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Soap Opera The Fate of GEL
Ten New Airlines entered the Georgian Market in 2018 – Air Market analysis
Georgia will adopt a New Law for the Power Sector Law by Late August
Wine Industry in Figures – The World and Georgia
GEL Exchange rate Volatility Drive Growth in Prices May 2019 recorded 4.7% Annual Inflation Rate
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Exported Wine Income increased by 16% In January-May 2019, 33,6 milion bottles (0,75l) of wine has been exported to 39 countries worldwide, that is 6% higher than the similar data of 2018.
Annual Inflation Rate mainly influenced by Price Changes in Food and Beverages The annual inflation rate was mainly influenced by price changes for the following groups: Food and non-alcoholic beverages.
Factors that Determine Unequal Incomes in Georgia - Response by EBRD’s Chief Economist Frequently, the gender or residential place of a specific person preconditions low and unequal incomes, EBRD’s chief economist Sergei Guriev told the Forbes Week.
Driving Licenses to become Obligatory for Scooter and Light Quad Drivers Scooter and light quad drivers will be obliged to take driving licenses, the bill of amendments to the Law on Road Traffic reads.
Georgian Student to start Working as a Software Engineer on eBay Fourth-year Georgian student, Ana Gurgenidze has been hired in eBay. Recently, she is studying at the Free University of Tbilisi on the faculty of Mathematics and Computer Science – MACS. One year ago, she sent an application in response to the vacancy announced by eBay.
Government to attract New Investor for Tskhrajvari Resort Development Tkibuli city hall representatives told BM.Ge that at the end of 2018 Tkibuli Council approved a plan for regualating the development of tourism-recreational complex territory of Tskhrajvari resort.
Commercial banks’ Assets amounted to 40 Billion GEL Policy that Georgia should follow regarding HPPs – Austrian Ambassador answers We have a a lot of exmaples of collisions and conflicts regarding hydro power plants, including Nenskra HPP and Khadori HPP. Moreover, investors have spent millions of USD and their problems only grow. What messages do similar investor receive? On the one hand, you invite them to the country, on the other hand, we cannot ensure safe and peaceful environment. What is the golden mean?
French Magazine named Levan Gelbakhiani as one of the Most Talented Stars of Festival De Cannes And Then We Danced was screened within the category called Director's Fortnight by Levan Akin.
In the reporting period, the total volume of assets of Georgian commercial banks increased by GEL 590 million and 1, 5% and amounted to GEL 40 billion.
Rehabilitation of Orbeliani Square completed Rehabilitation of the Orbeliani square has been completed in the framework of the project "New Tiflis" major rehabilitation program.
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;
Ukrainian Low-cost SkyUp Airlines starts operating at Kutaisi International Airport Ukrainian lawcost airlines SkyUp Airlines launched first flights to Odesa and Kharkiv from Kutaisi International Airport starting June 4, announces the United Airports of Georgia. ‘’We are glad that one more low-cost airline company has
started operations in Kutaisi airport. Our strategy is to offer as many low-cost flights as possible from Kutaisi airport so that many tourists have the opportunity to come from different countries and also our citizens to have more chances to fly in Europe at affordable prices”,
said CEO of the United Airports of Georgia Giorgi Chogovadze. SkyUp Airlines first appeared on the Georgian market in summer 2018
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with direct flights from Batumi International Airport. Later the company also launched flights from Tbilisi International Airport.
