrepreneurs will have to raise these resources from consumers’ pocket. As a result, they will have to increase tariffs on various services and products and ordinary consumers will bear losses again. This signifies if we request a restaurant to remake the facility within a year, due to these regulations, it will have to increase service prices more than it would be necessary in case of two years.

It should be also noted that, under the current legislation, all bars and restaurants are obliged to have 50% of total space for a nonsmoking place, but the practice shows that only one restaurant in every 100 ones protects this regulation.

This signifies another problem arises here – implementation of adopted regulations in life, because there is no mechanism who and how will control similar facilities and how this norm will be protected. Consequently, this norm is not fulfilled in practice. We will receive the same picture by expanding the mentioned space to 80% from 50%. The Government cannot ensure that restaurants organize 50% nonsmoking zones and how will it manage that restaurants expand this space to 80%? Nor the new bill determines mechanisms for enforcing this regulation.

Consequently, it is unclear for us what is the goal of introduction of regulations that will not be implemented in practical life?! If we allocate budget funds to establish a new control body, how will this mechanism work?! Will state officials go to restaurants and measure spaces whether nonsmoking zone makes up 80% of total space or 78%?!

7

NGO

Association of Young Financiers and Businessmen:

Correct PR Campaign, not Restrictions will Lower Smoking Level Licensing and Restriction of Visibility Introduction of licensing for tobacco sellers and restriction of tobacco product visibility are the most dangerous regulations, AYFB members said. These restrictions will bring both economic and social damages, they said.

According to the tobacco control bill, tobacco traders must be licensed, but the document does not determine the mechanism of licensing, what criteria must be satisfied and what is the objective of introducing this norm in the country. If the licensing requirements are heavy, this signifies that a majority of small entrepreneurs will not be able to satisfy them (small supermarkets and stores) and they will just go bankrupt. As a result, only major entrepreneurs will take licenses and make profits of extreme reduction of market competition. In another case, if the licensing norms are genuinely satisfactory and everybody will be able to obtain it, what will be the effect of introducing similar regulations?! This will be extraction of money from consumer’s pockets because of useless license, even more so, the bill does not determine the objective of this regulation. At the same time, according to economists, the licensing system is a main source of corruption in state structures. It is unclear why licenses should be imposed on tobacco sellers if it is not necessary. Is it required any special knowledge for tobacco sales or is it necessary to have special infrastructure to store tobacco products?!

Moreover, the new bill restricts visibility of tobacco and tobacco products and trade booths, stores and supermarkets will be obliged to use special closed boxes. When you represent the Government of Finland with 4 times higher GDP per capita, compared to Georgian GDP, you can implement these regulations painlessly, even more so when there is no street trades. But in case of Georgia, where street trades is an only source of revenues for a considerable part of our society, introduction of the mentioned regulations contains both economic and social hazards. To put simply, introduction of licensing system and restriction of visibility of tobacco products signifies that street traders who sell tobacco products will be fined. And this will cause much discontent in our society because it is inadmissible to make small and medium-sized enterprises go bankrupt and, on the contrary, strengthen major enterprises.

Excise Tax Over the past 3 years, starting September 1, 2013, excise tax rate rose four times on both filter and non-filter cigarettes. As a result, the cigarette retail price doubled. Despite this fact, the excise tax growth and higher tobacco product tariffs have not narrowed smoking level in the country. Over the past 3 years, excise tax rate on filter cigarette rose to 1.10 GEL from 0.60 GEL, while on non-filter cigarette the rate increased to 0.30 GEL from 0.15 GEL. This signifies the existing excise tax rate has doubled and new proportional excise tax rate was added that totaled 10%. The objective of raising the excise tax is to tighten tobacco control mechanisms and to reduce the smoking level in the country and to adjust the Georgian legislation to the EU standards. However, if we analyze outcomes of excise tax growth, we will make sure that the policy carried out for reduction of smoking level has brought absolutely different results.

