Issue #944 Business

facebook.com/ georgiatoday

Issue no: 944/77

• MAY 9 - 11, 2017

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Yet Another (Questionable) Farewell to Street Vendors?

ISET PAGE 4

Tourism Market Watch GALT & TAGGART PAGE 6

FOCUS

Japanese Wine Master Tests Georgian Wine Potential

ON US SUPPORT

PAGE 8

In Georgia's development we trust...Trump signs act recognizing Russian occupation and aggression PAGE 2

EU Provides GEL 83 mln to Help Georgia Meet EU Integration Commitments

BY THEA MORRISON

T

he European Union (EU) is to allocate GEL 83 million in a financial agreement that will be used to facilitate the implementation of the Association Agreement, approximation of laws, and institutional reinforcement in Georgia.

Georgia’s State Minister for European and Euro-Atlantic Integration, Victor Dolidze, and European Commissioner for Neighborhood Policy and Enlargement Negotiations, Johannes Hahn, signed a Financing Agreement which launched the 2016 Technical Cooperation Program.

Continued on page 2

Response to Nord Stream-2: How Europe Will Support Russian Competitors on the Gas Market PAGE 9

EU Bank Introduces Financial Instruments to Support Georgian SMEs PAGE 10

Victor Dolidze and Johannes Hahn sign the financing agreement. Source: Office of the State Minister of Georgia on European and Euro-Atlantic Integration

New Driving License System to Take Effect on July 1 SOCIETY PAGE 14 Prepared for Georgia Today Business by

Markets As of 05ͲMayͲ2017

STOCKS BGEO Group (BGEO LN) GHG (GHG LN) TBC Bank Group (TBCG LN)

COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)

INDICES

Price

w/w

GBP 36.48

+1,3%

+7,9%

GEOROG 04/21

105.28 (YTM 5.26%)

Ͳ0,2%

Ͳ0,1%

GBP 3.66

+3,0%

+1,5%

m/m

GEORG 04/21

BONDS

111.15 (YTM 3.79%)

Price

+0,1%

w/w

+0,1%

m/m

GBP 16.40

+0,9%

+9,3%

Price

w/w

m/m

49,10

Ͳ5,1%

Ͳ9,7%

CURRENCIES

w/w

m/m

1 228,01

Ͳ3,2%

Ͳ2,2%

GEL / USD

2,4400

Ͳ0,2%

+0,6%

GEL / EUR

2,6695

+0,2%

+3,3% +4,6%

GRAIL 07/22

110.55 (YTM 5.38%)

+0,1%

Ͳ0,1%

BGEOLN 07/23

101.12 (YTM 5.78%)

+0,1%

Ͳ0,0%

Price

Price

w/w

m/m

GEL / GBP

3,1644

Ͳ0,1%

FTSE 100

7 297,43

+1,3%

Ͳ0,5%

GEL / CHF

2,4720

+0,6%

FTSE 250

19 699,61

+0,4%

+3,3%

GEL / RUB

0,0421

Ͳ1,9%

Ͳ2,3%

DAX

12 716,89

+2,2%

+4,1%

GEL / TRY

0,6884

Ͳ0,0%

+5,0%

DOW JONES

21 006,94

+0,3%

+1,7%

GEL / AZN

1,4209

Ͳ0,2%

Ͳ0,2%

6 100,76

+0,9%

+4,0%

GEL / AMD

0,0050

Ͳ

Ͳ

NASDAQ

+2,4%

MSCI EM EE

147,83

Ͳ1,9%

Ͳ2,4%

GEL / UAH

0,0921

Ͳ

+3,3%

MSCI EM

978,27

+0,0%

+0,9%

EUR / USD

0,9092

Ͳ0,9%

Ͳ3,0%

SP 500

2 399,29

+0,6%

+2,0%

GBP / USD

MICEX

2 002,41

Ͳ0,7%

Ͳ2,6%

CHF / USD

0,9877

Ͳ0,7%

Ͳ1,7%

MSCI FM

2 641,68

+1,3%

+0,7%

RUB / USD

57,9368

+1,8%

+2,8%

GT Index (GEL)

1 133,22

Ͳ

+0,0%

TRY / USD

3,5439

Ͳ0,2%

Ͳ4,2%

GT Index (USD)

931,07

Ͳ0,6%

+3,2%

AZN / USD

1,6972

Ͳ0,2%

Ͳ0,5%

0,7703

Ͳ0,2%

Ͳ3,8%

2

NEWS

GEORGIA TODAY MAY 9 - 11, 2017

EU Provides GEL 83 mln to Help Georgia Meet EU Integration Commitments Continued from page 1 Through this program, which will run until 2024, the EU will allocate GEL 83 million (EUR 32 million) to Georgian public institutions to help them comply with commitments set out in the EUGeorgia Association Agreement and Visa Liberalization and Readmission Agreement, as well as to support participation of Georgian beneficiary institutions in select EU Programs.

The program will provide support to the Georgian government in the fields of: general assistance and training for government institutions, energy, trade facilitation, intellectual property rights, banking services, public procurement, migration, and the participation of Georgia in the EU’s Horizon 2020 and Creative Europe programs.

"The European Commission will continue providing support for Georgia on its European path. We will also intensify our cooperation with Georgia as the regional frontrunner in the preparatory process ahead of this year's Eastern Partnership Summit," said Commissioner Hahn after the signing ceremony.

Georgia’s Foreign Minister, Mikheil Janelidze, said the assistance from the EU contributes to the implementation of the Association Agreement and will be directed towards the strengthening of respective institutions.

“Georgian export to the EU during the first three months of 2017 increased

by 44%, clear proof just how important the DCFTA and our institutional reforms are. These reforms not only encourage the export of Georgian products to the EU market but also make them internationally competitive,” Janelidze said, adding that the allocated funds under this Agreement will also go towards the Horizon 2020 and Creative Europe programs, which will, for their part, open up new opportunities for representatives of science, innovation and culture.

Janelidze noted that Hahn had sent out important messages regarding Georgia’s European perspective.

“The priorities of the Eastern Partnership are fully in line with the Georgian government’s goals and priorities in the area of development. The EU has a very clear vision of the steps that need to be taken to bring not only Georgia but all six countries of the Eastern Partnership closer to the EU,” Janelidze said.

The minister underlined that the key message of the European Commissioner’s statements is that Georgia must keep on the path leading it to its ultimate goal.

Johannes Hahn visited Georgia on Friday. He met the President of Georgia, Giorgi Margvelashvili, Prime Minister Giorgi Kvirikashvili and other governmental officials to discuss the implementation of the Association Agreement and preparation for the Eastern Partnership Summit.

US President Signs Legislative Act Recognizing Abkhazia & Tskhinvali as Regions Occupied by Russia

BY THEA MORRISON

T

he President of the United States (US), Donald Trump, has signed a legislative act which says that Georgia’s breakaway regions – Abkhazia and South Ossetia - have been occupied by Russia.

The legislative act also imposes restrictions on any US funding of a state that does not recognize the territorial integrity of Georgia and prohibits US representatives in international financial institutions from supporting programs that violate Georgia's territorial integrity and sovereignty.

President Trump signed the legislative act on May 6. Prior to that, the document was supported by the House of Representatives and the Senate.

