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February 4, 2019 - www.cbw.ge

#269

WEEK

Failure to Upload Photos Impotent Pension Agency

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Winter Tourism 2019 Overwhelming Problems at Resorts

Georgia and the World in 2019

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Myths about the Small and Medium Business Sectors in Georgia

The South Caucasus Economy in Figures – Europe still on the Horizon


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Government Development for Preventing Air Pollution Prime Minister of Georgia Mamuka Bakhtadze has presented the government’s plans to deal with air pollution in the country. Bakhtadze notes that different branches government, as well as local governments, will implement new regulations and policies against air pollution.

Georgian Railway expects Growth in Freight Turnover In 2018, rail freight turnover decreased again and amounted to about 10 million tons, however, CEO at the Georgian Railway David Peradze says that the declining trend slowed down and he expects freight turnover to grow in 2019.

Public Parking to be arranged in Kobi in 2019

Bank of Georgia transmits 3.7 million GEL shares to Kakha Kiknavelidze According to the statement published at London Stock Exchange (LSE), 68 000 shares of Bank of Georgia was transmitted to Kakha Kiknavelidze, the former director general of Bank of Georgia. Total market value of the shares constituted 1.08 million GBP, that is 3.7 million GEL.

Papuna Lezhava appointed as Vice President of National Bank of Georgia Papuna Lezhava has been appointed as the Vice President of National Bank of Georgia.

Georgia’s Positions advanced in Heritage Foundation 2019 Index of Economic Freedom

This year the Ministry of Infrastructure plans to arrange public parking in Kobi. The Minister of Infrastructure Maia Tskitishvili stated about it at the economic conference.

The Heritage Foundation’s 2019 Index of Economic Freedom indicates that Georgia has improved its position in the region by one place and is at the eighth position among 44 European countries while it is at the 16th position among 180 countries of the world with overall score of 75,9 points and the status of “Mostly Free”.

Giorgi Kobulia signed Memorandum of Cooperation with JSC Nenksra Hydro

Soundwave presents Live Session of Swede Musician Jay-Jay Johanson

Giorgi Kobulia, the Minister of Economy and Sustainable Development signed a Memorandum of Cooperation with the JSC Nenskra Hydro. The signing ceremony was held within the frames of the visit of Hak Soo Lee, the Chief Executive Officer of Korea Water Resources Corporation (K-water), the Investor Company of the Nenskra Hydropower Plant Project.

SOUNDWAVE – is a new wave of live music, which is presented by Likani and Velvet Session.

Tbilisi hosts the 2019 World Federation of Tourist Guides Association Convention in Partnership with AS Georgia-Dirsi The 18th World Federation of Tourist Guides Association (WFTGA) Convention is being held in Tbilisi.

Tbilisi Municipal Budget to spend 400 million GEL on Small and Medium Projects in 2019 Tbilisi City Hall plans to implement various infrastructural projects in various districts of Tbilisi. Total value of all projects makes up 400 million GEL. At today’s government meeting Tbilisi Mayor Kakha Kaladze noted that all projects will be fulfilled at the highest level.

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


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4 Febryary 4, 2019 #269

Failure to upload Photos

Impotent Pension Agency The authorities have enforced a contributory superannuation system on January 1, 2019. During 18 work days this year, more than 25,000 private companies were registered in the pension agency system, and more than 300,000 individual pension accounts were opened. According to Levan Surguladze, the head of the Pension Agency, the fund has already accumulated 20 million GEL. The figure is expected to grow, according to January indicators, to about 35 million GEL for 500,000 individual pension accounts. The Parliament adopted the law in July 2018, and was then doomed to postponement because the initial budget did not have the necessary financial resources for the pensions system reform. However, at the end of 2018, the authorities allocated the required resources for the pension agency, and the entire reform was approved by the agency director with 10-15 thousand GEL a month. At the end of 2018 and in the beginning of 2019, the pension fund held several meetings to discuss improving how it was perceived. These meetings were held only with businessmen, and these efforts were not sufficient to cast light on a lot of issues. As a result, we have a situation where the business sector, and our citizens have met the reform absolutely unprepared, and this factor damages the current, scant fragile trust in the pension system. According to an NDI report prepared in June-July 2018, 51% of Georgia citizens had no information about the oncoming pension system reform. “I have contacted the pension agency and nobody has answered the phone or even responded on the indicated internet address. 90% of this reform must be prepared anew,” businessman Revaz Vashakidze noted regarding the contributory superannuation system. “This system is not ready because nobody knows where these financial resources will go and who will be responsible if the funds required for reform and savings are embezzled,” he said and put forward an initiative to amend the Criminal Code to determine the responsibility of those persons who may embezzle the accumulated financial resources. “Who bears responsibility if the money is lost? I think this reform is being carried out in haste, with the aim to collect money from a weak private sector. This is a superficial approach and superficially prepared project” Vashakidze said. The founder of the Chirina company says that he does not object to the pension system reform, but the reformation should not be carried out in haste because there are a lot of questionable aspects. The founder of Tsivi Tskali, Gocha Ghaghashvili, says that the company cannot issue salaries because of pension fund enforcement. “Bookkeepers have attended information meetings, but there are a lot of unanswered questions,” he said. “We are facing problems with administrative issues, because we could not transfer salaries. It is unclear how to fill out forms, or where to transfer this 2%. My bookkeeper cannot issue salaries at this stage. There is some sheet to fill out, we did it, and it turned out we had made a mistake. My accountant has attended the information meetings. We suppose the problem with salary

