Caucasus Business Week #317

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BUSINESS caucasus

March 9, 2020 -




The World Bank and Georgia



Business Environment and Regulations



Modern Technologies in the Development Sector

yoUr App Scrollex - Innovative Address Book and Networking Tool Introduced

“The Government is Doing it’s Best Work, When the, Business Environment is Free”

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NGO: Another Attempt to Pursue the Interests of the Tobacco Industry in Parliament Is Being Legislated Parliament's decision on amendments to the Law on Tobacco Control calls the Alliance for Tobacco Control sad and shameful.

Le Meridién to Open in Batumi Marriott brand hotel Le Meridién officially opened in Batumi. Chairman of Adjarian government attended the opening ceremony.

Gastronomic Association of Georgia to Host "50 Best Explores Georgia"

Ships Entering Georgia have to Submit Heath Declaration due to Coronavirus Outbreak All ships entering ports are required to comply with international health care rules, Georgian Maritime Transport Agency said.

Supported by USAID/Georgia Economic Security Program and National Tourism Administration, Gastronomic Association of Georgia hosts project of The World's 50 Best Restaurants - "50 Best Explores Georgia".

The Autonomous University of the State of Hidalgo to be Introduced with Georgia's Economic Potentials and Reforms

Rehabilitation of Turtle Lake Road has been Completed Rehabilitation of the access road to Turtle Lake has been completed. Within the framework of the project, the three-kilometer section of road was fully arranged.

The Autonomous University of the State of Hidalgo is a public university located in Pachuca, the capital of the State of Hidalgo in east-central Mexico.

Rehabilitation of Modinakhe Fortress to be Finished Rehabilitation processes of Modinakhe fortress are finished.

Wizz Air Reduced Flight Frequency from Kutaisi to Some Italian Cities

SOCAR: TAP to Commission by late 2020

Wizz Air has reduced the number of flights from Kutaisi Airport to several Italian cities.

SOCAR considers the end of 2020 to be the deadline for the launch of the TAP that will take gas from Azerbaijan’s Shah Denis field to European markets.

Southpawer Names 16-year-old Nini Chilachava as Winner in Eminem's Challenge Thousands of rapper fans took part in the challenge announced by Eminem a few days ago.

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili WWW.CBW.GE Address: Aleksidze Street 1 Sales: Mob: +995 591 01 39 36 Email: Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Copy Editor: Ellie Rambo Reporters: Nina Gomarteli; Mariam Kopaliani; Merab Janiashvili, Economic columnist: Andria Gvidiani; Technical Assistant: Giorgi Kheladze;

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Cooperation between the World Bank (WB) and Georgia, and the World Bank’s new project worth 102 million USD – Sebastian Molineus, the WB’s regional Director of the South Caucasus, has discussed these issues for Business Partner TV, and noted that this project aims to develop human capital and the education system in Georgia. The current year will test economic steadiness, and Georgia is expected to withstand this dramatic year. The Coronavirus has generated serious risks to the global economy, and Georgia cannot be an exception. The year 2020 will test Georgia’s crisis management capabilities, Sebastian Molineus pointed out, and added that two fields will be affected the most: healthcare and economy. As for March 5, the number of infected people has exceeded 95,000 in 60 countries and the death toll has surpassed 3,500. Naturally, this factor will essentially affect Georgia, which is a very small and open economy. This will be a real test for Georgia to show how ready the country is to overcome a period of crisis. “As for the economy, I see black clouds gathering over Georgia. The World Bank, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) have lowered the global economic growth forecasts. Naturally, this trend will affect the Georgian economy, too. Tourism is one of the sectors that will shrink, and face certain problems. Imports-exports and trade will also suffer negative outcomes. These tendencies may affect consumers, and they may refrain from buying certain products. We believe that the Government will take all necessary steps to overcome the economic crisis”, Sebastian Molineus said. The WB’s Regional Director for the South Caucasus has also discussed the education sector’s challenges. According to the OECD study, 12-grade pupils at secondary schools are rated at only an 8th-grade level of education. The quality of education is the most important thing, and we should improve these aspects. Georgia is an exemplary country in this regard, because it plans to grow investments in this field. However, there are serious shortcomings in the Georgian education system, and they should definitely be improved, he said. As noted by Sebastian Molineus, many countries confirm that education is an important field, but only few of them make real investments, while the Georgian government plans to expand funding of the education sector by up to 6% of GDP. “I would like to talk about challenges, first, and then to offer mechanisms for resolution, or how to overcome them. Based on 2017 PISA studies, the Program for International Students Assessment (PISA) fulfilled by OECD, Georgia ranks 71st among 79 countries, while Georgia ranks 61st among 157 countries in terms of human capital. According to this study, the productivity of children born in 2018 will reach only 61% of their potential.

