Issue #854 Business

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Issue no: 854/32

• JUNE 21 - 23, 2016

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

MINDSPACE: a New Way of Influencing Behavior through Public Policy ISET PAGE 4

PASHA Bank Sponsors Bond Congress

FOCUS

PAGE 6

Ferretti Group Yachts to Enter Georgian Market

ON CREATING NEW OPPORTUNITIES

Georgian Govt opens Startup Georgia program to encourage business entrepreneurship for a more positive country

PAGE 3

Developing Gudauri: Govt and Constructors to Sign Memorandum

PAGE 8

International Conference Highlights South Caucasus Archaeology Finds

PREPARED BY MARIAM KIASASHVILI

O

n June 24, the Ministry of Economy and Sustainable Development, Mountain Resorts Development Company Ltd and Redco Ltd will be signing a Memorandum of Mutual Cooperation at Holiday Inn, Tbilisi.

Prime Minister Giorgi Kvirikashvili; Vice-Premier, Minister of Economy, Dimitry Kumsishvili; Head of Mountain Resorts Development Company Ltd by the Ministry of Economy, Alexandre Onoprishvili, and the representatives of Starwood Hotels and Redco will be attending the event.

Continued on page 5

PAGE 11

Dechert OnPoint: An Overview of Georgia’s Immigration Regime PAGE 13 Prepared for Georgia Today Business by

Markets As of 17ͲJunͲ2016

STOCKS Bank of Georgia (BGEO LN) GHG (GHG LN) TBC Bank (TBCB LI)

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

INDICES

Price

w/w

Price

w/w

m/m

GBP 24.92

+0,6%

+6,2%

GEOROG 05/17

102.06 (YTM 4.51%)

+0,2%

Ͳ0,1%

GBP 2.85

+9,4%

+28,0%

m/m

GEORG 04/21

BONDS

110.54 (YTM 4.42%)

Ͳ0,5%

Ͳ0,5%

US$ 13.00

Ͳ

+11,6%

GRAIL 07/22

110.50 (YTM 5.68%)

Ͳ0,5%

+1,1%

GEBGG 07/17

103.94 (YTM 3.84%)

Ͳ

Ͳ0,5%

Price

w/w

m/m

49,17

Ͳ2,7%

Ͳ0,2%

CURRENCIES

Price

w/w

m/m

1 298,65

+1,9%

+1,5%

GEL / USD

2,1800

+2,4%

Ͳ0,1%

GEL / EUR

2,4337

+1,7%

Ͳ1,3%

Price

w/w

m/m

GEL / GBP

3,1276

+3,1%

Ͳ0,8%

FTSE 100

6 021,09

Ͳ1,5%

Ͳ2,4%

GEL / CHF

2,2700

+2,8%

+1,9%

FTSE 250

16 422,04

Ͳ2,4%

Ͳ2,5%

GEL / RUB

0,0337

+2,7%

Ͳ

9 631,36

Ͳ2,1%

Ͳ2,6%

GEL / TRY

0,7449

+2,5%

+1,2%

17 675,16

Ͳ1,1%

+0,8%

GEL / AZN

1,4307

+2,2%

Ͳ1,6%

DAX DOW JONES NASDAQ

4 800,34

Ͳ1,9%

+1,8%

GEL / AMD

Ͳ

0,0046

+4,5%

MSCI EM EE

121,92

Ͳ2,1%

Ͳ4,2%

GEL / UAH

0,0876

+2,8%

+1,4%

MSCI EM

806,22

Ͳ2,1%

+0,6%

EUR / USD

0,8868

Ͳ0,2%

+0,3%

Ͳ1,2%

SP 500

2 071,22

+1,2%

GBP / USD

0,6964

Ͳ0,7%

+0,7%

MICEX

1 877,07

Ͳ1,4%

Ͳ1,7%

CHF / USD

0,9600

Ͳ0,5%

Ͳ2,1%

MSCI FM

2 576,22

+0,6%

+0,9%

RUB / USD

64,7542

Ͳ1,1%

GT Index (GEL)

