Caucasian Business Week #94

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BUSINESS WEEK WWW.CBW.GE caucasian business week Partner News Agency

April 6, 2015 #94

April 6, 2015, Issue 94






he European Union has decided to allocate a €4.8 million grant to Georgia for training the bank staff, to develop lending strategies for agriculture projects and to improve banks’ existing financial products. Pg. 3


eorgia’s market economy is growing at a sustainable rate, reveals the National Statistics Office of Georgia. Pg. 5

Pg. 9



he Association Agreement between Georgia and the EU provides for the introduction of free trade and the removal of tariffs on exports, but at the same time envisages a fee that has not been canceled. Pg. 5



inistry of Economy and Sustainable Development declares, that there is interest towards all objects which are brought for privatization and negotiations are held with the potential investors. Pg. 5



he project’s lead, Levan Targamadze, notes that generally he currency crisis present in the country will negatively affect business, including the financial state of companies participating in government tenders. Pg. 6



he National Bank has revised downwards its economic growth forecast for this year. Pg. 9

EBRD AND EU SUPPORT INNOVATIVE FARMING IN GEORGIA he European Union (EU) is providing a €4.8 million grant to train Georgian bank staff, develop lending strategies for agriculture projects and improve banks’ existing financial products. Pg. 5



dvertising your business is never an easy endeavor, but it is a highly necessary one. Just like for anything else in the business world, you, as a business owner, need to establish a clear communication strategy to identify the specific demographic and social class your business aims at attracting. Stemming from that information you move onto addressing different media outlets, such as TV, Web and Print Media. Of course, the combination of all these would give your business the best exposure. However, with limited finances, which one should you address? At BusinessWeek we took these three popular advertising media and calculated how much advertising at each of them on average will cost your business in Georgia. The costs represent an arithmetic mean of three major companies of each industry. For the purposes of colle-

gial discreteness we do not disclose the names of these companies. TV advertising cost is calculated in advertising per minute during the prime time interval, which is 8 pm to 11 pm. We calculate the arithmetic mean of three major TV stations in Georgia’s prime time advertising costs – GEL 8,512 per minute. Web advertising represents costs of placing web banners on popular news portals. We took the price of placing a head banner on a popular website. The average cost, as you can see on the Infographic above, amounted to GEL 1,181 per month. In Print Media advertising, such as our newspaper represents, we calculated the cost of placing a full-page ad for a month, the arithmetic mean of which amounted to GEL 3,177 – arithmetic mean of three major newspapers in Georgia.

GEORGIA RECORDS ONE OF THE HIGHEST PRICES ON INTERNET SERVICES Competitive Market with Permanently Growing Prices?! Pg. 3

Irakli Shavishvili: Business Sector Needs Time to Get Adjusted to Legislative Amendments Soso Pkhakadze: We Aim to Raise Healthy Nutrition Awareness in Georgia Pg. 8

Pg. 4

Kakha Okriashvili: We Need a New Concept of Open Leadership in the Country Pg. 8 Ucha Nanuashvili: Mountain Law Needs to be Adopted Fast Pg. 8

Pg. 12

Pg. 13



DO WE NEED GENDER QUOTAS? In order to combat gender imbalance in politics and protect women from political isolation, more than 70 countries implemented gender quotas in elections. The quotas vary largely, governed by constitution and legislation as well as regulated by political parties and unions.

Pg. 3

TBC Bank CEO Named CEO of the Year 2014 in CEE & CIS by EMEA zine Finance Magazine



President on Georgia’s Business and Economic Development





PRESIDENT ON GEORGIA’S BUSINESS AND ECONOMIC DEVELOPMENT premier, and on the other hand when his decisions are being hampered by various economic councils or agencies,” Margvelashvili continued.


wo Georgian Governmental projects have been listed among the world’s best communication projects to raise awareness of community issues in their local society. Choose Your Profession, a project designed by Georgia’s Ministry of Sports and Youth Affairs andIntroduction of e-Governance in Local Governments by Public Service Development Agency of Georgia’s Ministry of Justice are among the 1, 013 projects being represented at the World Summit on the Information Society (WSIS) Project Prize 2015.



bilisi is hosting a trilateral Defence Ministerial between Georgia and two of its neighbouring countries to discuss the region’s security environment. Defence Ministry officials from Georgia, Turkey and Azerbaijan are gathering at the Tbilisi Marriott Hotel today to discuss how to strengthening security and stability in the region. Information released by the Georgian side noted special focus would be placed on developing trilateral cooperation in the military education area in today’s discussion between Mindia Janelidze of Georgia, Turkey’s İsmet Yılmaz and ColonelGeneral Zakir Hasanov from Azerbaijan.



eorgians continue to want deeper ties to the democratic community, and the overwhelming majority of the country is for European Union (EU) and NATO integration. Furthermore, the vast majority of the Georgian population still expected a threat of aggression from Russia. Results of the International Republican Institute (IRI) poll reveal 62 percent of people surveyed “fully support” Georgia joining the EU, while 23 percent “somewhat support” the same idea. As for NATO, 57 percent of Georgians “fully support” and 21 percent “somewhat support” the country’s North-Atlantic direction.



eorgia’s Foreign Minister is on a working visit in Brussels, Belgium to meet European officials. On March 31 Foreign Minister Tamar Beruchashvili, accompanied by the State Minister of Georgia on European and Euro-Atlantic Integration David Bakradze, met the Foreign Minister of Belgium Didier Reynders.



ncreasing women’s participation in security issues was the main topic of discussion between Georgia’s Prime Minister Irakli Garibashvili and NATO’s Special Representative for Women, Peace and Security Marriet Schuurman in Tbilisi today. The parties also spoke about Georgia’s National Plan of implementing the United Nations Security Council Resolution 13/25 – a declaration about women, peace and security that acknowledges the disproportionate and unique impact of armed conflict on women and girls.



eorgia and other countries facing pressure from Russia deserve more support to develop their defensive capacities, said a top NATO official while speaking during an online Question and Answer (Q&A) session today. James Appathurai, NATO’s Special Representative for the Caucasus and Central Asia region, spoke about the plight of Georgia, Moldova and Ukraine during today’s online session, hosted by Atlantic Council of Georgia, where he answered questions from the Georgian community.

April 6, 2015 #94

caucasian business week

PROBLEMS AFFECTING ECONOMY AND UNPREPARED GOVERNMENT TOWARDS EXTERNAL SHOCKS President Giorgi Margvelashvili delivered his second annual state of the nation address in the Parliament on March 31, giving praise to some of government’s policies, but also criticizing the way the country is governed, speaking out against what he called “parallel” structures and warning against weakening of state institutions. In his 50-minute wide-ranging speech, Margvelashvili raised for number of times, what he called, the problem of “systemic parallelism” involving setting up of numerous parallel councils and commissions under the Prime Minister with overlapping functions be it in economy, foreign policy or other areas.” “I deem it unimaginable to implement correct economic policy and reforms under conditions of currently existing systemic parallelism,” Margvelashvili said in his speech. “Economic development is impossible, when on the one hand we have the Economy Minister, who is also the vice

‘GOVERNMENT LISTENS TO PEOPLE’ The President said that “today the government listens to the people” and he considers it to be “a huge achievement.” “Public opinion is often decisive in political processes,” he continued. “This is a chance for the people to get more actively involved in country’s life.” In his speech he also hailed increase of foreign direct investment in 2014, and praised the government for keeping “human-oriented budget”; he also noted “successful” state-funded projects in the healthcare sector, and state-funded assistance programs for small and medium enterprises in agriculture. ‘UNPREPARED FOR EXTERNAL SHOCKS’ On economy, the President said that recent depreciation of the Georgian currency, lari, demonstrated that the country was not prepared for external economic shocks. “The fact is that we have not yet reached a desirable dynamism in economic processes. The level of unemployment and inequality is still high; and we are facing slowdown of economic growth,” Margvelashvili said. He then spoke about opportunities opened up for Georgia after deep and comprehensive free trade agreement with the EU and noted the need for providing more information to the citizens and businesses about possibilities that this treaty creates. The President said that “sharp fall of lari” and economic slowdown made the authorities to con-

sider revision of budgetary targets and halving of growth outlook. Although the government said last month it may more than halve its current 5% growth forecast, Finance Minister, Nodar Khaduri, said last week that final decision will only be made after economic data for first quarter becomes available. Real GDP growth was 2.7% y/y in the first two months of this year. Margvelashvili said that these developments showed “once again the lack of Georgia’s preparedness in the face of external economic risks” and “actual absence” of proper economic forecasting. “To better tackle external shocks we need a flexible system of economic forecasting,” he said. “Cooperation should be deepened between the Finance Ministry, Economy Ministry and the National Bank in a way in which the independence of this latter will be protected.” ‘DRAWN-OUT DECISION-MAKING HURTS BUSINESS’ The President said that protracted decision-making on various policy issues by the government creates problems for the economic development. “Local or foreign business representatives are still frequently talking about dragging out of various decisions by the authorities as a result of which implementation of business initiatives are delayed and attracting of investments hampered,” Margvelashvili said. “It is important to involve businesspeople in the process of making business-related decisions. It is essential to have more communication with business before unveiling or enacting those initiatives, which are related to business environment, investments, tourism; at the same time, when decision are made, they should be implemented quickly and vigorously,” he said.



dvertising your business is never an easy endeavor, but it is a highly necessary one. Just like for anything else in the business world, you, as a business owner, need to establish a clear communication strategy to identify the specific demographic and social class your business aims at attracting. Stemming from that information you move onto addressing different media outlets, such as TV, Web and Print Media. Of course, the combination of all these would give your business the best exposure. However, with limited finances, which one should you address? At BusinessWeek we took these three popular advertising media and calculated how much advertising at each of them on average will cost your business in Georgia. The costs represent an arithmetic mean of three major companies of each industry. For the purposes of collegial discreteness we do not disclose the names of these companies. TV advertising cost is calculated in advertising per minute during the prime time interval, which is 8 pm to 11 pm. We calculate the arithmetic mean of three major TV stations in Georgia’s prime time advertising costs – GEL 8,512 per minute. Web advertising represents costs of placing web banners on popular news portals. We took the price of placing a head banner on a popular website. The average cost, as you can see on the Infographic above, amounted to GEL 1,181 per month. In Print Media advertising, such as our newspaper represents, we calculated the cost of placing a full-page ad for a month, the arithmetic mean of which amounted to GEL 3,177 – arithmetic mean of three major newspapers in Georgia. The EBRD’s organizational team in Georgia and


The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Shrosha Street 8/10 Director: Levan Beglarishvili Mobile phone: 591 013936; 577472234 WWW.CBW.GE Email:

the representatives of the media observed the initial stages of the EBRD-funded works that are being held at the territory of the Parliament and the Youth Palace in Tbilisi. All three – Finance Minister Nodar Khaduri, the Deputy Economy Minister Ketevan Bochorishvili and the Mayor of Tbilisi David Narmania hosted the EBRD press tour. Out of EBRD funds GEL 2, 607,464 are allocated to build 4 temporary constructions to host the forum’s international guests, such as press and the business sector representatives. “These construction sights will remain in government possession and will be used in the future to host such events,” – says the Parliament of Georgia’s EBRD report. From the EBRD funds 255,487 lari are allocated for the reconstruction works at the Youth Palace, the former ‘Pioneers’ House’, where finance minister Mr Khaduri and mayor of Tbilisi Mr Narmania along with the deputy economy minister Ketevan Bochorishvili were today to look at the construction works with the media representatives. 1,346,066 lari are used to fund the EBRD delegation’s temporary office inventory, such as com-

puters, desks, chairs, etc. Surprisingly, most of the EBRD money is going into funding the delegation’s transportation means – 4,718,475 lari are allocated to buy 67 new Toyota Camry model cars, with rationale being that protocol requires events of international importance such as the EBRD business forum for the guests to be transported in “business class” auto cars. “Market research indicated that renting and importing from abroad of the same standard vehicles would cost the government GEL 3, 500,000, none of which would be used to benefit the Georgian economy in the long-term. Accordingly, there was a consensus to acquire these vehicles instead, so they can be used in the future as well” – reads the Parliament report. Remaining of the GEL 2,820,919 will be used to fund such services as synchronized translation in five languages, renovation of Parliament, security and mobile services. “Investing for Change will be the overarching theme of this year’s Business Forum and dynamic Georgia is a fitting backdrop for the exciting series of events,” — writes EBRD 2015 Forum’s website about the event to be held in Tbilisi this May.