Let’s imagine the scale of the potential of what needs to be rebuilt. In Georgia, children go to secondary schools for 12 years, but the study has shown that 12-grade pupils reach only the level of 8th graders. Quality is the most important thing. We should ensure corresponding education quality. Another important thing is the qualification of teachers. A teacher is a key figure, even if we have the best education system. According to my information, at this stage, universities are developing a special course for pre-school education and primary education teachers. Energy efficiency also matters, because frequently, classrooms are cold. In the winter, it is too cold, and in summer it is too hot in classrooms. Heating and infrastructure issues should also be resolved. Children should have corresponding conditions”, Sebastian Molineus said. Georgia is a reforming country, and the time has come to become a country of advanced achievements, Sebastian Molineus pointed out. “These reforms have already brought real results, because the country ranks 7th in terms of Ease of Doing Business. This is not an easily achievable goal. This means that the country has carried out consecutive reforms. As for the management’s indicators, Georgia is reported among the top 20 countries with similar revenues in terms of the first six indicators. Naturally, these figures will be reflected in

economic growth. Maybe you are discontent with 5% growth, but I would name many other countries with similar revenues that dream of such a pace of growth”, Molineus pointed out. As for global problems – coronavirus, it will generate serious problems for the global economy, and Georgia cannot be an exception. Georgia may also receive a certain portion of finances from the 12 billion USD assistance package that the World Bank has been allocated for developing countries for overcoming coronavirus related problems, Sebastian Molineus noted. “We have talked about coronavirus, and this is a real challenge for the economy. It will negatively affect Georgia, if not directly, indirectly, because it hits the tourism industry and other fields of the economy. The WB has allocated 12 billion USD to assist other countries in overcoming economic problems. Naturally, we will cooperate with Georgia, too. I do not know whether Georgia needs these funds at this stage, but we always stay ready to assist you”, Sebastian Molineus said.

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Business Partner TV discussed the importance of new technologies in the construction business, and the prospects for renewable energy. As noted by Agustín Payá, founder of NTI Spanish Development Company and the official engineer of the American technological giant TESLA, we should forget that an economy based on fossil fuel in an age of sustainable energy, and we should give priority to sustainable energy and sustainable transport. On March 5th, the Spanish development company NTI and its partner, the auditing company NEXIA held a working meeting, and updated domestic construction companies and government officials on 2020’s trends in the sector. As noted by NTI founder David Zakariadze, the Barcelona-incorporated NTI has gained a lot of experience in implementing major developments, and infrastructural projects such as the Barcelona Seaport, Barcelona Airport and new

terminals. NTI aspires to share its experience with Georgian companies and promote new companies in terms of development, he pointed out. As stated by NTI founder and TESLA Official Engineer Agustín Payá, Georgia’s obvious aspirations for EU integration helps to shape a business-friendly environment in the country. “I have come here because our partner in Georgia is a very good company, and Georgia aspires to EU integration. I sympathize with this aspiration, I see the EU flags, and this is another reason. Yesterday, I arrived for the first time, and I found a place like home, because of the mindset, values, the sense of a family, and even the red wines are very familiar to me. There is an excellent environment in Georgia, and not only for me. These efforts will also bring benefits to this country. These efforts will be beneficial for everybody – that’s the idea”, Agustín Payá said.

