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facebook.com/ georgiatoday

Issue no: 892/51

• NOVEMBER 1 - 3, 2016


Source: ENPARD Georgia


In this week’s issue... Preliminary Results Show GD Wins in 48 of 50 Districts


World’s Second Longest HPP Tunnel Built in Georgia

FOCUS ON GEORGIAN AGRICULTURE Facing possible gov't budget cuts, will the co-operatives survive? PAGE


Georgia Expects Huge Benefits from Tourism This Year BY THEA MORRISON


ead of the Georgian National Tourism Administration (GNTA), Giorgi Chogovadze, has announced they expect a record income from tourism this year. “Georgia will receive more than USD 2 billion in 2016,” he says. It is the highest profit Georgia has ever received from the sector. “I can say that tourism has never been such a priority as it has this year,” Chogovadze said. “Georgia has had more than 6 million visitors!” He went on to explain that the strategy of tourism development for the next 10 years was implemented in 2015 and envisaged Georgia entering new- previously inactive - markets. Continued on page 2


Georgia, Azerbaijan to Deepen Economic Relations PAGE 5

Electricity Market Watch GALT & TAGGART PAGE 6

4,000 Union Members Stand with Pipeline Union in Case against BP PAGE 7

Giorgi Chogovadze, Head of the National Tourism Administration of Georgia

Tbilisi Marathon 2016 Supports Hospice Construction for Children SOCIETY PAGE 12 Prepared for Georgia Today Business by

Markets Asof28ͲOctͲ2016


COMMODITIES CrudeOil,Brent(US$/bbl) GoldSpot(US$/OZ)

































































































































































NOVEMBER 1 - 3, 2016

ZARA store. Source: Fashionista.com

ZARA Clothes Factory to Open in Georgia BY NINO GUGUNISHVILI


urkish Company ENA Textile plans to build a factory to produce clothes for the popular Spanish brand ZARA in Ozurgeti, Georgia. ENA Textile representatives visited the Horizon College where training for the future factory employees is to take place. The project sees the potential hiring of up to 1000 locals to work at the factory. “ENA Textile representatives came to see what possibilities the region has to offer and explored avenues for privatization,” said Gia Salukvadze, Governor of the Ozurgeti region. ZARA is one of the leading clothes and accessories retailers with more than 2000 shops worldwide.

Georgia Expects Huge Benefits from Tourism This Year

Continued from page 1 “We saw a huge increase in visitors from the Arab GCC (Gulf Countries), which were not on the list of tourist visitors to Georgia before. This region is now very well connected with Georgia in terms of air traffic," said Chogovadze. The GNTA Head says positive steps have been made towards enticing visitors from the United States and Europe, too. He hopes that when Georgia gets visa-liberalization with the European Union (EU), it will become even better known as a possible holiday destination for EU residents. “We recently became a member of the biggest Association of Travel Agencies of the United States,” said Chogovadze, adding that more that 22 million GEL ($ 9.132041) has already been spent on advertising Georgia abroad. “The markets which we chose for advertising

Georgia had to meet number of criteria which included direct air connectivity and the existence of a certain level of prior awareness about our country on the market," Chogovadze said. In 2015, the GNTA invited more than 400 international journalists and representatives of tour companies to Georgia in order to promote tourism. The GNTA is also actively involved in international tourism exhibitions. “We also plan to open rest areas along all major roads throughout the country,” the GNTA Head announced. “The rest areas, which will be spaced around 40 minutes apart on motorways, will include toilets and other necessary infrastructure to allow drivers and passengers to rest, eat, or refuel.” The government is willing to give land from the State, with specific conditions, to any business person or company ready to arrange such infrastructure.




Preliminary Results Show GD Wins in 48 of 50 Districts BY THEA MORRISON


he preliminary data published by the Central Election Commission of Georgia (CEC) revealed that the ruling party Georgian Dream (GD) won in 48 of 50 districts during the parliamentary election runoff held on October 30. According to the results, the main opposition party United National Movement (UNM), which faced GD in 44 districts, had no winning candidate after the run-off. The ruling GD failed to win in only two districts: in Khashuri, central Georgia (N43 district), where the candidate of the Industrialists, Simon Nozadze, won the run-off, and in N1 district of Mtatsminda, Tbilisi, where an independent candidate, Salome Zurabishvili, won. GD had no candidate in Mtatsminda, but supported Zurabishvili. GD also managed to obtain a majority in Adjara’s Supreme Council and, according to the CEC, Georgian Dream candidates won in all six constituencies of the region. GD got 8 mandates from the proportional elections and 8 mandates from the first-past-the-post elections. On the whole, Georgian Dream will have 14 deputies in the 21-member Supreme Council of the Autonomous Republic of Adjara. Georgian Dream is to have a constitutional majority in the 9th composition of the Parliament of Georgia. 150 parliamentary seats will be distrib-

uted among 77 proportional and 73 majoritarian MPs. The constitutional majority needs 113 MPs. Only three parties crossed the 5 percent election threshold: GD, UNM and the Pro-Russian Alliance of Patriots, which will have 6 mandates in parliament. GD gained 44 mandates in the proportional elections and 23 in the first round of majoritarian elections on October 8. According to the preliminary results of the second round, Georgian Dream won elections in 48 precincts. Consequently, according to the preliminary results, Georgian Dream-Democratic Georgia will have 115 MPs in the new Parliament. According to the Chair of the CEC, Tamar Zhvania, the elections were held

Parliamentary Elections are over in Georgia. Source: marshalprss.ge

in a peacefully and voters had an opportunity to express their will. Zhvania noted that there were some incidents during the run-offs but underlined, however, that on the whole, the process was carried out in a transparent manner and the voters were able to participate in the elections in a free environment. The CEC will publish the final election results by November 19 and adopt a sum-

mary protocol of the final results no later than 19 days from the second round of the elections. The first session of the new parliament needs to be held no later than 20 days following the adoption of that protocol. Parliament Speaker, Vice-Speakers and Committee Chairmen will be elected at the first session, appointed and opened by the President of Georgia, Giorgi Margvelashvili.