Furthermore, the signed act commissions the US Secretary of State to report on the occupational actions of Russia to the Congress within 90 days.

The document also provides additional assistance to the Eastern Partnership countries to tackle Russian aggression and to support the implementation of the Association Agreement and Free Trade Agreement.

Georgian Foreign Minister Mikheil Janelidze stated that the fact represents an unprecedented support for Georgia's territorial integrity, sovereignty and non-recognition policy.

"The supporting text and additional funding for Georgia once again confirms the unwavering support of the United States for Georgia's territorial integrity and sovereignty, as well as our close bilateral cooperation. This is an important tool in the peaceful settlement process,” he said.

The President of Georgia, Giorgi

Margvelashvili welcomed the signing of the act. Through this law, both houses of the US Congress, the executive government and President Trump have directly strengthened the strategic partnership between Georgia and the United States, he said.

"Through this law the United States protects Georgia's sovereignty and adds special strength to the non-recognition policy… I would like to thank our strategic partner for such support.

I would also like to thank the Ministry of Foreign Affairs of Georgia and the Embassy of Georgia to the United States

for their active and fruitful efforts," read the statement of the President of Georgia.

Prime Minister Giorgi Kvirikashvili said that the bill signed by Trump featured a passage on Georgia's occupation for the first time.

“This reiterates the support of our strategic partner, the United States of America, for the territorial integrity and sovereignty of the Georgian state, and reaffirms unconditional trust in the country's ongoing democratic and economic development,” the PM stated.

4

BUSINESS

GEORGIA TODAY MAY 9 - 11, 2017

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

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.

Yet Another (Questionable) Farewell to Street Vendors?

BY IRAKLI SHALIKASHVILI

T

bilisi residents have already experienced a fair number of cycles in street vending regulations where local authorities tolerate, then regulate, and then evict street vendors. These cycles correspond with economic trends and election cycles, starting in 2006, when street vending was declared illegal by the Tbilisi Government and the first attempts were made to enforce the ban.

Just recently, the Tbilisi Mayor’s Office restarted its efforts to restrict trading in the streets of Tbilisi, claiming that illegal stalls in the busiest places prevent movement on the sidewalks and disturb the local population and tourists with noise and unsanitary conditions.

While many welcome such efforts from the local government, their economic and social conse-

quences need to be thoroughly evaluated and considered in order to develop economically and socially sustainable long-term solutions.

Street trading is pervasive across the globe, especially in developing countries. It provides an important source of earnings for the unemployed in urban areas, as well as a source of relatively inexpensive goods and services for financially vulnerable citizens. Even though it is the most visible segment of the urban informal economy, the accurate number of vendors and their contribution to the economy is virtually unknown and is still in flux.

Street vending markets provides access to paid work for groups with poor educational or vocational qualifications, and/or those who have been out of formal work for an extended period of time.

Informal paid work can have a positive role in peoples’ lives in preventing them from falling into abject poverty, and developing their confidence and skills to build social capital (Travers, 2000).

In developing countries, half to three quarters of the non-agricultural labor force participates in the informal sector; street vending constitutes quite a high portion (nearly 65%) of that work force (Martha Alter Chen and Marilyn Carr, 2001). In addition, street vending provides for important economic opportunities for women due to its flexibility. Women can more easily combine street vending with life events such as having children, and childcare, as well as other household duties.

Hence, it is not surprising to see that women dominate street vending in Tbilisi and beyond.

Vendors in the informal market can either sell their products in bazaars (specially segregated places for trading where vendors pay daily fees for stalls), or in the streets for free. Some of the vendors choose to trade in the streets, because they do not have to pay a fee for permission to trade (stall fees), and they have more flexibility in choosing the best place to sell their goods and services (in terms of consumer activities). Moreover, they can charge higher prices than in bazaars, since some consumers’ willingness to pay is higher due to their desire not to go inside a given bazaar and spend time searching for needed goods. They are willing to pay higher prices because they save time, and vendors take advantage of this fact. But it is not that street vendors necessarily earn more than off-street vendors. Street vendors also incur costs such as having their merchandise confiscated – a risk to which off-street enterprises are not subject to, as well as daily fees levied or bribes demanded in exchange for their use of public space.

Therefore, one might argue that this kind of market allocation is stable and optimal, because both parties find relevant consumers for their goods and services, and consumers are able to self-select in differentiated markets. Street and off-street vendors can exercise their economic rights, and, possibly, resources are optimally allocated.

However, street-trading is not a typical market activity for one simple reason: the economic activity does not take place on private property, but on public property. Not surprisingly, therefore, individual economic rights clash with collective rights in these public spaces. Opponents of street vendors argue that collective rights are violated when street vendors appropriate public space for their own use, impede the free flow of pedestrians and motorized traffic, and congest transportation networks. Temporary structures like sheds and kiosks, unsanitary conditions, noise, and little regard for the intrinsic beauty and suitability of vending in certain public spaces deter citizens from enjoying the impacted public spaces. In this view, governments must defend public space from such intrusions by strictly regulating or even outlawing street vending.

Outlawing street vending was a decision made by the Georgian government many years ago, but its enforcement in many ways has been costly, inconsistent and characterized by political cycles.

Incidentally or not, the recent renewal of efforts coincides with the beginning of the new political cycle, when Georgian politicians have much less incentive for political populism. Georgian citizens engaged in this economic activity represent a significant share of Georgian constituents, and we might argue that they exert significant influence on political decisions during elections, which makes us suspect that the solution offered by the government will only last up until the next important elections.

An alternative strategy that could be considered by the Tbilisi Government is to treat street vending as an essential, viable feature in economic governance. Street vending, as has been argued, contributes to the economic and social wellbeing of a society by offering dependable retail outlets for a wide range of affordable goods. Because street vendors sell affordable goods in small quantities, they offer low-income customers access to otherwise unaffordable goods. It is mostly poor public management that generates problems of congestion and pollution, which could be avoided by well designed, innovative and inclusive policies which many countries (e.g. Greece, Italy and Spain) have effectively embraced.

Outlawing street vending was a decision made by the Georgian government many years ago, but its enforcement has been costly, inconsistent and characterized by political cycles

6

BUSINESS

GEORGIA TODAY MAY 9 - 11, 2017

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.

Tourism Market Watch

BY KAKHABER SAMKURASHVILI

S

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

COMPLETION OF INTERNATIONAL BRANDED HOTELS IN GEORGIA IS BEHIND SCHEDULE Expected completion dates for 11 of the 26 international branded hotels in our 2016-2018 pipeline (see our June 2016 tourism report, Shifting into High Gear) have been pushed back by a year. That represents 36.7% of the hotel rooms included in the aforementioned pipeline. The delays vary significantly across regions. For Tbilisi, only two of 14 hotels have been postponed, whereas four of the six in Batumi and five of the six in other regions have been officially delayed by a year. The delays can be largely attributed to regional instability in 2016, along with the currency fluctuation and election year in Georgia.

Even so, the international branded hotel stock is expected to increase by 1,203 rooms (+69.9%) in Tbilisi and 224 rooms (+24.1%) in Batumi by the end of 2017. With new hotel projects announced since June 2016, there are now a total of 19 international hotels in the pipeline for Tbilisi, nine in Batumi, and nine in other regions.