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Soap Opera - The Fate of GEL The GEL exchange rate is beating new records – even regarding stabilization and strengthening, the GEL never returns to the position from before it started depreciating. Any new exchange rate represents only a 3-4 month break prior to a new devaluation. A lot of reasons are given, starting from serving external debts, ending with the fatal influence of the Turkish and Russian currencies. We already know by heart how the Turkish Lira and Russian Ruble have an influence. We permanently hear continuous references to these currencies, and the Georgian authorities uses this factor as a justification – “Turkey and Russia are Guilty. We could do nothing.” Nobody realizes that it is an abnormal situation when, through so many years, this country stubbornly relies on other currencies – anyway, this doesn’t paint the Georgian authorities in a good light. The astonished faces of high-ranking officials and the same texts cause a smile – “The fundamental factors are in order. Therefore, the GEL exchange rate should be stable.” Yes, the GEL exchange rate should be stable, but it is not. Seemingly, the GEL knows nothing about these amazing “fundamental factors”. However, it would not be correct to accuse the Government of everything. Naturally, the authorities should bear their own responsibilities because of declining investment inflows, failed major energy projects, a deteriorating business climate and the nonconsecutive spending of budget funds. However, there is the most important thing, the most fundamental factor behind continuous devaluation – a weak economy and almost zero production. In the 21st century the industry lost its importance that it had 30-40 years ago, and therefore it is possible to develop an economy through the tertiary sector – finances, services, tourism, transit, and so on. However, the reality shows that even in this age of high technology and software, developed economies are mainly created by the old industries – metallurgy, machine building, household equipment, and so on. In one word, the traditional industries of the 20th century. Europe and the USA have taken the
main part of their production to Asian countries, but it is wrong to think that they do not manufacture anything and only provide high technologies and services. For example, the automobile industry, a traditional sector of the economy, remains the cornerstone of developed economies even today. Elementary statistics proves this – China is the world’s major vehicle manufacturer (23.5 million vehicles), but the EU and the USA also record impressive figures – 16.9 million and 8 million vehicles a year. The same tendencies are reported in other fields. Despite China’s quantitative leadership, both in Europe and theUSA, factories keep working and create products worth hundreds of millions of USD. Moreover, the countries entirely associated with services, trade, finances and logistics, are also major manufacturers. For example, Singapore’s Hi-Tech exports exceed 136 billion USD a year, and total exports exceed 320 billion USD. Hong Kong’s annual exports surpasses 135 billion USD. And naturally, Europe also relies on traditional industry. For example, tiny Slovenia, with 2.5 million residents, exports products worth 28 billion USD a year, while annual exports from Latvia, with 1.9 million persons, make up 16 billion USD. These figures illustrate how Georgia remains in stagnation, with 3 billion USD of exports, which mainly consists of vehicle re-exports, and the export of traditional products to Russia, the market, which may be closed in a blink. However, this is not the only problem, - these confusing figures seem more pessimistic, meaning that domestic industry largely depends on imports. “Domestic” dairy products entirely consist of imported raw materials – starting with milk powder, ending with packing materials. Domestic chocolate in Georgia is made of Belgian materials, and this component considerably affects the formation of the prime costs. Even the domestic wine basically employs foreign packing materials. In practice, there is no production in Georgia that does not primarily use imported resources: furniture production – foreign wooden materials, metallurgy – foreign raw materials, cement so on.
Naturally, there are other sources for foreign currency inflow, besides industrial exports. For example, the tourism sector, which attracts 3-4 billion USD a year. This resource suffices to fix the GEL at 2.8 point against the USD, and not at 280.0. But the practice shows us that countries that mainly live off of tourism sector incomes are much smaller than Georgia – Cyprus (650,000), Montenegro (620,000), Malta (400,000), and so on. The countries with comparatively bigger population where an essential role of the tourism sector develop an industrial sector anyway. For example, Greece, with 11 million residents, exports 30 billion USD products a year. The country sells not only orange and olive oil, but also oil products, medicine, construction materials, steel pipes, ships and vehicles. Consequently, Georgia cannot make progress without serious industry, and this direction cannot be replaced by either tourism or transit or the power sector or anything else. Therefore, the country faces a serious challenge – the development of industrial production. Georgia will cope with this stagnation if the whole country changes from top to toe. The government alone is not able to achieve this goal. This is the responsibility of generations. Therefore, let’s have some popcorn – the adventure show “The Fate of the GEL” will still run a long time. By Tengiz Ablotia