NOVEMBER 1 - 3, 2016



The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

To Cut or Not to Cut? Shifting Government Priorities and the Uncertain Future of Georgian Agricultural Cooperatives BY RATI KOCHLAMAZASHVILI AND NORBERTO PIGNATTI


cannot see any use [for the cooperative I have set up] if I cannot find anywhere [someone] willing to lend us money- Spanish Priest, 1908 (Cited in Garrido, S. 2007 )

THE GEORGIAN AGRICULTURAL SECTOR AND THE POTENTIAL ROLE OF AGRICULTURAL COOPERATIVES The Republic of Georgia was among the fastest Former Soviet Union countries to implement a large scale land reform and land redistribution plan, starting in 1992. Land redistribution resulted in the formation of hundreds of thousands of small family farms, replacing large-scale collectives and production cooperatives (Sovkhozez and Kolkhozes). The main purpose of this land individualization process was, arguably, to help a large part of the population survive extremely hard times. The goal was achieved, and the Republic of Georgia managed to contain the drop in agricultural output in a period in which it experienced one of the sharpest declines in economic activity in recent history, with GDP per capita falling by more than 70 percent between 1990 and 1994. Today, however, the Georgian agricultural sector is perceived more as a missed opportunity than a success story. While employment in agriculture still absorbs 47 percent of the employed (2015 data, Geostat), the share of agricultural output in total GDP is now down to 9.2 percent, much smaller than it could be. Land fragmentation is always indicated as one of the main culprits of the low productivity characterizing Georgian agriculture. According to the census conducted by the Ministry of Agriculture in 2014, there are 574.1 thousand agricultural holdings (with land) in Georgia, of which 99.6 percent are held by households (with an average farm size of 1.2 ha). The average small farm size, however, does not necessarily imply low productivity. Around the world, small farms have been found to be highly productive (sometimes more so than larger ones). Small farms, however, need a supportive environment to flourish, even more so than larger ones. In particular, small




farmers are hampered when – as is the case in Georgia – access to credit, marketing and technology is limited. The development of agricultural cooperatives has been identified by both international donors and the Georgian government as a promising way to encourage the development of the Georgian agricultural sector. The potential advantages for small farmers joining a cooperative are numerous. By pooling their resources, small farmers can gain better access to credit markets, better physical capital, achieve economies of scale, and improve their bargaining power in the value chain. However, Georgian farmers seemed historically reluctant to spontaneously aggregate into cooperatives. Among the main reasons identified by those who studied the issue a few years ago was the lack of trust in such institutions, associated by most farmers with the Soviet Kolkhozes. Another reason was the lack of a coherent legislative framework regulating agricultural cooperatives.

ENCOURAGING THE BIRTH AND DEVELOPMENT OF AGRICULTURAL COOPERATIVES: A BOLD START This was taken into account by the European Union when it designed a special project - European Neighborhood Program for Agriculture and Rural Development (ENPARD) – aimed at fostering agriculture cooperative development in Georgia from 2013-2017. With the support of ENPARD, the government of Georgia elaborated the Law on Agricultural Cooperatives (July, 2013) and established the Agricultural Cooperative Development Agency (ACDA) under the Ministry of Agriculture to support the development of agricultural cooperatives throughout the country. Since March 2014, when the first agricultural cooperative was officially registered by ACDA, more than 1600 agricultural cooperatives have been registered, exceeding initial expectations. Both ENPARD and the government have worked quite hard to support the newborn cooperatives. Since early 2014, ENPARD selected and assisted about 250 cooperatives, with a total budget invested (by ENPARD) of GEL 11.3 million (Annual Cooperative Survey, 2016). ENPARD assistance took a number of forms, such as support for the purchase and installation of machinery and equipment,

Figure 1. Constraints to the Development of Cooperatives

critical factors constraining their business development, ranging from access to credit and capital to access to markets, to government regulation, difficult access to inputs and to information. In particular, the top constraints for business development seem to be “Access to Finance/ Credits” and “Access to Capital.”


Source: Annual Cooperative Survey, ISET & ENPARD consortia, 2016

training, support of the creation of linkages with input and output markets, etc. Over the same period (from 2014 to date), ACDA has introduced several supporting programs for cooperatives, such as: a) a state program fostering hazelnut production development through promotion of agricultural cooperation; b) a state program to support beekeeping agricultural co-operatives; c) a state program to support dairy production agricultural co-operatives; and d) a co-financing program for purchasing agricultural machinery for cooperatives. In total, ACDA has spent GEL 6 million on these programs (ACDA, 2016). Theoretically, cooperatives could also benefit from other public support programs targeting the agricultural sector (such as “Plant the Future,” “Cheap Loans,” “Produce in Georgia,” “Georgian Tea,” etc.) but in reality very few did, as the programs were not tailored to the specific needs of cooperatives. This reduced both the potential benefits from participation and the probability of qualifying for support.

…AND A LESS BOLD FOLLOW UP Just a few years after the introduction of the Law on Agricultural Cooperatives and the related initiatives to encourage their birth and development, the government drive to support agricultural cooperatives seems to have lost its momentum. About a month ago, the government issued the first draft of the state budget for 2017. According to the published document, the Ministry of Agriculture’s

budget will decrease by 25% compared to the last year. ACDA’s funds are expected to decrease by 26% (GEL 1.9 million). This means that, unless the Government changes its announced plans, ACDA will find itself with significantly less funding to support the birth and development of agricultural cooperatives at exactly the same time as its responsibility for cooperative support increases (ENPARD will end next year). In practice, cooperatives are going to experience a quite remarkable and sudden reduction in the amount of support they could have hoped for. This may not be a problem, if market conditions allow agricultural cooperatives to cope with the challenges they are facing (mostly) on their own. But … is this the case?