THE HOTEL PIPELINE IN GEORGIAN

REGIONS OUTSIDE OF TBILISI AND BATUMI REMAINS STRONG, WITH THE KAKHETI REGION ATTRACTING A LOT OF INTEREST

Adjara Group Hospitality has announced plans to enter the Kakheti market with a 40-room farm hotel concept in Sagarejo.

A 100-room Golden Tulip in Telavi is expected to be completed by end-2017 and a 120-room Radisson Blu in Tsinandali by end-2018. The Partnership Fund signed a partnership agreement with Lopota Resorts and will invest US$ 5.4mn in the expansion of the resort, which will include the addition of 85 hotel rooms and a 300-person conference room, along with other amenities to the complex.

Of the top five source markets, there was strong growth from Armenia (+13.2% y/y), Azerbaijan (+7.1% y/y), Russia (+16.5% y/y), and Ukraine (+27.2% y/y). The number of arrivals from Turkey continues to exhibit a downward trend (-19.2% y/y), as border delays persist in Sarpi. Arrivals from the EU were up 44.8% y/y to over 26,000 visitors.

TWO INTERNATIONAL MIDSCALE BRANDS ENTERED THE GEORGIAN MARKET IN 2017 Maqro construction unveiled its second international midscale brand, Ibis Styles, in Tbilisi, after introducing Mercure Tbilisi Old Town in 2015. The 3-star Ibis Styles opened its doors in April and features 118 rooms. Another international midscale brand, Wyndham Hotel, opened in Batumi in February, adding 146 rooms to the stock of branded hotel rooms. Rooms Hotel and Best Western VIB are also expected to open in Batumi in 2017.

THE NUMBER OF INTERNATIONAL ARRIVALS WAS UP 11.1% Y/Y TO 1.78MN VISITORS IN JANUARY-APRIL 2017

expected to increase further, as several Russian carriers have announced plans to expand their offering during the summer season.

The number of visitors increased from all major source countries except for Turkey (-15.5% y/y).

Armenia (+14.6% y/y) and Russia (+24.1% y/y) were the largest contributors to overall growth, with Ukraine also posting doubledigit growth (+20.2% y/y). The number of visitors from Azerbaijan posted a modest increase of 4.9% y/y, but from the high base of January-April of 2016 (+22.9% y/y).

THE NUMBER OF INTERNATIONAL ARRIVALS WAS UP 10.2% Y/Y TO 0.51MN IN APRIL 2017

WHILE THE TOP FOUR SOURCE MARKETS ACCOUNTED FOR 82.6% OF INTERNATIONAL ARRIVALS SINCE THE

THE SHARE OF VISITORS ARRIVING BY AIR TO GEORGIA IS INCREASING 19.1% of international arrivals came in through the Georgian airports in January-April 2017, compared to 13.3% during the same period in 2016. The main driver was Tbilisi airport, with the number of international arrivals up 61.0% y/y to 295,000, while the Kutaisi airport has recorded almost 28,000 international visitors (+62.7% y/y) since the begin-

ning of the 2017. The growing share of air arrivals goes hand in hand with the diversification of direct flight routes out of Georgian airports. Georgia’s air connectivity with the Middle East is improving, with a Jordanian low-cost airline, Air Arabia Jordan, now operating flights between Tbilisi and Amman.

Connectivity with Russia is

10 Galaktion Street

BEGINNING OF 2017, SECONDARY SOURCE MARKETS ALSO POSTED ROBUST PERFORMANCES The number of Iranian visitors was up 3.3x to 66,000 visitors in first four months of 2017, mainly due to an inflow from Iran during Novruz Bairam. The number of Indian visitors was up 139.8% y/y to over 16,000, while the number of Israeli visitors increased 66.8% y/y to almost 19,000 visitors. Arrivals from the EU were up 26.3% y/y to over 65,000 visitors in January-April of 2017, with Germany (+43.2% y/y), Poland (+29.8% y/y), and United Kingdom (+26.0% y/y) driving the growth.

THE TOURIST CATEGORY CONTINUED TO DRIVE ARRIVAL GROWTH IN APRIL 2017 The number of overnight visitors (‘tourist’ category) was up 29.7% y/y and accounted for 43.6% of international arrivals. Same-day arrivals were down 2.1% y/y, while the number of transit visitors was flat. The number of tourist arrivals is up 26.9% y/y to 0.74mn in January-April of 2017, while the number of same-day visitors is down 1.8% y/y and the number of transit visitors up 11.3% y/y.

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge

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Safe Environment

Fitness Center

Event Hall

Swimming Pool

Green Area

Kindergarten

For the safety of residents, the whole territory of Tbilisi Gardens is fenced and controlled by security staff.

A 25-meter and children’s pool are located within a total area of 1100 m2, where you can relax and enjoy a healthy lifestyle the whole year through.

A 375m2 fully equipped gym with experienced trainers is available 24/7.

Italian designers have been working to create the green area of Tbilisi Gardens. The location of the building in the garden is idyllic, while the selected trees guarantee the quietness and green environment.

An event hall and magnificent terrace is the right place for louder events and meetings.

A colorful space and caring teachers will always be there for the smallest residents of Tbilisi Gardens.

8

BUSINESS

GEORGIA TODAY

MAY 9 - 11, 2017

Japanese Wine Master Tests Georgian Wine Potential

ICCA Signs Memorandum with French-Georgian Experto Consulting

Japanese master of wine, Kenichi Ohashi. Source: Georgian National Wine Agency

BY THEA MORRISON

K

enichi Ohashi, Japanese Master of Wine, is visiting Georgia for a weeklong wine market investigation.

During his trip to Georgia, Kenichi Ohashi is accompanied by the representative of Japanese Sommelier Association journal (JSA), wine writer Akihiko Yamamoto, who will publish an article about Georgian wine in JSA next year.

The Georgian National Wine Agency reports that Ohashi is the only wine master in Japan and his visit aims at studying Georgian wines in order to recommend them to Japanese consumers.

On the first day of his visit to Georgia, the Japanese guests held a meeting in the Georgian National Wine Agency, visited the museum and enoteca of the Agency and visited wine company Chateau Mukhrani.

The visit continued in Kakheti where the guests

had opportunity to taste over 100 different varieties of Georgian wine.

Georgian wine made quite an impression on the Japanese wine master.

“My impression of Georgian wine is absolutely fantastic. I am very ashamed for not having been familiar with it before now. Once I came here, I learnt a lot of new information, number one being the 8,000 year history of Georgian wine,” he said.

Ohashi said he believes that Georgian wine has a brilliant future in Japan.

“Japanese cuisine is on the list of UNESCO Heritage, as is Qvevri winemaking. The combination of these two is a double World Heritage, and they perfectly fit each other,” he added.

After visiting Kakheti, the Japanese guests also tasted some wines in the Kartli region.

Marketing and PR Department of National Wine Agency, Irakli Cholobargia, stated that Kenichi Ohashi represents the contractor marketing company Red Bridge, which is organizing a marketing and advertising campaign for Georgian wine in Japan this year.

