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BUSINESS
GEORGIA TODAY
OCTOBER 16 - 18, 2018
Badri Japaridze, TBC Bank, on the Georgian Economy Today BY KATIE RUTH DAVIES
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BC Bank, featured on the London Stock Exchange (LSE), is in an ideal position to promote Georgia as a prime destination for investment. Speaking at the Bristol Business Conference in Tbilisi on Friday, the Deputy Chairman of TBC Bank, Badri Japaridze, explained how. “Georgia is uniquely positioned in a region known for turbulence, offering a stable and predictable economy and politics,” he said. “The economy has
Ease of Doing Business #9, Ease of Starting Business #4, Economic Freedom Index #7, Ease of Registering Property #4, Safety Index #5, Protecting Minority Investors #2, Open Budget Index Globally #5
been growing fast in the last 10 years. When the world saw a financial shake up that affected our neighbors, Georgia saw a 2.4% increase in GDP. This year’s forecast is 5.6%. Negative developments in the region, such as that happening in Turkey, lead investors to be concerned about the potential impact on Georgia, but we explain to them that thanks to Georgia’s economic diversity, any impact felt will be minimal. The Turkish situation only hit Georgia with a 0.5 % impact, leaving a strong 5.6% GDP forecast due to that very diversity.” He went on to invite guests at the conference to compare the Lari performance to the currencies of neighboring countries, citing it as the most stable in the emerging markets economies. “The Lari is free-floating, absorbing regional shocks and enabling Georgian producers to keep their products competitive,” he said. “The Lari reacts in a prudent way, and while it depreciated at the beginning of the year, fluctuation since has been minimum. I would personally say the Lari is undervalued.”
TRADE & SERVICES As a result of the AA and DFCTA, last year Georgia-EU trade increased to make up a larger total percentage of export and trade as compared to 12 years ago when Georgia was more exposed to the neighboring market. Tax rate as a percent of commercial profit is just 16.4% in Georgia, putting it way below the majority of European countries (as an example, Estonia is 48.7%, Lithuania 42.7%, Turkey 41.1%, Ukraine 37.5%, Bulgaria 27.1%, and the UK has 30.7%). “Among the main drivers of the Georgian economy is tourism and hospitality. By September this year, we had welcomed 40% more British holidaymakers, the same amount as in the entire year of 2017,” Japaridze noted. Tourists are also up from Russia, Israel and Turkey in 2018. After the nearly 8 million visitors who enjoyed Georgia last year, the government is targeting 10 mln by 2020, an impressive number for
Deputy Chairman of TBC Bank, Badri Japaridze, speaking at the Bristol Business Conference in Tbilisi
a country that sports just a 4 mln population. “The difference between us and our neighboring countries is that we’re not dependent on oil prices,” he went on to note. “When they are low, we benefit as importers. When they are high, we still benefit because that means our neighboring countries are doing well and have more to spend on their visits to us.”
TRANSPORT AND LOGISTICS “The under-construction Anaklia Deep Sea Port will give Georgia the chance to increase flow of goods from the EU to Asia and vice versa. We are definitely a hub for financial services. We have two banks on the London Stock Exchange, which speaks of the high level of transparency and governance, setting us as an example and benchmark in the region,” he said. Japaridze then went on to compare Georgia to Singapore, where growth is
also driven by FDI. “It’s a good example for us as it also plays a role as a hub in financial services,” he said.
OPPORTUNITIES IN EDUCATION & HEALTHCARE The TBC Deputy Chairman spoke briefly on two sectors in Georgia that are particularly ripe for investment: the education system and healthcare, clearly hoping to tempt the British businessmen present to look into them further. “Georgia is historically known for its high level of education,” he said. “And today we’re seeing a growing number of foreign students coming from the Far East, India, and Africa. It’s also an attractive area for investment, which would help us to enhance our role as an educational hub in the region.” “We have one pharmaceutical company on the LSE, clearly speaking for the strengths and qualities of that company. Pharmaceuticals is an area with a big
role to play and makes for a good area to invest in. Georgia has a track record and special relationship with post-Soviet tourists interested in its health resorts, and so it boasts interesting opportunities for medical tourism development.”