CHALLENGES STILL FACED BY AGRICULTURAL COOPERATIVES The ENPARD implementer community, working closely with the supported cooperatives, is highly skeptical. According to them, even the already established cooperatives are still in the embryonic stage of development (including ENPARDsupported cooperatives, which are considered to be relatively better positioned than others), and market support services are still underdeveloped. This implies that most cooperatives may not survive without additional financial and technical support for at least a couple more years. A recent survey (self-assessment) conducted among one hundred cooperatives supported by ENPARD (Figure 1) confirms that there are still a number of

Now, to the main question. Does it make sense for the Georgian government to cut the ACDA budget? As often happens, giving an answer to this question is not easy. On one hand, it is not clear where the saved resources will be spent, which makes the assessment of expected benefits of such a cut extremely difficult. On the other hand, the costs associated with these cuts are anticipated to be high. In other experiences (such as the Spanish one, to which our initial quote refers) insufficient support for young cooperatives resulted in setbacks and in the delay - lasting decades - of the development of the whole cooperative movement and, arguably, of the entire agricultural sector. This is something no one wishes for Georgia. This is why policy makers should think very carefully about whether to cut or not, how much to cut and where, even in a moment of shifting political priorities. At the very least, even if the need to cut ACDA funds was to be confirmed, particular attention should be given to ensure that the remaining resources are spent, after a thorough analysis of cooperatives’ needs, on the most needed support activities. This means, if the results of the survey results presented above are confirmed, to start by helping cooperatives get better access to finance and capital. Garrido, Samuel (2007). “Why Did Most Cooperatives Fail? Spanish Agricultural Cooperation in the Early Twentieth Century.” Rural History, 18(2): 183-200.

Source: ENPARD Georgia





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Georgia, Azerbaijan to Deepen Economic Relations


eorgia and Azerbaijan agreed to establish a Working Group to further develop mutual trade relations and increase export potential from both countries. The decision was made during the official visit of Azerbaijani Foreign Minister, Shahin Mustafayev, to Georgia. Georgia’s Economy Minister Dimitry Kumsishvili met his Azerbaijani counterpart on Friday. At the meeting the ministers accented the benefits of bilateral transport cooperation and highlighted positive developments in tourism relations. Georgia’s Prime Minister, Giorgi Kvirikashvili, also met the Azerbaijani delegation. The two parties discussed strategic partnership between the two countries and prospects for deepening relations in various sectors of the economy. The sides also decided to widen the current economic corridors and develop new ones to facilitate the increased throughput and volume of traded commodities. The officials discussed the Baku-TbilisiKars (BTK) railway project, the construction of which is set for completion in the near future. It was mentioned at the meeting that the railway link will boost the volume of transported cargo and will also attract additional volumes from both Europe and Asia. Also discussed was the upcoming forum, planned within a tripartite format of Azerbaijan-Georgia-Turkey and sched-

World’s Second Longest HPP Tunnel Built in Georgia BY NATIA LIPARTELIANI



Georgia’s Economy Minister Dimitry Kumsishvili meets his Azerbaijani counterpart

uled for November 16, in Istanbul, Turkey. The fifth Azerbaijan-Turkey-Georgia business forum will be attended by Azerbaijan’s Economy Minister Shahin Mustafayev, Georgia’s Minister of Economy and Sustainable Development Dimitry Kumsishvili, Turkey’s Economy Minister Nihat Zeybekci, and President of Turkey’s Foreign Economic Relations Board, Omer Cihad Vardan. Joint projects, as well as economic cooperation between the countries, will be discussed there. Azerbaijan has invested almost USD 1.7 billion in Georgia’s economy since 2006, including USD 283 million since early 2016. In 2015, Azerbaijan invested USD 550 million in neighboring Georgia’s economy. This is the highest indicator of Azerbai-

huakhevi Tunnel is the second longest tunnel built for Hydropower in the world. The world's longest tunnel is located in Iceland at the Kárahnjúkar Hydropower Plant and measures 39.7 km long, while Georgia’s Shuakhevi is 37.4 km. To date the longest tunnel built for hydropower plant in Georgia itself was that of the Engurhesi which stands at just 15.3 km in length. The building process of the Shuakhevi tunnel involved both drilling and blasting methods with the help of a vibration meter to monitor the strength of vibration at regular intervals. Within the frames of the Shuakhevi project, three main tunnels were built: the headrace tunnel from Chirukhistskali to Skhalta (electric power supply of Skhalta HPP), the transfer tunnel from Skhalta to Didachara, and the main headrace tunnel (electric power supply of Shuakhevi HPP).

Azerbaijani Delegation was welcomed by PM Kvirikashvili at the Governmental Administration

jani investments in Georgia. Trade turnover between Azerbaijan and Georgia amounted to USD 244.58 million in January-September 2016, according to Azerbaijan’s State Customs Committee. Georgia, with USD 221.83 million (3.39 percent of the total volume of Azerbaijani export) ranks ninth in the list of main importers from Azerbaijan.


Source: bpn.ge

The tunnel construction is complete and the construction of dams and a power unit will be finalized by the end of the year. HPP will start functioning in spring 2017. After completion of the Shuakhevi project, Georgia will have a 187 MW worth capacity clean energy producing plant which will generate enough electricity for the entire population of Georgia throughout winter and summer. When the capacity for generating electricity is greatest, Georgia will export its energy to Turkey. The Shuakhevi HPP project is the first hydropower project in Georgia to be certified by the United Nations Framework Convention on Climate Change to reduce carbon emissions. "Shuakhevihesi" is to produce 450 million kilowatt / hour electricity and reduce greenhouse gas emissions by more than 200,000 tons per year. The project is carried out by Adjaristsqali Georgia LLC. A total of 730 people are to be employed in the project. After Shuahkevi’s entry into operation, the plant will be operated jointly by both Georgian and foreign professionals.




NOVEMBER 1 - 3, 2016

The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research. For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at gt@gt.ge.



ector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of the Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our energy sector coverage, we produce a monthly Electricity Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.