Ten New Airlines entered the Georgian Market in 2018 – Air Market analysis The Fly Emirates Arab airline is interested in launching operations in Georgia. Experts assert that the entrance of this airline will bring a huge, positive, popularizing effect on Georgia. The Caucasus Business Week (CBW) has inquired as to how many airlines entered the Georgian market over the past year, and what is the current situation of Georgia’s air market. According to Georgian Airports Association, over the past year, the following airlines entered the Georgian market: Ukrainian Sky Up, Romanian Tarom, the Saudi Lynas , Jazira Arways, Salam Air, Air France, Air Malta, Air Korea, Ellinair, Uzbekistan Airways, and Red Wings. The Air Market expert Iase Zautashvili explains that international airlines have shown growing interest in Georgia. It is important how the country meets this growing tendency. According to Zautashvili, the Tbilisi International Airport’s arrival terminal cannot stand up to criticism. This is a very small and inconvenient place, and it cannot serve 3-4 flights simultaneously. “And I do not mention tourists who visit Georgia for transit purposes. Tbilisi Airport doesn’t work for them,” Zautashvili said. The same situation is reported in Batumi airport, which is cannot satisfy any standards, and it should be closed. As for Kutaisi Airport, which remains on the state balance, it has made a lot of progress in 2.5 years. Passenger turnover rose by 48-50%. Today, Kutaisi International Airport should mainly serve low-cost airlines, but in reality, it has become the banner of Wizz Air, while other low-cost airlines perform flights from Tbilisi International Airport, he said. “And we face a major challenge. Low-cost airlines mainly use secondary airports. Consequently, they receive low-quality services, and this factor is reflected in extremely low-cost tickets. When I fly from Tbilisi, I’m more comfortable. Consequently, I pay more for my ticket. Today, this difference has disappeared because of several factors: 1. Low-cost airlines fly to and from Tbilisi International Airport. 2)
In low-cost airlines, for example Wizz Air, on season (MayOctober), you will never be able to buy a cheap ticket. What does this mean? This means we either cheat each other, or they swindle us, as consumers. These low-cost companies receive subsidies from the state budget on an annual basis. In exchange, instead of a supply of cheap tickets, they offer high prices for Kutaisi. Genuinely cheap companies like Pobeda and others use Tbilisi International Airport’s services and, consequently, offer unhealthy competition to ordinary low-cost companies. As a result, we have full-on disorder,” Zautashvili noted. TAV Georgia, operator of Tbilisi and Batumi International Airports, answers questions provided by Caucasus Business Week (CBW). A lot of experts criticize TAV
Based on an agreement between TAV Georgia and the Georgian Government signed regarding the promoting of the national airline, a special offer was prepared for Georgian Airways, with 50-80% discounts on required services. Moreover, under the same agreement, Georgian Airways was allowed to provide land services for their airplanes and passengers, and this component has considerably reduced their production expenses. Starting in 2017, the Georgian airline has been using a special tariff for operating its airplanes, and this tariff offered 20% discount. At the same time, regarding the promotion of domestic flights, starting 2010 a special tariff was introduced for companies which
Georgia as they are accused of creating an uncompetitive environment atmosphere and introduce high prices, especially if it does not cooperate with domestic airlines for development. TAV Georgia explains that, after they entered the Georgian air market, TAV Georgia prioritized transforming Georgia into an aviation hub of the Caucasus region. Therefore, from the very conceptualization of the project, the company offered special preferences to Georgian airlines based in Tbilisi and Batumi International Airports. “It should be noted that Georgian Airways ranks first in number of transported passengers in Tbilisi. Only a strong national airline is able to transform the country into a regional aviation hub. Consequently, based on the Competition Law, we do our best to promote the development of national airlines”, the TAV Georgia representatives noted.
perform domestic flights that enable Georgian Airway to essentially reduce expenses on domestic flights. At this stage, Georgian Airway is only a Tbilisibased national airline, for which TAV Georgia lowered the passenger duty from 24 USD to 19 USD. These preferential tariffs will be applied to any Tbilisi-based national airline which handle more than 100,000 passengers. In response to the question of whether operation of low-cost and high-cost airlines at Tbilisi International Airport shapes unhealthy competition, including whether high-budget airlines will refuse to perform flights from Tbilisi International Airport because of low-cost airlines operate in the same airport, and TAV Georgia representatives explained that today, 10 lowcost airlines operate at Tbilisi International Airport, and their
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destination in several cases repeat the destination of high-budget airlines. Consequently, TAV Georgia states that their key objective is to offer several options to any type of passengers, and then let passengers choose airlines. TAV Georgia completely follows wider market rules. Therefore, no airline can keep a monopoly on this or that direction. We stay open for all interested airlines, be it low-cost or high-budget or national airlines which are ready to perform flights from Tbilisi/ Batumi, or to any destination”, TAV Georgia representatives said. In response to the question of whether there are plans to lower duty so that international airlines that refuse to enter the Georgian market, like the Irish Ryanair, did so because of high duties, and the strategy tailored to one specific airline, Turkish Airlines, TAV Georgia representatives said that besides Turkish Airlines, 50 other airlines operate at Tbilisi International Airport and, for many years, they employed TAV Georgia’s services and perform flights on a continuous regime. “Moreover, they increase the frequency of flights on season, add new directions. So far, no airline has expressed claims against TAV Georgia because of duties or service supply. All airlines enjoy a joint tariff system for passenger duties. We are ready to conduct negotiations with any airline that wants to launch flights to Tbilisi and Batumi international airports”, TAV Georgian representatives pointed out.