Ana Sabakhtarishvili, Executive Director ICCA, Zurab Alavidze, Minister of Regional Development and Infrastructure, and Levan Dvali, Managing Director at Sakenergoremonti, at the event

BY NINO GUGUNISHVILI

N

ew perspectives for and approaches to the construction sector and Georgian innovative technologies were discussed at an event organized by Infrastructure Construction Companies Association (ICCA) at Rooms Hotel Tbilisi last Wednesday.

Attended by Georgian and international company representatives operating in the construction sphere on the Georgian market, and Georgian government and French Embassy in Georgia officials, the event consisted of presentations and signing of a memorandum between the ICCA and French-Georgian consultancy company Experto Consulting.

“It is critical to eliminate the problems the Georgian construction sector is facing today. Together with the Infrastructure Construction Companies Association, we are working very actively in this regard,” said Zurab Alavidze, Minister of Regional Development and Infrastructure.

Vice Mayor of Tbilisi, Lasha Abashidze, talked about the infrastructure projects realized by the city municipality, in particular the ongoing New Tiflis project and the reconstruction of the Shindisi-Krtsanisi road, with the budget for the next year enabling an intensification of road

Mixture of Cafe and Theatre under a single space in the very heart of the old city.

Warm environment, Georgian & European Food, Art and Music Open everyday from 12:00 pm to 01:00 am

infrastructure improvement.

“Support of the economic development of Georgia is our priority, being a country of high interest for its business climate and economic perspectives,” said Didier Leroy, Charge d’Affaires of France in Georgia, underlining the importance of the construction sector development for the country. “The recent visa liberalization is a unique chance for Georgian construction sphere representatives to attend numerous fairs, exhibitions and business meetings in France”.

Louis Toulorge, Economic Attache for the French Embassy to Georgia, spoke about the infrastructure projects the Government of Georgia is working on, noting that the construction sphere tends to be an extremely attractive area for foreign investment possibilities, especially for private enterprises in the energy, hospitality, and real estate sectors.

Other speakers at the conference included Nino Gventsadze, Head of Spatial Planning and Construction Policy Department at the Ministry of Economy of Georgia; Giorgi Isakadze, Editor-inChief Forbes Georgia; Ana Sabakhtarishvili, Executive Director of Infrastructure Construction Companies Association, and the representatives of Georgian and French companies- Jeu Group, Sakenergoremonti, Doro Group LTD, Basalt Fibers, Rebas, Borun Mining and of French Menard Vibro, all of whom gave detailed presentations and introduced their activities to the attendees.

Georgian Wines Showcased at VYNO DIENOS in Vilnius

BY NINO GUGUNISHVILI

W Samghebro St. 9/11 +995514001122 )% Ϥϛϯϟ Ϣϟϛϭϫϣ &DIH 7KHDWUH

ith the support of the Georgian National Wine Agency and the Embassy of Georgia to Lithuania, eight Georgian wine producing companies: Winery Khareba, Besini Winery, Georgian Wine Corporation, Giuaani, Zakro Vino, Kardenakhi 1, Kindzmarauli Marani and Askaneli Brothers, were presented at a special wine tasting titled ‘Georgia - Homeland of Wine’.

Headed by Giorgi Tevzadze, Advisor to the Georgian National Wine Agency Director, the presentation focused on the aldest traditions of winemaking in Georgia, Qvevri wine producing and the Georgian grape varieties.

Held in Vilnius’s largest exhibition center LITEXPO, the VYNO DIENOS was held for the 13th

time this year, with thousands of guests attending, including sommeliers, wine importers and distributors, wine experts, journalists and bloggers.

Lithuania is among the Top 10 countries exporting Georgian wine.

BUSINESS

GEORGIA TODAY MAY 9 - 11, 2017

9

Response to Nord Stream-2: How Europe Will Support Russian Competitors on the Gas Market

BY DIMITRI DOLABERIDZE

R

ussia's strengthened position on the European energy market is raising serious concerns among Western colleagues overseas. The Atlantic Council, a traditional platform for the exchange of opinions of military and international leaders, has issued a report showing forward movement in the idea of Europe's withdrawal from Russian gas and transition to Azerbaijani.

Which means Europe is going to remove itself from the Russian gas needle.

The Atlantic Council’s report promotes the need for Europe to support an alternative pipeline from Azerbaijan to Europe via Georgia - the Southern Gas Corridor, in order to "weaken Europe's dependence on Russian gas," and in fact redistribute financial flows to other destinations.

Europe's interest in this context is to create a full-fledged competitor of Russia in the gas market by weakening Russia's position through "convenient" agreements with "non-Russian suppliers." No less interesting is the author of the report, Bad Kut, who recently resigned from the CIA where he worked as an energy analyst. Among other things, he also advised American politicians on energy markets.

As a guide to action, the Atlantic Council proposes the provision of favorable conditions for "non-Russian gas suppliers", which should help in the competition with Russia. Interstate agreements and agreements between supplier and recipient countries can be a key instrument for creating those favorable condi-

tions. It is further expected to enter into profitable supply contracts. To provide competitive advantages for "non-Russian suppliers" it is proposed to involve international financial institutions. A year ago, Azerbaijan requested $5 billion for a pipeline project from the World Bank and the European Bank for Reconstruction and Development.

Another proposal of the Atlantic Council is the creation of gas infrastructure which includes the organization of transportation and processing of gas. In Europe, redistribution of the received Russian gas between the European countries through the "addition" of pipelines in Central and Southern Europe to the Russian gas pipelines is already planned.

This will allow gas "to move in all directions" in Europe.

The expansion of the Bulgarian gas pipeline system and the creation of new pipeline connections between Bulgaria and Turkey, Greece, Serbia and Romania, as well as the expansion of the Romanian gas transportation network towards Hungary, are envisaged to expand the domestic gas system of Europe. In the north of Central Europe, it is currently planned to build new gas pipelines from Poland to Lithuania, Slovakia and the Czech Republic, and between Austria and the Czech Republic.

A very important role in the redistribution of gas flows is played by LNG (Liquefied Natural Gas) terminals, into which gas will be pumped for further distribution throughout Europe. New terminals for LNG are expected to be established in the Thrace region in Greece and on the island of Krk in Croatia. In connection with this, connecting pipe-

lines are to be built to transport gas from Krk eastwards to Serbia, Bosnia and Hungary. The redistribution of gas flows is planned in Western Europe via the Midcat gas pipeline between Spain and France. This will transport gas from the LNG terminals on the coast of Iberia through France to Central Europe.

The goal of this broad plan is the liberation of parts of the European gas market from isolation. Further expansion

of the gas infrastructure will enable other external suppliers, including the USA, to find new routes for gas distribution.

The report also lobbies the creation of the North-South corridor, which will use a new bidirectional gas pipeline from Poland to Croatia that connects the LNG terminals in Swinoujscie and on Krk. The corridor will connect with existing and planned pipelines that will unite it with national networks throughout Cen-

tral and South-Eastern Europe. It is planned to supply gas to Ukraine via the North-South gas pipeline from Poland, with supplies there planned to increase to eight billion cubic meters per year.

“This project primarily benefits suppliers of liquefied gas,” President of Poland Andrzej Duda announced, himself an ardent opponent of Nord Stream-2.