819,99

+2,8%

+2,9%

TRY / USD

2,9274

Ͳ0,1%

Ͳ1,2%

GT Index (USD)

758,18

+2,4%

+5,4%

AZN / USD

1,5220

+0,1%

+1,8%

Ͳ0,1%

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BUSINESS

GEORGIA TODAY

JUNE 21 - 23, 2016

European Investment Bank to Support SMEs in Georgia

New Tbilisi-Beijing Flight to Begin in September

BY EKA KARSAULIDZE

T

he European Investment Bank (EIB) has decided to financially support small and medium-sized businesses (SMEs) in Georgia via local commercial banks in SeptemberOctober, according to Georgia’s Economic Adviser to the President, Maya Melikide.

The banks that will be involved in the

financing include Bank Republic, TBC Bank, ProCredit Bank and Bank of Georgia.

Melikidze finalized the agreement after she met with EIB representatives last week to discuss the conditions for supporting the development of Georgia’s small and medium enterprises.

She said the EIB agreed to actively take part in the financing of local SMEs, but business owners would be required to meet the current stringent conditions required to gain initial capital.

BY EKA KARSAULIDZE

C

hina Southern Airlines is to launch a new route Beijing-Urumqi-Tbilisi beginning September 22, Georgia’s Ministry of Economy and Sustainable Development said in a press release.

The route will connect the two capitals via Urumqi, a city located in western

China’s Xinjiang Uyghur Autonomous Region that was once a major transport hub along the old Silk Road.

The new flights were announced after a meeting last week between Georgia’s Civil Aviation Agency and Chinese air travel authorities. Representatives from Air China, Hainan Airlines, China Southern Airlines and China Eastern Airlines also met with the Georgia delegation to discuss expanding the number of air routes between the two countries.

Chinese airlines have begun showing

greater interest in expanding their services to Georgia to tap into the emerging tourist and investment markets.

China’s Hualing Group registered a new airline in May that will be based in Georgia and carry out flights to Asia and Europe.

Trade and economic relations between China and Georgia have increased significantly over the last year. 4,424 Chinese citizens visited Georgia since the beginning of the year, a 52.3 percent year-on-year increase from 2015.

BUSINESS

GEORGIA TODAY JUNE 21 - 23, 2016

3

Startup Georgia: More Start-Up Opportunities than Ever Before

BY EKA KARSAULIDZE

Speakers at the launch of Startup Georgia, June 17

T

he Georgian Government is continuing to promote and support startup projects and ideas. At the presentation of the ‘Startup Georgia’ project, Prime Minister of Georgia, Giorgi Kvirikashvili, stated that anyone who has an original and interesting idea, but no capital for its implementation, can be an eligible participant. Acceptance of applications to the program was launched on June 17 and will last until August 1.

Once the winners are identified by an international group of experts, “successful entrepreneurs will receive at least 10 percent of the whole cost of the project.

The cost of the idea will be at least 40 percent of the whole project budget. In a joint startup company, beneficiaries will own at least 50 percent shares of their new business,” explained the representatives of the project.

In future, the beneficiary will then have the opportunity to purchase the Startup Georgia share in the business and own 100 percent shares, or find another investor.

Furthermore, the creators of the program noted that if a business proposal is specific to the high-technology field, and is regarded as unique, the beneficiary will be wholly financed by the Georgian

It is important for us to give each person the chance to realize their goals, generate ideas and build business Innovation and Technology Agency (GITA). In this situation the beneficiary will retain 95 percent shares of the new business. The Agency can allocate up to USD 46,000 (100,000 GEL) for such candidates.

The Georgian Minister of Economy

and Sustainable Development, Dimitry Kumsishvili, said in his speech that in addition to financial support, beneficiaries will be able to use the whole package of opportunities offered by GITA and Technological Park (Tech Park). “The program will provide an opportunity to

gain the right know-how to set up the business properly and to manage it. It will also provide the right legal, managerial and financial support. In future, the government program will also help to promote projects abroad, and will organize presentations to potential inves-

tors and banks,” said Kumsishvili.

Further, GITA and Startup Georgia will offer free trainings, coaching, mentoring and consulting for all beneficiaries. Representatives of the program hope that this will help to create an innovative environment and a platform for ideas and knowledge exchange.