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Irina Milorava: "Georgia will adopt a New Law for the Power Sector Law by Late August" The current challenges in Georgia’s power sector, and how to become an energy self-sufficient country – Irina Milorava, head of the Georgian National Energy and Water Supply Regulatory Commission (GNERC), has answered these and several other interesting questions for the TV Program Business Partner. First of all, Georgia is expected to adopt a new law on Power Sector by late August. The bill has been submitted to the parliament, Milorava noted. “We assumed obligations with the energy community regarding the adoption of this law, and launch necessary reforms to help start forming the appropriate institutions and platforms. This new law will lead the country towards a very interesting model; namely, hourly market tariffs. Today, we are accustomed to an electricity deficit, or a systemic disorder balanced through generation. When talking about market liberalization and development of competitive market, it presupposes that consumers become active participants in this market, and they receive certain benefits from the market. A deeper analysis of the the objective of this model. Electricity is a competitive product in itself. Today about 90 generation facilities operate on the market is necessary, and there are opportunities for electricity imports from neighboring countries. And the question is: why should we fix the tariff in a competitive market? And soon, consumers will enter the market themselves and they will be able to communicate with generation facilities. Last year, two consumers appeared on the wholesale market. Since May 1, 2019, ten new consumers appeared, and the process continues”, Milorava noted. The GNERC chairman has also discussed energy security challenges, and noted that a country with rich hydro resources
should not refuse to develop hydroelectric generation, because this is a cheaper resource compared to alternative resources. As reported, on May 3, the GNERC director submitted the 2018 report to the Parliament, and declared that Georgia’s dependence on electricity imports are dramatically growing, and domestic generation development is the only mechanism to neutralize the growth of electricity imports. The power sector is not the only component of energy independence. Therefore, the country should make us of all energy resources, even more so when the country is rich with these resources, and all projects should be implemented in compliance with the highest environmental protection standards, Milorava said. “The energy sector is one of the important components of the economy, not only energy independence, but also national independence, in general. We remember bad examples of what energy dependence can cause. Therefore, this is the primary task. I have stressed in the parliament that energy imports have been growing dramatically. Imports have tripled over the past 2 years, and this is not a small figure. The direct mechanism for neutralizing imports-dependence is to develop domestic generation. It is unimaginable to seek alternatives. What should a country with rich hydroelectric resources develop? Naturally, hydroelectric resources. I have frequently heard about the development of solar and wind resources, but we should not refuse developing hydro resources, because this is a cheaper resource than the alternatives. When talking about developing generation, I imply that all projects must reach environmental standards”, Milorava said.
In response to the question of how hydro resources should be developed when local residents frequently protest against the implementation of hydro projects, Milorava noted that the authorities should comprehensively explain to the population what benefits will be derived from hydro power projects, and all objections will disappear. “I believe the main problem comes from a miscommunication with our citizens. If we manage to provide the correct explanations about this or that project for a specific region, village, country, power sector, I am sure all objections will disappear. We had a similar example in Batumi tourism zone. Energo Pro Georgia could not rehabilitate the transmission line because of resistance from local residents. The reason was miscommunication. Therefore, we provided intense cooperation with local and national government. The company representatives started door-to-door explanations to detail why it was necessary to expand this network. These people think they hinder a company. In reality, tens and hundreds of people stand behind each company when they cannot receive electricity. You should visit them as many times as necessary. We were facing serious problems, but now the scales are more balanced”, Irina Milorava said. The GNERC chairwoman also explains the reasons behind the breakdowns that took place several days ago on Zhvania Square in Tbilisi, and noted that water and energy supplier companies bear full responsibility for the quality of the provided services. If they fail to satisfy certain quality indicators determined by the GNERC, their tariffs will be negatively affected. As for the breakdown on Zhvania Square, the regulator will explore the case in detail.