GEORGIA’S FULL MEMBERSHIP TO EUROPEAN ENERGY COMMUNITY APPROVED On October 14, 2016, the Energy Community (EnC) Ministerial Council unanimously approved the accession of Georgia to the EnC treaty at its meeting in Sarajevo. Georgia is expected to join as a full-fledged member in the course of 2017, following the ratification of the accession agreement by the Georgian Parliament. Accession to the EnC will require Georgia to take on obligations set out in the accession protocol, with implementation deadlines set for the beginning of 2020. Implementation of regulations is expected to result in a transparent and competitive electricity market, with higher standards of customer service. Ancillary service market development is also on the agenda. One of the most important legal reforms that the Ministry of Energy will have to undertake is the effective unbundling of generation and supply, provided that the interests of the shareholders of vertically integrated undertakings are defended in the process. There is also

a separate provision on the importance of cost-reflective tariffs.

GUARANTEED CAPACITY FEE FOR GARDABANI CCPP TO BE REVISED FOR 2017 The guaranteed capacity (GC) fee for Gardabani CCPP for 2017 is to be determined. The regulator will commence the relevant proceedings on October 27, 2016 and finalize the decree by December 31, 2016. GNERC sets the GC fee based on the methodology adopted in 2014. The daily fee is determined by dividing the sum of fixed OPEX and CAPEX for the tariff year by the number of days the guaranteed source will be on stand-by. The maximum number of days on stand-by is indicated in a decree issued by GNERC.

DANISH CONSULTANTS TO ADVISE GEORGIA ON ENERGY EFFICIENCY AND RENEWABLE ENERGY INTEGRATION A Danish consultancy, Niras, is consulting the Georgian government on matters of energy efficiency and sustainable energy. The project is financed by the Ministry of Foreign Affairs of Denmark and encompasses assistance in developing energy efficiency monitoring methodology and regulations on integration of renewable resources into the grid.

TBILISI AND THE ABKHAZIAN REGION DRIVING ELECTRICITY CONSUMPTION GROWTH Domestic consumption increased 4.3% y/y in September 2016, with Tbilisi and the Abkhazian region driving the growth. DNO consumption was up 4.5% y/y, with the greater Tbilisi area (Telasi subscribers) posting a 16.8% y/y growth rate. Usage of Energo-Pro subscribers was down 1.3% y/y, while Kakheti Energy Distribution usage was up 2.0% y/y. Con-

sumption of eligible consumers was the main drag on growth, down 12.9% y/y from an already very low base in September 2015. Georgian Manganese drove the decline in direct consumption, down 10.8% y/y from the September 2015 low base. Consumption of the Abkhazian region was up 17.3% y/y, following a 12.9% y/y increase in August 2016. Electricity exports were negligible. A significant amount of electricity transit (101.5 GWh) took place from Azerbaijan to Turkey.

IMPORTS ACCOUNT FOR A MERE 3.0% OF TOTAL ELECTRICITY SUPPLIED TO THE GRID IN SEPTEMBER Domestic consumption needs were met almost entirely by domestic generation in September 2016, with imports accounting for a mere 3.0% of total electricity supplied to the grid. Total generation was up 2.9% y/y, with regulated HPP generation increasing 28.1% y/y and accounting for 88.4% of total hydrogeneration. Generation by Enguri and Vardnili was up 34.4% y/y, while generation by deregulated HPPs increased 10.2% y/y. TPP generation in September 2016 was down 40.6% y/y. Guaranteed capacity was provided by each of the five guaranteed capacity sources for the entire month, with the exception of G-Power (11 days on stand-by) and Gardabani CCPP (26 days on stand-by). The GC fee almost quadrupled (3.6x), to USc 0.84/kWh, compared to September 2015 and was up 19.3% m/m. Electricity imports in September 2016 were down 46.8% y/y, with Azerbaijan the sole source of imports.

WHOLESALE ELECTRICITY PRICES DECREASE IN SEPTEMBER Wholesale market prices in Georgia decreased 23.3% y/y to USc 4.4/kWh, 10.2% below the Turkish market clearing price in September 2016. Notably, Turk-

ish electricity prices decreased 11.7% y/y to USc 4.9/kWh from a significantly low base in September 2015. 11.9% of total

electricity supplied to the grid was traded through the market operator, with the rest traded through bilateral contracts.

Georgian Wine Presentation Held in Dublin BY NINO GUGUNISHVILI


he Georgian National Wine Agency held a wine tasting and presentation of Georgian wines and brandy in Dublin, Ireland, at which foreign diplomats, sommeliers, local and international wine importers and media representatives had a chance to get acquainted with the long history of wine making traditions and culture in Georgia. Various varieties of grapes and grapevines were introduced and a report given about the recent trends and developments in the sphere. The presentations were made by Giorgi Tevzadze, Advisor to the Head of the National Wine Agency of Georgia, and Levan Mekhuzla, Head of the Viticulture Regulation and Analysis Department. Georgian wine presentation in Dublin




4,000 Union Members Stand with Pipeline Union in Case against BP work on a collective bargaining project immediately following creation of the primary union. In parallel, it is said that BP started to pursue primary trade union members in order to close the Union. At present, the lawsuit of the deputy chairman ofthePipelineUnioncommittee,Pirmisashvili, who allegedly suffered as a victim of persecution, is under review by the GeorgianCivilCourtwiththeassistanceofUnion lawyers. The fate of the Pipeline Union largely depends on the solution of the lawsuit. “We hope that the truth will prevail," said Kvitatiani in his speech. At the congress meeting, participants expressed their solidarity with the members of the Pipeline Union and its deputy chairman. "There are still cases where leaders [in Georgia] exercise pressure on trade union organizations. Such measures are often covert. It is all the more unfortunate when pressure on trade unionists and discriminatory actions are seen in a superior equipped, world leading oil company," said trade union workers. The following resolutions were made at the 13th congress of the Georgian Oil and Gas Industry Workers Trade Union: • “Congress delegates recommend the Board and member organizations to strictly adhere to the segment charter, the law on trade unions, other legal acts, with the help of international professional associations, and support employees in their efforts to address their social and economic legal rights” • “The delegates express the belief that the sector's trade union and member organizations will adequately meet the challenges they currently face and will use every possible means to protect the rights of each union member.”