Regretfully, Georgia does not make annual statistics of quantity of smokers. However, the smoking level may be determined due to volume of sold cigarettes. Over the past years, Georgia’s tobacco imports grows on annual basis, while small declination was registered in 2015 compared to 2014. In January-June 2016, Georgia imported 55.5 million USD cigarettes, up 3.5 million USD compared to the same period of 2015. But if we compare the first half indicators to 2012 indicators, tobacco imports have increased by 15%. This signifies that over the past 3 years, the doubled excise tax has not reduced the smoking level, but increased.

International Experience proves that growth in cigarette taxes cannot lower smoking level in the country or measure this brings only minimum results. Economic experts know that cigarette is not relevant product in relation to prices, unlike other products. Smokers just prefer to buy lower-quality cigarettes to replace expensive products.

Removal of Tobacco Products from Free Trade Agreement Lately, along with tobacco control bill, active discussions are underway on removing tobacco products from free trade agreement. It is unclear what is the objective of similar activities, because our country cannot receive any benefit from this mechanism.

Removal of tobacco products from the Free

Trade Agreement will: 1. further increase tobacco product prices in case of imports. Georgia’s imports tax is 12%. As a result, the retail prices will increased by about 20%, because tobacco product prices risen by 12% will be added 10% proportional tax. We have already noted above what results we have received from rising tobacco product prices and, instead of reduction of smoking level, we have opposite picture and the smoking level has increased.

Consequently, this step will seriously damage the Georgian consumer; 2. in case of exports, Georgia will bear serious losses. Georgian manufacturers and Georgian exporters will lose interest in exports of tobacco products, because product prices will become uncompetitive because of imports taxes. As a result, tobacco exports will be ceased from Georgia, in practice. As a result, several tens of job places will disappear. Even more so, one of the domestic manufacturers has obtained an important financial assistance as part of Produce in Georgia state program for cigarette production in Georgia and then for its exports. It is unclear when the Government supports domestic production, on the one hand, and frustrates its development, on the other hand.

Conclusion The AYFB believes that the bill submitted to the parliament should be fundamentally revised. First of all, a number of regulations should be entirely removed from the bill or they should not damage the interests of our citizens. At the same time, the bill lacks for financial analysis. Consequently, it is unclear what economic outcomes the country will receive by adopting the bill in the current edition.

The explored materials prove that the country will receive no economic benefits, however, the bill cannot determine what losses the country, budget or the whole country will have. At the same time, the tobacco control bill comprises many regulations that cannot be implemented in practice or the bill authors cannot provide efficient implementation mechanisms and this will create additional problems.

At the same time, we would like to note that educational policy should be enhanced if we genuinely want to reduce the smoking level in he country, like experience of other countries.

Higher price cannot bring real results, nor unclear regulations, that are expected to only damage the public interests.

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PR

October 3, 2016 #163

A crisis is just a challenge that you can accept, overcome, and use as an opportunity to achieve better results - Can you tell me a little about your educational background?

- I hold BA in Journalism and an MA in Communications Management.

- What was your first job?

- I started working as a party PR specialist in Parliament when I was 18.

- And what is your current job?

- I work at Adjaristsqali Georgia as the head of communications.

- What was your earliest achievement?

- I spent my childhood on stage as an event presenter. I think my first appearance on stage was my earliest achievement. I defeated my fear, overcame the beating of my own heart, and even managed to enjoy the whole process. I was only 8 years old then, but I can still remember this emotion clearly.

- What are some other projects or achievements that you are proud of?

- I represent the company that is building the Shuakhevi Hydropower Plant, one of Georgia’s largest power generating facilities.

Our social projects are setting high standards of social responsibility in our country. I take pride in all of the projects that we have implemented over the past two years and their considerable contribution to Georgia’s long-term development. So far, we have implemented roughly 70 social projects aimed at improving the quality of life in upper Adjara.

- What is one field that you would never work in?

- In some ways, the work we do sets the tone for our lives because it consumes so much of our time.

I enjoy communications, but I think I would be less successful in a technical field. That being said, there is a strong need for technical specialists in Georgia, and I would advise anybody to choose a technical profession.

- What makes a person successful in your field? Besides knowledge, what special characteristics are required?

- Strong communication skills.

Communicating with people is an art, and a company’s image depends on effective communication. A PR specialist is responsible for developing that image and forming a company’s long-term reputation. In addition to knowledge, this job requires broad vision to determine the best communication strategy, one that takes into account all possible risks and dangers.