payments will be settled, and everything will be resolved. We have time till the end of the month. We are still clarifying the situation, and we will have to pay a fine in case of a mistake. This is a mandatory tax. They summon bookkeepers for training, to instruct them about the details of this process. A guaranteed pension is wonderful, but nobody knows how this system will work. In Europe, people relax after retirement, they travel a lot. If we have the same results, that would be wonderful”, the businessman noted. The Employers’ Association also criticizes the pension reform implementation process. The organization, which represents 2,000 companies, says that a lot of technical problems arose after during law enforcement, and even today they do not know where to pay or how much to pay. The association proposes a suspension of the law until the issue is clarified. The new pension system has brought problems for distribution companies, too. The companies complain about both technical problems and even the nature and essence of the reform. This is an unconstitutional law, and it imposes additional taxes on a business. CBC Georgia founder Saba Kiknadze noted that certain problems arose regarding the administration of the tourism sector. “Employers are obliged to pay 2% of their salary. For those who live nearby, the payment procedures are much simpler, but if we eat something somewhere and pay in cash, even 5 GEL above 15 GEL, it is considered as income, and a due portion must be transferred to the pension agency. There are a lot of catastrophic details, and another separate company is required to administer these details. At the meeting, we met with the Minister of the Economy, and we raised this issue, and the Minister agreed to deliver this information to the Ministry of Finance. There are a lot of stupid things. This is a Post-Soviet, Byzantine, socialist system. Now we have to continue taxing, and determine which of these taxes go to the pension fund. This is unimaginable stupidity. This reform has entirely changed administration issues. We have always said that we had a few taxes, and now the situation has changed”, Saba Kiknadze said. Note that government officials, including the business ombudsman and the Minister of Economy, recognize that the PR campaign and information promotion campaign was to start much earlier. According to Business Ombudsman Irakli Lekvinadze, a lack of communication is a key problem regarding pension system reforms. “It was necessary during the due process of organization to provide detailed information to the small and medium business sectors before the implementation of the program,” Lekvinadze said. “January is the first month when pension payments were to be made. Despite the meetings, we think more communication was necessary for financiers and accountants to answer a lot of questions in various directions. As for other topics, time will show all the gaps in this process. We are ready to provide a reaction in due course to all registered problems”, Lekvinadze said. The Minister of Economy had announced a broad PR campaign at the end of 2018, but neither the campaign nor the PR was seen. “ We are ready in terms of our system, and in several days we will launch a strong campaign to inform and update our citizens about how the pension system will work. We are ready to launch this process on January 1. We had to start a PR campaign earlier, but we will compensate for this because we plan to carry out an intense campaign. The main thing is that the system is ready”, Kobulia noted. The Pension Agency has to conduct an intense PR campaign about pension system reforms, but even groups such as teachers and doctors lack necessary information. There is one more important problem: the deducting of 2% of the employee’s salary by the employer. This factor causes serious discontent among Georgian citizens. However, we should also mention that state-owned companies, including Georgian Public Broadcaster (GPB). The company management told its employees that 320,000 GEL from the company was used to pay annually for the health insurance of its staff, and will be paid to the pension fund, and the GPB has no other financial resources for serving insurance issues. Amid similar irresponsible activities by the authorities, it is not surprising that private companies may lower salaries for their employees. And the Pension Agency, which is a key actor in this process, seems impotent. The Pension Agency has not given its position regarding this irresponsible action by the GPB. And, meanwhile, the pension agency director will take 15,000 GEL salary, and the fate of employees from other state structures does not matter. How can they protect the rights of employees, when the Pension Agency website has not uploaded information about its employees, or their photos Should we entrust our billions of GEL to this agency for many years, while it has failed to even upload photos on its own website? By Merab Janiashvili