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

Editor-in-Chief: Nino Gojiashvili. Mobile phone: 595 050404 Reporters: Nutsa Galumashvili; Lazare Gvimradze


April 6, 2015 #94



Competitive Market with Permanently Growing Prices?!


eorgia’s internet market has been completely disoriented. Two main players Caucasus Online and Silknet grow service prices every year referring to accelerated speed, consumer interests and economic developments. There are tens of internet providers in Georgia, but only Caucasus Online and Silknet control over 60% market ratio. Thus, these two companies dictate the market conditions. Increased tariffs raised protests among subscribers, but in vain. Frequently, these companies refer to consumer interests and demands to substantiate increased tariffs. In reality, they have never followed the consumer interests and they increase service tariffs on the existing packages without introduction of any alternative packages. They even do not enable the subscribers to maintain the existing tariff and service conditions instead of increased prices and speed. CAUCASUS ONLINE GROWS TARIFFS AFTER SILKNET Currently, Caucasus Online and Silknet have created, in practice, a bipolar market and naturally, their appetite grows and they have been increasing service tariffs on internet and TV packages. Last year Caucasus Online increased service tariffs by 5-7 GEL referring to a growth in connection speed. Then Silknet grew tariffs on March 4 on both optical and DSL internet services and TV packages, as well as combined packages of TV and internet services. Prices rose by 6-10 GEL on all packages. The company substantiated the decision by the argument the service quality had been improved and the connection speed had been accelerated. “Internet connection speed in basis packages for optical and DSL internet grows by 100% to 200%. At the same time, internet and TV service tariffs change and Silknet prices have practically equaled to the market price. Prior to this decision the company had managed to keep quite low tariffs for a long period. But now we have decided to equal prices”, Ilia Enuqashvili, a director for the strategic development department, noted that time and added the connection speed had increased because of consumer demands. After Silknet increased tariffs, the company could lose subscribers, who were expected to move to


caucasian business week

Caucasus Online, but, surprisingly, contrary to competition principles, Caucasus Online also spread information on a growth in prices. Prices for optical-fiber internet services in Caucasus Online are as follows: 10mb/sc – 25 GEL, – 35 GEL, – 45 GEL and 100mb/sc – 100 GEL. Starting March 23 the new tariffs are as follows: Optimal – 10mb/sc – 27 GEL, Express 30mb/sc – 37 GEL, Extreme – 50mb/sc – 50 GEL, Infinite – 100mb/sc – 100 GEL. DSL technology – 3mb/ sc Maxi 8mb/sc – 70 GEL./ Prices of internet services to corporate bodies are beyond all logics. We have already talked about prices for the individual sector. Now we will make focus on high tariffs set to the corporate sector. The information is published on the website: 1. Caucasus Online’s internet speed and prices: 6mb/sc local and 0.73mb/sc global (1pc) – 55 GEL 8mb/sc local and 1mb/sc global – 75 GEL 10mb/sc local and 2mb/sc global - 145 GEL Global=average price of local 10mb/sc- 1500-2000 GEL 50mb/sc – 5000 GEL 100mb/sc- 8000 GEL

tional Communications Commission (GNCC) should intervene in the heaviest situation on the market. PRICES ON INTERNET PACKAGES IS ONE OF THE HIGHEST IN DEVELOPING COUNTRIES Samples of various developed countries show there are one of the highest internet prices in Georgia. Below we indicate samples of several countries, including major part of them are developed countries, to more evidently appraise the current situation in Georgia. Prices are indicated due to the connection speed that is provided by operators on the Georgian internet market. The chart does not contain samples of Armenia and Azerbaijan, because Georgia carries out internet re-exports from these countries.

2. Silknet internet speed and prices: 10mb/sc global/local guaranteed speed – 800 GEL 20mb/sc glob al/local guaranteed speed – 1600 GEL 50mb/sc global/local guaranteed speed – 4 000 GEL 100mb/sc global/local guaranteed speed – 8000 GEL 1gb/sc global/local guaranteed speed – 70 000 GEL

3. DeltaCom speed and prices: 10mb/sc global/20mb/sc local – 1450 GEL 20mb/sc global – 2700 GEL 50mb/sc global – 6 000 GEL 100mb/sc global – 12 000 GEL

As reported, the price of 10mb/sc internet service for individuals makes up 100 GEL, while the price is 8 000 GEL for the corporate sector. The difference is catastrophic. As to revenues from the individual and corporate sectors: 1. Silknet: Individual sector in 2014 – 218 915 subscribers and 43 557 251 GEL revenues Corporate Sector – 12 917 subscribers and 18 103 539 GEL revenues 2. Caucasus Online Individual Sector in 2014 – 155 126 subscribers and 43 401 832 GEL revenues Corporate Sector – 6 379 GEL and 13 086 938 GEL revenues. This is a good sample to prove the Georgian Na-

The table demonstrates internet service tariffs are one of the highest worldwide in Georgia. Moreover, these prices continue growing. Therefore, GNCC should pay due regard to these circumstances and put an end to the current disorders on the internet market.




he European Union has decided to allocate a €4.8 million grant to Georgia for training the bank staff, to develop lending strategies for agriculture projects and to improve banks’ existing financial products. The funding will also serve as a way to share the lending risk and introduce innovative financing for agricultural businesses in the same value chain – such as helping to link local milk farmers to larger dairy producers. Agro-business Lomtagora in southern Georgia is one of 15,352 industry enterprises and farmers in Georgia, which has already benefited from European Bank for Reconstruction and Development credit lines and EU support. To avoid foreign exchange rate risks, loans are offered also in the local currency, the lari. “The loan helped me to bring my company to the next level and to make it more competitive,” Lomtagora company founder Kakha Lashkhi said. According to farmers, the loan makes a good ground to purchase fertilizers and subsequently to achieve a better harvest, which in turn results in a higher income for businesses. As a result of the additional financial support, the latest technology for drying, storing and sorting out the farming products mechanically have been installed in number of farming facilities in Georgia. In Georgia, the EBRD focuses on supporting the private sector clients directly and via private banks. Investing in energy sector projects, which aim to increase production and access export markets is also a key direction for the banking structure. The EBRD also supports the introduction of modern regulatory frameworks and investing in infrastructure, logistics, telecommunications and the financial sector to support cross-border economic activities in Georgia.



ccording to National Bank of Georgia, the gross external debt of Georgia as of 31 December 2014 amounted to 13.5 billion USD (25.1 billion GEL), which came to 81.4 percent of the last four quarters’ GDP. Of that total, public sector external debt was 5.9 billion USD (11.0 billion GEL) or 35.8 percent of GDP. A total of 4.2 billion USD (7.9 billion GEL) or 25.7 percent of GDP was the debt of the general government; the external liabilities of the National Bank amounted to 251.8 million USD (469.2 million GEL) or 1.5 percent of GDP; and the bonds and loans of public enterprises were correspondingly 829.3 million USD (1.5 billion GEL) or 5.0 percent of GDP and 578.7 million USD (1.1 billion GEL) or 3.5 percent of GDP.

Banking sector external debt amounted to 2.7 billion USD (5.0 billion GEL) or 16.2 percent of GDP; other sectors’ external debt stood at 3.5 billion USD (6.4 billion GEL) or 20.9 percent of GDP; while 2.8 billion USD (5.3 billion GEL) or 17.1 percent of GDP was the debt of intercompany lending. A total of 93.6 percent of the gross external debt of Georgia was denominated in foreign currency. The net external debt of Georgia totaled 8.5 billion USD (15.9 billion GEL or 51.7 percent of GDP) as of 31 December 2014. Net public sector external debt was 3.2 billion USD (5.9 billion GEL or 19.2 percent of GDP) and net private sector external debt was 5.4 billion USD (10.0 billion GEL or 32.4 percent of GDP). During the fourth quarter of 2014, the gross external debt of Georgia increased by 160.4 million USD (289.3 million GEL). Out of that, transactions and other changes led to an increase of gross external debt by 399.8 and 36.8 million USD respectively (721.1 and 66.5 million GEL). During the same period, exchange rate and price changes led to a decrease of gross external debt by 176.1 and 100.2 million USD respectively (317.6 and 180.7 million GEL). External liabilities of the government sector increased by 92.8 million USD (167.4 million GEL) during the fourth quarter of 2014. Transactions resulted in an increase of government debt by 209.0 million USD (377.0 million GEL). While exchange rate and price changes led to a decrease of 83.2 and 33.0 million USD respectively (150.1 and 59.5 million GEL). External liabilities of the National Bank of Georgia

decreased by 10.5 million USD (19.0 million GEL). Out of This, exchange rate changes lead to a decrease of 5.9 million USD (10.6 million GEL) and transactions - to 4.6 million USD (8.3 million GEL). By the end of the fourth quarter of 2014, the external debt of the National Bank of Georgia amounted to 251.8 million USD, of which 208.6 million USD are Special Driving Rights (SDR)1 which have no maturity date, therefore there is no obligations to repay them as long as Georgia is a member of the IMF. External liabilities of the banking sector decreased by 8.9 million USD (16.0 million GEL), of which exchange rate changes led to a decrease of 24.3 million USD (43.8 million GEL) and price changes - to 16.1 million USD (29.0 million GEL). While transactions increased banking sector external debt by 31.5 million USD (56.7 million GEL). Other sectors’ external liabilities increased by 22.5 million USD (40.7 million GEL) during the reporting period. Of that amount, nonbanking financial corporations’ debt increased by 12.0 million USD (21.6 million GEL), and the external liabilities of nonfinancial corporations’ increased by 10.6 million USD (19.1 million GEL). Other sectors’ liabilities increased by 98.1 and 9.1 million USD (177.0 and 16.5 million GEL) due to transactions and other changes, respectively. While price and exchange rate changes led to a decrease of other sector debt liabilities by 51.1 and 33.6 million USD (92.2 and 60.6 million GEL) respectively. Intercompany lending increased by 64.4 million USD (116.2 million GEL) during the fourth quarter of 2014. Transactions and other changes led to grow of 65.8 and 27.7 million USD (118.7 and 50.0 million GEL) respectively;

while Exchange rate changes led to decline of lending by 29.1 million USD (52.5 million GEL). Liabilities denominated in foreign currency increased by 141.0 million USD (254.4 million GEL) and amounted to 12.6 billion USD (23.5 billion GEL) and liabilities denominated in the national currency increased by 19.3 million USD (34.9 million GEL) and totaled 864.6 million USD (1.6 billion GEL). Starting from the fourth quarter of 2014, the National Bank of Georgia begins publishing the new gross external debt’s statistics table, in addition to the old statistical tables of the external debt of the country. The new table is compiled according to the renewed in 2013 methodology. The new “External Debt Statistics: Guide for Compilers and Users” (2013) meets the changes introduced by BPM6. The main methodological changes are following: - The instrument “arrears” is cancelled. According to the new methodology arrears are included in appropriate main instrument. Before, it was recorded separately as short term debt instrument; - Accrued interest is included in according instruments: the interest accrued to long term debt instrument is included in long term debt and interest accrued to a short term debt instrument is included in short term debt. According to previous edition accrued interests on both - long and short term debts were recorded in short term debt instrument; - The different treatment of a trade credits in BPM6 resulted numeral difference in trade credits by old and new methodology. Therefore the gross external debt by the new methodology is somewhat less than the gross external debt presented by old redaction.




lastic bags are all around us. In Georgia, plastic bags are used for virtually any purpose – from carrying groceries and other items to tying on special wishing trees, pictured above. Despite being convenient, a major downfall of plastic bags is that they are extremely harmful to the environment.

caucasian business week

BUSINESS SECTOR NEEDS TIME TO GET ADJUSTED TO LEGISLATIVE AMENDMENTS CBW has interviewed auditor Irakli Shavishvili on whether Georgia’s taxation system is liberal and acceptable for the business sector and whether the taxes should be lowered.



eorgian wine is gaining recognition in Asia and especially among Japanese women, who recently rewarded Chkhaveri wine from Guria in Georgia’s west with a Diamond Trophy. The Diamond Trophy is the highest award of Sakura Japan Women’s Wine Awards and presented to the best wines submitted in the competition.



eorgia is making changes to the country’s Tax Code in a bid to better support car importing businesses. The Revenue Service of Georgia’s Ministry of Finance planned to implement a number of changes to the Tax Code to make it more simplified, specifically regarding auto imports. Deputy Finance Minister Giorgi Tabuashvili met auto importers and discussed possible ways the Government could better support the industry.



eorgia has amassed a $13.5 billion USD (25.1 billion GEL) gross external debt. This figure, as of December 31, 2014, was 81.4 percent of the total GDP of last year, revealed data published by the National Bank of Georgia (NBG). Of that amount, external debt generated from within the public sector was $5.9 billion (11.0 billion GEL) or 35.8 percent of GDP. A total of $4.2 billion (7.9 billion GEL) or 25.7 percent of GDP was the debt of the general Government; the external liabilities of the NBG amounted to $251.8 million (469.2 million GEL) and the bonds and loans of public enterprises correspondingly reached $829.3 million (1.5 billion GEL) and $578.7 million (1.1 billion GEL).



eorgia’s international investment position (IIP) has dropped on a global scale, reveals new data published by the National Bank of Georgia (NBG). As of December 31, 2014, the IIP of Georgia amounted to $17.1 billion USD (-31.9 billion GEL), which was 103.6 percent of Georgia’s GDP. This figure had decreased by $1 billion (1.8 billion GEL) compared to the fourth quarter of 2013, and by $95.9 million (172.9 million GEL) compared to the previous quarter.



n $85 million USD plant for producing civil aircraft parts will soon be built in Georgia. Construction work will begin in three months and about 300 people will be employed at the new facility. The project will be jointly implemented by Georgia’s Economy Ministry, state-owned shareholding company the Partnership Fund and Israelibased international aerospace company Elbit.



he summer aviation season has begun, and with this, more flights will come into and out of two of Georgia’s airports. Yesterday marked the opening of the 2015 summer season at Tbilisi International Airport and Batumi International Airport, where both facilities announced updated flight schedules and noted an increase in flights to both airports from airlines that currently served the Georgian market.