“The companies will bear responsibility for the quality of services and products. They are licensed companies, and the nature and essence of their license is that they are the only bodies responsible for the supply of high-quality products. The situation in Tbilisi took place in the zone owned by Georgian Water and Power (GWP) and, naturally, our commission will explore this issue. We maintain constant communication with company managers, and they will have to submit detailed information about the reasons behind the repeated breakdowns the next day”, Milorava noted. GWP has almost tripled investments when compared to previous years, but the case of Zhvania Square shows that these efforts do not suffice, and investments should increase. In general, water and power supply companies are interested in improving the quality of services and minimize the number of breakdowns, Milorava said. “We supervise breakdowns in an online regime. We have developed a special software to detect breakdown locations, determine repair times, how many clients are left without water, and so on. These cases will not be finished only by explorations. The trend of breakdowns will affect company tariffs. In response to certain actions, we tell the companies that we want to see a positive trend. Therefore, we set positive target indicators for these companies. If these indicators are not met, this means that significant funds will be deducted from company revenues when calculating the next tariff. Therefore, this factor is an additional stimulus for companies to fulfill not only their obligations regarding supply, but also to reduce the number of similar breakdowns”, Irina Milorava said.
Wine Industry in Figures – The World and Georgia In 2018, winemakers bottled 292.3 million hectoliters, or 39 billion bottles of wine. According to the International Organization of Wine and Vine (OIV), Italy ranks first among the world top 5 wine production countries. On the Apennine Peninsula, 310,000 companies and 46,000 winemakers have engaged in winemaking, and they bottled 54.8 million hectoliters of wine in 2018, 19% of the world’s wine production. French winemakers have produced 49.1 million hectoliters of wine (17% in global wine production). Spain ranks third, with 44.4 million hectoliters (15%). The USA ranks fourth with 23.9 million hectoliters (8%), and Argentina is the fifth greatest winemaking country with 14.5 million hectoliters (5%). These countries are top wine exporters, too, but France is the leader in terms of revenues from wine exports. In 2018, France sold 9.3 billion USD wines, Italy – 6.1 billion USD, Spain – 2.9 billion USD, Australia – 1.8 billion USD, Chile – 1.7 billion USD. On the whole, wine worth 31.3 billion USD were sold worldwide in 2018. According to OIV, the highest rate of wine consumption was recorded in the USA – 33 million hectoliters. France ranks second in terms of wine consumption, with 26.8 million hectoliters. It is interesting that Portugal is a leading country in terms of wine consumption per capita. One Portuguese person drinks 62.2 liters of wine a year on average. The French rank second, with 50.2 liters. The Italian rank third, with 43.6 liters. As for the space of vineyards worldwide - according to the FAO reports, across the world, vineyards
cover 7.4-million-hectares of space. The largest area of vineyards is recorded in Spain. The total space of vineyards in Spain make up 969,000 hectares. China ranks second, with 875,000 hectares. France comes third, with 789,000 hectares. Italy is fourth, with 702,000 hectares, and Turkey is fifth with 448 000 hectares. It is interesting that such a small country as Moldova ranks 15th in terms of vineyard space (147,000 hectares), and ranks ahead of Australia, Russia, Greece, Brazil, Hungary, Bulgaria and Mexico. As for wine production, Moldova ranks 19th with 1.9 million hectoliter of annual production. As for wine importers, Germany tops the list with 15.5 million hectoliters. Great Britain comes second, with 13.3 million hectoliters. The USA ranks third, with 11.5 million hectoliters. France comes fourth, with 6.9 million hectoliters. China ranks fifth, with 6.2 million hectoliters of wine imports. An interesting fact is that the USA recorded the highest expenses on wine. Experts have ascertained that this country places a focus on the import of expensive wines. As for Georgia, in 2018, Georgia exported 86.2 million bottles of wine to 53 countries and this is a record figure over the past 30 years. The year on year growth made up 13%, compared to 2017. The total value of the 2018 wine exports amounted to 203 million USD. In 2018, Georgia exported wines to the following markets: Russia (53,682,627 bottles), Ukraine (10,687,835 bottles), China (6,951,019 bottles), Kazakhstan (3,599,143 bottles), Poland (3,508,122 bottles), Latvia (1,711,078 bottles ), Belarus (1,606,002 bottles), Estonia (581,190 bottles), Lithuania