With new introductions into the European energy market, Turkey's position may not be on the side of Russia at all.

With the Southern Gas Corridor, Ankara can create an infrastructure independent from Russia. In addition, it is wellknown that Turkey wants to become a center for the distribution of gas flows to Europe, allowing Ankara to directly influence the European market.

Director of the Center for Political Conjuncture, Dmitry Abzalov, believes that Washington will rather support the expansion of the network of gas terminals in Europe than the Southern Gas Corridor.

Against the background of the fall in energy prices, the Southern Gas Corridor does not present as particularly profitable.

Further, the implementation of this project relies on a resource base from which to "reinforce" this gas. Azerbaijani gas is one option, an idea which was supported

by Europe, but it is extremely difficult to pump the entire South outline. It is much easier to do what Washington does now: create a LNG terminal system and deliver gas through the US. This is also economically impractical, but for the US it at least means supporting its producers. Such plans suggest the maximum desire of Washington that the European Union create a system of LNG terminals throughout Europe.

10

BUSINESS

GEORGIA TODAY MAY 9 - 11, 2017

EU Bank Introduces Financial Instruments to Support Georgian SMEs

D

elivering on its key objective of private sector development in Georgia, the EIB Group (European Investment Bank and European Investment Fund) is implementing two new programs developed jointly with the European Commission, both of which were prepared in the context of the Association Agreement of Georgia with the EU: the DCFTA Initiative East and the EU Research and Innovation Program Horizon 2020: InnovFin – EU Finance for Innovators.

The two program were presented at a conference held on May 8 in Tbilisi, bringing together around 200 representatives of business, banks, microfinance institutions, financial advisors and industry associations. The conference guests were addressed by high ranking representatives of the European Union, the Georgian government, and the EIB: Janoš Herman, Ambassador of the European Union to Georgia; Dimitry Kumsishvili, First Vice Prime Minister and Minister of Finance of Georgia; Levan Davitashvili, Minister of Agriculture of Georgia; Giorgi Cherkezishvili, Deputy Minister of Economy

and Sustainable Development of Georgia; and Heinz Olbers, Director of the Neighboring Countries Department of the EIB. The Deep and Comprehensive Free Trade Agreement (DCFTA) Initiative East aims to strengthen economic development in the countries which have signed an association agreement with the EU, namely Georgia, Moldova and Ukraine, by providing financial and technical support targeted at small and medium-sized enterprises (SMEs) in these three countries.

The EIB Group is joining forces with the EU’s Neighborhood Investment Facility (NIF) to provide a package of instruments designed to support the three countries in addressing the market needs and underpin the objectives of the DCFTAs, aiming for the progressive removal of barriers and creation of the necessary conditions to allow SMEs to benefit from the new market environment.

The overall objective of this initiative is to support economic growth and the generation of employment in the three countries. It will also enhance access to finance in the form of improved lending

terms and conditions and provide first loss SME portfolio guarantees, enabling local intermediary banks to take on more risk and reach out to underserved segments of the economy.

The initiative will strengthen the capacity of the private sector, in particular SMEs, to compete in local and international markets, by: Offering SME loan guarantees to local banks and other financial intermediaries in cooperation with the European Investment Fund (EIF), enabling them to improve lending terms and conditions and thus providing wider access to finance for SMEs. Providing technical assistance to counterpart financial intermediaries via institutional and capacity-building activities and advisory services to the small and medium-sized enterprises at regional and local level by promoting rural development with a particular focus on agri-food value chain development.  Supporting micro-enterprises through local microfinance institutions.

"InnovFin – EU Finance for Innovators" is a joint initiative launched by the EIB Group in cooperation with the European Commission under the EU Research and Innovation Programme Horizon 2020 and consists of a series of integrated and complementary financing tools and advisory services covering the entire value chain of research and innovation in order to support investments from the smallest to the largest enterprise.

In February, the European Investment Fund (EIF) and ProCredit Bank JSC (Georgia) signed the first agreement for SMEs and small midcaps in Georgia under InnovFin. The agreement, supported by the InnovFin SME Guarantee facility is expected to enable ProCredit to provide EUR 50 mln in loans to innovative companies over the next two years.

This first InnovFin SME Guarantee Facility in Georgia was presented during the conference.

“It is in the interests of both Georgia and the EU to work towards strengthening private businesses in Georgia,” said Dario Scannapieco, EIB VicePresident responsible for the financing of SMEs and midcaps. “A well performing private sector, represented particularly by SMEs, is strategically important for growth and job creation in Georgia and for further diversification of the country’s economy”.

“These programs are further proof that the EU is committed to supporting the development of Georgian SMEs,” said Ambassador Herman. “In close cooperation with the EIB, we provide tangible support to innovative businesses that seek to take advantage of the new opportunities with the EU." “Projects of great significance for Georgia are being implemented with the financial support of the EIB in roads, energy, water and municipal infrastructure sectors,” said Minister Kumsishvili. “The EIB is also supporting the country’s private sector.

The operations and future plans of the EIB manifest themselves in the great support for the Four Point Reform Agenda initiated by the Prime Minister of Georgia for the acceleration of infrastructure projects and support for entrepreneurship”.

“The tools presented today are tangible for raising private sector competitiveness, absorbing innovation and for developing the right skills, it is also opportunity for wider access to finance,” said Giorgi Cherkezishvili, Deputy Minister of Economy and Sustainable Development, Ministry of Economy and Sustainable Development of Georgia. “I hope the startups, SMEs, mid-caps, as well as large companies and commercial banks will take the advantage from the opportunity the EIB is providing”.

“The Government of Georgia pays huge attention the development of agriculture sector, one of the most important priorities for the Georgian govern-

ment is to support farmers and SMEs to have access to the affordable finances,” said Minister Davitashvili. “After signing the DCFTA agreement, export to the EU has been increasing. In order to fully enjoy the benefits, firstly, Georgia will have to comply with the EU norms and regulations and secondly, should have quality products to be competitive in the international market. After successful negotiations with EIB, the Government of Georgia concluded financing agreement worth EUR 100 million. The EIB credit facility will be diverted for the development of Georgian horticulture, including nuts, and wine value chains. With long-term financing schemes, farmers and SMEs will have the possibility to produce high value crops and quality products to gain full access to the international market and with allocated funds, in close cooperation with the banking sector, we will make huge impact for the positive development of the agro-food sector”.

The EIB, the European Union’s bank, finances projects in Georgia on the basis of the EU External Lending Mandate. The mandate provides the EIB with a guarantee covered by the EU budget for projects in the areas of social and economic infrastructure, local private sector development, in particular SMEs, and climate change mitigation and adaptation.

The EIB is a AAA-rated, policy-driven EU financial institution raising funds in capital markets to on-lend to eligible investments supporting EU policies and priorities. The EIB passes on the financial advantage it obtains through benefits such as attractive interest rates and long maturities to projects that score highly in terms of EU objectives and are consistent with the Bank’s commitment to supporting sound, sustainable investments. The EIB’s extensive experience in financing projects, its in-house sector expertise and its deep knowledge of European policies facilitate the identification of projects that match both national and EU priorities. The EIB’s project appraisal covers technical, economic, financial, environmental and social aspects as well as credit risks, provides for the appropriate mitigants and conditionality and helps structure projects in line with EU standards. The EIB thus acts as a flag carrier for EU policies outside the EU, contributes to the dissemination of best practices and facilitates the participation of other financiers in EU priority projects.