April 6, 2015 #94

- How would you appraise Georgia’s taxation environment. Do you think Georgia practices liberal taxation system for the business sector? - I believe the current taxes are no liberal for the business sector. At the current stage of economic development Georgia should practice lower taxes. The USA is a good sample in this respect. At the beginning of the 20th century the incomes tax in the USA was 1%, the profits tax used to range from 1% to 8% and the USA was much ahead of Georgia in terms of economic development. That’s why the USA has become the world’s mightiest country as opposed to our current situation. - Do you agree with IMF mission’s recommendations for growing taxes? - I categorically object to similar recommendations. The existing taxes are quit high amid the current economic situation and we cannot compete with European countries, because their GDP per capita makes up 40 000 USD on average, while in Georgia the figure makes up 3 500 USD. The tax burden in European countries ranges from 40% to 45%, in Georgia the figure ranges from 25% to 30%, but the Georgian burden is heavier and Georgia citizens spend money on only essentials. As to the European

40 000 USD, if European citizens pay even 20 000 USD in tax, they can preserve another 20 000 USD and this is a quite normal amount for living. If we further grow taxes, the business activities will further weaken. - Part of businessmen complains about frequent and protracted audits. What is the default of the current auditing methodology and what should be revised? - I would say audit regulations are determined by the Tax Code. When tax officers enter companies for a tax audit, they must meet the deadlines, no more than 5 months. Another practice implies a chamber audit, when taxpayers are requested to deliver documents to the tax office and this kind of audit has no deadlines. Therefore, similar audits continue for many years sometimes. If you visit the Revenue Service, you will see a huge number of documents, cases in the corridor that are preserved there for a long period. Naturally, taxpayers need these documents for operation. I would like to say we have got very uncomfortable situation in this respect. - How taxes are classified in relation to agriculture and non-agricultural land plots? - Property tax on land plot represents a local tax. The Tax Code determines a basis rate of property tax on land plots and then local self-governments are authorized to change coefficients to the basis rate in their governing zones. Land plots are divided in two parts: agriculture and non-agriculture land plots. The basis rate of a tax on a square meter of non-agriculture land plot makes up 0.24 GEL, while local self-governments set maximum and minimum rates themselves. As to agriculture land plots, basis rates have been set due to territorial units and a category of land plots. Agriculture land plots are divided into plough, mowing, pasture and low-quality and highquality plots and so on. All these factors are taken into account when imposing a tax. These procedures refer to every legal landowners, but there also certain category of land plots that are exempted from taxation.

- Increased tax on beer has brought noisy protests in the business sector. Why has the government increased excise tax on beer, as well as on cigarettes? -The government thinks the state budget suffers from a revenues deficit and it has decided to increase taxes. There is additional important aspect: The state constitution, to a certain extent, bans a growth in taxes, excluding excise taxes. Therefore, when the government needs to mobilize additional revenues to the state budget, it increases excise tax. Naturally, an excise tax, as an indirect tax, immediately hits the pocket of ordinary citizens. It should be also noted, a growth in excise tax makes no positive affect on public healthcare. On the contrary, similar decision brings opposite reactions. When cigarette excise tax grows, smokers cannot give up smoking at once and they have to smoke lower-quality cigarettes and their health conditions worsen. - Rush amendments to the Tax Code create much headache to businessmen. What should be done to reach stability in this direction? - I and my friends have been offering a way out from this situation to our government, so as the taxation environment be stable, to a certain extent. We have offered to enact any amendments on the 1st of January, that is, at the beginning of the budget year. At the same time, taxpayers should be given enough time to get adapted to the amendments. Therefore, we have noted that the amendments adopted before July 1, 2015 should be enacted on January 1, 2016, that is, the business sector will have a 6 month period to get adjusted to the amendments. If amendments are adopted after July 1, 2015, they should be enacted on January 1, 2017. Such an approach coincides with the budget-planning process. A new budget planning procedures start in springtime and the main work is performed in autumn. On the ground of amendments adopted in spring the Finance Ministry will be able to have information in what environment and under which taxes it will operate. At the same time, he Finance Ministry will plan the budget without problems in autumn.



he Association of Young Financiers and Businessmen (AYFB) has organized a meeting with state officials and representatives of the small business sector as part of the Develop Business project. The meeting was held in the format of a round table. Representatives of the Economy Ministry Entrepreneurship Development Agency and Projects Management Agency of the Agriculture Ministry held presentations. Later, the small business sector representatives expressed their considerations and approaches. Irina Mezurnishvili, an advisor for the Entrepreneurship Development Agency, introduced the Produce in Georgia project and outlined the project priorities and achieved results. She basically covered industrial directions. “By the Georgian Government’s initiative we have been developing the Produce in Georgia state program with the aim to promote entrepreneurship in Georgia, create new job places and increase the exports potential. The program is coordinated by the Georgian Ministry for Economy and Sustainable Development through the inferior units: Entrepreneurship Development Agency, National Agency for State Property and Georgian Agency for Innovations and Technology. The project promotes: accessibility to finances, attainability to real estate and technical assistance. In the first case, we finance interest rates of bank credits taken for implementing the selected projects. In the second case, we promote enterprisers by handing over necessary real estate for doing business at symbolic prices. In the third case, we provide free of charge trainings for enterprisers”, Irina Mezurnishvili said. As to the small grants program of the Entrepreneurship Development Agency, Nino Skhirtladze, a head for the international relations direction of the agency, said: “The government has allocated 20 million GEL to promote service-oriented businesses in regions. The project calls for financings business ideas by 5 000 GEL on condition of a 1000 GEL co-participation. It should be stressed a cash co-

participation is a mandatory request. Besides financial support, the project also provides a retraining program. It is important entrepreneurs that may fail to obtain grants will also pass retraining courses in marketing and developing business plans. As a result, they will acquire due skills and knowledge to obtain grants in other similar projects the government is expected to announce in the future. The project has been inaugurated in the regions of Imereti, Racha-Lechkhumi and Kvemo Svaneti, SamtskheJavakheti and Kvemo Kartli. As to other regions, the project implementing organizations will be soon exposed and I believe all regions will have joined the project in May “, Nino Skhirtladze said. Irakli Moistsrafisvhili, a manager for agro credits projects, have talked about the Agriculture Ministry projects. He explained to the attending businessmen that they are able to take part in the following projects of the Agriculture Ministry: Interest-free Property Installment Scheme for Small Farmers, Preferential AgroCredits for Floating Capital, Preferential AgroCredits for Fixed Assets, Preferential Agro Leasing, Preferential AgroCredits for Granted Enterprises, Produce in Georgia state program, Agro Insurance and Plant the Future. The bank sector has issued over 800 million GEL loans after the inauguration of agro projects. At the meeting, the participant enterprisers put for-

ward a characteristic problem. Namely, the state sector is trying to increase an access to finances by promoting bank credits, while a major part of the enterprisers fail to meet the bank requirements. As a result, their involvement in the state projects is minimized. Heavier situation is recorded for enterprisers with negative credit histories. This category is unable to join the state programs. Banking expert Lia Eliava proposed an initiative for resolving this problem: “I believe the Government should tighter cooperate with the National Bank of Georgia (NBG). The central bank is able to issue recommendations to commercial banks to revise standards and requirements for issuing credits to the enterprisers”, Lia Eliava said. The Develop Business is a joint project of AYFB and Beeline company. Beeline has joined the project as part of the parent Vimpelcom’s social campaign of MAKE YOUR MARK. The project makes focus on identifying small and micro business problems and growing awareness of target audience on state programs. As part of the project, AYFB actively cooperates with Agriculture and Finance Ministries. A total of 6 working meetings have been held with a group of enterprisers that operate in Regions. AYFB will hold a presentation of transient results in the near future.

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eorgia’s market economy is growing at a sustainable rate, reveals the National Statistics Office of Georgia. Latest Geostat data concluded the country’s economy grew almost five percent last year – a positive sustainable trend when comparing earlier data. Figures released today showed the country’s progress in the past 12 months. Year-on-year (y/y) data revealed in February 2015 the country experienced a 4.9 percent growth in GDP (Gross Domestic Product). The estimated real GDP average growth reached 2.7 percent for January-February 2015 y/y. Looking ahead, global rating agency Moody’s estimated Georgia’s economy would grow 3.5 percent in 2015. The Agency’s latest report saw Georgia retain its stable outlook on its sovereign rating, at ‘BB-’, and retain its ‘positive’ outlook. In February 2015, VAT payers’ turnover used in rapid estimations of economic growth increased by 13.1 percent y/y and amounted to 3.6 million GEL. Similarly, last month the number of registered enterprises reached 3,915 units, which was 3 per-

cent more than the number registered in February 2014. Deputy Minister of Georgia’s Ministry of Economy Irma Kavtaradze said the growth in GDP was caused by strong growth in a number of sectors, particularly construction (29 percent), food and beverage producing (9 percent), manufacturing (8 percent), trade (8 percent) and financial intermediation (7.5 percent). Meanwhile the country’s GDP at current prices totalled 29.187 billion GEL. Geostat said currently the largest share in the sectoral structure of GDP was held by trade services (17.4 percent) and industry (17.1 percent), followed by transport and communication services (10.5 percent), public administration (9.9 percent), agriculture, forestry and fishing (9.2 percent), construction (7.3 percent) and real estate, renting and business activities (6 percent). Real growth was experienced y/y in a number of sectors, including construction (13.5 percent), financial intermediation (10 percent), real estate, renting and business activities (8.5 percent), communication (7.1 percent), transport (6.4 percent), and trade (6.1 percent).



he Association Agreement between Georgia and the EU provides for the introduction of free trade and the removal of tariffs on exports, but at the same time envisages a fee that has not been canceled - it is known as the “entrance fee”, and implies a ban on exports of goods to the EU at a price below a defined quantity. In particular, if the value of goods exported from Georgia to the EU is lower than quarter for the same products in the EU, the exporter will have to pay the difference between the estimated and quotation. The entry fee covers 28 types of products - including 8 varieties of grape juice, tomatoes, cucumbers, artichokes, courgettes, citrus, and 9 kinds of fruit. The entrance fee is calculated according to the seasons - in particular, from 1 June to 30 September value of 100 kg of tomatoes in the EU must

be at least 52. 6 euros. If an exporter company brings tomatoes at a price of 51,5 euros per 100 kg, it will have to pay 1 euro per 100 kg at the customs. The lower the price of the exporter - the more he will have to pay for the “entrance”. However, the Chairman of the Parliamentary Committee on Agrarian Policy Gigla Agulashvili believes that this rule doesn’t pose problems to Georgian exporters. “Production of agricultural products in the EU costs cheaper than in Georgia, so this provision does not pose any threat to our entrepreneurs in any case they will not be able to export their products to the EU at below market price. In Europe, farmers much better use land resources and modern technology, respectively, their yield is much higher than ours. On this basis, our exporters will not have to pay for the “entry “ into the market, “- the MP notes.


inistry of Economy and Sustainable Development declares, that there is interest towards all objects which are brought for privatization and negotiations are held with the potential investors. According to State Property Agency of the Ministry, auctions will be announced after the negotiations are finished. The ministry is not restricted in the privatization terms. Currently, auction is officially announced on the one object, former building of Drug-abuse Treatment and land-area, locating on Abashidze str. 17/4 in Tbilisi. The initial price of the object is 3,550 million USD. The auction will be finished on March 31, the bid amounts to 5 thousand USD. Merely, Technical University, locating in Batumi is sold from the objects listed by the state for privatization. LLC “Batumi Tower” has acquired the object at 25,004 million USD. The privatization list has also included Atoneli Government Residence, - former Government



he European Union (EU) is providing a €4.8 million (11.5 million GEL) grant to train Georgian bank staff, develop lending strategies for agriculture projects and improve banks’ existing financial products. The funding would also serve as a way to share the lending risk and introduce innovative financing for agricultural businesses in the same value chain – such as helping to link local milk farmers to larger dairy producers. Agri-business Lomtagora in southern Georgia was one of 15,352 industry enterprises and farmers who have benefitted from European Bank for Reconstruction and Development (EBRD) credit lines and EU support. To avoid foreign exchange rate risks, beneficiaries can also take out loans in the local currency, the Lari. “The loan helped me to bring my company to the next level and become more competitive,” said Lomtagora company founder Kakha Lashkhi. “We plant crops to produce our seeds. The loan allowed us to purchase fertilizers to achieve a better harvest, which in turn resulted in a higher income for our business,” he added. Lomtagora ben-


he American Chamber of Commerce believes that the Government should take effective steps to attract more tourists to the country. Members of the Tourism Committee of the Chamber of Commerce will help the government to develop an action plan to promote tourism. More specifically, the Committee members will

present their views to the Economy Ministry on the long and short-term plan of development of tourism. In addition, the Tourism Committee of the Chamber of Commerce considers that the National Tourism Administration should set up the Advisory Council. As reported, the Tourism Administration is working on the Tourism Development Strategy 2025, but when it will be submitted is not yet known.

efitted from a 100,000 GEL loan (approximately €42,500) under the EBRD’s Georgian Agricultural Finance Facility (GAFF) in 2014. The loan was provided by JSC ProCredit Bank, which was one of five local partner banks of GAFF who provided credit lines, totalling €40 million. As a result of the additional financial support, Lomtagora was able to construct new grain silos that are equipped with the latest technology to dry, store and sort grains mechanically. At the same time, Lashkhi planned to invest in new seed varieties and to purchase a production line for animal feed.