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(488,154 bottles) and Germany (483,791 bottles). Last year, wine exports were carried out by 284 companies, up 34 companies compared to 2017. In January-May 2019, Georgia exported 33.6 million bottles of wine to 39 countries, up 6% compared to the same period of 2018. The total value of wine exports in the reporting period exceeded 87 million USD, up 16% year on year. As compared to Georgia, modest figures are reported from Armenia and Azerbaijan. In 2018, Armenia sold 2 503.3 thousand liters of wine, worth 9.4 million USD. 79% of Armenian wines are exported to the Russian Federation. According to the official statistics, exports of Armenian wine to Russia declined by 14%. Specialists assert that the slowdown is caused by the low competitive capacity of Armenia wines. Almost the same indicators are reported from Azerbaijan. Namely, in 2018, the wine exports of Azerbaijan made up 8 million USD. Russia emerged as a key exports market in this case too – 85% of Azerbaijani wines were exported to Russia. It is worth noting that in 2018, Azerbaijan produced only 14 million bottles of wine. By Zurab Khachapuridze
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Tamuna Rostiashvili: "It takes more Profound and Detailed Study of a User to plan a Campaign nowadays" Interview with Marketing Director of Altaokay, Tamuna Rostiashvili. Tell us about how you got into the field of marketing, and what factors played an important role in choosing this profession? I studied Business Administration, and we didn’t have a specific specialization, we did each module separately, among them marketing. I continued doing my Master’s in the field of finances. My first steps in my career was in marketing, and I found it very interesting, so I decided to stay in this field. My background knowledge in finances helps me to plan marketing activities more efficiently. In regards to technological changes, what challenges do you face as the head of a marketing service? People tend to spend more time with their gadgets, nowadays. Markers are faced with the challenge of getting in touch with a customer through different channels to create campaigns on social networks, display an advertisement, and do e-commerce. Today, a marketing department should be able to combine the creativity and technical side of the database, digital engineering and analytics. The digital revolution changed three things in marketing : the speed, relevance and reach of campaigns. It's possible to target and send certain content to a particular group that increases efficiency. It is worth mentioning the budget issue, as it became possible to plan a successful and interesting campaigns with a small budget. I can not even underestimate the value of evaluating results, because everything in the digital world is measurable. Statistical data, analytics can be checked every second. What has changed in the field in the last 5 years, and what changes are expected? Many things have changed over the last 5 years. First of all, it is worth mentioning the digital transformation. The source of traditional media has changed, and the internet, where
a large amount of content is created and shared. Customers' behavior have also changed accordingly. The moves were efficient for customers and, in some cases, it may not be effective anymore. Marketing activities and planning campaigns requires more detailed study of the user, and more profound and intuitive insights. What important features should a marketing manager focus on, and what are their roles in an organization? The role of marketing in the company is quite high, especially in such a competitive market. It is important to communicate with the customer, take care of the image of the company, customer satisfaction, determining the right strategy, planning, effective budgeting, and getting the results. It is important that marketing managers have the ability to properly plan, define the effectiveness of campaigns, constantly develop and follow innovations and changes.
What’s your organization's model? The customer is most important for us, so all of our activity is oriented to them. The most useful advice you’ve ever received in your life? The first thing I remembered is "push all the time", always try to reach the end result, calmly and patiently plan, strengthen communication, change the direction, but never give up in the middle. Think of a person who inspires you, professionally. I can’t think of one person. My inspiration is specific campaigns, interesting work and challenges.
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Business News
Business Sector’s Turnover grew by 27.5 %
It is easier in Georgia to start business than to expand it, Italian ambassador in Georgia Antonio Enrico Bartoli noted and outlined the measures that Georgia should take to improve the business climate.
In Q1, 2018, the turnover of the Georgian business sector increased by 27.5% compared to the same period in 2017 and amounted to GEL 22.9 billion.