The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

Since the beginning of 2016, all EU activities that support small and medium-sized enterprises (SMEs) in the Eastern Partnership countries have come under the umbrella of EU4Business.

EU4Business provides: 1. Support to national authorities, helping to change and improve laws and regulations, building a better regulatory framework to improve investor confidence; 2. Support to Business Support Organizations (BSOs) as membership organizations enable a dialogue between government and business. EU4Business can organize PPD (Public-Private Dialogue), co-operation and networking; 3. Direct support to small and medium-sized enterprises (SMEs), for example by providing finance, training, coaching and advice, and import and export support and matchmaking.

BUSINESS

GEORGIA TODAY MAY 9 - 11, 2017

11

TBC Bank Successfully Finalizes Merger with Bank Republic

BY NINO GUGUNISHVILI

B

ank Republic has become a part of TBC Bank, successfully ending the several month-long merger process; making TBC number 1 in all banking segments on the market.

TBC Bank is now the number1 bank in Georgia for loans and deposits. As of March 31, its market share in loans was 38.7% and 37.6% in deposits. Its market share in retail loans increased by 11% to 43.9%. TBC Bank’s clientele reached over 2 million, giving it the highest number of clients on the market. TBC Bank has expanded its service network, with a growing number of branches (167) and the number of ATMs up to 530 on the territory of Georgia.

The Bank also strengthened its position with highly qualified personnel offering extensive experience in the banking sector.

“We’re delighted that the largest merging of two companies in Georgia has ended,” Vakhtang Butskhrikidze, CEO of TBC Bank said at a press conference on Friday. “We underwent a several month-long difficult process in order to make integration comfortable for our clients. I would like to thank both bank teams for the work they’ve done. We assure Bank Republic clients that we will provide them with the highest quality service, one that made us stand out

on the market”.

Former Bank Republic clients will benefit from the full spectrum of TBC Bank’s innovative products and services, including internationally acknowledged online and mobile banking, the first chat bot in Georgia (Ti-Bot), a variety of credit and deposit products and an extended network of branches and ATMs from May 8, when the technical migration of the two banks will be ended and former Bank Republic clients will become clients of TBC Bank, able to receive the

full range of services in all TBC Bank and Bank Republic branches.

“It’s the largest transaction not only in Georgia, but also regionally. With all the indicators, TBC Bank today is the biggest financial institution in Georgia; however, for us the most important thing is the highest quality service to be provided to our customers.” Butskhrikidze noted as he spoke about the advantages and outcomes of the recent merger.

“Since the period of acquisition, we’ve managed to increase Bank Republic’s

shares both in deposits and loans, and it happened thanks to Bank Republic’s employees”.

Approximately 500,000 new customers were added to TBC Bank’s client portfolio.

“Our primary objective is to have clients that are satisfied with our service, to develop together with them and bring tailored products and services to as many people as possible, enabling them to fulfil their wishes. Having 500,000 new customers that are now TBC Bank cli-

ents is the beginning of a brand new stage for our bank and we hope to use the strengths of TBC Bank in order to meet their needs,” Butskhrikidze emphasized.

“We finalized the merging very quickly and effectively,” said Vano Baliashvili, Deputy CEO, TBC Bank. “It was a difficult process, and this weekend we’ll be upgrading the technical systems of the two banks”.

Butskhrikidze also noted that no staff cuts were made in front office during the merging process.

Nika Kurdiani, Deputy CEO of TBC Bank talked about new services and products soon to be offered to SME clients. He said by the end of the month, TBC Bank will be introducing a new service to its SME clients. However, he didn’t go into detail, moving on to briefly describe yet another change TBC Bank plans to launch in the near future which will enable SMEs to be more competitive.

“We’re also extremely active in corporative business and we hope that 2017 will be the most successful in this regard.

We believe it to be a very positive one for the Georgian economy, giving a chance to Georgian business to operate much more successfully. It was critical for us to maintain all the corporate clients Bank Republic had and we managed not to lose any of them. We’re working with them on a day to day basis, offering a long-term strategic partnership,” Butskhrikidze concluded.

12

BUSINESS

GEORGIA TODAY

MAY 9 - 11, 2017

Adjara Tourism Development Budget to Increase

BY THEA MORRISON

T

he Adjara tourism development and promotion budget is to increase by GEL 1.116.200 (+15%) next year in order to facilitate tourism development and improve quality of service in the region.

A total of GEL 8.557.800 is planned to be spent on the implementation of tourism development programs in Adjara in 2018.

This year, the budget of the department is GEL 7.441.800.

Discussions regarding the 2018 tourism development budget were held this weekend, attended by members of the Regional Advisory Board of Tourism, representatives of NGOs and governmental structures.

In 2018, around GEL 6.094.700 will be spent on advertising and PR campaigns in order to attract local and foreign tourists to Adjara.

The increase of the advertising budget planned for next year is 929.700 GEL (+18%).

GEL 5.594.700 will be spent on advertising the country's tourism opportunities in 16 target countries, while GEL 500.000 will be spent on advertising within Georgia.

The Department will spend GEL 195.000 to improve

Source: s.iha.com

tourism services in the region in 2018.

The projects "Tourism Development School", "Recommended by the Tourism Department" and "Magnolia 2018", which is an award for the best tourist services, will also continue next year.

A new project will be launched from 2018 “Mys-

tery Guest�, which will establish the level of service quality in Adjara.

In 2018, the Department will also study foreign tourists in Adjara and determine the level of their satisfaction and problems encountered- GEL 275.000 will be allocated from the budget for these studies.

The Department will spend GEL 517.000 on the development of tourism products and routes in mountainous Adjara in 2018.

The Agency will also host the Village Tourism and Bird Festival next year, and will organize a special ceremony opening the tourist season.

Microsoft Georgia & Degustate Wine Club Startup Announce Cooperation

FIRST BRAND HOTEL IN KUTAISI UNDER BEST WESTERN INTERNATIONAL Within the framework of the Georgian Hotels’ Regional Network Development Project “12 hotels in 12 regionsâ€? by GHYHORSPHQW FRPSDQ\ Âł6LPHWULD´ WKH ÂżUVW EUDQG KRWHO KDV been opened in Kutaisi under the Best Western International brand.

The hotel accommodates 45 guest rooms, including 40 standard rooms and 5 suites. The hotel was designed taking into consideration special conditions and safety for guests with disabilities.

Address: 11 Grishashvili Str., 4600, Kutaisi, Georgia TEL 219 71 00 info@bwkutaisi.com

Three mobile conference halls are available with a total capacity of about 100 persons.

(XURSHDQ FXLVLQH FDQ EH HQMR\HG LQ WKH JURXQG ÀRRU FDIp and a grill-bar menu in the roof top restaurant with panoramic views over the city.

The International Hotels Management Company “T3 Hospitality Management,� providing the hotel management, has 20 years’ experience in hotel management in different countries globally.