Residence of Borjomi - Likani, “Resort Akhtala”, Residence of Mestia, Sanatoriums of Akhtala, 70%-share of LLC “Georgian Lottery Company”, Tbilisi Thermal Resort – National Medical Centre of Health and Rehabilitation of Tbilisi, former building of National Bank, Tskhneti Government Cottages, former President’s Residence of Bobokvati and other objects. George Kvirikashvili, minister of Economy has also announced at the session of Parliamentary Committee several weeks ago, that the state also plans realization of 25% share of “TELASI” and sale of “Georgian Post”. The government considers privatization as one of the means of GEL rate stabilization.

eorgia and 14 other countries are lining up to join the China-led Asian Infrastructure Investment Bank (AIIB). The AIIB is expected to be established by the end of this year and aims to provide loans for developing countries in Asia for infrastructure projects. Countries have until the end of today, March 31, to apply for AIIB founding membership. Britain and Switzerland had already been formally accepted as founding members, while the final number of founding members will be confirmed on April 15, based on approval by the applicants themselves. “Georgia is ready to join AIIB as a founder country,” said Georgia’s Deputy Minister of Finance David Lejava. “To be a founder country means to work on the founding documents together with the other countries, where Georgia’s interests will be taken into account as well. We [hope] to be a receiver country and not an investor country,” he added. Lejava believed AIIB would bring new opportunities to Georgia to attract more investments and therefore implement more projects. Georgia’s Economy Minister Giorgi Kvirikashvili hoped Georgia would benefit by joining the AIIB as it could be another large donor organisation for Georgia. At this moment 15 countries have applied to join

AIIB. The Chinese side expected this number to grow to 30, and to generate $50 million USD equity capital. On Saturday Russia, Australia and the Netherlands announced they planned to join the AIIB, adding clout to an institution seen as enhancing China’s regional and global influence. The AIIB, seen as a challenger to the World Bank and Asian Development Bank, has drawn a cool response from the United States (US), despite European US allies Britain, France, Germany and Italy already announcing they planned to join the bank. The US thought the AIIB inhibited the US’ efforts to extend its influence in the Asia Pacific region to balance China’s growing financial clout and assertiveness. Meanwhile other countries such as Turkey and South Korea have also said they would join AIIB. Brazil, China’s top trading partner, said it would sign up and if there were no conditions set. Australian Finance Minister Mathias Cormann said the country was planning to apply to become a founding member. Similarly, the Netherlands also planned to join, announced Dutch Prime Minister Mark Rutte on his official Facebook page after a meeting Chinese President Xi Jinping. China’s Finance Ministry said Austria had also applied to join and had submitted its documents to China.



iorgi Kvirikashvili’s Statement Overshadowed The Euphoria Caused By Lari Devaluation… “The government will compensate winning companies in government tenders, specifically those who developed problems because of the currency devalutation” – said Georgia’s Vice-Premiere, The Minister of Economy and Sustained Development, Giorgi Kvirikashvili, at a press briefing. The majority of the companies who partook in the tenders are positively responding to the government’s initiative. They believe that activating given initiative will allow on one hand for the companies to work unhindered, and on the other to create the same benefit for all infrastructural projects that the government is carrying out in central or municipals levels.

“Saba Construction” is one of the construction companies carrying out important infrastructural projects in Georgia. The project’s lead, Levan Targamadze, notes that generally he currency crisis present in the country will negatively affect business, including the financial state of companies participating in government tenders. The reason for this is simple – imported goods are rising in price, as does the workforce which creates risk for financial damage to companies. It will render them unable to finish existing projects with the old national currencies. The company’s lead also emphasizes the dangers of undertaken tender commitments. As Targamadze noted, the statement made by Giorgi Kvirikashvili regarding the compensation of companies participating in government purchases has overshadowed the euphoria caused



he international food ordering takeaway service “foodpanda” offers its customers the best service on the world market, which it is striving to lead. Among many goals the company has carried out to achieve this goal, one of the most significant would be the total amount of $200 million funding it has raised cumulatively since 2012, with $110 million being just this year alone via its business incubator, Rocket Internet. Nowadays foodpanda operates via its iOS and Android applications, as well as a full-fledged website at The comfortable food ordering method has been implemented in 40 countries with over 45 thousand active partners. After acquiring major competitors on large markets like India, Mexico, Russia, Brazil, Europe, the Middle East and Asia, the company further bolsters the technological prowess of its product.

A few weeks ago the company announced that online payments have been implemented in over 80% of Georgian restaurants, which means further convenience when ordering complex menus without the luxury of cash. Oliver Samwer, CEO of Rocket Internet said: “The online food takeaway sector is currently undergoing tremendous change. With the newly created Global Online Takeaway Group, Rocket Internet is at the forefront of consolidating the key markets in one of the most attractive online sectors. The Middle East is one of the most attractive markets with significant growth potential and highly attractive EBITDA margins. The acquisition of is another important step in our long-term global Food & Groceries strategy. We believe in the long-term growth potential of this space and are excited to take advantage of opportunities to build out our global leadership.”

by the Lari devaluation. “Companies ended up in virtually stalemate situations because of circumstances that were out of their control. A certain number of these companies, due to the scale of the tender, became instant bankruptcy candidates. In the best case scenario they will have to carry out commitments they’ve taken with the government through their losses. It’s probable that the compensation mentioned by the Vice-Premiere also includes a change in law regarding purchases,” – explains the company lead. Oncoming threats are not denied in the government either. “As you may know, the currency crisis has caused damage to companies lately, companies that have participated in government purchases and projects very important to the government (meaning first of all, projects that were announced both by the central government and various municipalities, as well as projects that we’re carrying out using international donor organization funding). They came upon a threat of the national currency disallowing them to finish existing projects under denominated, previously announced prices. We’ve oftentimes received signals that these companies are not beginning the work and that they even prefer losing guarantee funds instead of carrying out the project and risking loss. Which is why the government disputed this matter and decided to take the existing conditions into account in the corresponding sub-legislative act which pertains to government purchases, and use the 10% limit which is envisaged in the sub-legislative act but rarely used,” – states Kvirikashvili. Part of the experts are positively responding to the government’s initiative, however others consider this means of compensation incapable of regulating the problem created by the currency crisis. “It’s natural that the Lari devaluation process has had negative effects on companies participating in government tenders and their financial states. Two threats exist here: one is that the rising costs of raw material for the companies partaking in government tenders facilitates a risk of financial loss for these companies, and the other is that the

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execution of the commitment the government takes with the tender comes under danger as well. In a number of cases this threat can be expressed through the incompletion of commitments defined in the tender, and in others there’s no saying they will be carried out but poorly. In any case the government, the business and society are all disadvantaged,” – explains an expert in economic matters, Levan Kalandadze. He also considers it a rational and pragmatic decision for the government to facilitate individual approaches and look over tender terms to take the Lari devaluation into account. According to the minister, every variable will be accounted for and every specific matter will be taken into account. Specifically those pertaining to a company already having or not having purchased materials, and them planning to do so in the future, etc. “The government made a very important forward step and will do all in its power to, first of all, give the companies an unhindered possibility to work, and second of all to not stagnate any infrastructural project that the government is carrying out on central or municipal levels. I want to call to every company, whose works have become problematic because of this reason, to carry on working without pause” – stated Giorgi Kvirikashvili. Compensation will only go to project currently underway and to be carried out in the future. “Ongoing works are especially emphasized, since those exact companies who have won with specific prices in tenders and are unable to carry them out due to the devaluation effect are having problems nowadays. I will specify that these are works that haven’t even had their delivery reports created” – noted Georgia’s Minister for Economy and Sustained Development. It’s unclear at this point as to what sum of money will be considered for compensation. According to preliminary evaluation, the devaluation effects should not go over ten percent of entire purchases. We remind you that the national currency has been devaluated by 27 percent since November 2014.



eorgia’s is preparing to utilise its wind energy potential through the creation of the country’s first wind farm. The inaugural wind power plant will include two turbines and is expected to be operational by next spring. The plant is earmarked to be built between Georgia’s capital city Tbilisi and nearby Gori, a small city in eastern Georgia, and produce 20-MW of power per year, announced Georgian officials today. The €25 million (60 million GEL) project will be implemented by the Georgian Energy Development Fund (GEDF), a joint stock company established by the Government of Georgia, together with the European Bank for Reconstruction and Development (EBRD). A tender to purchase the turbines has been announced and in October-November, once the turbines were in Georgia, construction of the new power station will begin. Officials noted the wind farm would start producing energy in the second quarter of 2016. “First there will be a kind of test works. We will observe how the plant works and if there are no problems then we will start thinking about expanding the plant and adding another 100-150 MW [turbine] on the same territory,” said GEDF project manager Tornike Khazarashvili. He said energy created from the new facility would be transferred to the national grid and be distributed around the country. Georgia’s wind energy initiative was announced in May 2013, which at the time, Georgia’s Energy Minister Kakha Kaladze said plant operations would begin in 2014. “We have already started to prepare to use the wind farms’ power,” he said. “Next year the stations will be used in pilot mode, but they will be small.”

According to the EBRD’s Renewable Development Initiative, hydro power was the country’s most dominant energy resource but wind and geothermal energy sectors were promising resources. The EBRD estimated Georgia’s wind power potential could reach two GW, while other industry sources estimated the country’s wind potential could reach five GW - almost half the nation’s annual energy use. A feasibility study by Tbilisi’s Karenergo Wind Energy Scientific Centre revealed rich wind resources in the Chorokhi River Gorge, Paravani Lake, the Likhi mountain range, Mukhrani field, the outskirts of Kutaisi, parts of Tbilisi, the outskirts of Rustavi and the areas between Khashuri and Gori. “We have all the materials needed to start building wind turbines there but currently interest … isn’t high enough,” said Archil Zedginidze, Karenergo director. Meanwhile one small wind turbine was currently operational in the Skra village however the facility could only produce 22, 000 KWh of energy per year - enough for only a couple of households. The project to establish this wind turbine cost about $25,000 USD (about 55,000 GEL) and was funded by USAID.

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caucasian business week

FOR REAL FOOD WITH SHOCK APPEAL, HEAD TO GEORGIA “Georgian cooking is all about extraordinary combinations - just don’t try tampering with it” France taught me to cook, but Georgia taught me to eat. I lived in Tbilisi for two years at the end of the last century. It was during the dark years of President Eduard Shevardnadze’s post-Soviet era: electricity down to four hours a day, no heat in the winter. Economic flatline. The country fell .back to subsistence. Georgia had no intensive farming, no food processing industry and no supermarkets. There was no money for chemical pesticides or packaging; bunches of herbs were tied with onion fronds, homemade vinegar was sold in plastic coke bottles. Every day I went to the market, and it was here – piled up on tarpaulins laid on the sidewalk or pouring out of the back of an old Lada – that I discovered the true splendour of the original ingredient. Tomatoes were soft and pulpy and delicious, with thin skins that split with a fingernail push. When strawberries came into season I would take glass jars to the market: they were so perfectly ripe that if you put them in a plastic bag they would be jam before you got home. I learnt that real food (produce that has not been picked unripe, irradiated with argon, genetically engineered) is fragile and lasts no more than a day or two before it wilts. But oh how real food tastes! It tastes! How can I describe the shock and compound delight of the delicate, flowery scent of an unwaxed lemon, the bitter coffee cream aftertaste of walnuts that a wizened grandmother has been extracting with a hammer and a pair of nail scissors all morning; the honeyspicemusk of a really truly ripe apricot? The Georgian feast, or supra, must be, according to the traditions of Caucasian hospitality, abundant. The table is piled high with multiple dishes: skewers of pork, plum sauce with garlic and dill

and coriander, spiced kebabs, spinach pounded with walnuts, fried cornbread, slices of salty cheese, lamb stew with tarragon and sour green spring plums, roasted suckling pig. Glasses of wine are raised as the toasts roll over one another. Ever since Georgia, I have avoided the three stages of the dinner party: starter, main, pudding. Now I put dishes on the table all at the same time and everyone digs in. But while the Georgian table is wonderful and delicious, the menu is constant. Kinkhali, the national dish of pleated top-knot meat dumplings that squirt hot broth into your mouth when you bite into them are sublime (especially when eaten beside a wood-burning stove with a snow storm outside), but the recipe never varies. Kitchen tenet is preserved as national dogma. Plum sauce goes with meat, walnut with chicken. Vegetables are always cooked and then served cold. In this way Georgians have kept their culture, despite millennia of invasion and occupation by overlapping empires: Armenian, Greek, Roman, Mongol, Ottoman, Russian. “That’s why most Georgians don’t like me,” says Tekuna Gogechaishvili, who is the first Tbilisi chef to dare update Georgian food at her restaurant, Culinarium. “Eighty per cent of our clients are foreigners. Regular Georgians think I am destroying Georgia.” Tekuna originally studied psychology and went to New York to get her PhD. She ended up at the Culinary Institute of New York instead. Her parents were furious. When she returned she had worked at several restaurants in the United States, including Thomas Keller’s three Michelin-starred Per Se. Culinarium grafts Tekuna’s worldly experience onto the venerable root stock of the Georgian ingredient. Sit down and discover: bread dipped into a saucer of tobacco-coloured cold-pressed sunflower oil that has an extraordinarily strong

nutty diesel taste. A jug of fresh feijoa juice, a subtropical fruit that is somewhere between a kiwifruit and guava and wheat grass. Quince soup, an indefinably complex mélange of sweet, sour and umami made with salt from the high mountain villages of Svaneti. The spice mix that recurs in Georgian cuisine and tastes unlike anything else you know: blue fenugreek, coriander seeds, paprika, caraway, clove, cumin, garlic and at its heart an untranslatable ochre-coloured powder. In Georgian it is simply known as “yellow flower” or “foreign spice”; English books sometimes give it as marigold or saffron, but it is neither. “Georgia was on the old Silk Road,” says Tekuna. “I think it’s originally from India, but no one knows what it is.” Keep eating: fried elargi spheres – white corn po-

lenta that is usually mixed with smoked cheese and served as a congealing porridge, with an almond butter dip. Carpaccio of trout with fresh green apple to soothe the adjika, a fiery red pepper condiment that usually accompanies kebabs. Beef with red cabbage and lentils echoing the Georgian combination of fruit and sour. Georgians remain unconvinced. “My grandmother is my barometer,” says Tekuna. “When she says something I make is ‘very good’ I know everyone will love it. But she still says to me: ‘Why are you doing this?’ She says the Georgian kitchen that has been passed down [the generations] will be lost. “Once I made her gomi [yellow polenta] with squid ink so it was black instead of white. She almost had a heart attack.”