WINTER

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TOURISM 2019

OVERWHELMING

PROBLEMS

AT RESORTS The winter resort season has reached its peak at ski resorts. It is noteworthy that ski resorts greet the active tourism season with various infrastructural and residential problems. The Caucasus Business Week (CBW) has made inquiries as to how ski resorts have met the new season, and how their infrastructure is prepared to for provide valuable services? Gocha Gobronidze, a representative from the Bakuriani administrative unit, noted that Bakuriani has met the 2019 season with an unprecedented number of tourists. Currently, no detailed figures are available, but official indicators will be published after the winter season completion. CBW has learned from local residents that, this year, Bakuriani failed to professionally host an unprecedented inflow of tourists. Namely, the resort lacks hotels, restaurants, parking and cableways. Moreover, over the past 4 days, Bakuriani residents were left without water, though the problem has been resolved. He also assures CBW that cableways are absolutely ready to provide valuable services for tourists. According to Gocha Gobronidze, in the most active season there are continuous problems regarding parking in Bakuriani. Therefore, 3 parking lots were arranged in nearby Kokhtagora for about 500 vehicles. At the same time, there are 4 other parking places in Didveli for more than 500 vehicles, he noted. As for other infrastructural projects in this season – 4 new cableways were arranged, including a Gondola, Bubble, Bigell and Funicular. There are 8 skiing tracks with a length of 16 kilometer for all categories of skiing. Three new skiing tracks were arranged at Didveli, Kokhtagora and Mitarbi. An artificial snow making system was also installed at Didveli. The snowmaking process is ensured by 34 snow-spraying machines and 2 snow guns along the 2000 meter skiing track. Skiing is also available at resorts at night thanks to a high-tech colored illumination systems, the so-called LAD lamps. An additional attraction, the TOBOGAN, was installed at Didveli by the Slovak company Tatralift. The length of the track is 960 meters. In whole, there are about 300 hotels and 5 new restaurants at the resort. According to Gocha Gobronidze, at this stage internal roads are being rehabilitated in Bakuriani and the Bakuriani-Andezit motorway is being also constructed. Internal roads will be rehabilitated along 20 blind alleys by November 15, 2019, and the local budget will finance the works with 9,000 GEL. As for water supply and electricity issues, this year the new facilities and buildings will be supplied by the United Water Supply Company. The total investment value of the project is estimated at 4 million GEL. Energo-Pro Georgia is implementing a project to provide additional voltage to the facilities under construction. Ia Tabagari, the head of the Tour Operators Association also appraised the winter resort season. She explains that, from the very beginning, the resort was designed badly, and that’s why current problems cannot be resolved. For many years, various authorities used to sell land plots without any general design