- How is the PR field understood in Georgia?

- Some companies do have a strong understanding of the role of PR in business. They work on long-term strategies and recognize the need for PR services in their company’s success. However, many Georgian companies remain skeptical about PR and think that its role is limited to media relations or executing decisions made by top management.

Iza Gotsadze - Head of Communications at Adjaristsqali Georgia LLC (AGL)

The PR field still remains in its infancy in Georgia. This is a problem that is particularly evident in the process of personal image building.

For example, when politicians are advised to act in a way that would generate positive public reactions, their personal characteristics are not taken into account. This creates artificial public personae that are inadequate and do not inspire public confidence. PR specialists should understand that the most efficient strategy for image formation is to consider the personal characteristics of the person and highlight their strengths while not ascribing to them characteristics that are artificial or unfamiliar to the public.

- How easily do you manage crisis situations and quick decision making? Do these crises affect quality of your business?

- I believe that crisis management and making fast decisions under pressure is an important part of

any manager’s job. Managing a crisis without harming the quality of work requires not only a strong character but also depends considerably on experience and knowledge. In my 15 years of experience, I have come to learn that a crisis is just a challenge that you can accept, overcome, and use as an opportunity to achieve better results.

- Is there an interesting experience from your life or work experience that has had a strong impact on you?

- Even though I work in the PR field, I studied to be a journalist.

At first, I had a lot of doubts about whether starting the journalism program was the right decision for me. During my studies at GIPA, I interned at a major Georgian TV broadcaster. This was a very interesting period in my life filled with novelties and challenges. In the last few seconds before a live broadcast, in spite of the adrena-

line, there was so much to do and so many decisions to make. Everything had to be right the first time because there wouldn’t be a chance correct any mistakes later. I learned my part in this rhythm and decided that this was the right field for me.

This ultimately led me to a career in the PR sector.

- If you weren’t working in PR, where would you work?

- If I had to choose a different profession, I would certainly work in business journalism.

- What are your strengths as a businesswoman?

- I think my strengths are my abilities to make decisions quickly and take responsibility for my actions.

- What do you like about working for your employer? What makes the company interesting for you?

- That is something I could talk about endlessly. The company encourages all of its employees to fully realize their potential and

make the most of their abilities. We work as a team to overcome challenges and advance the goals of the company.

Facing challenges is part of any energy project, not only in Georgia but throughout the world. Problems arise every day, but resolving them efficiently without harming the company’s reputation is what I find to be the most satisfying part of my job, especially because our company’s management fully recognizes the role of the PR department its success.

- Is there anything you don’t like about working at your company?

- There’s nothing to dislike when you love your job and work in an environment that supports you.

- Where do you see yourself after 20 years?

- It’s difficult to say where I’ll be in 20 years, but I think by then I will have moved from the private sector to the public sector.

REAL ESTATE

October 3, 2016 #163

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White Elephants on the Silk Road Dr. Andrei Maximov Maximov&Partners LLC. am@maximov.com www.maximov.ge

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he ruler of Siam (that is the king of ancient Thailand) could make, when falling into a bad mood, a “royal present” to his courtier: he would give him a white elephant which would ruin the unfortunate official due to the necessity of feeding the animal. It was not possible of making the sacred animal do any work, while the albino elephant required a lot of food, since it had to be constantly well-fed with varied fodder.

One can find many of such ”white elephants” when reviewing the economy of many countries. They are insanely expensive projects and infrastructure facilities that did not find any use: empty airports and railway stations, unused stadiums, or factories and plants that were abandoned due to absence of demand for their production. There are examples of this in any countries, especially in those where the role of the state in the economy is too big: in China and Brazil, in North Korea and Venezuela plus in many other countries around the world. Soviet Union with its planned economy was especially noted for creating such “white elephants”: their skeletons can still be seen both around Georgia and throughout all of the post-Soviet space. Russian economy continues these “great” Soviet traditions: its expenses for all kinds of championships and Olympics, monumental bridges and other facilities are, as a rule, as enormous as economically not feasible. Only the Olympic Games in Sochi cost Russia around 1.5 trillion rubles (25 billions of US dollars), which made it the most expensive Olympiad in the sports history of the mankind. 98% of the funds were spent for construction, but most of the construction estimates grew significantly larger than expected due to traditionally poorly detailed project documentation. As a

<<

There is never enough money, not enough investment for projects.