OCAR Georgia Petroleum, SOCAR Georgia Gas, Batumi Petroleum Terminal and other oil and gas industry members, about 4000 employees in all, have come out in support of the primary trade union ‘Pipeline Union’ and its deputy chairman Vakhtang Pirmisashvili, in the ongoing legal battle with employers BP Georgia and its Human Resources Recruitment Agency (HRRA). Last week, the 13th Congress of Georgian Oil and Gas industry workers was held, attended by delegates of oil and gas industry workers trade union organizations. Among them were SOCAR Georgia Petroleum, SOCAR Georgia Gas, Batumi Oil Terminal, the employment agency's HR and other primary trade union delegates. At the meeting the Head of the Oil and Gas Industry TradeUnion,GochaKvitatiani,gaveareport, the main focus of which was trade union new member organization affairs. In particular, the issues between the Pipeline Union, a professional organization of laborers working for recruitment agency HRRA and for all South Caucasus region energy carriers, and their employers were discussed. It was explained that the employer of the Pipeline Union is BP Georgia, which fully determines its contractor recruitment agency’s work policies. The chairman noted that there had been several attempts by BP employees to join the trade union in the past but through the “negative interference” of BP Georgia, the talks were ceased. The Pipeline Union committee began

Women Working for Free: Expert Market Report Highlights Gender Pay Gaps across Europe BY NINO GUGUNISHVILI


ollowing the Equal Pay and Gender Pay Gap debate, a new study was conducted and a report released by Expert Market, which claims to be Europe’s leading B2B marketplace, highlighting that the average woman in Europe earn 16.68 percent less annually than men, which is the equivalent of working for free for nearly two months of the year. The report gives a number of examples, including Bosnia, where, according to Expert Market findings, the gender pay gap is the highest in Europe at 46 percent. Slovenia appears to have the lowest at 3.20 percent, the UK shows 19.70 percent and a 34.80 percent pay gap is shown in Georgia. The report was conducted using existing European data and a selection of European studies concerning the gender pay gap, enabling a calculation of the dates on which women this year started “working for free” across Europe, which, for Georgia, was August 25 and for the UK, October 19. The calculation is made using the average earnings of women in each country as a percentage of men’s earnings. When it comes to Georgia, according to another study titled: ‘Priority gender issues in Bosnia and

Herzegovina; Georgia; Moldova; Serbia; and Ukraine – with consideration to gender and governance,’ by Pamela Pozarny and Brigitte Rohwerder, con-

ducted under the GSDRC (June 2016), despite the improving economic environment of the country, there still remain challenges related to women’s participation in business and their ability to benefit from economic opportunities. A weak entrepreneurial and promotion policy and legal environment, poorly skilled employees and limited access to finance are the decisive factors for this, alongside the absence of a “culture” of entrepreneurship. For women, patriarchal attitudes and social customs are what underpin traditional gender roles and limit women’s opportunities. The report also demonstrates the low rate of female employment in the country: 48.8 percent in 2016 compared to 54.5 percent in 2015. Salaries for woman are often lower, while the pay gap is visible in both the private and public sectors. In commenting on their latest workplace report, Michael Horrocks from Expert Market notes: “When we examine gender pay disparity across Europe, it can be difficult to actually imagine how this difference in pay is reflected in everyday life. Our findings highlight the amount of money women across Europe are losing out on in comparison to their male peers. It is disappointing to see that in many European countries, women are essentially working for free for two or more months Gender Pay Gap Map of Europe. Source: Expert Market each year.”

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NOVEMBER 1 - 3, 2016

EXIN Launches New Privacy & Data Protection Exam


lobal certification institute EXIN has expanded its portfolio with a new exam: EXIN Privacy & Data Protection. The content is aligned with the European General Data Protection Regulation (GDPR) that came into force in May 2016. These tighter rules will have a large impact and companies would do well to comply. Under this new regulation, any company or individual that processes data by which an individual can be identified will also be held responsible for the protection of that data. This includes third parties such as cloud providers. Complying with these rules does have benefits; doing business in European countries will be less expensive and complicated as all countries have the same rules. This harmonization is expected to save businesses up to EUR 2.3 billion per year, according to the European Commission’s Impact

Assessment. Also, it can lead to enhanced client satisfaction and new clients can be attracted when a company is known for respecting their clients’ privacy. On the other hand, not being compliant can lead to severe penalties, but also reputational damage. Organizations outside the EU will need to comply with the EU data protection rules as well, making this certification relevant on a global basis. “I am very pleased with this expansion of our portfolio. This is such a relevant topic in times where data is collected, stored, analyzed and used. Privacy must at all times be a priority. Professionals that handle customer data will need to understand their increased responsibility, the impact for their organization and what needs to be done to be compliant. Having certified professionals with the right level of knowledge will certainly help organizations to face these opportunities and challenges,” said Bernd Taselaar, CEO of EXIN. The EXIN Privacy & Data Protection exam was developed in joint cooperation with the Security Academy, a European training institute with a focus on Information Security, Business Continuity Management (BCM) and Security Management. The partnership with the Security Academy is meant to combine hands-on, practical and job-oriented ICT security experience with EXIN’s vendor independent IT certification knowledge base, both at a high international level.