requirements, and without any urban development plan. As a result, we have a similarly chaotic structures and an awful reality. Now, we have a space arrangement planning project, but it will be difficult to implement it considering the current reality. As for Gudauri, according to Tabagari, she has personally supervised the resort and confirmed that state regulations are not respected. “There is a parking lot several meters from the highway. Therefore, it is very difficult to reach the cableway. It is almost impossible to park a vehicle here on weekends. It is very dangerous that pedestrians walk on a frozen road together with vehicles, because there are no sidewalks. There are serious problems with security in Gudauri. People do not feel safe. Foreign visitors, who are accustomed to comfortable resorts, compare our conditions to those abroad. We have excellent snow slopes and tracks, a lot of cableways have been arranged, but there are many other details that must be improved,” Tabagari said. The problems with WCs have also remained unresolved for many years. Toilets do not exist, or they are damaged, or out of order. One may have the impression that the local municipality and the Ministry of Infrastructure fail to cooperate with each other, and they do not follow a joint strategy, she noted. “Several days ago, there, where 10 buildings located in the settlement, and tractors were cleaning the territory of snow from 5 o’clock to 10 o’clock in the morning. This is not normal. Visitors had to listen to the sound of tractors over the weekend. Moreover, icicles hang on the roofs, the roads to entrances are frozen. I do not know who specifically is responsible for these details, but these issues should be improved”, Tabagari pointed out. In response to how the country will manage to host the 2023 World Championship in Skiing and Freestyle Snowboarding, which is scheduled to be held in Bakuriani, Tabagari noted that she cannot answer this question. It will be difficult to overcome all the current shortcomings at ski resorts, she added. “If driving on the cableways is banned, free shuttles will move in, and this will be excellent. A lot of ski resorts in Europe practice this method. We have problems with parking spaces in Bakuriani and Gudauri. Ski Resorts Company tirelessly builds cableways and takes real efforts to make holidaymaking more comfortable. They plan to build a parking lot in a specific location. And in this situation, it turns out that the Ministry of Economy has sold or transmitted this specific location to another owner. Therefore, cooperation fails,” Tabagari pointed out. As for statistics, no dramatic changes have taken places compared to the previous year, though growth is evident. This year, the majority of tourists came from Russia. They find Georgia attractive thanks to geographical proximity and low prices. As for European tourists, they are not expected to return to Georgia, having experienced discomfort. ‘I would place emphasis on construction projects. The authorities invest money in order to build cableways and roads, and then an investor comes and builds residential buildings there, their construction is unmanageable.. Buildings have almost come onto the

skiing tracks. And then all these facilities are rented without any state regulations. The government does not collect a duty on tourism. Huge financial resources are spent, and the question is, what the country should expect in exchange. New hotels would employ a lot of citizens, and it would also pay taxes towards the state budget, and even these issues are not regulated. All these problems should be resolved in a comprehensive way,” Tabagari said. Tourism expert Giorgi Kvezereli explains that the resort season continues in Bakuriani and Gudauri, but with problems. The absence of infrastructure creates problems at settlements. Namely, there are no sidewalks, there are high prices, while quality standards are not respected. “It is the responsibility of both the Ministry of Infrastructure and the private sector to arrange infrastructure. For example, in Bakuriani, the space arrangement is chaotic. When the private sector obtains a building license, it should show more responsibility, because, frequently, buildings and various structures are raised immediately near and even the road. Moreover, they do not clean spaces in front of their buildings. One may go out and become injured”, Kvezereli said. It will be awful if our country hosts the 2023 World Championship in Snowboard with this infrastructure. This will be shameful, Kvezereli pointed out. Maia Tskitishvili, the Minister of Regional Development and Infrastructure, has also commented on the state of the winter season- namely the resort at Bakuriani. Bakuriani is not a small settlement any more, and it should be managed as an internationallevel resort. With the assistance of the World Bank, the transport potential of Bakuriani is being explored, and this is a very important component of resort development, Tskitishvili pointed out. “The New Year’s peak always outlines problems that at this resort. First of all, we should provide an accurate assessment of arrangement potential. When we try to direct more than 20,000 visitors through a narrow street constructed in the Soviet period, when this resort was small settlement, naturally, we end up with an unwanted situation. When the report is ready, we will be able to determine what we should do regarding municipal transport system development… because Bakuriani is not a small settlement, and it should be managed as an international-level resort,” Maia Tskitishvili noted. The report on transportation potential of Bakuriani will enable us to determine what size and how many buses will run at the resort, and will determine the range of routes and zones to be restricted for private transport, the Minister said. “We have many ongoing and upcoming projects in Bakuriani. This year, we started the rehabilitation of the central park and the road to the Mitarbi cableway, and the construction of a bypass road, expanding the Didveli parking lot, and designing the sewage system. We are also constructing Bakuriani-AndezitTsikhisjvari motorway”, Maia Tskitishvili said.


The South Caucasus Economy in Figures – Europe still on the Horizon

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According to a forecast by the International Monetary Fund (IMF), Georgia is expected to achieve the current level of economic development level of Eastern and Central European countries within 18 years. According to the IMF report, Georgia’s average economic growth indicator will be 5.8%. Consequently, it will take 18 years for Georgia’s GDP per capita to exceed 10,965 USD, and Georgia will come to the current level of Bulgaria, Hungary, Poland, Romania, Serbia and Turkey. It is interesting that under the IMF report, Kazakhstan will come up to the European level in 7 years, Turkmenistan in 10 years, Armenia in 23 years and Azerbaijan in 45 years.