To implement largescale projects, Georgia should not wait for EU integration. The country should implemente many large-scale projects before integration, he pointed out. One of the key preconditions for success is not to wait for EU integration. You should implement largescale projects before EU integration, so as to have a rich portfolio when the EU offers membership, Agustín Payá noted. ‘NTI and I have a lot of motivation, in terms of cooperation with young people. We can effectively engage young people in excellent tech projects”, he added. As noted by the engineer for Tesla, Georgia should further develop its renewable energy resources, because an economy based on fossil fuel is the past. Like Spain and many other European countries, Georgia lacks large energy resources. Huge financial resources are spent to import resources from other

is not a good plan. Making investments in the domestic renewable energy industry is a good plan. Georgia is rich in these resources, such as wind power, hydro power, solar power, Payá noted. “The sun in Georgia is not as strong as in Spain, but Georgia is rich in water resources. I believe we should forget the fossil fuel economy, because this economy is not good for humankind, because we are destroying our planet, our home. We should follow up on and develop new directions. This is the age of sustainable energy, and we should give priority to sustainable transport, electric cars and so on”, Agustín Payá concluded.

Business Environment and Regulations Georgia’s business environment and the regulations that must be adopted as part of the GeorgiaEU association agreement; The Natakhtari corporate director Nikoloz Khundzakishvili discussed these issues for the Business Partner TV program. Natakhtari strives for diversifying export markets and expanding its geographical area; however, this does not mean a diversification of the export portfolio. Besides traditional products, the export portfolio should also include products that will remain popular all over the world for the next 5-10 years, Nikoloz Khundzakishvili pointed out, and added that, besides financial resources, domestic business requires more training, and new tendencies to prevent an outflow of the highly educated workforce from the country. “It is important for us to have diverse approaches and, together with traditional products, including tourism products, we should also add sought-after products that will be popular worldwide for the next 5-10 years. Consequently, we should direct our intellectual potential in other directions, and create new products for export. For example, information and telecommunication technologies are the most important components and, despite the borders, they allow working over long distances. I do not mean a supply of outsourcing services. We should become suppliers of high-tech products. Georgia has this potential. We have people who graduate from

departments of mathematics and computer sciences. The best young people are leaving the country, and they strengthen the economies of other countries. Furthermore, they get employed in a system where they cannot attain personal development and perform a routine job. There is no alternative to a proper education, be it dual education, vocational education, or something else. We need people who will engage in our work ecosystem. This may be achieved only through cooperation with the business sector and educational facilities”, Khundzakishvili pointed out. Foreign investors always refrain from entering countries where the judicial system is questionable. Besides regulations, investors pay attention to what kind of rules there are to the local game, and how independent the court system is, Khundzakishvili said. “For me, as an investor, it does not matter whether VAT accounts for 18% of 20%. The most important thing is how the administration of taxes is carried out, how equal conditions are for everybody, and whether there are preferences for somebody, some company or not, etc. The authorities should satisfy all these standards and requirements. I know that they are taking every effort to prove this to me, as a potential investor. They should ensure a just and unbiased environment. However, when we talk about the court system, the independence of the judicial

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system is one of the central moments. If some questions arise in this regard, this is a bad sign. Questions mean that investors lose interest in entering this or that market”, Khundzakishvili said. Questions and unclear situations frighten foreign investors, most of all, he explained. “In this specific case, we talk about foreign investors, who have no emotional contact with Georgia and who make pragmatic, rational and reasonable decisions. We need this group while we, citizens of Georgia, can turn a blind eye to some things and make investments anyway. These foreign direct investments have declined because of this factor, including because of the global context. This category of investors refrain from entering the country, because they know we have an election year where two political forces confront each other. This situation raises questions and, consequently, our potential and rational investors are waiting until the elections pass and that, supposedly, will have no effect on business”, Khundzakishvili pointed out.