How Business Really Works in the North Caucasus BY DIMITRI DOLABERIDZE


he image of the North Caucasus as a subsidized region must be changed, because the North Caucasus really can feed Russia- says the Minister for North Caucasus Affairs, Lev Kuznetsov, who was appointed so by Russian President Vladimir Putin on an executive order. Kuznetsov argues that from 2017, the NCFD (North Caucasian Federal District) development program will move from development of social infrastructure to that of industrial projects. The real picture shows that it does not matter how many subsidies are transferred to the Caucasus, the real growth of production will not happen while there is no freedom for business in the region and while federal funds are allocated to corrupt schemes. It seems to me that the main problem of the North Caucasus is not image, nor is it allocation of finances to the North Caucasus region in the framework of the development program NCFD (North Caucasian

Federal District). The main problem is the extremely high costs and risks of doing business. Businesses in the North Caucasus tend to prefer to keep their heads down for risk of "dispossession". When civilians were asked how corrupt local businesses were, the numbers varied from 30% to 50%. As regards subsidization, it should be understood that in most countries of the North Caucasus, the vast majority of money coming from Moscow ends up in the pockets of the local elite and never reaches the general population or the real manufacturerssubsidies distributed on the basis of corrupt schemes, fake figures and documentation (all researchers know the problem of the North Caucasus "air sheep"- the grant of subsidies to support agriculture). If all investment barriers remain in place, we can hardly expect real output growth in the region. Regardless of how much money the federal budget injects. Perhaps it would be better to think about this problem rather than changing the image and putting out catchy slogans, which pointlessly proclaim such messages as "Stop Feeding the Caucasus" or "The Caucasus Can Feed Russia."

Construction of World's Largest HPP Renewed in Tajikistan BY DIMITRI DOLABERIDZE


xplosives were used to unblock the channel of the River Vakhsh, Tajikistan, and preparation has now begun on the construction of the Rogun Hydropower plant. President Emomali Rahmon was present for the opening ceremony before Italian construction company Salini Impregilo moved in to begin works on a deal costing the Tajik government USD 3.9 billion.

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Promoting Georgia Abroad: ‘Discover Georgia’ Conference to be Held in Iran by Dreamland

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ranian investors are becoming increasingly interested in the tourism and real estate markets and Georgian and Iranian businessmen are trying to use all possible bilateral resources for the promotion of Georgia’s potential in these sectors. For Iranian investors the initial stage involves the exchange of the most important information. For this reason from 2-6 November a large-scale conference ‘Discover Georgia’ will be held in Tehran, Iran. The idea was initiated by the Iranian company Dreamland Real Estate, which actively and successfully cooperates with Georgian and foreign companies. The company is headed by businesswoman Shahrzad Efat who told Business Resonance that the company is trying to contribute to the development of Georgia's real estate business and is actively involved in attracting big investors to invest in Georgia. “In order to engage an investor in terms of investing in the country, he/she must be provided with the relevant information about the state of the country's business development and it should be ensured that informational exchange with the target segment is carried out without any intermediaries,” Shahrzad Efat says. The starting phase for this is the conference in Iran, which Georgian government officials and businessmen are invited to attend. As Georgia was able to create a favorable environment for investors, Iranian investors' interest in the country has increased. Accordingly, there is greater desire to ensure the necessary informational exchange with Iranian investors and to strengthen business ties. “Our company has been operating successfully for over 5 years in the Georgian and international real estate sector, in collaboration with Iranian, Arab and Georgian companies, on such projects

as development and construction company Red-co and more,” says Shahrzad. Georgia is very attractive country for Iranians as a tourism destination, with the number of Iranian tourists increasing annually. According to the Georgian National Tourism Administration (GNTA), the number of tourists from Iran in 2016 compared with 2015 increased by about 360%, motivating the Georgian authorities to further develop tourism zones and to receive the expected significant economic benefits. “Georgia as a tourist zone in Iran is known only for the summer season and people are less aware of the winter resorts,” says Shahrzad. “Moreover, my countrymen have no idea about the potential of mountain resorts which can be very attractive for the implementation of tourism projects. Accordingly, we want to introduce Georgia to Iranians in terms of unusual winter resorts to attract more and more tourists.” “We met with the Georgian National Tourism Department and invited them as our guests to the conference. The conference will also see guests coming from the GNTA and Georgian companies. The gold sponsor of the development of the construction is Red-Co, which has been an active and successful operator company in the real estate market since 2012, having successfully implemented projects in Tbilisi, Batumi and in other tourist regions,” says Shahrzad. The conference will be attended by Iranian investors and businessmen, the largest construction and development companies, charter airline officials, Iran's National Tourism Administration, and many other companies which are ready to establish business links with Georgian companies and make future cooperation plans. Shahrzad says that the tourism and real estate segment were specifically chosen because these two areas of Georgia have such huge potential.

"Our partners and investors operate in various sectors but the tourism and real estate business in Georgia is developing rapidly and the prospects for these areas need promotion.” Until now, Iran, Turkey and Dubai were the main targets for Iran, but in these countries the Iranian investors feel insecure and sense risk for their businesses, which is why they are looking for alternative markets. “Georgia is one of the most trusted countries in this regard,” Shahrzad says. She went on to discuss one of their already implemented projects: "This year for the first time, we implemented charter flights from Iran to Georgia. During a month and a half a large number of tourists visited the country and in future we are planning to implement similar projects." Dreamland Real Estate offers a real opportunity for Georgian-Iranian business ties to be strengthened and established beyond the upcoming conference. “Leading tourist agencies and other related tourism sector companies who are interested in starting a business in Georgia not only for the summer but also the winter, as well as investors who are ready to collaborate with Georgia in a variety of fields, will be among the guests attending the conference from Iran." "During the conference, companies that operate in tourism, real estate development and real estate will make presentations. There will be a city tour and a celebratory dinner, where the participants and invited guests will have the opportunity to come to know each other. This will become the basis for future business relations,” Shahrzad Efat says. “Our company is ready to get a lot of interesting and important projects, and we will try to expand the scope of our work further." ADVERTISING