GDP of Georgia, Azerbaijan and Armenia in 2018 According to Geostat, the national statistics service of Georgia, the pace of GDP growth in 2018 was at 4.8%. According to January-November indicators, Azerbaijan’s economy grew by 1%. It is noteworthy that in 2011-2018 the economic growth of Azerbaijan was at 7.7%. This indicates that the Azerbaijani economy has increased by only 0.9% a year. Specialists refer to unstable prices for oil and gas. As for Armenia, according to the Statistics Committee of Armenia, GDP growth in 2018 made up 5%. According to specialists, if not for the 2018 political developments (protest rallies, change of power), the figure would be much higher. It turns out that in January-March of 2018, the pace of economic growth in Armenia reached 10%, and, according to specialists, the figure could be even 11%. Economic Growth Paces of the countries in our region in 20032017 (based on IMF report): 2003 : Georgia - 11.2%; Armenia - 14.1%; Azerbaijan - 10.2% 2004: Georgia - 5.8%; Armenia - 10.5%; Azerbaijan - 9.3% 2005: Georgia - 9.6%; Armenia - 14.1%; Azerbaijan - 28% 2006: Georgia - 9.4%; Armenia - 13.2%; Azerbaijan - 32 2007: Georgia - 12.6%; Armenia - 13.7%; Azerbaijan - 25.5% 2008: Georgia - 2.4%; Armenia - 6.9%; Azerbaijan - 10.6% 2009: Georgia - 3.7%; Armenia - 14.2%; Azerbaijan - 9.4% 2010: Georgia - 6.2%; Armenia - 2.2%; Azerbaijan - 4.6% 2011: Georgia - 7.2%; Armenia - 4.7%; Azerbaijan - 1.6% 2012: Georgia - 6.4%; Armenia - 7.1%; Azerbaijan - 2.1% 2013: Georgia - 3.4%; Armenia - 3.3%; Azerbaijan - 5.9% 2014: Georgia - 4.6%; Armenia - 3.6%; Azerbaijan - 2.7% 2015: Georgia - 2.9%; Armenia - 3.3%; Azerbaijan - 0.6% 2016: Georgia - 2.8%; Armenia - 0.3%; Azerbaijan - 3.1% 2017: Georgia - 5%; Armenia - 7.5%; Azerbaijan - 0.1%

International ratings As a result of streamlined tax procedures, in the Ease of Doing Business rating, Azerbaijan ranked 25th, Armenia 41st and Georgia 6th. Azerbaijan has surpassed Armenia in the Best Countries for Doing Business rating by Forbes, where Azerbaijan ranked 70th, Armenia 81st and Georgia 44th. In the Economic Freedom rating by the Heritage Foundation, Georgia ranks 16th among 186 countries, Azerbaijan is 67th and Armenia is 44th.

Shadow Economy According to an IMF report published on its website in 2018, Georgia is a leading countries worldwide in terms of the ratio of the economy to the shadow economy. According to the report’s authors, Leandro Medina and Friedrich Schneider, the correlation of Georgia’s shadow economy to GDP exceeds 53%. According to the 1991-2015 indicators, the ratio of shadow economy in Turkey represents 31.38%, Russia – 38.42%, Armenia – 42.59% and Azerbaijan – 52.19%.

Social Inequality Indicator or Gini Coefficient in South Caucasus As is commonly known, the Gini coefficient measures a distribution of incomes among citizens. The higher a Gini coefficient, the larger the inequality. Regretfully, in this metric Georgia comes back only at the level of Russia (42.02) in the PostSoviet space. As for the South Caucasus, we have the following situation: According to the 2016 UN indicators, Georgia’s Gini coefficient is at the 40.0% percentile, Armenia – 31.5%, Azerbaijan 33.7%. It is interesting to note that, according to World Bank indicators in Georgia the middle class represents around 7% of the population, 32% are poor, 37% are moderately poor and 24% live below poverty level. According to the statistics specialist Soso Archvadze,the income of the rich citizens of Georgia exceeds the incomes of the poor citizens by a factor of 17.