Especially in Georgia.

The main issue is not whether to develop or not to develop infrastructure projects, but which should be done first

>>

result, some half a dozen of the largest Russian construction companies went bankrupt right after the Olympics.

It is hardly likely that small Georgia should start creating its own “white elephants”, even if their scope is a hundred times smaller. Still, one can locate them looking at the economic map of the country. For example, a large slaughtering plant in Natakhtari with a capacity of 200 cattle per day has not been operating for several months now. With its modern equipment and latest technology it could handle up to 200 cows daily, but there are at best only 5 cows per day available for processing… It is cheaper not to run the slaughterhouse at all than to suffer losses due to such low processing volumes. Attempts were made to import cows from abroad in order to export the products later on, but this scheme proved unprofitable, too. No one can tell when the investment can start bringing profit.

There is a large refrigerator in Natakhtari featuring the deep-frieze facility, but it does not have incoming initial raw materials either. There are no products to put into this refrigerator facility, so it is not in operation. In Poti, there exists a refrigerator plant which has not been operating for years now. It is easy to continue the list of such examples. The reasons for this situation are as follows: poor preliminary analysis, lack of project marketing or its insufficient handling, lack of knowledge about the local raw material basis, about export possibilities for the products, about international markets and about one’s competition.

The above examples, however, had cost only millions or, at a maximum, tens of millions of dollars. They are only “white baby elephants”… Which is not the case of port Anaklia with its 5 billion US dollars of investment. It is

known that in recent years the cargo traffic through the port of Poti, especially container traffic, was constantly declining by approximately 20% per year. This is, of course, the result of the current crisis in the neighboring countries, and the situation may improve in the future. I am very concerned whether Anaklia may become a Georgian “white elephant”. It would seem that developing the existing, effectively operating port of Poti which is currently underutilized would have been a better solution. Especially since its operator, APMTerminals, was ready to invest about $250 millions in the expansion of the port capacities— that is, before the Anaklia project was launched. 250 million is not 5 billion after all, plus the fact that the deadlines for putting the facility into operation would have been, to put it mildly, quite different.

My potential opponents should know in advance that I am not against the development of the transportation infrastructure or the construction of a deep-water port or, let us say, the railway connecting Baku, Tbilisi and Kars.

I am very concerned about them, however, perhaps due to lacking enough information, because I do not know whether any professional did calculate the volumes of cargo going to and from the port of Anaklia for it to be profitable--from which countries would that cargo arrive and to which destinations it would be sent? As per cargo transshipment at Anaklia, it should be known which other Silk Road routes it would compete with? The Baku-TbilisiKars railway must by definition take away the cargo flow from the Georgian Black Sea ports, because containers from Europe to Middle and Central Asia will be transported via the rail route, directly, without any expensive transshipment operations. Plus there are alternative routes, too.

I keep genuinely admiring China’s geopolitical and economic strategy, its “soft power” in creating the Silk Road project. This is what happens: the Chinese lobby and finance simultaneous construction of several routes via many countries in Asia and Europe, and thus they include them into the orbit of their influence. This is not a philanthropic enterprise because credits will have to be paid back, sooner or later. The construction itself is done pretty often by Chinese companies which get in this way very large and stable contracts. In the end, there will be several transportation routes from China to Europe that would be competing with each other and, possibly, dumping transportation fees in their struggle for cargo volumes. Thus the Chinese will be profiting again in this case, due to the lowering of their transportation expenses.

There is never enough money, not enough investment for projects. Especially in Georgia. The main issue is not whether to develop or not to develop infrastructure projects, but which should be done first. How to prioritize them. My personal conviction is that Georgian interests lie much more not in directing investment to Anaklia as a first choice, but in modernizing and widening the Georgian Military Road. I know from own experience how high are the losses of Georgian businesses (and, respectively, the Georgian state) because of its irregular operation. Several times around the year the Upper Lars custom and crossing point is shut down due to poor weather conditions, and it can stay closed not for days but for weeks on end! As a result, Georgian exports of perishable peaches and nectarines decline drastically, as was the case last summer, and in winter the same happens to tangerine shipments.