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NOVEMBER 1 - 3, 2016

Cancer is Not a Death Sentence! BY VAZHA TAVBERIDZE


opeful as this title may seem, there’s still one “if” – if the cancer is discovered early. At a glance, this is fair enough: in order to avoid the worst possible outcome of this ailment, it needs to be detected as fast as possible, which necessitates regular health check-ups. Even if we think ourselves healthy, we still need to go to the doctor and undergo screening – a worldwide method of early cancer detection which plays a crucial role in its prevention. Screening isn’t new to Georgia, but as with many other things, our country’s reality and consciousness are able to find a great deal of arguments against making use of it. The State program for breast, cervical, colon and prostate cancer was implemented in 2008 and is

free for the age groups it is aimed at. Since the program began, the early pathology detection rate has tripled. This does not mean that the percentage of cancer patients has grown – on the contrary, the increased availability of screening has contributed to early prevention and many lives saved as a result. Despite this, a large part of the Georgian population remains vary of the method. For example, only 8 percent of women are involved in the cervical cancer screening program – a miniscule number when compared to the same statistic in France (72 percent), the Netherlands (76 percent), Czech Republic (60 percent) or Poland (47 percent). We asked Rema Ghvamichava, head of the National Screening Center, about the reluctance of Georgian women to undergo screening: “Awareness plays the biggest role in this. Awareness and education. Prior to us adopting the new approach, only women who’d heard about screen-

Czech NGO Caritas, the Oncological Prevention Center, and medical-psychological center Tanadgoma, have a project which raises awareness and educates the population and first-tier medical operatives regarding early cancer detection and prevention

ing would visit; now, however, we’ll be sending them letters and text messages urging them to come and get involved,” he said. Early cancer detection and prevention measures represent a crucial part in the preliminary tier of healthcare – rural and family doctors are tasked with providing their patients with information regarding participation in the country-wide cancer screening program. This is especially vital in the regions where the rural doctor and nurse are the first links to the medical world, and it is their competence and qualifications that determine whether or not a rural woman who is busy all day long will go and get screened, especially if she is not in any obvious pain. “The people have yet to realize the necessity of visiting a screening center even while healthy, and to act on it,” says Ioseb Abesadze, head of the Oncological Prevention Center. Czech NGO Caritas, the Oncological Prevention Center, and medical-psychological center Tan-

adgoma, are two years into a joint project, the purpose of which is to raise awareness and educate the population and the first-tier medical operatives regarding early cancer detection and prevention. Czech expertise, experience and professionalism have been a tremendous help in this regard – according to one of the project participants, trainer Lubomir Skopal, the current situation in Georgia is reminiscent of what was happening in the Czech Republic a few years ago. However, significant efforts aimed at awareness-raising and education have yielded impressive results. “The project is based on a holistic approach which implies facilitating early cancer detection and prevention through strengthening the first tier of medical assistance. It is also dedicated to overcoming the stigma associated with cancer. The project has been financially supported all these years by the Czech Republic Development Agency,” said Tamar Kurtanidze, project manager of Caritas, at a large-scale conference held in Zugdidi dedicated to raising the people’s and first-tier medical operatives’ awareness regarding cancer prevention. It gets worse – challenges faced by the regions as described above are most acutely felt in the Samegrelo-Zemo Svaneti region, as there is no screening center there and the local denizens need to go to Kutaisi or Adjara to get involved in the program. This is theory, while in practice the number of rural denizens who actually do that is very small. As a rule, healthy people do not have much contact with doctors and are even more unlikely to cover a large distance in order to undergo a preventive procedure. Reasons for this have already been discussed – lack of awareness and education, everyday business and geographical unavailability of the program. It can be freely said that the lack of a screening center in Zugdidi negatively affects the opportunity of local denizens to make use of the program and potentially save themselves from a life-threatening condition. The good news is that such a center is about to be opened, again thanks to efforts of Caritas and the Czech Republic Development Agency. It will be equipped with the most modern technology available in Georgia, to boot. “It will be the most modern screening center in Georgia at the moment, and I promise that it will save thousands of lives,” says Ghvamichava. Stay healthy!




60th Anniversary of the Hungarian Revolution that Shook the World BY MAKA LOMADZE

Georgian Foreign Ministry Presents New Accreditation Software


he Georgian Foreign Ministry presented new digital software of diplomatic accreditation, yet another step towards the development of public services. The diplomatic accreditation software has few analogies in the world and provides e-accreditation for members of the diplomatic corps in Georgia. This innovative, technologically advanced and easily operable tool ensures the efficiency of the accreditation process: this means compliance with timelines, digital processing of data, incorporation with other existing databases, a high level of data security, and more. Aside from the new software, a new type of accreditation card has been launched which has special technical features to minimize the possibility of counterfeiting. “The Georgian Government’s priority is to provide a maximum level of e-government and e-services. We have already taken considerable steps in this direction,” Mikheil Janelidze, the Georgian Foreign

Minister, said. “Our success earned approval during the General Debate of the United Nations where Georgia was recognized as one of the leaders in terms of developing e-services. We are determined to further continue our reforms in this direction.” “We are all devoted to providing a fast, efficient and comfortable service that ensures an improved process of data protection and management, as a part of wider process of approximation of domestic laws and regulations with international and EU standards in order to fulfil Georgia’s international commitments in a more effective and efficient manner,” said Zurab Darchiashvili, Director of the Diplomatic Protocol Department. The new digital software of Diplomatic Accreditation is a product of the joint efforts of the Diplomatic Protocol Department of the Ministry of Foreign Affairs of Georgia and the Public Service Development Agency of the Ministry of Justice of Georgia through the financial support of SIDA, the Swedish International Development Cooperation Agency.