Foreign Investments According to 2018 January-September indicators, in Armenia foreign direct investments (FDI) constituted 178 million USD. Over the past 25 years total FDI inflows do not exceed 10 billion USD. Specialists assert that this low activity is related to the complicated political situation in Armenia. There is a better situation in Georgia in terms of FDI inflows. According to Geostat, in January-September 2018, FDI inflows made up 998 million USD. Over the past 15 years, FDI inflows to Georgia exceeded 12.45 billion USD. It is clear that foreign investors demonstrate much more interest in Georgia than Armenia. Foreign investors show a higher degree of interest in Azerbaijan, namely in the hydrocarbon resources of the country. According to the government of Azerbaijan, in 2006-2017 years FDI inflows to Azerbaijan exceeded 44 billion USD. In January-September of 2018, FDI inflows to Azerbaijan exceeded 2.9 billion USD. According to the Central Bank of Azerbaijan, FDI inflows to the country in 2018 declined by 35.5% compared to 2017.

By Zura Khachapuridze


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In many poorly developed countries, people demonstrate one specific characteristic– they pick up a certain topic, and then this topic is widely discussed everywhere, while nobody understands the nature of this. This consideration refers to politicians, first of all. In the Post-Soviet space, which includes Georgia, small and medium business sectors are one of these sacred topics. All politicians, all economic experts or self-proclaimed ignorant experts talk about these topics. Our society refers to small and medium business sectors as an answer to all questions and a universal panacea. We are close to sanctifying these sectors. What can actually help to develop production? The development of small and medium businesses. What creates new employers? The Development of small and medium businesses. What attracts investments? You should have already guessed what… Politicians and experts perform ritual dances around the issue of small and medium businesses. The Authorities adopt laws, simplify taxes, introduce preferences and so on. In a word, even praying seems to be sufficient for the revival of small and medium business sectors and the Georgian economy, in general. However, the reality is different. Collective dances around the fire cannot resolve the problem, while small and medium businesses are represented only in restaurants, street peddlers and beauty salons. The point is that the belief that the small and medium business sectors can rescue the country from decades of poverty is a typical Post-Soviet myth, which has nothing in common with the reality. This stereotype has already become an inseparable part of public opinion, and it is repeated endlessly without analysis. The number one problem stems from the incorrect and superficial perception of the issue of small and medium businesses. This perception results in unachievable dreams in the countries like Georgia, where people repeat with a child’s impatience – “Small and medium businesses create 60% of jobs in Germany”. And this is true, and not only in Germany, but… what do we mean by small and medium business sectors? The point is that the majority of Georgian citizens have the psychology of a street merchant. Everything is small and thin in Georgia. Tbilisi is full of hundreds of microscopic automobile maintenance centers, small workshops for assembling and producing something, tiny trading outlets. In developed countries, one major high-technology plant works, and in Georgia there are thousands of small enterprises, where ignorant former peasants work without knowledge, qualifications or technological expertise. In Germany, 80% of small and medium business companies are not represented by beauty salons and bakeries, like Georgia – primarily, these are enterprises with about 150 employees, and they represent strong and high-technology plants and their value makes up tens of millions of EUR. They are smaller or medium sized compared to BMW or Siemens, but in Georgia, the investments of tens of millions of USD are required to build similar enterprises. Moreover, we also need a highly-qualified workforce and engineers, labor culture, sales, markets – and Georgia lacks all of these components. Another factor is less discussed - besides the aforementioned plants, the fulfillment of orders for major business is one of the key functions of small and medium business companies. For example, today in Munich there is a giant BMW plant and hundreds of small companies functions around it, which manufacture glass, rubber, spare parts, engines and thousands of other details, without which an automobile could not be assembled. There are also a lot of developed companies in Munich which build houses and apartments for workers at BMW and related companies; restaurants, where the workers of BMW and related companies have meals, beauty salons, schools, kindergartens, supermarkets and so on. In a word, the majority of small and medium business companies are directly affixed to giant corporations, which acts as a locomotive and without which nothing would be created. And the consideration that “80% are represented by small and medium business companies” should not let someone make the erroneous conclusions that if BMW factory closes tomorrow, 80% of these small and medium companies will disappear like last year’s snow. Only restaurants, beauty salons and several small workshops, and a lot of fair sellers will remain, as its happens in Georgia. You will find no country has flourished thanks to the small and medium business sectors. In Georgia, we keep making useless conclusions over the past 20 years, and the time has come to understand that, naturally, small and medium business sectors play a significant role, but only major business create an economy – major plants, major hotels, giant HPPs, huge farms with tens and hundreds of hectares, major investments in agriculture. Today, business should strive for maximal concentration and enlargement, and only this method will stimulate the development of small and medium business sectors, not the inverse. And if we continue to pray and dance around the fire, nothing will change anyway.