he farmer declares, that sometimes cucumber is exported with dumping price from Turkey. The cost is less than 1 GEL, while the wholesale price of Georgian cucumber “Shusha” is within 4-6 GEL. However, the entrepreneur declares, that Georgia cucumber’s competitive advantage is its quality. “Sometimes, Cucumber is imported from Turkey with a dumping price. The cost amounts to 80-90 tetri to occupy their niche. However, Turkish product will not come close to Georgian quality. Despite the fierce competition, we do not have problems in the realization of the so called “Shusha cucumber”. Currently, cucumber prices fluctuate on the market, because it has become warm and prices are daily changed. Wholesale price of 1 kg cucumber rages within 4-6 GEL. Cucumber “Shusha” is for premium segment, such cucumber is not imported in the country”, - Otar Pkhakadze, director of greenhouse industry LLC “Vidi-Capital”. The greenhouse works in Khobi through 3 years and there are grown, cucumbers, greens and green salads. The greenhouse is located on 0,5 ha. It is warmed with natural thermal waters. “Growing of cucumber is more recommended in Khobi due to the climate. There is a lack of light in winter, the air is moistly, so the cucumber is grown better. However, growing of tomato is much difficult. We gather 10-11 kg on q square

m, this is good amount of harvest in Georgian conditions. It should be noted, that 99% of product is exported in the Eastern Georgia, basically in Tbilisi. Part of the product is brought in the agricultural market and then it is distributed in the markets. Some of the products are brought in the chain of “Carrefour”. We annually gather 600-700 kg and send the products on each second day in the city. Therefore, there is a tomato deficit on the market in this year, because many of the farmers have not planted tomato in Autumn. Cucumber had a good price in 2013, so the farmers have sowed the cucumber actively in the greenhouses. However, when they started planning of the harvest, planting of cucumber has been decided in October-November, 2014. Such tern is everywhere – in the Western and in the Eastern Georgia. This conditioned by the information deficit. Farmers do not know how much culture must be grown. If they see that cucumber is sold at good price, they will sow it. However the product will be surplus in the next year, the price will be dropped, so they avoid to grow this culture in the next year and so on. We plan to sow cucumber in the next year as well. I think, that most of the farmers will be returned to the tomato and they will grow less amount of cucumber and the price will be high”, - Otar Pkhakadze declares.

ack of tomato crops in the greenhouse industry has conditioned small amount of agriculture products on the local market in this year. The reason is that great part of the farmers have preferred to saw other cultures instead of growing the tomato, it is added by lowquality of the seeds and other problems. Now, cost of 1 kg Georgian tomato totals to 5,5-6 GEL on the local market. However, the cost of imported tomato from Turkey is within 2,5-3 GEL. LLC “Geodera” has the greenhouse industry in Tsilkani, which is located on 8 thousand square m. The greenhouse is jointly founded by 3 foreign investors in 2013. Dutch tomato “pandaroza” has been planted in greenhouse though the previous year, but it had harvest merely through 3 months. The crop did not give harvest to the farmers in winter. As the company declares, cost of high quality potato has amounted to 5,5-6 GEL and the demand has been high. To note, merely population with high purchasing ability can buy Georgian tomato, because its taste is better and the product is environmentally safe. Turkish tomato cannot

compete with Georgian one with quality, but it can compete with price – Turkish tomato is sold because of low prices. “We cannot replace Turkish tomato on the market at this stage, because we do not have enough harvest especially in winter. We have planted Dutch “pandoza”, but it has been failed. The plant had to give harvest through 6 months but the products have been spoiled in winter. Supposedly, the distributed seed was bad or the distributor has exaggerated the opportunities of this variety. There are cases, when seed distributing companies do not have information or sell bad quality seed. However, they started importing of lower cost seed after GEL devaluation. We grow Bulgarian pepper and tomatoes “Cherry” with seeds imported from Israel in 2013. Reportedly, it has been a good seed. We brought the tomato in “Carrefour” and Goodwill. We started to sow the new harvest from May and we want to choose 3-month variety. We plan to try other varieties in August, which will have the harvest in winter. We carry out experiments, but we have not reached to find the desired seeds”, representative of the company declares.



“Mountain law needs to be adopted fast”

UCHA NANUASHVILI Public defender of Georgia Mr Nanuashvili demands for a law regarding infrastructural projects in high mountainous re-

gions of the country to be adopted in an urgent manner. “Mountains are becoming abandoned and this issue needs to be addressed immediately. I was visiting the mountainous areas of Georgia myself recently. There are numerous problems that the indigenous population is facing. Especially dire are the economic and social conditions of these people – lack of healthcare and normal living conditions. The government needs to work on a wholesome state strategy and the subsequent plan of action, which will be aimed at improving overall social conditions of people in the mountains of Georgia. It is necessary to start working on the mountain law in a fast-paced regime. All of the above-mentioned issues of the mountainous region of Georgia need be to addressed promptly.”

“We need a new concept of open leadership in the country”

KAKHA OKRIASHVILI Parliament Majority Member “A new concept of open leadership needs to be adopted – it is no doubt important what one does, but it is even more important who your partner is,” – Parliament majority member Kakha Okriashvili told the press. He added that every institution in the country needs to be depoliticized. This way the country can achieve a 7% economic growth,

in Mr Okriashvili’s view. “Ever since we gained independence in the 90’s, the country has had a homogenous government. This type of governing hiders the creation of a free idea-generating environment with a quick decision-making process and implementation. In such situations the higher tiers effectively becomes hindered, whilst the lower tiers, accustomed to slow functioning settle into this slothful comfort even more. They are ok with such layout of things, because their responsibility is close to zero.” “That is precisely why we need to adopt a new governing concept – that of open leadership. It’s important what one does, but it’s even more important who you do it with. Such style of governing will give us a chance of an annual 7% economic growth.” “We have to attempt depoliticize not only Ministry of Internal Affairs, but other governing institutions of the country. We have to work on the country’s development short-term, a 3-year long plan and a longer-term, 10-year long one.”

“We aim to raise healthy nutrition awareness in Georgia”

SOSO PKHAKADZE Founder of Wissol Group The supermarket chain Smart, founded by Wissol Group, started a new health food initiative on April 3rd.

“We as a corporation recognize that health is social cause. That is why we as a food chain always sensed the responsibility of acting upon this issue. Today, with the help of the nutrition expert Nana Gagua Smart widens its service to offer its customers even more healthy choices.” “We’ve created a conceptual project called ‘Healthy Choice.’ In the framework of this project we will revise our own production methods. As you know Smart owns several such factories as Gudushauri Factory. We will sort the production of each one of them, focusing on healthy nutrition. Also, we signed agreements with our partners and very soon Smart will offer separate sections where lactose-free and gluten-free products will be sold, as well as organic produce. Overall by this initiative we aim to raise healthy nutrition awareness in the country and in the Georgians’ minds.”

Silknet: Russian operator has not crossed the country’s territory even with a single inch


e want to underline, that Russian operator has not crossed the country’s territory even with a single inch within the frame of construction project of Larsi-Kazbegi transit highway”, - Silknet has declared to the response of released versions in media, concerning to the cooperation with MegaFon. According to the operator, modernization of copper line on Zemo Larsi-Kazbegi rout is finished. However, capacity was increased to 100 GB by optical channel replacement and its usage for the internet-transit has became available. The purpose of the trunk line is to pass all types of telecommunications traffic to Russia, Europe

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and the Caucasus. “The main line gives possibility of the entrance on the new markets. As well as, it gives opportunity of quick access for Georgian operators to Russian internet resources, European operators and content-providers “, - Silknet’s statement notes. According to Silknet, they cooperate with the leading telecommunications operators of Turkey, Armenia, Azerbaijan and other countries of the region. “Georgia has a corridor function for the region’s countries, Europe and Asia. Silknet’s strategy is to fulfill the function of an important transit corridor in the region’s telecommunications space”.

GEORGIA: COUNTRY PROFILE RECENT DEVELOPMENTS In June of 2014, the Association Agreement between Georgia and the European Union was signed. This agreement aims to expand political and economic relations between Georgia and the European Union and to gradually integrate Georgia into the European Union’s internal market. Georgia’s international ratings has been revised In 2014: • Standard & Poor’s: BB- Stable (Affirmed in May 2014) • Moody’s: Ba3 Positive (Affirmed in August 2014) • Fitch Rating: BB- Positive (Affirmed in October 2014) The Heritage Foundation ranked Georgia the 22nd among 178 countries in Economic Freedom Ranking. In the World Bank’s “Ease of Doing Business Index 2014”, Georgia ranks 15th out of the surveyed 189 economies. In the same ranking in 2006 Georgia held the 100th position. According to the Global Peace Index (GPI) issued by Institute for Economics and Peace (IEP) in 2015, Georgia is fourth safest country in the World. BUSINESS AND INVESTMENT ENVIRONMENT Georgian government efforts to reduce corruption in public and private sectors have significantly improved Georgia’s ranking in the World Bank’s Doing Business Survey. By the latest survey it stands on 15th position among 189 countries. Georgia ranks as 1st in property registration, 3rd in dealing with construction permits, 5th in starting a business and 7th in getting the credit. Among transitional economies, Georgia has improved its ranking in the Corruption Perception Index from 85 to 50 in the years 2002-2005. The Georgian tax system was simplified, customs duties were reduced and procedures for granting licenses and permits were simplified. According to Forbes, Georgia was ranked as 4th least tax burden country in 2008. At present Georgia enjoys free trade agreement with Turkey and nearly all CIS countries. Georgia is eligible for Most Favored Nation (MFN) treatment from all the WTO member states and is the member of WTO since 2000. Georgia has been granted a Generalized Scheme of Preferences (GSP) treatment by the following countries: the EU, the USA, Japan, Canada, Switzerland and Norway. The Association Agreement between Georgia and the European Union, signed in June 2014, includes the setting up of a Deep and Comprehensive Free Trade Area (DCFTA). The DCFTA has been enacted since September 2014, therefore products or services produced in Georgia can freely access to the EU market with more than 500 million consumers. DCFTA will contribute to economic growth, integration with world markets and global supply chains, and will open new prospects for Georgia and for entrepreneurs doing business in our country. In 2015, the Government of Georgia began negotiations on signing the Free trade Agreement with the European Free Trade Association (EFTA) that unities Switzerland, Norway, Island and Lichtenstein. After the signing an agreement with the EFTA, market of high purchasing value will open for the Georgian products and services that unities 4 countries and more that 13 million customers. LEGAL SYSTEM The Constitution, adopted in 1995, sets out the

structure of the national government as well as its powers and functions. The powers of government are divided into three branches – legislative, executive and judicial. The court system in Georgia has three branches: Courts of First Instance (District or City Courts), Appellate Courts and the Supreme Court. First Instance Courts have jurisdiction over all civil, criminal and administrative cases. Decisions from First Instance Courts may be appealed to the Appellate Courts and, from there, to the Supreme Court. The Constitutional Court of Georgia is the sole organ of constitutional jurisdiction of Georgia. As an alternative to litigation, Georgia allows for third party arbitration. Georgian law also allows foreign companies to include provisions in their contracts (including those with Georgian entities) that allow for arbitration by international arbitration institutions. INFRASTRUCTURE & TRANSPORT Located on the shortest route between Europe and Asia, Georgia’s transport system is a key link in the historic “Silk Road.” It is believed that long-term growth will stem from Georgia’s role as a transit state for pipelines. Three pipelines currently exist: • The Baku-Supsa pipeline (GPC-Georgian Pipeline Company) runs 814 km from Baku to Supsa (444 km in Azerbaijan and 370 km in Georgia) and transports “early oil” from the Caspian Sea region. • The Baku-Tbilisi-Ceyhan (BTC) oil pipeline extends 1,750 km across Azerbaijan, Georgia and Turkey and is designed to transport up to one million barrels of Azeri oil per day. The oil is transported via Georgia to the Turkish port of Ceyhan. • The South Caucasus Pipeline (SCP) System project was completed in late 2006. The initial capacity of the pipeline is 8.8 billion cubic meters (bcm) of gas per year and, after 2017, its capacity could be expanded to 20 bcm per year. As part of the transit payment, Georgia will receive 5% of the volume of natural gas transited from Azerbaijan to Turkey. One of the main partner and operator of the project is BP. Four airports with a total capacity of 3,100 passengers per hour, serve the country in Tbilisi, Batumi, Kutaisi and Mestia. The total length of railway amounts 1,612 km, with capacity of 3.3 million passengers per year and the length of roadways amounts 19,109 km. Completion of the Baku-Tbilisi-Kars (BTK) railway in 2015 will also stimulate advancement of Georgian Railway. Major sea ports are located in Poti and Batumi. The Government of Georgia strives to enhance port infrastructure. For this purpose, particular importance is attached to the construction of the new Deep Sea port in Anaklia. Construction of the new port is strategically important and shall result in significant increase in cargo turnover through Georgia. ENERGY Georgia has a developed, stable and reliable energy sector but efforts are required to improve the efficiency in domestic energy use. The most promising source of additional energy generation is hydropower and the Government is focused on securing private investments for the construction of new hydropower stations. In 2012 9.694 billion kWh was produced in Georgia and consumption amounted 9.379 billion kWh. With a large number of planned investments in energy sector it is expected that Georgia will be fully energy self-sufficient by the year 2020.