he Hungarian Embassy in Georgia this month marked the 60th anniversary of the Hungarian Revolution and War of Independence. Hungary’s legendary 1956 revolution and desperate fight for independence and freedom lasted no more than two weeks and yet it shook the world. In October 1956 the Hungarian nation proved that it was capable of taking control of its own destiny. In the same year freedom fights erupted in Poland and in Tbilisi, too, both suppressed by the soviet regime unmercifully. The memorial event of the Embassy of Hungary to Georgia presented two exhibitions: ‘For Freedom and Independence,’ paying tribute to the “Boys of Pest” and an exhibition of the Archive of the Ministry of Internal Affairs of Georgia depicting the chronology of the tragic event in March 1956 in Tbilisi. “Hungarians all over the world commemorate these days,” said Sandor Szabo, Ambassador Extraordinary and Plenipotentiary of Hungary. “The Hungarian Revolution of 60 years ago is without any exaggeration an event of paramount historical importance, the news of which at the time reverberated around the world. In what was one of the first liberation attempts in Eastern Europe, the freedom-loving youth of an oppressed

nation took up arms to free their country from a political system imposed on them from the outside, although from the very first day they knew the consequences of confronting the overpowering enemy,” he said. One of these consequences was that a hundredthousand people had to leave their homeland to escape persecution. In the Ambassador’s words, the Hungarian refugees waited in their adopted countries calmly, without violence, and with respect to the laws of the receiving country. Many of them became eminent personalities of the countries which gave them refuge. The Ambassador, who has worked in Georgia for a number of years, thanked the Georgians for their compassion. “We Hungarians feel a special connection with our Georgian friends,” the Ambassador went on. “With particular empathy we understand what it means to lose one fifth of the state territory and leave numerous compatriots behind, as Georgia did in its recent history. As a member of the European Union and NATO we are consistently advocating in favor of the acceleration of Georgia’s European and Euro-Atlantic integration process. We sincerely hope that this acceleration will manifest itself in the coming weeks in the form of abolishing the visa requirement for Georgian citizens visiting the Schengen area.” The memorial event was sponsored by the ‘1956 Hungarian Revolution and Freedom Fight 60th Anniversary Memorial Board.’

National Bank of Georgia Issues New 100 Lari Banknote BY NINO GUGUNISHVILI


ew 100 GEL banknotes will be available throughout the territory of Georgia from November 1, the National Bank of Georgia has announced.

The new 100 Georgian GEL banknote features famous Georgian poet Shota Rustaveli and the illustration of the poem ‘The Knight in the Panther’s Skin’ with one of the pages of its original print and an ornament from the original manuscript. The 20 and 50 GEL banknotes were renewed from February 2016. The older version of 100 GEL banknotes will remain in circulation.

THE FAMILY HOTEL Autumn Promotion All reservations in October and November get

free airport transfer and an authentic Georgian dinner for two Contact: Mob: +995 577 763685 Address: 41a Mnatobi str., Tbilisi Georgia E-mail: welcome@hotelthefamily.ge www.hotelthefamily.ge Facebook: thefamilyhoteltbilisi New Georgian Lari banknote. Source: National Bank of Georgia



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NOVEMBER 1 - 3, 2016

Tbilisi Marathon 2016 Supports Hospice Construction for Children


n October 23, the 5th Tbilisi Marathon organized by HeidelbergCement was held, this year proving more popular than ever before, with international guests from up to 60 countries visiting Georgia just for the event and 120 teams participating. 2346 people registered and 1185 crossed the finish line. The funds raised from the registration hit 23,196 GEL, which will be doubled by HeidelbergCement to make a total of 46,392 GEL to be transferred for the construction of the first Children’s Hospice in Georgia. As per tradition, exclusively for the Tbilisi Marathon, the track was set through the city center, with main roads leading to the central streets blocked for the race. The Marathon included three runs: a Half Marathon (21,097 km), a 10km Race, and a Kids Run (500 m and 1.2 km). Children aged 6-11 registered for the shorter run while those aged 12-15 participated in the 1.2 km run. The Half Marathon winner was David Kharazishvili (Georgia), crossing the finish line in 1 hour 07 minutes, after 18 minutes followed by the fastest Half Marathon female finisher, Susanne Miller (Georgia). The fastest man to run the 10 km race was Saba Khvichava (Georgia) by finishing the race in 32 minutes, and Ellada Alaverdyan (Armenia), finishing the race in 42 minutes. Tbilisi Marathon is the first race in the

Caucasus to hold international status, the event is an official member of The Association of International Marathons and Distance races (AIMS), and the win-

ners’ results are accredited worldwide. Tbilisi Marathon was held with full compliance to international standards. The race was counted by the traditional

partner, German Company Mika Timing with the internationally recognized “Official Timekeeping and Data Processing” system.

Tbilisi Marathon is organized under the patronage of Tbilisi City Hall, the Embassy of Germany in Georgia and the Ministry of Sport and Youth Affairs of Georgia. The sponsors of Tbilisi Marathon 2016 were LENOVO, Wissol Group (represented by Wissol, Wendy’s, Smart and Dunkin brands), information center 11808, Marriot and Sheraton Hotels providing Pasta Party and Checkpoint refreshments, GDS TV, IMEDI TV, 1st Public Broadcasting, exhibition center “Expo Georgia”, “Zedazeni”, Information center My.ge, Tskaltubo Plaza Hotel, Rooms Kazbegi Hotel, Lopota resorts hotel, TIME company, Radio Jako, Auto Radio, Vitamin Well, Territoreff – Business Georgia journal, La Belle esthetic center, Pulse.ge, Sairme Waters, Bike. ge, City Sport, Rauch, Velo+, Club 71, Snap, Dio, Treepex, Check in Travel, Marketer.ge and GEORGIA TODAY. Besides promoting healthy lifestyle and charity, Tbilisi Marathon also strives to develop tourism and to promote the city of Tbilisi worldwide. The event also included a pasta party and entertainment program of an award ceremony, concert, celebrity cake and gifts for the winners. Promotion of a healthy lifestyle is an integral part of Health & Safety programs that represent a major aspect of the HeidelbergCement corporate policy, which, together with the charity contribution, are the main reasons for holding the Tbilisi Marathon.

Profile for Georgia Today

Issue #892 Business  

November 1 - 3, 2016

Issue #892 Business  

November 1 - 3, 2016