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Nutsa Kistauri- "I Believe that in the Coming Years, most Communication will be Automated between Intelligent Devices" Interview with Head of PR at Georgian Co-Investment Fund Nutsa Kistauri. Tell us about how you got into the field of marketing, and what factors played an important role in choosing this profession? I chose to get a BA in Global Communications with a minor in Social Psychology. These studies gave me the opportunity to identify, connect, share, relate and mobilize across geographic, political, economic, social and cultural divides, which is drastically important for my personal and professional growth. It all started with my interest in international marketing, and it’s value proposition allows for a whole bundle of benefits which the firm promises to deliver, not just the benefits of the product itself. In regards to technological changes, what challenges are you facing as a marketer? Web cultures have been transforming marketing in ways that we have so far had little opportunity to analyse or understand. The major, defining characteristic of these changes has been the increasing involvement of users in the creation of content itself. Terms like social-network sites, user-generated content, me-media and many others are becoming familiar to use when conceptualizing a terminology that will be used in future for such changes. What has changed in the last 5 years in the field, and what changes are expected now? I believe that in the coming years, most communication will be automated between intelligent devices. Humans will intervene in only a tiny fraction of that flow of

in communication. Most of it will go on unnoticed and ultimately unknown by humans. What important features should a marketing manager hold their focus on, and what are their roles in an organization? • Customer-orientation skills– as the market consists of people with wants and needs, money to spend and different degrees of willingness to spend money on those wants and needs; • Marketing Research skill; • Marketing Planning ability; • Ability to analyze customer satisfaction; What steps did you take as an organization to catch up with new trends and use innovative approaches in the field of marketing?

One should be active every single time, and oriented to work towards self-development and self-growth. That’s the most important factor for every job. One word that describes your work. Active. The most useful advice you’ve ever received in life? “Do everything you can to understand your target audience. The better you understand what reality looks like through their eyes, the easier it will be for you to make the right marketing decisions.“


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Business News Adjara Group plans to open Rooms Hotel in New-York

and Bekar Mikaberidze, special representative of GCCI in China.

Negotiations are underway about opening Rooms Hotel in New York.In the case of New York, the group will be a co-owner, rather then franchiser. Date of launch is unknown for now.

Rauscedo Vine Seedling Farm to share its Experience to Georgian Winegrowers Organized by Green Solutions company, on Jnanuary 30, the worldwide distinguished vine seedling farm ROUSCADO will hold a meeting with Georgian winegrowers and winemakers. At the meeting the company representatives will introduce virus-free Georgian vine seedlings and update Georgian winegrowers about the breeding rules. m² Issues 30 million USD Bonds m² Real Estate development company has issued 30 million USD bonds. The m² portfolio comprises m² Construction College – Construct 2 Submission is Now Open

Stamba received People’s Choice Prize at Ahead Global Awards

“Construction 2” is a joint project of “m² real estate” and Ministry of Education, Science, Culture and Sport of Georgia, with full investment worth of 3 million GEL.

Hotel Stamba became the owner of one of the most prestigious prizes of the hotel industry worldwide.

commercial, office and storehouse spaces. Zurab Pagava: Location of Georgia Palace plays

The US Library of Congress to be provided with Georgian Books

Revenue from Exported Georgian Men Suits exceeded 11 Million USD Official statistics say that in 2018 men’s suits worth $ 11 million were exported from Georgia. Avto Namicheishvili appointed as Deputy CEO of CGEO’s Water Utility and Renewable Energy Businesses Staring from 28 January 2019, Avto Namicheishvili assumes the role of interim CEO of the Group’s Water Utility and Renewable Energy businesses, in addition to his deputy CEO role at Georgia Capital.

Director of National Library, George Kekelidze and Director of the Library of Congress, Carla Heiden met with each other in Washington. Georgian Business House to open in China Georgian Business House for Belt and Road unveiled in the Chinese city of Guanjou, with the support of Georgian Chamber of Commerce and Industry, local self-government of Guanjou

Special Role in Decreasing Risks of Cardiovascular Deceases According to researches, deceases of heart, brain, aorta, and peripheral vascular system are the largest reason behind mortality and invalidity in the entire world. However researches exist confirming that this statistics can be decreased by 50% with the help of preventive and rehabilitation activities.