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he National Bank has revised downwards its economic growth forecast for this year. According to the quarterly publication of NBG “Inflation Review” (February), economic growth forecast of 2015 is revised downwards, it reflects the impact of the current economic situation on the region’s economy. As of the current estimation, GDP’s annual growth will be within 2% in 2015 and its main obstacle is the external sector. However, Asian Development Bank has made economic growth forecast of 2% in the previous week as well. The current state budget, which adjustment is planned, economic growth forecast is defined by 5%. The government has declared, that this forecast will be reduced to 2% as well. NBG also considers, that net exports will have a negative contribution in the economy through this year, while economic growth will be conditioned due to domestic demand. Lending growth will support increase of investments and consumption on the background of government capital expen-

diture growth and expansionary monetary policy. Fuel price cut will partially counterbalance the negative impact of the external factors, which has a positive effect on current account, as well as all sectors of the economy. “Current forecasts are heavily dependent on exogenous factors and include risks of change in both directions. The external sector is the major risk factor of forecast. Namely, if the situation, which exists in the region, will be reflected on Georgian economy more than expected, it will reduce economy growth on the one hand and on the other, the inflation will contribute to inflation delivery from the trade partner countries. The mentioned factor will have a positive influence if foreign investment volume will be more and big project impact on the economic activity. In addition, if global price reduction on the food staff and oil will be delivered more on the local prices than expected or the imported inflation from trade partner countries will be less, it will condition reduction comparing to the current inflation forecast in Georgia”, - the document says.

TBC BANK CEO NAMED CEO OF THE YEAR 2014 IN CEE & CIS BY EMEA FINANCE MAGAZINE The Bank wins Best Bank in Georgia Title for the Fourth Consecutive Year


BC Bank CEO, Vakhtang Butskhrikidze, was named CEO of the Year 2014 in Central and Eastern Europe and the CIS by the EMEA Finance magazine within its Europe Banking Awards 2014 program. TBC Bank was also honored to receive the Best Bank in Georgia award for the fourth consecutive year in 2014. Mr. Butskhrikidze is the first Georgian executive to be acknowledged by the magazine for his professional achievements in a regional context. “TBC Bank continues to help drive the fast moving Georgian economy forward, and it is easy to see why with domestic leading in key categories like retail, SME, micro-loans delivering impressive growth year over year. The Bank is effectively employing all its funding opportunities, not least the ‘bread and butter’ of banking - customer deposits - where growth in deposits registered a very significant 15%. The Bank’s ability to con-

tinue to grow market share, and increase profits year-over-year is a result of the solid leadership demonstrated by CEO Vakhtang Butskhrikidze. We are proud to recognize him as EMEA Finance’s CEO of the year in our annual Europe Banking Awards,” said Christopher Moore, Publisher & CEO, EMEA Finance magazine. “We are extremely proud to receive the Best Bank award for the fourth consecutive year. This continued recognition is testament to the tireless, daily contribution of our outstanding team to the Bank’s sustained success and development. I am also humbled to receive this recognition as CEO of the Year and would like to once again thank my team for their collaboration and support throughout my work at TBC Bank,” commented Vakhtang Butskhrikidze, CEO, TBC Bank. Barclays and UBS were named Best Investment Banks in Georgia 2014 for their work on the TBC Bank IPO.

MiniCredit service center offers the first credit to clients without charging interest rates. MiniCredit clients are able to enjoy this preferential product starting April 1. The amount of the first credit ranges from 50 to 200 GEL. For example, having taken the first credit of 200 GEL with a 30 maturity period, borrowers will return the same amount of 200 GEL without additional commission fees. Staff of the MiniCredit Café service center provides valuable services to visiting clients, including: • Registration on • Filling out an application with a desirable amount and maturity period. • Interest-free credit – 0% • Selection of a desirable card design free of charge. • Clients are able to take a credit in desirable amount on MiniCredit plastic card. During the application discussion process, the applicants are able to enjoy a variety of coffee. Visit MiniCredit Café at Goodwill hypermarket, Kavtaradze Street 1. Working Hours: 10 to 20 o’clock for all 7 days a week.



EL official exchange rate is devaluated by 5,3% towards USD in February (from 2.0557 to 2.1654). NBG has held 3 auction in the reporting month and sold $120 million. Interventions have made up $80 million in the same period of 2014, but on the contrary, the regulator has removed the foreign currency from the market. However, GEL has strengthened towards USD by 1,82% - from 1,7819 to 1,7495. According to NBG’s review, the bank increased

concentration of currency market in February. To note, 69% accounts for 5 banks (2014 – 72%). The total turnover of USD/GEL on the interbank foreign exchange market has made up 91,4 million USD, the figure exceeds by $36 million (66%). To note, the reduction has amounted to $7,1 million (10%) and deals between banks are reduced by 11%. As of February, 2015, GEL real effective exchange rate has depreciated by 2,5%, while nominal – by 1.1% (02/2014 – increase 2%, 2,2%).



he share of problem loans is defined by 3,3% in the total portfolio of the banks (01/03/15 – 3,2%). The volume of non-performing loans (substandard, doubtful, bad) amounts to 465,6 million GEL. The figure is increased by 23 million. Annually, total lending is increased by 36%, while the rate of problem loans - by 39%. However, the

volume of problem loans has been decreased by 17,5% (y/y) comparing to the same period of the previous year. Therefore, credit portfolio of the sector has been increased by 20%. The mentioned category of the loans are regulated by 30%, 40% and 100% backup request (reliable, trustworthy -2%, 10%). The reserve volume has amounted to 882 million GEL by March 1 (01/02/15 – 847 million).



n 31th of March,TBC Gallery hosted a press conference to honer Black Sea Jazz Festival. Press conference was lead by Minister of Culture and Monument Protection of Georgia Mikheil Giorgadze,General Director of TBC bank Vakhtang Butskhrikidze and Director of Easter Promotion Giorgi Kereselidze. On this event the names of foreign performers,who will perform in Batumi,2015 become known. Also at the conference ministry of culture and TBC Status announced the annual

contest to create the art-poster of this year’s Jazz Festival Minister Giorgadze stressed the importance of Jazz for the country and accentuated on the fact that support for jazz festival is an good example how ministry and private sector can create a joint product.”-Two years ago April 30 has been designated as International Jazz Day by the United Nations Education, Scientific and Cultural Organization (UNESCO),saying Jazz development is like development of the country,festival can help to improve infrastructure and tourism sector.”-said Mikheil Giorgadze.



BC Bank’s share is 31.5% on the retail lending market by March 1 (2014 – 24%, 2013 – 23%). The volume of the bank’s retail credit portfolio amounts to 2,054 billion


Total credit portfolio is defined by 3,97 billion GEL (2014 – 3,3). Growth of TBC Bank’s portfolio is significantly conditioned by merger of “Constanta”. The bank has acquired micro business loan portfolio of 39 million GEL from ProCredit Bank as well.



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ibar Khalvashi wants to restore his activity in the construction business. The businessman demands the return of the property in “Arti”, “International Building Company” and “Piza Ltd” companies , which were seized by the previous government without any reasons, the businessman’s lawyer Paata Salia says. Salia notes that the consultations on the businessman’s activity are underway and the final decision is expected to be taken this year, because the issue has been well studied. In Salia’s words, Khalvashi was engaged in the construction and he is eager to return the property in order to resume his activity in Georgia. As a result , jobs will be created and the economy will develop.

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he new investment fund engaged in construction activity will appear on the Georgian market in the next few days. The fund is going to be set up by a businesswoman Maya Rcheulisvili. The founders will offer investors free land assets and will co-financee the counstruction, after which the shares will be distributed equally – 50%- 50%. Maya Rcheulishvili speaks about free land assets worth $ 20-22 million where the construction has already started. Rcheulisvili will attract the investor to finish the construction. As for the mechanism of work, in Rcheulishvili’s words, the tender will be announced for each project and the company will put up lots. The first agreement will be signed with “Gino Paradise” owner Nodar Giorgadze this week. Maya Rcheulishvilis explains that the idea of creating her own investment fund came after she became convinced that dealing with the Georgian banks is disadvantageous. The businesswoman points out that the banks themselves are interest-

ed in the construction business, so they are trying to hinder her business. In her words, many businessmen have already showed their interest in the initiative and investing in the construction field, namely, Georgian Jews are going to invest money.



f “Hipp Georgia” launches the stopped enterprise elucidates in May, after they will have preliminary data about the volume of apple harvest in this year. The company will not renew its activities in Georgia, if there is no desired amount of apple harvest. Concentrate plant of “HiPP”, which is located in Agara, is stopped over 2 years. “We do not know what the apple price will be in this year. However, there has not been enough apple harvest in the previous year. Apple amount is reduced though the last years. To note, pat of the apple gardens have remained on the occupied territory after August War 2008, so harvest is reduced by 50%. However, bad weathers have been added to it and the work has lost the meaning.

Apple price is high on the market as well. Now, we should discuss, what we shall have to do. I have though to grow apple garden, but it does not seem profitable at this stage. We take apple 1 kg at 10 tetri. We should have to start wholesale apple business in the case of growing apple gardens, however it is long-term and expensive project. It needs a great investment. We expect May, when we will see what amount of apple will be harvested, so we will know if we continue to work or not”, - Archil Zhvania, director of “HiPP Georgia” declares. German entrepreneur of children organic foods HiPP GmbH & Co. Vertrieb KG started production fruit concentrate from 2009 in Agara plant. HiPP has acquired the plant at the auction announce by Georgian government.



xporters take high quality bay from population at 3,50-3,60 GEL, the price is increased over 1 GEL comparing to the previous year. The cost is grown due to the increased export in Russia and Turkey. Turkish buy much amount of bay in the Western Georgia. Processing and packing is carried out in Turkish plants and the product is exported in Europe. The demand is increased from Russia as well. To note, European want to make export of Georgian bay in this year, but Georgian entrepreneurs were not able to provide them with products due to the transporting problem.

LLC “Laurusi”, which is located in Senaki, makes bay export in Russia. As Ivane Jalagonia, director of the enterprise declares, he had an order on 205 t and the supply will be finished in May. “We all started export after Russian bounders are opened and it increased the bay price. Turkish but it in a big amount as well. They have a demand on all types of products. So the people actively started to grow bays. They search plants to multiply the products. We have the bay on 52 ha and we plan further development. We also gather the products from the population for export. We have an order from Holland in this year. They were paying 5 USD in 1 kg, but we have not been able to supply them. They demanded to transport it near to the Port and we have not been able to find a track of 5 t. Tracks with more tonnage is very expensive. So such profitable order has been failed. Poland wanted to make an export as well, but we could not make it. Russian market is large, but prices are low. Europeans pay more, so export in European countries is much profitable. However, we do not have partners yet otherwise the export is risky”, - Ivane Jalagonia declares. Over 4,182 thousand t bay has been exported from Georgia in 2014. To note, 36% of the export accounted for Russia. The second big exporter is Turkey with 22%-share. It should be noted, that 1,068 thousand t has been exported abroad and 52,5% accounts for Turkey. Among exporting countries are Ukraine, Kazakhstan, Nigeria, Filipinas, Uzbekistan and so on.


he infamous company “BlockGeorgia” is interested in purchasing the building of the Ministry of Economy. According to Tornike Jamrishvili, “Block Georgia” representative, they are interested in purchasing the Economy Ministry building, however, notes that the issue of privatization of the building is not yet settled. At the same time, the company plans to build “Park Inn Tori” hotel in Tbilisi. The project presentation will be held in April. “Block Georgia” signed Memorandum regarding the hotel development with “Rezidor Group”, now there is the final stage of obtaining permission from the Ministry of Economy. Tornike Janashvili says that the project will be presented to “Rezidor” representatives who are expected to arrive in Tbilisi on April 16. In his words, “Block Georgia” is going to build another hotel which will

be located near “Sheraton” hotel andthe process of obtaining a building permit will be completed in April. “Park Inn Tori” will be a 180-room hotel, the hotel will include a restaurant, bar, a conference room and a parking area. According to information available on “Park Inn” official site, the “Park Inn Tori” hotel will be opened in 2017. “Park Inn” is a young and dynamically growing brand operated by Rezidor Group, which is targeted at mid-market segment. Recall that “BlockGeorgia” is the Georgian-Czech company, which had to implement the “100 Hospitals” project launched by the previous government. Due to the contract violation, in 2010 the government canceled the contract with the company. The government of Georgia plans to privatize the other objects. “Batumi Tower”, where the previous government planned to open the Technical University, has already been sold.