LOOKING AHEAD Reforms implemented in the country are helping to facilitate and encourage reinvestment. TBC Bank claims to be a good benchmark in the region for its strength and resilience. “In 2008-09, Georgia experienced war, global financial meltdown and local instability. There was no bail-out for the Georgian banks, and yet we went on to enjoy strong growth. In the last five years we have seen responsible growth, not inflated or without fundamentals, demonstrating to investors, in the four years of TBC Bank’s being in the LSE, that we have delivered on all our promises and will continue to do so.”
The Caucasus Wine University BY SAMANTHA GUTHRIE
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Caucasus University
his weekend, Caucasus University announced that it will expand, opening a new campus in the town of Gurjaani to be called ‘Caucasus Wine University,’ which plans to accept its first class of students in the 2020-2021 academic year. The announcement was made during the 2018 Gurjaani Wine Festival. Member of Parliament, Gurjaani Majoritarian Davit Songhulashvili, presented the project to the Minister of Education, Science, Culture and Sport of Georgia, Mikheil Batiashvili, Head of the National Tourism Administration Giorgi Chogovadze, and other guests. Songhulashvili and representatives from Caucasus University, including founder and president Kakha Shengelia, presented a series of digitally rendered images of the new campus design, a modern, glassy, oversized take on a traditional Kakheti winery, resembling the Chateau Mere and Schuchmann Wines Chateau buildings. The 2018 Gurjaani Wine Festival presented more than 100 varieties of traditional qvevri wines from both large companies and small family-owned cellars. The festival was held within the framework of Georgian Wine Week,
supported by the Ministry of Environment Protection and Agriculture, the National Tourism Administration, and the National Wine Agency. Gurjaani’s festival was implemented by MP Songhulashvili and his staff. The festival was designed to promote the development of wine tourism and introduce wine culture and local traditions to international and domestic visitors. Gurjaani is a town with a population of approximately 8,000 people in the eastern Georgian region of Kakheti. It is 40 minutes from Telavi, the regional capital, and 30 minutes from popular tourist destination Sighnaghi, but does not have a significant tourism industry itself. Gurjaani has a long tradition of wine and viticulture, located in the fertile Alazani River Plain. The town’s history dates back to the 16th century, and has several significant landmarks, including the house-museum of actress Nato Vachnadze and the early medieval Kvelatsminda Church – the only twodomed church currently standing in Georgia. Caucasus University is one of Tbilisi’s largest and most prestigious institutions – and one of the most expensive. The high tuition cost funded the new Tbilisi campus, relocated from a cluster of older high rises in the Saburtalo neighborhood to a stunningly renovated Orthodox Christian seminary, built in 1909, in Svanetis Ubani (Svaneti Neighborhood),
near the New Aghmashenebeli area. Caucasus University began in 1998 with the establishment of the Caucasus School of Business by Kakha Shengelia. The school was expanded into Caucasus University in 2005 and now includes ten schools: Business, Law, Media, Technology, Governance, Humanities and Social Sciences, Tourism, Medicine and Healthcare, New Cinema, and Economics. It is currently unclear whether Caucasus Wine University will be considered a tenth school or a separate institution. Caucasus University’s stated priorities are “high-quality education, high employment rate of its graduates, international exchange, and dual programs.” While Caucasus University representatives have not yet released detailed information on their plans for Caucasus Wine University, the decision to open a campus outside Tbilisi is significant. The shift will increase access to formal education for rural populations in the Kakheti region and expand the knowledge and technical expertise collected in the capital to more of the Georgian population. There has recently been an increased push by the Georgian government to professionalize the national wine industry, particularly to strengthen export possibilities to the European Union and beyond. By car, it takes about an hour and 45 minutes to travel between Gurjaani and Tbilisi.