World News 10 Febryary 4, 2019 #269

The World Health Organisation is in Crisis – and at a Crossroads The World Health Organisation (WHO) has just embarked up a year-long election to find a new Director-General to run the 8,000 person organisation.

Google CEO: Emerging Europe has Enormous Innovative Potential Health Agency spends more on Travel than AIDS Dr. Margaret Chan, director-general of the World Health Organization, traveled to Guinea earlier this month to join the country’s president in celebrating the world’s first Ebola vaccine.

Central and Eastern Europe has huge potential to development an innovative economy, Google CEO Sundar Pichai said during a visit to the Polish capital Warsaw on January 21.

Azeri Energy Company SOCAR acquires EWE Turkey Azeri state energy company SOCAR has decided to acquire the energy business of Germany’s EWE in Turkey, taking part in the natural gas distribution business in the country for the first time.

Belarus to improve Investment Climate with EU and World Bank Support Turkey Initially bought about 292,000 Tonnes Wheat in Tenders Turkey’s state grain board TMO has initially purchased about 292,000 tonnes of wheat in a series of tenders which closed on Wednesday.

Improving the business environment and strengthening entrepreneurship in Belarus are the main goals of two advisory programmes on private sector development, launched on January 31 by the European Union and the World Bank Group.

EU to increase Financial Assistance to Armenia The European Union will increase the amount of financial assistance to Armenia, Johannes Hahn, EU Commissioner for Enlargement and Neighborhood Policy, said at a press conference today in Yerevan.

World’s Biggest Pension Fund reports Record US$136b Loss Amid Market Turmoil Facebook to open Content Review Centre in Bulgaria The world’s largest social network, Facebook, has announced plans to open a content review centre in the Bulgarian capital Sofia. The media giant will work together with Telus International, one of the largest outsourcing companies in Bulgaria.

The world's biggest pension fund posted a record loss after a global equity rout last quarter pummeled an asset class that made up about half of its investments.


Georgia and the World in 2019 11 February 4, 2019 #269

On January 29-30, an economic conference ‘Georgia and the World 2019’ was held at the Tbilisi Technology Park under the title of the annual edition of the British Economist, the World 2019 and with the financial support of the Ministry of Economy and Sustainable Development. Prime Minister of Georgia, Mamuka Bakhtadze opened the event.

Natia Turnava talked about Energy Sector Development Strategy Ivane Machavariani: From February 15, Business will receive VAT Overflow Automatically

State-owned Companies Hinder Agriculture Sector Development

Maia Tskitishvili: "Within 2023 the 327 km New International Highway will be exploited"

Henrik Hololei:“Georgia is the leading aviation country in Eastern Partnership”

Georgia to Place Customs Documents into Blockchain System

Mamuka Bakhtadze: We will never be Able to put Georgia in the Number of Countries with Developed Economies, if we do not carry out Largescale Investments in the Education Sector

Asian Development Bank to Finance 700 Million USD of New Projects

Natia Turnava Discussed Benefits of HPP Cascade Construction in Pankisi

Government to arrange Greenery Cluster in Imereti Region

Mamuka Bakhtadze: We are doing everything to achieve Inclusive Growth in Georgia, the Kind of Economic Growth that will benefit Well-being of each Citizen

Henrik Hololei: “Transport and Mobility, through delivering better links are also Lifeblood for our Economies. These links enhance not only Economic Development but also augments People-toPeople links.”.

Bakhmaro to gain 5000 New Accommodation Places

EU offers to establish a Road Safety Regional Center in Georgia

Considerations as if HPPs Construction is Detrimental for Georgia are Ungrounded


12 Febryary 4, 2019 #269

Profile for Caucasian Business Week

Caucasus Business week #269  

1. #GeorgianRailway expects #Growth in Freight #Turnover 2. #GiorgiKobulia signed #Memorandum of Cooperation with JSC #Nenksra Hydro 3. Fail...

Caucasus Business week #269  

1. #GeorgianRailway expects #Growth in Freight #Turnover 2. #GiorgiKobulia signed #Memorandum of Cooperation with JSC #Nenksra Hydro 3. Fail...

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