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Tamar Manjavidze: "Exhibition Industry Marketing is Specific, Each Exhibition needs a Different Approach to Marketing Campaign Planning" Interview with Marketing Manager of Exhibition Center ExpoGeorgia, Tamar Manjavidze. Tell us about how you got into the field of marketing, and what factors played an important role in choosing this profession? I am a journalist by profession, and have worked in this field when I was a student. However, I soon realized that I wanted more creative work, one where I could better manage my knowledge and skills. So, I decided to change something in my life, pursued a Master's in public relations, started working in one of the marketing agencies, and studied the new profession extensively. I haven't replaced one profession with another, but I have linked skills that I learned in journalism to help me with marketing - writing, communicating, and working in stressful situations. Amidst technological changes, what challenges do you face? Keeping up with technological changes is a must in our field. Today, social media is a major source of information for customers, and the environment is very competitive. The main challenge is to create content that stands out and attracts the attention of the user. What has changed in the field in the last 5 years, and what changes are expected? Technological changes affect marketing on a daily basis. For 5 years, the culture of information exchange between business and customers has changed. The experience of consumers has become much more interactive, and marketers have to keep up and stay up to date - exploring and using new channels and tools. Obviously, digitalization will continue, and in my opinion, marketers will gradually shift to planning online campaigns most of the time. What do you think are the most important qualities a marketing manager should have, and what is his or her role in the organization in general? The marketing manager must under-

stand the best interests and desires of the customer. She or he cares about the company’s image, and speaks on behalf of the company, which is a big responsibility. The marketing manager must be sociable, creative, organized and like a little bit of risk. It is helpful for a marketer to be proficient in a related profession to communicate properly with his / her team members (designers, social media managers, developers, etc.) What do you do to keep the organization from falling behind on the latest trends, and keep applying innovative approaches to marketing? One of the main fields of ExpoGeorgia is industrial exhibitions. Representatives of our company often visit large exhibitions in different countries, where they become acquainted with trends in the field and the new, innovative approaches that our team works on on a daily basis. What's an organization's business model in marketing like? And how focused is it on the customer?

The exhibition industry marketing is specific and each exhibition needs a different marketing campaign planning. The most important thing for us is to provide our customers with maximum comfort, help them grow their businesses, and be their reliable partners. One word that describes your job. Diverse - As we run more than 10 industry exhibitions a year, I might work on both construction and a wine exhibitions in a single day, which could be intense, but at the same time very exciting. The most useful advice you’ve ever received in your life. Listen to learn - I think it's very important to be able to hear what people say. In the modern world, feedback plays a crucial role in self-development. So I'm trying to take customers into consideration, in order to achieve better results.

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Business News

Remote Sessions on Innovation and Technology - GITA and BTU Launch New Project

den of Tbilisi Building of Botanical center started in the National Botanical Garden of Tbilisi. Investment price of the project is 2.7 million Lari.

An educational project on online entrepreneurship, technology and innovation sessions will be launched shortly. Under the initiative of the Agency for Innovation and Technology of the Ministry of Economy and Sustainable Development and the University of Business and Technology, the cycle of knowledge transfer in the field will not cease and will be initiated with the involvement of professors, startups, experts in the field.

World Bank to Launch 103 million USD Project for Education System Development in Georgia Georgian Education Minister Mikheil Chkhenkeli and the World Bank’s (WB) regional director in South Caucasus Sebastian Molineus announced the inauguratio ofn a new 103 million USD project “Innovation, Inclusive Education and Quality”. workshop by Toula Limnaios. EA Solar to Supply Kutaisi FIZ Solar Panels to over 70 Countries As reported, German brand EA Solar launched operation in Georgia 3 years ago. In May 2019, the company officially opened the Europe’s biggest plant in Kutaisi, the Hualing Free Industrial Zone. The plant’s annual output is 500 MW solar panels and the company’s gross output exceeds 1 Gigawatts.

Georgian Restaurants Record 8.7% Average Rise in Prices

Employees in Quarantine and Self-isolation to Receive Compensations for Missed Workdays

In December 2019, prices at Georgian public food outlets rose by 8.7% on average, as reported by Geostat, the national statistics service of Georgia, based on several subcategories of prices at restaurants and cafes.

Employees in quarantine and self-isolation will receive compensations for missed workdays, Ekaterine Adamia, head of the Health Policy Management of the Health Ministry noted.