Transportation to Russia over this route is stopped, so the traffic of goods

goes via Azerbaijan, which makes the Georgian export products much more expensive. If the Georgian Military Road were modernized and overhauled, both Georgian budget and Georgian businesses would immediately experience a very positive change. On the other hand, small-scale, but numerous investment projects into the correctly pinpointed market niches existing in the sphere of tourism and agriculture are always much more effective from the point of view of profitability as compared to gigantic projects.

My last comment is somewhat beyond the topic, perhaps. I read recently, with quite a shudder, that POSCO, a South Korean company, is making plans for building an ultra-modern iron and steel plant in Georgia, with the annual capacity of 1 million tons of steel, expecting to invest half a billion US dollars per year.

I do not know any details, but I do not know of any convincing arguments for such a project in Georgia. This is, of course, not a “white elephant”: this plant will most certainly be profitable since it the Koreans who would be developing the project. They are great in their economic activities, just as are the Chinese. In the 1960s and the 1970s the Republic of Korea did create its powerful steel industry within the framework of their strategy for phasing out imports. They did that with a major state support and they have been operating using imported raw materials. They are now among the five largest steel producers in the world. Which means that the time has come to take abroad such plants that harm their environment.

But why move them to my small and beautiful Georgia? This country is, in my opinion, a boutique, in the economic respect, so everything here must be small, unique and environmentally friendly.

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BUSINESS

October 3, 2016 #163

Unusual Concept Hostel Fabrika Opens in Tbilisi Unique concept hostel Fabrika opens at old cloths factory in Tbilisi on Egnate Ninoshvili street. Hostel has 365 rooms and apart from that building offers a free space to work on special projects or to just meet people. Fabrika is ready for festivals, exhibitions and different kinds of events. Ana Svanidze manager of the hostel talked with Commersant about the new hostel about it’s different conception and services. The main idea of the hostel is to create alternative space for gathering in Tbilisi, where Georgian and foreign guests will share ideas and impressions. Architectural group “Multiverce Architecture” (MUA) works on the project.

BANK

HOTEL

TBC Banked moved to London Stock Exchange’s Premium Segment

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supervisory board, Mamuka Khazaradze.

TBC Bank’s shares have been listed on LSE since 2014. Over the past two years, the bank has demonstrated top results in corporate governance and proved that it is a company of the highest standards, which has earned the right to move to the premium segment of the LSE. Now TBC Bank shares are available to the world’s largest and the most influential investors. This is a great opportunity for TBC Bank as there are only 12 banks in the LSE premium listing worldwide, including large banks like Barclays, Lloyds and HSBC. The companies listed in the premium segment are regulated by the strictest standards, which implies that TBC Bank meets the strictest requirements for transparan-

BC Bank moved to the premium segment of London Stock Exchange.

An official ceremony to mark the occasion was held in London. TBC Bank’s chairman of supervisory board, Mamuka Khazaradze, representatives of the bank and Minister of Economy and Sustainable Development of Georgia Dimitri Kumsishvili were attending the event.

“For our bank, a move to the LSE premium segment means an unlimited opportunity for development, the expansion of our investor base and the potential to increase the liquidity of our stocks.

As for the local market, this means our clients are receiving financial services from an even more stable bank, which is managed using the highest standards” - stated TBC Bank’s chairman of

NEWS

BRAND

Goldon Tulip Hotel Opened in Historic Building

Mugsy’s Burger – New Burger House in Tbilisi

Golden Tulip Hotel opened in historic building located in Borjomi, Georgia, international operator Golden Tulip who is a member of Louvre Hotels Group network will manage the hotel. Blue Palace Firuza is one of the most important historical buildings in Borjomi.

Situated at the entrance of the “Mineral Water Park”, it was built in 1892 by the consul of Iran and is considered a unique cultural monument.