Tbilisi Government announces Auction for arranging Recreation-Youth Space on Radio Factory Territory Tbilisi Government has announced auction for arranging a recreation-youth space on the territory of Radio Factory in Mukhiani, Tbilisi, the city hall mayor Kakha Kaladze noted. Radius Hotel opens at Gallery Tbilisi Radius hotel has opened at Gallery Tbilisi multifunctional center on Freedom Square with the support of Co-investment Fund.
Georgian Information and Communication Technology Companies connect with their Estonian and Latvian Counterparts On June 5, leading Estonian and Latvian information and communication technology (ICT) companies visited Georgia to participate in an international business-to-business exchange event, where they discussed possibilities for potential partnerships and joint projects.
First Georgian Playing Cards Ulala - filled with Traditional Georgian Details Beka Adamashvili won European Literary Prize The creative director of the Agency Leavingstone and writer Beka Adamashvili became the owner of the European Literary Prize in 2019. He is the first Georgian author to win this award.
“Ulala” is a product of “Livlivi”. “Livlivi” is a platform elaborated by Gvanca Gelovani, which creates illustrations and Ulala is its first and earnest project.
The First Robot Lawyer - Lawbot In Georgia The founder of the first lawyer bot in Georgia, Ucha Dzimistarishvili notes, that it is already probable to mechanize 30% of the lawyer's work. Ambassador of Italy: It is Easier to start Business in Georgia than to expand it
Baku to host EU-Azerbaijan Business Forum
New Georgian Sound System - Sioni Hifi
On June 13, the Azerbaijani capital of Baku will host the EU-Azerbaijan Business Forum.
Sioni HiFi is the first hand build/purpose build Dub Reggae SoundSystem in republic of Georgia. Run by extended family of Juno Q Beat Selecta(Soundsystem operator) Samory MC, GmirSelector and the crew.
Georgia Homeland of Wine nominated for the Oenovideo Festival The Georgian science art documentary film "Georgia Homeland of Wine" is nominated for the "Oenovideo" festival, which is the world's largest photography and cinematography festival dedicated to winemaking and viticulture.
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GEL Exchange rate Volatility Drive Growth in Prices May 2019 recorded 4.7% Annual Inflation Rate
In May 2019, the Consumer Price Index increased by 0.5 percent compared to the previous month, while the annual inflation rate amounted to 4.7 percent. It should be noted that this year, the National Bank of Georgia (NBG) has planned a target rate at 3%, but over the past 3 months, the annual rate has exceeded the target rate, and keeps growing. The monthly inflation rate was mainly influenced by price changes for the following groups: Food and non-alcoholic beverages: The prices in the group increased by 1.2%, contributing 0.37 percentage points to the overall monthly inflation rate. Within this group, the prices were higher for the following subgroups: vegetables (8.1 %), fruit and grapes (7.1 %), sugar, jam, honey, chocolate and confectionery (2.0 %), meat (1.8 %), and also fish (1.2 %). Meanwhile, the prices decreased for milk, cheese and eggs (-5.7 percent); In a certain period, the inflation rate may be higher or lower than 3%. Transport: Prices went up by 1.9 %, contributing It is important that we provide due information, and analysis why this 0.22 percentage points to the overall monthly process meets our monetary policy. It will always move to the target inflation rate. The prices in the group increased inflation rate”, Gvenetadze said. for the operation of personal transport equipment This year the inflation rate will be higher than the target rate, the NBG (2.1 percent) and transport services (2.0 %); President said. Restaurants and hotels: The prices increased “According to April indicators, the base inflation rate makes up 1.4%. In terms by 1.1 %, with a relevant contribution of 0.06 of macroeconomic aspects, this signifies that we do not have an inflationary percentage points to the overall monthly trend, and the price index is growing temporarily; this year, the inflation rate will CPI growth. Within the group, the prices be higher than the target rate because of these factors”, Koba Gvenetadze said, were higher for accommodation services (4.6 and added that the NBG expects the inflation rate to go back to the target rate. percent); Economic experts assure that the average level of prices rose because of the In the case of annual inflation rate was mainly volatile exchange rate of the GEL. Since about 70% of food products are imported, influenced by price changes for the following consequently, exchange rate devaluation results in growing product prices. groups: “There is much probability that inflation is related to GEL devaluation. Food and non-alcoholic beverages: The prices Consequently, supposedly the National Bank will have to revise monetary policy, in the group increased by 7.9 %, contributing and tighten it in the near future”, economist Akaki Tsomaia said. 2.43 percentage points to the overall annual The NBG President disagrees with this. Regretfully, an incorrect analysis is made inflation rate. Within the group, prices were as to what results the country may receive, “especially regarding the direction in higher for the following subgroups: vegetables growing prices. I would like to note that the exchange rate is a factor, but not the (33.7 %), fish (13.5 %), bread and cereals (11.6 %), most important one. meat (7.2 %), mineral waters, soft drinks, fruit The statistics prove that in 2007-2008, when the exchange rate was the most and vegetable juices (4.8 %). Meanwhile, prices stable, the inflation rate recorded the highest figure. In 2007-2008, the inflation decreased for fruit and grapes (-19.9 percent); rate was 12%. A joint demand has more of an effect on inflation, and the NBG Alcoholic beverages and tobacco: Prices increased possesses mechanisms to prevent a growth in price”, Gvenetadze said. by 21.1 %, with a relevant contribution of 1.38 ‘The National bank’s management has released a statement that the GEL percentage points to the overall annual CPI exchange rate cannot have an influence on the inflation rate. This is an growth. Prices also increased for tobacco (44.6 average level of prices on consumer basket. And the consumer basket percent); demonstrates an interesting tendency. Food is 30% of the whole Transport: Prices increased by 3.2 %, which consumer budget, while the figure makes up 50% in all other countries, resulted in a 0.39 percentage point contribution to like Georgia. This means that the figure was lowered artificially. the overall annual inflation rate. Prices were higher Therefore, the fact is that prices will not rise in home appliances mainly for the operation of personal transport and expensive things. On the contrary, price may even decline. equipment (4.4 percent) and transport services (1.6 And our population will not react to this category. Prices will percent); increase on essential products for our population. 80% of Recreation and culture: Prices went up by 4.6 %, the consumer budget consists of imported products, contributing 0.26 percentage points to the overall and this consumer basket is a thing of concern for annual inflation rate. The prices in the group increased the population”, ex Economy Minister Vladimer for recreational and cultural services (6.4 percent); Papava noted. Health: Prices went up by 3.0 percent, contributing 0.25 percentage points to the overall annual inflation rate. The By Merab Janiashvili prices increased for the following subgroups: medical products, appliances and equipment (4.5 percent), outpatient services (2.9 %) and hospital services (1.6 %). “The inflation rate, not exchange rate, matters for growth in economic stability”, NBG President Koba Gvenetadze noted, and added that in Georgia, the inflation rate remains within the norm, but a single-time factor influence the existing inflation rate. “This is the effect of an excise tax – 1.3%. Moreover, oil prices have also risen, and this is exogenic i.e. nonmonetary factor. As a rule, central banks which carry out inflation targeting, do not react to similar factors.Inflation targets do not imply a precise 3%, but it signifies a rate around 3% in the midterm.
TBC Group hosts Investors’ Day in London participants also discussed market trends in Uzbekistan and Azerbaijan that TBC Group considers primary strategic directions for development and growth. Investors’ Day lasted several hours. TBC Management representatives held presentations on the following topics: business On June 6 TBC Group hosted strategy, financial results, digital Investors’ Day in London. The bank space, macroeconomic event was held at the Stock analysis, risk-management, Exchange office and about 120 retail, corporate and investment investors, analysts and financiers from various countries attended it. banking service, micro, small and medium business, TBC Insurance, Representatives of the TBC innovations on Azerbaijani and Bank top management updated Uzbek markets, Agile structure investors about financial and and so on. technological achievements, The event was continued in objectives and development interactive regime and the plans of TBC Group. The event investors were able to receive
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comprehensive answers to interesting questions from heads of specific directions. “Investors’ Day is a unique opportunity for the bank, on the hand, and investors, on the other hand, to meet each other and exchange information. Organizing similar events is an approbated method worldwide. Similar communication with investors even once a year is a crucially important in terms of attracting investments”, TBC Bank financial director Giorgi Shagidze noted. This year TBC Group hosted investors in London for the fifth time.
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