Georgian Confectionery Manufacturer Barambo Exported to Israel Chocolate Barambo was exported to Israel, signed a three-year contract with the importing company, and sent a 40-foot container of Georgian products at the first stage. Botanical Center to be Built in Botanical Gar-

Bolnisi Old Cellar to Sell Wine in England Bolnisi Old Cellar will sell wine in England. Export talks have already begun and test samples have been sent. Goethe Institute and Platform for Experimental Dance Circe to host Workshop by Toula Limnaios Circe – Experimental Platform for Dance and Theatre and Goethe-Institut Georgien host

20 Startups are Known to have Received a GEL 100,000 Grant within GITA Program The winning startups of the GITA co-financing program of the Agency for Innovation and Technology of the Ministry of Economy and Sustainable Development are known. Within the framework of the program, a total of 20 winners were named, each with a grant of 100,000 GEL.

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“The Government is Doing it’s Best Work, When the, Business Environment is Free”

“The government of Georgia is doing its best to shape an exemplary business climate in the country”, Georgian Prime Minister Giorgi Gakharia noted, and added that free business is the cornerstone and backbone of economic development. The Caucasus Business Week (CBW) has inquired as to how stable the business environment in Georgia is, and what the business sector’s representatives think about the Prime Minister’s statement. As noted by Nikoloz Khundzakishvili, Corporate Director of the Natakhtari Company, the business environment’s stability is a serious consideration. The last period has shown one thing: that our businesses have been more deeply integrated in the global economy, when compared to previous years, Khundzakishvili added. “This fact has both positive and negative aspects. Any shocks in the region hit our economy, too. And it is the government’s responsibility to alleviate these shocks through liberal policy. All economic parameters are good, and every statistic in the neighboring countries is lower than in Georgia. All our macroeconomic numbers are very good. Today, our agenda is determined by association agreement obligations. The business sector suggests following it scrupulously, but we want to set a low benchmark, because the association agreement enables us to introduce both less painful and very strict regulations. In this context, we have undertaken a dialogue with the government, and our opinion is taken into account. The key problem is that we have more positive expectations, and we want more. Our expectations determine whether we have a positive or a negative view”, Khundzakishvili noted. Revaz Vashakidze, founder of Chirina : “Everything is comparative, comparative to the neighboring countries, European countries, and so on. There is a positive, a good business climate in Georgia. This does not mean that we should be content. We should strive for further development. In this regard, both the government and the business sector should provide an active job. As for the question of whether, today, the business is table, I would say that there are various organizations in the country, for instance, trade unions, labor safety organizations, and they always try to change the business climate that, frequently, are not beneficial and effective. Many changes require huge financial resources, and these costs

aggravate the burden on business, and they cannot be useful in this respect. It is better to develop a business, create material wealth, and only after that care for labor conditions, how long we should work, and so on. Georgia is a very poor country, and our GDP per capita is very low. It is very difficult to harmonize our legislative acts with European countries, where GDP per capita is at least 20,000 USD”. Anzor Kokoladze, Techno Boom founder. “The Government is doing its best. We have quite a free business environment; however, these positives are overshadowed by the current situation in the court system. Without confidence in the court system, all other efforts will be useless. The perfect, free environment in Georgia has been weakened, because of low trust in the court system. At the same time, the business is free from pressure and, in this regard, the authorities have a healthy attitude, including the taxation office. We should also stress the exchange rate volatility and this is a negative aspect for both the population at large and business. At the same time, the floating exchange rate is very important. I believe that blunt interventions from the authorities or the National Bank are undesirable. The current economic growth rates are normal, but it would be better to have double digit economic growth. Nevertheless, we have good indicators in the region”. Bezhan Tsakadze, founder of the G&G Group: “Business development, attracting investments, GEL exchange rate – absolutely everything depends on political stability in the country. Today, we have many challenges. We see how tense the political situation is. Therefore, both the population and the government should care to settle tensions in the country. An election bring difficulties in all countries. As a rule, the situation is tense everywhere, and we also expect tensions, but my recommendation is that the authorities should not pay attention to all these factors, and they should continue operation as usual. Elections are frequently held in Georgia and, therefore, the authorities should continue operation in an independent regime, regardless of the rise and fall of the political temperature. The government genuinely demonstrates a willingness to shape an exemplary business climate”.