Episode – First Used Clothing Online Shop Appears in Georgia Episode is first used clothing online shop in Georgia, founders of the website Levan Okriashvili and Lasha Margiani are consumers of second hand clothing, who decided to create a platform where people could purchase used clothing.

Customers save time and energy and can purchase anything without leaving their homes. Apart from this we are providing free deliver service.

Mugsy’s Burger launched operation in Tbilisi in March, 2016, at a Small, comfortable facility on Paliashvili Street. Initially, the menu comprised only one variety of Burger and potato fries. However, the Burger House became popular in a short period and acquired a great number of clients.

On September 15 Mugsy’s Burger unveiled a new facility on Vazha-Pshavela Avenue N 63. Currently, clients are able to taste four varieties of Burger. Moreover, the menu also includes Chicken Wings, Cheese Sticks with Bacon, Chicken Nuggest and Fresh Salad. Mugsy’s concept is based on the current reality on the market.

Prices on Burger of natural, unfrozen products are very high, however, it is possible that prices of yummy burgers that is made everyday of new and high quality products be lower. Averaged price of similar sort of Burgers is 9 GEL, while Mugsy’s prices ranges from 4.9 to 8.9 GEL. Major attention is paid to the process of selecting fresh products. High-quality meat and other unfrozen products are used for dishes and they are bought every day. Sauces of Mugsy’s recipe are made on the spot. Finally, clients feel all these special characteristics from the very first taste.

It should be noted that in the Social Network Mugsy’s Burger is very popular and the page has attracted 30 000 users in short period. Visitors always give highest mark to Mugsy’s Burger House.

cy and corproate governance and will continue to do so.

Hence, for TBC Bank this is an opportunity to raise the bar even higher and share the world’s best service pratices with its customers.

“For Georgia, our presence in the LSE premium segment will contribute to increasing awareness about our country and will also create the necessary preconditions for businesses operating in Georgia to enter the international arena,“ - stated TBC Bank’s CEO Vakhtang Butkhrikidze.

In the nearest future, TBC Bank plans to become a candidate to entering the FTSE-250 list. This will further increase the availability of the bank’s shares and consequently, impact stock liquidity.

TBC Bank placed up to 50m shares on the LSE premium segment.

Hotel Euphoria Opened in Batumi New five-star hotel ‘Euphoria Batumi” was opened in Batumi.

The Prime Minister of Georgia attended the opening ceremony. Giorgi Kvirikashvili, alongside with the guests visited the newly-opened hotel.

“The volume of investment is 90 million USD and huge resort complex was constructed. It is also noteworthy that around 1500 people were employed in the construction process. 600 people will be permanently employed upon the termination of the building. This means 600 flourishing families – local residents are employed at this touristic complex. Respective step represents a sizeable contribution in the areas of economic development and social welfare,” – Giorgi Kvirikashvili “Euphoria Batumi” – hotel equipped with modern infrastructure – features 415 suits. Multifunctional hotel complex with an investment value of 90 million USD, also encompasses entertainment center and a mall – “Metro City”. 1500 people were employed during the construction process, whereas 600 individuals will be employed at the hotel complex.

October 3, 2016 #163

REAL ESTATE

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PUBLICITY

October 3, 2016 #163

October 3, 2016 #163

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WORLD NEWS Quotes

“ If you do what Cheap oil and reduced demand for imports of other goods because of the weakness of the Turkish lira helped keep it to 4.5% of GDP in 2015

you’ve always done, you’ll get what you’ve always gotten

”

The conference will be attended by delegates from 180 countries along with observers and intergovernmental and NGO’s

Tony Robbins

Tobacco Institute Turkey’s Economy Needs Iran IntroBoring Reforms. Instead, duces Credit Seeks Farmer, Industry Cards For First Representation in COP 7 it is Getting Quick fixes

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ast year Soner Tufan, straining to keep up with demand for guided tours around Istanbul, decided to move to spacious new offices. “Those were the days,” sighs Ali Emrah, his business partner.

Despite running one of the top-rated tour-guide companies in Istanbul, they have seen daily inquiries about tours fall from 20 or 30 to three or four following a series of terrorist attacks in Turkey, the most recent on Istanbul’s main airport. Their expansion now feels like an error. Many tour guides, they say, are looking for new jobs.