new building code project include items that create additional complexity to the business - for example, a project should be presented by a certified architect, more stringent criteria for the territory adjacent to the building are introduced, etc. - say the authors of the document. According to David Gigineishvili, Head of Spatial Planning & Construction Policy Department at Ministry of Economy and Sustainable Development of Georgia, the project also includes the items that on the contrary, stimulate business - in particular, the introduction of stages of obtaining a permit, and as a result, the paper will balance the interests of both businesses and individuals. CEO at the development company “Arci” Tornike Abuladze also mentions a tightening of the

rules but considers it the right approach. “In general, the Ministry of Economy has addressed most of our recommendations, but there are some points that are complicated. Business is always interested in loyal laws, but if we want to deal with a normal construction, the tightening is necessary. Today the business as a whole is free, but if we look at the long term, then certain limitations must be imposed,”- he notes. According to David Gigineishvili, the project is still being finalized and will be submitted to the Parliament in the first half of April after it is considered at a cabinet meeting. “Under the project, the procedure for obtaining permission will be 2 and 3-stage. The opportunity to hire a private company which will monitor the construction process is also provided. There will be a lot of other novelties, “- he adds.



pring season turned out to be active and full of novelties for major auto importers operating in Georgia. Along with various discounts and promotions, they offer new models to the customers. In particular, “Toyota Center Tegeta” offers customers several innovations, including a 20% discount on cars. During the campaign, customers who will acquire the car for the first time in this center will be able to get free lube oil, various spare parts, accumulator, accessories, as well as services at a discounted price. According to the company’s sales manager Merab Cheishvili, discount actions stimulate buy-

ers while the volume of sales remains stable in comparison with the same period of 2014, and is slightly increasing. 7 models worth $ 16 200 - 105 000 are displayed in the company’s showroom. “Nissan Center” plans to introduce the new ‘Nissan Micra’ worth $ 11 000 in late May. According to the center’s Director Mikheil Kharati, two new models - “Nissan Juke” and “Nissan X-trail” will be brought to the market in the near future. “Currently, “ Juke” is just the best-selling model, which costs $ 20 -24 thousand, “ - he notes. In total 15 models are displayed at “Nissan Center”, the cost of which ranges from $ 10 to 85 thousand.


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he EU Mobile Info Centre provides the citizens with information about the EU March 31st, 2015 — Students of the Tserovani Public School #3 had a very exciting day today, with lots of new faces visiting their grounds. Foreigners in the face of EU representatives, local vice governor and a flock of journalists shared with them the first event of “Let’s Meet Europe” campaign that jump-started at this very school today. The Delegation of the European Union to Georgia’s information campaign “Lets Meet Europe” aims at providing Georgian citizens with easy access to information about co-operation between Georgia and the European Union. With Georgia having signed the Association Agreement with the EU on June 27th of 2014, spreading knowledge about the Union among the young generation of Georgia has become relevant to the national politics. The inaugural ceremony of “Let’s Meet Europe” was held in Tserovani School #3 where internally displaced children from Tskhinvali, South Ossetia — the disputed region between Russia and Georgia — attend school. Tserovani, with an IDP population of 6,433 representing 1954 displaced families, is the largest of the 38 settlements built by the Georgian Government to house families who were displaced by the August 2008 war. The settlement is made of 2001 identical cement block cottages. The construction expenditure of Tserovani settlement was reimbursed through IDP II Programme financed by

the EU (total € 51 million). The opening was attended by the Head of Operations Section at the Delegation of European Union to Georgia, Kaido Sirel and the Deputy Governor of Mtskheta-Mtianeti Region of Georgia, Nugzar Kipiani. The EU Mobile Info Centre provided students with information covering a wide range of areas, including EU activities in Georgia and disseminated a special Georgian language edition of the book “Let’s Explore Europe.” Students had an opportunity to watch a documentary film about the European Union, titled “Travel to Europe”. The upperclassmen took part in an interactive quiz about EU and its history“How well do I know Europe?” – during which competing teams of students were asked question on the EU and its history. One of the questions, for instance, was: “How many EU countries have to approve the EU-Georgia agreement for it to become ratified?” [All 28 EU member states need to ratify the Association Agreement before it can become fully ratified — a note for the curious readers. Ed.] A bonus question that the Head of Operations Section at the Delegation of EU to Georgia Mr Kaido Sirel, put to two finalist teams that broke even during the quiz was, which EU country has the largest geographic territory, with France, Germany and Denmark as possible answers. Mr Sirel warned the students that the answer was not as apparent as it seemed. Students were eager to answer that Denmark was the EU country with largest territory, as Greenland is an autonomous

country within the Kingdom of Denmark. Third-graders had a much more fun day. Along with Mr Sirel and the governor Me Zeikidze they played with the EU map puzzle and coloured the colouring book with flags of EU Member States together with students. The colouring book has been specially designed for the EU Mobile Info Centre campaign. Moreover, using a magnetic map the students were shown the historical stages of EU enlargement. “EU has many different flags, but we are driven by the same goal,” Mr Sireli Head of EU Opera-

tions in Georgia, told students at the Tserovani Public school #3. “Hopefully, very soon, Georgian flag will be among EU flags as well,” — he added. The EU Mobile Info Centre offers free access to its resources and targets the public who is interested in the EU, including youth, students, the rural population, experts in various fields and businessmen. The bus hosting the EU Mobile Information Centre will travel to all Georgian regions including more than 140 schools in 2015. By Nino Gojiashvili



iming to realize the cessation of wars and world peace via signing the Unity of Religions Agreement, presenting the Agreement to Propose the Enactment of an International Law for the Cessation of Wars and encouraging political and religious leaders around the world to participate, the World Alliance of Religions’ Peace (WARP) Summit, has opened a new chapter in peace movement last September. Hosted by Heavenly Culture, World Peace and Restoration of Light (HWPL), a non-government organization based in Seoul, South Korea, the Summit has gathered 680 religious leaders from 120 countries, as well as former heads of state, 600 representatives and members of youth organizations of 139 countries attended the event, to-

gether with various women organizations. Representatives from Georgia were also invited to attend the Summit, including Religious leaders, youth organizations and women group. Diocese Armenian Apostolic Orthodox Saint Church, the Diocese of the Armenian Apostolic Orthodox Holy Church, Georgian Muslims Union, Educational Union of the Jewish communities of Georgia and Evangelical Baptist Church were representing the country together with CISV-Georgia, youth Association DRONI and Consent. “Religion that should love all life is causing conflicts in which the lives of people are taken away, putting the world at risk of destruction. The only way to protect the world from destruction is for the religious leaders to unite as one,” stated Man Hee Lee, the chairman of HWPL on the Summit.

He also emphasized that the cessation of wars stipulated in international law is the basic step toward building world peace, and he made clear that resolving the fundamental problems of international and interreligious conflicts is the way to establish true peace and to promote justice. According to Bishop Malkhaz Songulashvili, the representative of the Evangelical Baptist Church of Georgia, the Summit was very impressive and diverse. “The most important fact in such events is the meeting of people from various cultures and religions, who listen and learn from each other. And correspondingly, Georgian delegation have participated in several meetings,” he recalled. Currently, interfaith dialogues are being held all over the world with the hope to promote opening of the World Alliance of Religions Peace (WARP) Offices. The action is the result of the Peace Treaty signed at WARP Summit last year. It is also in line with President Barack Obama’s address to the ministers of over 60 countries gathered in the White House Summit in February, where he stressed the tasks of all great religions to bring people of different faiths together to work toward peace. The office aims to prevent the conflicts caused by religious misunderstandings and bring forth peace by gaining deeper understandings of the standards and teachings of each religion. With this in mind, the peace delegation of HWPL held a second meeting of the WARP Office in March

in Tbilisi, bringing leaders of various religious organizations to sign a pledge of active collaboration towards peace building. The meeting focused on five particular areas: politics, religion, youth, women and media with the purpose to hear feedback and understand ways in order to work together. As Debora Oh, the representative stated ending the wars is not a one man job, but it needs the full collaboration of everyone; it needs a big unity within this five sectors. According to her, the first meeting was held in December last year and also focused on religious leaders, as HWPL tries to bring all of the religious leaders together and give them the possibility to communicate with each other. “We saw that Georgia is a multi confessional country and getting them united with the purpose of world peace will be the best example for the entire Caucasus region and the rest of the world,” she added. At the moment offices of this kind have been opened in New York and Los Angeles (USA), Essen and Berlin (Germany), Tijuana (Mexico), Melbourne and Sydney (Australia) and Manila, Philippines. As Oh explained, the main purpose of establishing an office here in Georgia is to have dialogues to prevent and/or stop wars, as well as enact international law in Georgia and help the foundation of world peace, adding that the key is unity of the religious groups.



n March 29, 2015 the automobile social network of and the Giorgi Tevzadze and Friends charity foundation held the Giorgi Tevzadze 2015 Cup Tournament in Drifting. In honor to the memory of our friend, and the Charity Foundation will hold the Giorgi Tevzadze (Tevzi) Cup Tournaments at the end of March every year. In 2015 the Giorgi Tevzadze Cup Tournament was held for the second time. This year the tournament format was quite intricate compared to the previous year. Both professional and amateur drifters have taken part in the drifting. The tournament format was different for each class. Under the requirements, participants of the professional category were to drive vehicles equipped with frames, bumper guards, chairs. Moreover, they had to wear special racing suites and overalls. It should be noted both classes of professionals and amateurs have demonstrated sharp and tense competition. In addition, the weather was also gloomed by unexpected rain. Nevertheless, the tournament turned out successful and entertaining.

The winner was exposed in line with the Georgian drifting rules. The winner in the category of amateur drifters has received 100 liter fuel from SOCAR company and a memorable prize from the organizers. The winner in the category of professional drifter has received the Giorgi Tevzadze (Tevzi) Cup, 500-liter fuel from SOCAR, a voucher form Castrol lubricants company and memorable prizes form the organizers. The tournament winners: Winner in the class of professional drifters: Giorgi Javaxadze Winner in the class of amateur drifters: Iasha Janashia Public Sympathies: Class of Professional Drifters: Giorgi Sarishvili Class of Amateur Drifters: Avto Khelkhelauri Honorable Certificate: Only Female Participant of the Tournament: Sophi Khojava The automobile social network of and the Giorgi Tevzadze and Friends charity foundation wish all success to the winners.



April 6, 2015 #94

caucasian business week


SAXO BANK WARNS INVESTORS TO PRICE IN THE LIMITS OF “PLANNED ECONOMY” MODEL Saxo Bank, the online multi-asset trading and investment specialist, has published its Q2 outlook warning investors of the end to the current cycle of ”extend and pretend” as the planned economy model of the past eight years comes to breaking point. Saxo Bank Chief Economist Steen Jakobsen’s Q2 outlook for the global economy is dour. He believes that the current cycle of extend and pretend is nearing its end. For too long, policymakers and central banks have bought time by pumping asset markets with zero interest rates and QE, forcing investors to take greater risks on the lack of alternatives and allowing companies to boost share prices with huge buybacks, often with cheaply borrowed funds. From Q2, look for an increased risk for asset re-pricing and a period of zero or even negative returns. Predicting a rupture with the past, Steen Jakobsen, Chief Economist, Saxo Bank, said: “The global market is closer to the Soviet Union in 1989 in its political and economic structure than to a freely traded market. The inability to move all the printed money into the real economy remains the central issue and solution to the economic dilemma. The ECB’s move into negative rates in 2014 could turn to be the catalyst for change, especially since 35% of all European government debt is now trading at negative yield. ”If you are a company, it is difficult to keep sales volumes going up when your consumers are not taking part in the recovery. The conclusion should be that an economic system which does not allocate capital to the highest marginal cost of capital, and which continues to support the one per cent versus the 99 per cent ultimately comes full cycle to a point where the expected return of everything is zero again.” Against this backdrop, the bank publishes its outlook for the market and its key trading ideas for the next quarter. • COMMODITIES The collapse of the oil price in the last six months has stunned the global economy with the implications of a near 50% fall in the major benchmarks still unwinding says Ole Hansen, Saxo’s Head of Commodity Strategy. This environment has left the market open for some contango opportunities in Q2, expectations based on the premise that prices will rise in the future, especially in the US market. In Q2, focus will be on restoring a proper balance between supply and demand of the black stuff. Saxo Bank expects the gold price will continue to depend on the dollar, the direction of US bond yields and the timing of the first US rate hike with no major positive impact expected.