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As networking is crucial in doing business in many situations, it was time to introduce all-in-one application to the Georgian market. The yoUr App Scrollex combines all the tools that simplify communicating. CBW conducted an interview with Giorgi Kekelidze, founder of the startup: We’ve heard you recently launched a mobile application: yoUr App Scrollex, which is an address book and networking tool. Tell us more about this application; what inspired you to create Scrollex? The yoUr app Scrollex is an innovative address book that helps you keep existing contacts by updating your profile information into your contacts’ phones without communicating or bothering them,; while also controlling which contacts to share your updates with. Hence, with this new concept, you don’t waste your time and energy to save, edit and fill in your contacts’ information! Your contacts are supplying the latest information to you, likewise, you are supplying this by creating a profile in the app.. Furthermore, Scrollex is also a networking tool that will help you to grow business networks by sharing digital business cards in innovative ways. The inspiration came 5 years ago from a need to change my phone number, while also retaining the contacts list I’ve built over many years. Normally, people are lazy, or too bored to edit your new information into an address book, which eventually leads to losing contacts. Why is there a need for a new Address Book or Digital Business Card? I firmly believe that the current address book (the Contacts app) is outdated, and has not changed while the technology advances. For many years, it was used mainly for calling purposes, and no relevant features are added to make it more valuable or more useful. The fact is that we have an 80% empty phonebook, with

no information stored other than contacts’ name, phone number and email; the problem is, the way we are used to storing or sharing contact information. Furthermore, I also think that paper business cards should be history, which is backed by statistics showing that 88% of shared paper business cards are thrown out in the garbage in a week. Hence, the number 1 networking tool, the business card, does not help us to get new contacts. How does Scrollex simplify networking? Who’s the targeted group? The Business Info Card is a digital business card you can create in Scrollex, with no language barrier and in different colors to match your personality and style. In the case of changes in your business card, you can simply update the digital business card, and your contacts will have your recent information, hence you will never lose your contacts, even if you change your job, position, or whatever. Most importantly, every card has a unique code, like a barcode, named Ur Code, which consists of only 9 digits (e.g. 995 123456). Ur Code helps you to easily share and innovatively your business card’s information. If the Ur Code is printed on a paper business card, it gives you more chances to end up having your shared business card put into your new contact’s phone, and not in the trash. Additionally, functions such as Radar allows you to share your digital business card with Scrollex users that are around you within 200-meters radius, during conferences or networking events. Moreover, with built-in filters, you are able to search contacts by job, industry, profession, nationality, or date added in the contacts list. The target audiences are those that care about having the latest contacts information, care what information contacts possess on them, and do not only want to keep, but also grow their contact network. What are the main challenges in taking Scrollex to the market?

The main challenge is getting a sufficient user base for the app to provide you with full value. It is a matter of time, but, in order to overcome the challenge and make the app useful, Scrollex has a Web-link function that allows you to send by Messenger, email, text message, etc., a web-based link with your information that can be downloaded directly into the default address book. Most importantly, it can be shared with a non-Scrollex or Android users, even though currently the app is only for iOS users. What other functions or benefits will it have? No Advertisements – Scrollex aim is to help you, and never to bother you, hence you will see NO ads on the app. Scrollex view – A cool design inspired by a paper Rolodex, to view and scroll your contacts’ personal and business information Unknown Number Detection - When Scrollex user is calling, you will see his/her full name and company information on your screen, to avoid awkward introductions, or to be better prepared for a call Never Lose Contacts - In case you lose your phone, don’t worry, you won’t lose your precious contacts list Free to download – The app is free for personal use but if you need a digital business card, you have to subscribe for USD 12.99 annually. What excites you the most right now, and what do you see as your next step? I am very excited already, as I launched it 2 weeks ago, after working for 5 years on it. Currently, I am promoting and working on user acquisition. The next step is to create an Android version, by finding the right investor. After testing the app in Georgia, hopefully, next year Scrollex will be launched in other countries. By Nina Gomarteli

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