Turkey’s tourism slump is already visible in deserted sights and empty hotels, but not yet in its economic statistics. Banks have restructured loans to the industry; non-performing loan ratios will begin to rise only next year, says Ozlem Derici of DenizBank.

The impact on Turkey’s current account—last year revenues from tourism paid for half of Turkey’s trade deficit in goods—will become clearer as the summer wears on. Nihan Ziya-Erdem of Garanti Bank says the slowdown could shave as much as one percentage point off this year’s growth rate.

That is bad news for Recep Tayyip Erdogan, Turkey’s president. As it is,

Time

growth has slowed from rates of 7-8% a year when he was prime minister (see chart). The relatively healthy clip of 4.5% in the first quarter, year on year, was largely the result of a 30% boost to the minimum wage on January 1st, which lifted consumer spending. The IMF expects growth to decline further, to 3.5% in 2018.

Turkey’s current-account deficit, however, is already large and persistent.

Cheap oil and reduced demand for imports of other goods because of the weakness of the Turkish lira helped keep it to 4.5% of GDP in 2015. But Nafez Zouk of Oxford Economics, a consultancy, expects that the tourism slump will lead to a current-account deficit of 5% this year and 5.4% in 2017. This is worrying, as it leaves Turkey dependent on flighty foreign lenders and investors to cover its import bill. Turkey’s foreign debts have risen rapidly, from 38% of GDP in 2008 to 55% of GDP at the end of 2015. And more than 90% of them are denominated in foreign currency, not in lira.

Further depreciation of the lira risks a mismatch between what companies owe and what they can afford. And if the foreigners take fright, funding could dry up.

Armenian authorities racing against time to adopt new tax code before WB directorial board session

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rmenia’s government is racing against time to adopt a new tax code before the World Bank directorial board’s session in November, Haykakan Zhamanak (Armneian Time) reports referring to its sources.

According to the newspaper, at this very session the World Bank will decided whether to continue lending financial resources to Armenia or not.

“It is known that international organizations has made annual increase of tax revenue by 60-70 billion a condition for lending money to Armenia, and the Armenian authorities are trying to comply with this requirement by adopting the new tax code – otherwise, organizations will extend no loans to the country,” the authors of the publication say.

Vakhtang Mirumyan, the chairman of the State Revenue Committee, however, told the newspaper that there was no such a requirement.

“However, we ourselves already think that we must build up revenue, and that this can be done by combating shady dealings,” he added.

Mirumyan is also quoted by Haykakan Zhamanak as saying that after adoption of the new tax code in 2017, tobacco products and spirits will add AMD 8.1 billion to the budget in excise tax receipts, and in 2018, petrol and liquid gas will bring another AMD 17 billion to the budget as excise tax payments.

The Armenian National Assembly has passed the new tax code at two readings and is expected to give its final approval to the code before the end of this year.

Lifted sanctions have Iran’s financial sector leaping forward. Iran introduced credit cards for the first time on Sunday, the Iranian Students’ News Agency (ISNA) reported.

Iran is looking to bolster its oil production and economy after world powers in January lifted sanctions against the Islamic Republic in return for Tehran complying with a deal to curb its nuclear ambitions. Valiollah Seif, the head of the central bank of Iran, cautioned that it could take some time for banks to get used to the credit card system.

“It would be incorrect to think that these cards will be used quickly within the banking network,” ISNA quoted Seif as saying.

The cards will be offered with limits of approximately 3,000, 10,000 and 15,000 dollars and can be used for purchases in shops or online.

ADB Keeps Azerbaijani Economy Growth Forecast for 2017 The Asian Development Bank (ADB) expects Azerbaijani economy to grow in 2017 by 1 percent, according to an updated ADB report.

The new forecast is the same as in the previous ADB report. The ADB also predicts a 2.5-percent reduction in Azerbaijan’s economy in 2016 as compared to the 1-percent decline in the previous report.

Inflation will be 12 percent in 2016, but it will fall by more than twice in 2017 – to 5.2 percent, according to the ADB forecast, which was left same as in the previous report.