M

icrosoft Georgia and Degustate Wine Club Startup last week announced their cooperation. As a BizSpark member, Degustate will be running its business on the Microsoft Azure platform. “We are delighted to announce our partnership with Microsoft,� Nodar Baghishvili, Partner, Degustate said. “Such partnership comes at the right time for us, as the BizSpark program will help us with our IT infrastructure environment enabling us to run software on a secure, redundant and scalable platform, and will let us save on hosting and deployment of services. Besides the regular benefits of the secure Microsoft Cloud, we plan to use analytics to profile customers’ wine preferences, make predictions and the full power of the Artificial Intelligence of the Cloud platform. With the access to Microsoft Azure via BizSpark, we can efficiently support the demand for resources of Degustate’s

rapidly growing business�.

Founded in 2017 in Tbilisi, Georgia, Degustate is the first Georgian company to connect two different areas, Wine and Technology, introducing and implementing the respective new technologies and areas of future development. “More and more entrepreneurs are putting stake in the Microsoft Azure Cloud platform and making the right choice,� said Nikoloz Doborjginidze, General Manager at Microsoft Georgia. “The flexibility of the service allows resources to be scaled depending on real traffic needed and to manage businesses effectively. There’s no need to use resources on technical support of infrastructure as it is done by Microsoft. As a result, these resources can be invested in the main thing – business development�.

Microsoft BizSpark is a global program that helps startups succeed by giving them free access to Microsoft Azure Cloud services, software, and support.

BUSINESS

GEORGIA TODAY MAY 9 - 11, 2017

Business Café Holds 9th General L Meeting

13

Russian Economy Minister: Let’s Dump the Ruble

BY DIMITRI DOLABERIDZE

BY TAMZIN WHITEWOOD

O

n May 3, the 9th meeting of Business Café was held at Holiday Inn Tbilisi.

Sascha Ternes, Managing Partner at TERNES Real Estate Fund LLC and former CEO of ProCredit Bank, spoke about organizational culture, business ethics and corporate management.

Business Café is a project initiated by the consulting company “Insource”, which has been supported by PASHA Bank since 2015.

Business Café meetings are attended by top managers of large and mediumsized companies on a regular basis. Each meeting offers a convenient platform for the sharing of knowledge and experiences, as well as discussion of the recent trends in various industries and the

economy as a whole.

Interesting discussion topics and interactive events attract the participants and contribute to the rising popularity of the project.

As of 2017, two new sponsors have joined the initiative - ACT and Orient Logic.

“Today’s meeting, just like the previous ones, was very informative and dynamic.

This was a result of the speaker’s expertise and relevancy on the topic presented.

PASHA Bank is a partner of Business Café for the third year running and we are excited to see the growing interest and positive feedback towards the project,” said Anano Korkia, Head of PR and Marketing Department of PASHA Bank.

Among the speakers and presented topics of previous Business Café meetings were: - Lado Gurgenidze, former Prime Minister of Georgia, an executive chairman of the supervisory board of Liberty Bank

- “Thoughts about management and leadership”.

- Giorgi Kadagidze, former president of National Bank of Georgia - “Innovation management”.

- Alexander Jejelava, Minister of Education of Georgia - „Organizational corporate culture”.

- David Gogichaishvili, general manager of Night Show Studio - „Management of human resources”.

- Andro Dgebuadze, business advisor – ”Management 3.0 or MBA books in mirror”.

- Papuna Toliashvili, founder and managing partner of Synergy Group – “Circular Organizational Structures”.

- Tinatin Rukhadze, Co-founder and General Director of the research and consulting company ACT- “Who is the leader of the future?”

- Guga Tsanava, businessman and entrepreneur - “Stanford Model of Management”.

ast week, the head of the Russian Ministry of Economic Development, Maxim Oreshkin, said during a press conference that it is more profitable for Russians to buy foreign currency. The forecast for the average dollar exchange rate for 2017 is 64.4 Rubles, but by the end of the year it is expected to grow to 68 Rubles. As a result, many citizens have become preoccupied with buying currency, not only those that are going abroad this summer.

A recommendation to buy assets can be given by any analyst of a private financial company or by banks that manages assets in the stock or bond market. He risks only his reputation: his priority is the profit of his clients. However, the Minister of Economy is a governor, his salary is paid from the budget, not from the income of a private financial company operating at its own risk. He is supposed to recommend to his fellow citizens domestic tourism and Ruble deposits; to invest their savings in shares of Sberbank, Norilsk Nickel, MTS, Lukoil or Surgutneftegaz, and not to buy foreign currency. Active PR of the Russian Ruble and the Russian capital market in the 1990s was very well done, even by such a liberal “Westerner” as Anatoly Chubais.

Apparently, those who believe that patriotism and the modern liberal economic blocs are different are right. People come and go, but basically nothing changes. Orientation to the West and, above all, the US for Russian ministers is formatted in the brain.

The only problem is that Russia needs a strong Ruble. And this question is more political than economic. The fate of Eurasian integration largely depends on whether the Russian currency is strong or weak. First of all, it will be determined by the attitude to Russia of people in the former Soviet republics and neighboring states. At the same time, modern nations are completely bourgeois, personal financial interests, comfort and quality of life are always placed first and foremost. Therefore, Russia will be attractive for Eurasian integration if and only if dollar salaries and other incomes are much higher than that of its neighbors and potential partners for integration- when Moscow, not only in words, but in fact, becomes an international financial center, when it is much more profitable to live and work in Russia, and not in Belarus, Kazakhstan, etc. And this requires a very strong Ruble. Of course, a strong Ruble hits Russian import competitors, exporters and partially the budget. However, the geopolitical poles from a strong Ruble outweigh all the economic disadvantages.

There are a lot of leverages to maintaining a stable Ruble rate. Russia's international reserves are about $400 billion.

And the patriotic, and completely loyal to the Kremlin, Surgutneftegaz holds a cash pillow in currency of more than $36 billion. Other export companies have a good stash, not to mention the private offshore aristocracy, whose aggregate foreign exchange assets are estimated at $1.3 trillion.

The issue is in the political decision and political will. Of course, coming from the Kremlin, and not from the Ministry of Economic Development.

National Bank of Georgia & Microsoft Georgia announce cooperation

T

he National Bank of Georgia and Microsoft Georgia have held discussions on the topic of cloud computing and the supervision of outsourcing risk and announced their readiness for cooperation in the sphere of Cloud computing in the financial sector within the country. The operational

risk regulation of the National Bank of Georgia does not prohibit outsourcing for Georgian commercial banks, which also includes cloud computing, but the outsourcing of primary banking activities as well as the associated supporting information systems needs the approval of the NBG. Cloud computing is a major shift from

the traditional way organizations think about IT resources. Key benefits are speed, acceptable costs, productivity and customized scalability. Today cloud technologies are secure and transparent like never before. Thus, they will help banks in Georgia to be up-to-date with the latest software and be aligned with EU practices.

“Clouds are fundamentally changing the world, impacting everything around us. We believe that eventually it will be the core for all future financial operations not only in Georgia, but all over the world,” said Nikoloz Doborjginidze, General Manager at Microsoft Georgia”.

The National Bank is the regulator for all banks and financial institutions in

Georgia. NGB issued its operational risk regulation that includes requirements for outsourcing, in 2014. As mentioned above, the regulation allows subcontracting, including partnerships in sphere of Cloud computing implementation. If a commercial bank decides to outsource their infrastructure to the cloud, they should request approval from NBG.