Trade 1: A bullish exposure to precious metals Trade 2: Shorting WTI crude • MACRO The tailwind from lower energy prices, a weaker euro, and an overall less weak economy result in a meaningful upward revision to euro area growth to 1.5% in 2015. “In the US, I maintain the outlook for growth of around 3% while I remain below-consensus with a 6.7% forecast for China”, says Mads Koefoed, Saxo Bank’s Head of Macro Strategy. ”There are plenty of event risks in Q2 waiting to raise volatility in the markets. The Greeks may find themselves with their backs against the wall again in late June and in the US, the FOMC is preparing for the first rate hike since 2004 with June and September the most obvious candidates.” adds Koefoed. Trade 1: Stay long European high-yield corporate bonds on ECB QE Trade 2: Buy long-term US Treasuries on FOMC rate-hike postponement • FX In currencies, Head of FX Strategy John Hardy is looking for potential mean reversion in the extremes of NZD strength and SEK weakness in Q2. Elsewhere, the USD rally looks set to continue in Q2, though the pace is likely to slow significantly after the incredible advance of the previous six months. And the JPY outlook is a big question mark, as USDJPY has remained in a technical limbo in late Q1, which is the end of Japan’s financial year. GBP may stay under pressure as the elections approach in May. Trade 1: Shorting NZD vs. AUD and USD Trade 2: Shorting GBPSEK • EQUITIES Peter Garnry, Saxo Bank’s Head of Equity Strategy expects capital to be flowing again into Europe, amid an improved economic outlook, with equities set for their best start since 1995 and are already up 14 per cent year-to-date. One of the assets that has already benefitted a lot from the current trajectory of monetary policies and improving macro conditions is real estate, which is up 20 per cent this year. Tailwind is the word for the European equities in Q2 and 2015 could likely be a déjà vu of US equities in 2013 when they rose 32 per cent. This means that European equities could return an additional 15 per cent on top of their impressive start to the year. Trade 1: Long Airbus – buying Airbus Trade 2: Long Colombia – buying the Global X MSCI Colombia 20 ETF


ast week, mixed US economic data led to a intra-week volatility for the US Dollar. Lower-than-expected final US GDP release for the fourthquarter of 2014 and fifth consecutive monthly decline in durable goods orders, dragged US Dollar lower while strong reading on consumer price inflation and new-home sales data extended some support to the greenback. Combination of diverging economic data led to varying expectations of an eventual interest rate hike by the Federal Reserve and weighed on the US Dollar. Nevertheless, tor the week the overall US Dollar Index (I.USDX) ended lower for second consecutive week. Going forward, a series of top-tier economic events scheduled at the beginning of a new month will keep investors engaged and help in determining the near-term direction in the Forex market. This week key highlights includes one of the most keenly watched economic indicator from the US, monthly jobs report, popularly known as Non-Farm payrolls data (NFP) and important PMI figures for the month of March. Here is a brief overview on some of the important marketmoving events scheduled during the course of the upcoming week. This week’s US economic calendar begin with the release of a forward-looking indicator, pending home sales, scheduled for release on Monday. Following an unexpected decline of 3.7% in December and lower-than-expected rise of 1.7% in January, for the month of February pending home sales is expected to show a rise of 0.5%. In the run-up to the NFP release, movement in the Forex market are likely to be influenced by the release of ISM manufacturing PMI data and ADP report, which shows the number of private-sector jobs addition and provide an early estimate for the government’s report. The ISM manufacturing index, scheduled for release on Wednesday, has witnessed a gradual decline since Dec. 2014. For the month of March, the index is expected to drop further and come-in at 52.5. Meanwhile, the ADP report, also scheduled for release on Wednesday, is expected to show an addition of 231,000 jobs in March, outpacing the number of new private sector jobs created in the previous two months. US jobs report is one of the most keenly watched economic data from the US and is also known for triggering substantial volatility in global financial markets. This week’s release would be no exception as strong labor market report will support the optimistic view of strong labor market recovery that might force the central bank to announce a rate-hike sooner rather than later. The

latest monthly employment report for the month of March is scheduled for release on Friday. With the number of new job additions surpassing consensus estimates for four consecutive months, economists remain optimistic over the pace of recovery in the US labor market. Consensus estimate the report to show an addition of 251,000 new jobs to the economy in March and the unemployment rate is also expected to hold steady at a seven-year low of 5.5%. Even as the timing of interest-rate hike by the US Fed remains uncertain, yet another stronger jobs report would now be enough to convince market of an earlier than expected rate hike, leading to an ultra-strong dollar in the near-term. Only a highly disappointing NFP reading, say below 200,000, coupled with recent softer economic data prints, now seems to seriously deteriorate the strong uptrend for the US Dollar. From the Euro-zone, investors will closely scrutinize the inflation data for the month of March and unemployment rate for the month of February, both scheduled for release on Tuesday. The flash version of Euro-zone CPI for the month of March is expected to remain subdued at -0.3% and the unemployment rate for the month of February is expected to remain stable at 11.2%. Any further deterioration in the inflation number would further shatter investor confidence in the common currency, Euro, which remains vulnerable to any negative weaker data from the region. Important data to watch from this week’s UK economic calendar include final GDP print for the fourth-quarter of 2014 and key PMI readings (manufacturing and construction PMI) for the month of March. UK GDP for the last quarter of 2014 is expected to match the second estimate of 0.5% and is likely to prove as a non-event for the market. UK manufacturing PMI data, scheduled on Wednesday, and Construction PMI data, scheduled for release on Thursday are this week’s key event that could possibly drive GBP pairs in the week ahead. Meanwhile, economic data that could have a material impact on the Australian Dollar (AUD), includes PMI figures for the month March from Australia’s largest trading partner, China. Chinese PMI figures for the month of March includes HSBC’s final and official manufacturing PMI, both scheduled for release on Wednesday. Chinese economic data, specially pertaining to manufacturing activity, always has a lasting effect on AUD. Hence, reading below 50 (as is expected), which reflects contraction in manufacturing activity, is likely to exert pressure on the already weak Australian Dollar.

April 6, 2015 #94





Turkey determined to build nuke-plant



n order to combat gender imbalance in politics and protect women from political isolation, more than 70 countries implemented gender quotas in elections. The quotas vary largely, governed by constitution and legislation as well as regulated by political parties and unions. Attitudes towards gender quotas are also unequivocal in the countries, where women are actively involved in politics; the topic is actively discussed in contemporary Georgia, as well. ACT decided to research, what residents of Tbilisi think concerning the implementation of gender quotas. We asked our respondents, whether they consider it necessary to regulate the minimal number of women on legislative level, in other words, use set gender quotas.

urkey is determined to build a nuclear power plant, which is important for the country, the Turkish news agency Anadolu reported April 3 with reference to the Minister of Energy and Natural Resources of Turkey Taner Yildiz. The minister said that currently there are all conditions and opportunities in Turkey for the construction of the nuclear power plant. He said that the construction of the nuclear power plant will demonstrate economic and political stability in Turkey.

Armenia continues efforts to facilitate doing IT businesses


As research results show, six out of ten residents of Tbilisi supports gender quotas on all levels: parliament, electoral roll of the political parties, and executive positions. However, analysis by gender revealed that only half of men (50%) approve of this principle, while majority of women support it on all levels (based on the graph above: 69%-66%-63% respectively). We were also wanted to know, what citizens of Tbilisi think of equal pay for men and women, who hold the same position. In this case, majority of women, as well as men (women - 86%, men – 73%, total – 80%) think that the law should ensure the equal pay for men and women. Residents of the capital hold executive government responsible in raising awareness of gender equality and related topics. The second most important institution to inform the society of gender issues is media. It should be noted that the importance of civil society is comparably insignificant and holds fourth position, after government, media and parliament: executive government – 31%, media – 28%, parliament – 16%, civil society – 12%, international organizations – 4%. The survey was conducted on 416 adult residents of Tbilisi, in March, 2015. The statistical error of the data does not exceed 4.9%.



in Egypt feel as comfortable as possible. “Among the decisions approved by the Ministry of Tourism is worth noting that in Egypt Russians will be able to pay in rubles. This is also done in the hope that the Russian guests could feel in our country as comfortable as possible, “- said the representative of the Ministry. Salem said that in the near future, the Ministry of Tourism will announce new measures to attract to the maximum number of Russian tourists. Recall, 9-10 February, Russian President Vladimir Putin visited Egypt and discussed a wide range of issues with his Egyptian counterpart Abdel Fattah al-Sisi. As for the rest of Russians in Egypt, in January control of Egypt for Migration issued a decree according to which from January 15 30 April tourists from Russia are exempt from paying the visa fee at the border. In addition, Egyptian authorities announced their readiness to move to settlements in rubles. It was noted that the situation in the fall of the Russian national currency such a move would be an incentive to support the tourist flow from Russia.


Azerbaijan’s Biggest Bank EU antitrust to push Raises Capital against Google’s unfair euters- International Bank of Azerbaijan competition - media (IBA), the largest and only state-owned bank in the oil-rich country, said on Thursday it has increased its charter capital to 890 million manats ($848 million) from 200 million manats. The decision was made at the shareholders’ meeting, the bank said in a statement. The bank decided to leave undistributed 25.5 million manats of its 64.5 million manats income earned in 2014, it added. The bank, 50.2 percent owned by Azerbaijan’s Ministry of Finance, holds 35 percent of banking assets in the oil-rich ex-Soviet country.

gyptian authorities are considering the possibility to extend the abolition of the visa regime for the collection of Russian tourists during the summer period, a spokesman of the Ministry of Tourism of Egypt Mohamed Salem, RIA “Novosti”. Due to the fact that the flow of tourists from Russia to Egypt at the end of the year fell by almost half the country’s authorities have decided to cancel the January to 15 30 April 2015, the fee for entry visas for 25 per person. According to the Egyptian authorities, thanks to this measure, the number of purchased in Russia tours to Egypt would grow to 20%. “Currently, active negotiations in order to extend this practice to a longer period, perhaps for the summer season,” – said Salem at the meeting with Russian journalists in the Egyptian resort of Sharm el-Sheikh. The official said that after visiting Egypt, Russian President Vladimir Putin, the government and especially the Ministry of Tourism are trying to do everything possible to precisely Russian tourists


caucasian business week

erevan continues facilitation of doing IT businesses, Vigen Sargsyan, head of the Armenian president’s administration, said Thursday as met with representatives of Russia’s flagship IT companies at a discussion held in the city’s AYB High School as part of IT Summit – 2015: Meeting of the Industry Leaders. “We attach special significance to IT sector and we are proud of the fact that the industry has dramatically grown over the last years, that many young people are in demand here and that many universities have particular curricula,” Sargsyan said. “We keep studying ways for creating favorable environment for doing IT businesses and we see connection between business and educational establishments.”

Russia’s plants to replace 50% of oil industry equipment imports ‘in 2-3 years’


ussia’s machine-building industry will substitute more than half of its imports of oil industry equipment in two to three years, Minister of Industry and Trade Denis Manturov has said. He made the statement at a meeting headed by Prime Minister Dmitry Medvedev on Friday, TASS reported. All federal ministries have prepared import substitution programs on time, and decisions on the programs’ implementation should be made by July 1, Medvedev said.

Azerbaijan seeks to join Asian Infrastructure Investment Bank


zerbaijan announced its support to China’s long-awaited plan to start the first new multilateral development lender. The Azerbaijani government has expressed interest in becoming a founding member of the Asian Infrastructure Investment Bank created to meet the growing financial needs of the Asian region for the development of infrastructure. The Finance Ministry officially announced on April 3 about its intention to join the AIIB, which already gained support of Russia, Australia, Egypt, Ukraine, the U.K., France, Switzerland, India, South Korea and the Philippines. The energy rich country’s financial body already informed the Chinese side about its intention to join the Chinese-created alternative to the World Bank and International Monetary Fund.


fter a five-year antitrust investigation the European Commission is to launch a new probe into Google in the next few weeks over concerns the company was using its web search monopoly unfairly to hurt competitors, according to media reports. The European Union’s top antitrust authority had asked companies that have complained in the past about unfair competition from Google, for permission to publish some confidential information, the Wall Street Journal reported on Wednesday. The move was regarded by antitrust experts as a strong indication that formal antitrust charges are being prepared. Search services such as comparison shopping sites, travel search engines and sites for finding local services are among those who complained. They claim Google has too much control over how Europeans access information over the internet.

Oil reverses losing streak as Iran nuclear talks extend beyond deadline


il prices started to rise following early losses on Wednesday as Iran and the six world powers failed to meet the nuclear agreement deadline. Brent is up at $55.77 a barrel, on doubts Iran can unlock its oil reserves after years of western sanctions. Negotiations with Iran to settle the dispute over its nuclear program extended beyond the Tuesday deadline, as all the parties moved closer to a deal but failed to agree on some crucial details such as the lifting of UN sanctions.

World could run out of minable gold in 20 yrs report


he explored reserves of gold, diamonds and zinc will be enough for 20 years of extraction, according media reports citing a Goldman Sachs research. The explored reserves of platinum, copper and nickel will last for 40 years. “The combination of very low concentrations of metals in the Earth’s crust, and very few highquality deposits, means some things are truly scarce,” Eugene King, European metals and mining analyst at Goldman Sachs, wrote in a recent research note quoted by Zero Hedge.

US oil production growth at record 100-yr high in 2014 - EIA


S crude production increased to 1.2 million barrels per day (mbpd) to 8.7 mbpd in 2014, the largest volume rise since 1900, the date the US Energy Information Administration started keeping records. This is the sixth consecutive year that the US, with the help of horizontal drilling and fracking, has increased crude production. In terms of the growth rate, US oil production was up 16.2 percent last year, the biggest increase since 1940 and the largest yearly rise in more than six decades.



caucasian business week

April 6, 2015 #94

April 6, 2015 #94

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



caucasian business week

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

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

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

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

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

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

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

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,

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




caucasian business week

April 6, 2015 #94