I

nstitute says anti-tobacco lobbying has led to drop in demand for locally grown crop, impacting livelihood of Indian farmers.

The Tobacco Institute of India (TII), which represents the country’s farmers, manufacturers, exporters and ancillaries of cigarette segment of the tobacco industry, has requested the Indian government to allow tobacco farmers and companies to be represented in the forthcoming World Health Organization’s FCTC Conference of Parties (COP 7).

COP 7 is an anti-tobacco conference that reviews implementation of the WHO Framework Convention on Tobacco Control (FCTC) and the protocol to eliminate illicit trade in tobacco products. The conference will be attended by delegates from 180 countries along with observers and inter-governmental and non-governmental organizations (NGO). It is the presence of NGOs in COP 7 and exclusion of stakeholders in the tobacco industry which has concerned TII. “We are concerned that, at the behest of vested interests, NGOs and antitobacco activists in India, through their relentless and biased campaign, are influencing the government’s tobacco control policy and promoting extreme regulations that are already hurting tobacco farmers and the legal industry in the country, causing widespread growth of illegal trade in cigarettes”, Syed Mahmood Ahmad, director of TII said.

According to Ahmad, the growth of illegal cigarettes and the consequent sharp decline in the legal industry has led to the drop in demand for locally grown tobacco, and is having a devastating impact on Indian tobacco farmers and their livelihood.

TII has called upon the Guidance Note of the United Nations Secretary General on Democracy to emphasise that a democratic process is fundamental to all policy making, both at an international and at the national level, whereby the tobacco industry

as a whole needs to be represented.

“We are apprehensive that NGOs, who are allowed access to the FCTC COP 7, will carry a strong voice during the Conference and attempt to impose their biased agenda on the meeting and may even succeed in ensuring adoption of excessive antifarmer proposals by the Parties to the Conference causing further distress to tobacco farmers in the country”, he added.

Ahmad is of the opinion that it is important that policy development in the tobacco industry should not be left to the tobacco control activists and NGOs alone and interests of farmers and the legitimate rights of other constituents of the tobacco industry needs to be considered during policy formulation. However, it is still unclear how the farmers and the tobacco manufacturers will be represented in case the Indian government allows their participation in the conference. Previously, TII, , whose members account for more than 98 per cent of the country’s domestic sales of duty paid cigarettes, had stated that the tobacco control policies appear to be directed by NGOs and anti-tobacco activists who are funded by overseas vested interests.

A statement from the TII said that the FCTC itself, through its Guiding Principles, upholds and promotes transparency, and participation of all constituents and stakeholders in its procedures. The Preamble to the FCTC recognizes the need to consider the livelihood and economic interests of tobacco growers and workers in implementing its provisions and be mindful of the social and economic difficulties that tobacco control programmes may engender in the medium and long term in some developing countries and countries with economies in transition. The COP 7 Meeting, which is held every two years, is being hosted by India in Noida near the country’s capital, between November 7-12 this year.

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PUBLICITY

October 3, 2016 #163

October 3, 2016 #163

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 16 Akhmeta Str., Avlabari, 0144 Tbilisi.

E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi ;Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: +995 32 2 75 21 11, Fax: +995 32 2 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Ave., Tbilisi Tel: 225-20-72/73/74/76 embassy.tbilisi@mfa.gov.tr Consulate General in Batumi 9 Ninoshvili Street, Batumi Tel: 422 25 58 00 consulate.batumi@mfa.gov.tr Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00; Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16 Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.esRomania Embassy

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

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

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

Restaurants CORNER HOUSE Tbilisi, I. Chavchavadze ave. 10, Tel: 0322 47 00 49; Email: contact@cornerhouse.ge RESTAURANT BARAKONI Restaurant with healthy food.

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

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

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

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

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

Contact information: Email: info@gsservices.ge.

Address: Shalva Dadiani 10

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,

LIMELIGHTTRAVELINFOCENTER Address: 13 Sioni Street, 0105, Tbilisi (at the end of Shardeni Street) Phone: +995 322 999 123 E-mail: info@limelight.ge Web-page: www.limelight.ge Facebook page: www.facebook.com/limelight.ge

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

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

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October 3, 2016 #163