14

SOCIETY

GEORGIA TODAY MAY 9 - 11, 2017

Touch the Science: Tbilisi to Host Science Festival

BY NINO GUGUNISHVILI

O

n May 13, at 4pm in East Point Mall, Tbilisi, the Science Festival: ‘Touch the Science’ will kick off with the participation of over 120 talented students. Young scientists and successful students will introduce various activities and science projects to festival visitors alongside a two-hour program offering numerous hands-on experiments. The works of young inventors that have won in past competitions will also be showcased during the festival.

This year the Science Festival is to focus on the field of natural sciences, giving visitors the opportunity to see some 50 interesting experiments and

20 innovative inventions related to this theme.

The aim of the festival is to show the importance of natural science to students and its role in the process of education.

The experiment part of the show will be held in East Point’s central area and presented by the students of Demireli College. Festival guests will have the chance to enjoy various inventions and participate in innovative experiments themselves.

Apart from Demireli College, students from other Tbilisi schools, young scientists and children with special needs will be taking part in the festival.

Touch the Science festival is organized on the initiative of the students of Demireli College. The winners of the Young Scientists and Inventors Festival 2016 will also be involved in the festival activities, introducing their projects to guests.

New Driving License System to Take Effect on July 1

BY THEA MORRISON

I

n order to reduce the number of increased road accidents in Georgia, the Ministry of Internal Affairs (MIA) of Georgia will launch the new, 100-point driving license system from July 1.

The contactless patrolling initiative will also take effect on the same day. According to the parliamentary bill, the points system will be attributed to driving licenses issued in Georgia as well as in foreign countries.

Each administrative offense in traffic safety will result in deprivation of a respective number of points and if the points are reduced to zero during the calendar year, the license will be terminated and the driver will have to apply for the exams no earlier than two months upon termination.

On May 8, the MIA opened the Traffic Safety Week, during which the ministry will provide society, the non-governmental organizations and all interested people with information about the new

system and changes to the traffic law.

The ministry says various offences will result in the deprivation of license points: Drunk driving: 30-40 points Driving without seatbelt: 5 Using mobile while driving:15 Violation of exploitation rules of vehicles:5-20 Failure to comply with police / regulator's request: 15-35 points Speeding: 10-20 Violation of safety rules while transporting children: 20 points.

Last week, the parliamentary majority Georgian Dream’s Archil Talakvadze said that the government is thinking of encouraging the most lawabiding drivers who do not violate road rules and who maintain their driving license at 100 points per year.

The exact details of this initiative are not yet clear, but according to Talakvadze, one of the forms of incentives for drivers of this category may be preferential terms of vehicle and life insurance of cars.

Moreover, various prizes may be awarded to the most law-abiding drivers.

Wall Street Journal & National Geographic to Make Film about Georgia’s Ushguli

BY THEA MORRISON

M

edia outlets, the Wall Street Journal and National Geographic, are to make a short film about Georgia’s mountainous village Ushguli in the Upper Svaneti region.

Recognized as a UNESCO World Heritage Site, Ushguli is one of the highest continuously inhabited settlements in Europe. Compared to somewhat more developed towns like Mestia, Ushguli has been "saved" by its particularly inaccessible location, which helped preserve the village's timeless feel.

The press tour of journalists to Ushguli was organized by Georgia’s National Tourism Administration (GNTA) under the Ministry of Economy.

The guests will prepare a short film and article about Ushguli, which will be included on the Wall Street Journal, National Geographic and Star Airlines websites and social media.

Six guests were involved in the tour, including

National Geographic journalist Robert Reid, who participated in a specially organized horse race.

Head of the GNTA, Giorgi Chogovadze, underlined that placing a documentary film about Ushguli on such influential publication websites as the Wall Street Journal and National Geographic will help to promote Georgia and increase tourism in the country.

“Such projects help potential tourists to get information about Georgia and plan their journey, reflecting in an increased inflow of tourists. That is why the GNTA aims to regularly organize press tours from various countries,” Chogovadze said.

SOCIETY

GEORGIA TODAY MAY 9 - 11, 2017

15

Hotels & Preference Hualing Tbilisi to Host Wedding Show

BY NINO GUGUNISHVILI

T

his year, for the second time, Hotels & Preference Hualing Tbilisi is hosting a massive wedding show on May 14.

A combination of an exhibition and show, the annual event has made Hotels & Preference Hualing Tbilisi one of the most popular venues for weddings since it opened back in 2015. Uniting all companies, performers and artists in one space, the wedding show is a B2B event allowing companies to introduce their products and services to future newlyweds.

The upcoming event on May 14 is planned to be bigger than last year, moving from the hotel’s event hall to its lobby and outdoors, where the most expensive cars will be showcased alongside miniature retro ones, for couples to choose from for their wedding day transport.

“The idea of the Wedding Show is to offer a whole package of services to couples in the process of planning their wedding, helping them to meet the companies and choose from the products they have, and from the available discounts they offer,” says Nino Chechelashvili, Marketing and Communication Manager at Hotels & Preference Hualing Tbilisi. “There is so much joy and stress in planning a wedding. Often, it’s difficult to choose even which cake you want, which is why at our wedding show, there will be several companies presented in each category”.

The Wedding Show will run from 2 to 6pm and will be accompanied by a show program throughout the duration of the event. Contrary to last year, this time it will be centered around one particular couple soon to be married. The dress of the bride will be done by Dresscode, makeup by Oriflame, hair by beauty salon Le Bureau, and all of the most important rituals and ceremonies, flash mobs and surprises will be for them.

LAKA, a company with extensive expe-

rience in organizing weddings, is a co organizer of the event, while Dresscode is the supporter and partner of the wedding show. Along with the wedding dresses, Dresscode offers a range of services- from wedding decorations to a special hair and makeup. As Nino Chechelashvili noted, it’s thanks to Dresscode, that the visitors of the Wedding Show will find themselves in a true fairytale.

“Apart from being organizers and hosts,

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Hotels and Preference Hualing Tbilisi will also have their services presented at the Wedding Show, introducing our wedding menus and packages, as well as numerous offers with benefits,” Chechelashvili said, promising that there will be lots of prizes during the event, Hotels & Preference Hualing Tbilisi will also present its own stand at the show, where everyone can find out more about the Hotel’s services, taste its food, and choose from a variety of wedding menus.

“The event hall at Hotels & Preference Hualing Tbilisi can host almost 400 guests.

One of the many advantages of having a wedding at our hotel is that both the newly weds and their guests can stay after the wedding,” Chechelashvili highlighted.

40 different companies: floral, jewelry, pastry producers, beauty salons, DJs, bands, show ballet, Georgian traditional dance performers, a flash mob, photo studios, event companies, and wine companies are taking part in the Wedding Show, of interest to couples looking for both traditional Georgian and more European style wedding ceremonies.

“At the Wedding Show, we try to maximally suit the needs of each potential client, offering services with a different price range tailored to individual wishes and needs,” Chechelashvili said.

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Maka Lomadze, Tim Ogden, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison Photographer: Irakli Dolidze

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