At the outset, the Government will allocate USD 5 million (11 million GEL) to the program, but this will gradually be increased to USD 16 million (35 million GEL).

The creation of Startup Georgia is considered to be one of the most important parts of the State’s Four-Point Reform Agenda, “which will transform our country into a more positive place, create new opportunities, and develop business aspiration in our country,” said PM Kvirikashvili.

The Prime Minister pointed out that the most difficult part is taking the first step, but called for new entrepreneurs not to be afraid of their ideas or those steps that need to be taken to realize them. “It is important for us to give each person the chance to realize their goals, generate ideas and build business. Those with unique and creative business ideas should persevere,” he advised.

Startup Georgia is a daughter company of the State’s Partnership Fund. It is implemented with the support of the Ministry of Economy and Sustainable Development of Georgia and Georgia’s Innovation and Technology Agency.

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BUSINESS

GEORGIA TODAY

JUNE 21 - 23, 2016

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.

MINDSPACE: a New Way of Influencing Behavior through Public Policy

BY GIVI KUPATADZE

W

HY THE GOVERNMENT NEEDS TO UNDERSTAND MINDSPACE?

Influencing behavior is central to public policy. Policy-makers have many tools to change or shape behavior. Legislation and regulation are traditional tools used to achieve public policy goals. While these tools are often very effective they are not always advantageous. Effective law enforcement is expensive business for the government. Over the last three decades behavioral science has significantly advanced understanding of the influences on behavior. The main advantages of a behavioral approach over traditional tools are low cost, increased effectiveness and non-coerciveness, and the government needs to consider them.

HOW MINDSPACE CAME INTO EXISTENCE The Cabinet Office of the UK commissioned the Institute for Government to prepare a report about the implications of behavioral science for policy-making.

MINDSPACE was developed as an attempt to design a framework for incorporating behavioral insights into policymaking. David Cameron established under his cabinet the Behavioral Insights

Team, known as the “Nudge Unit” in 2010. Using insights of behavioral science, the Nudge Unit managed to reduce fraud, increase savings and recruitment among minority groups, and to improve effectiveness in many other domains of public policy. The White House launched its own Nudge Unit team under Barack Obama’s administration in 2013. The Government of Australia followed the path of the USA and UK and introduced the Nudge Unit inside the Department of the Prime Minister & Cabinet in 2015.

MINDSPACE has been developed as an attempt to design a framework for incorporating behavioral insights into policy-making

Source: MINDSPACE report

Taking into account the success stories of these countries in applying behavioral insights into policy-making it is reasonable to assume that many other countries will jump on the train of noncoercive policy-making.

WHAT IS MINDSPACE? MINDSPACE is a tool for changing behavior. The most important nine noncoercive and robust influences on human behavior are captured in a simple mnemonic of MINDSPACE and can be used as a checklist when making policy.

Es together allows policy-makers to address the over-aching “so what?” question in practical ways.

CONCLUSION Policy-makers need to understand and react accordingly to the fact that we are constantly being influenced and at the same time influencing others. Most of us are creatures of habit and of the environment we live in. The key point is that the government forms a significant part of this environment, whether intentionally or not. The government will always have choices to make: whether to intro-

WHICH POLICY CHALLENGES CAN BE TACKLED BY MINDSPACE? The domain of public policy where MINDSPACE can be applied is wide.

Some of the public policy areas where MINDSPACE has been used successfully and can be relevant for policy challenges faced by the Government of Georgia are: crime and anti-social behavior, healthy lifestyle and pro-social behavior, like volunteering and voting. Case studies revealed possibilities for non-coercive and low cost interventions, for example: • Logic of gang members can be used to combat gang violence (Norms).

• Giant bananas can be used to reduce littering (Salience).

• Inertia can be useful to save more for retirement (Defaults).

Other ideas for action can be: • Combating obesity in schools – using principles of choice architecture to improve diet in school cafeterias.

• Helping people to help themselves – using self-exclusion agreements to restrict access to online casinos and betting sites.

It must be noted that the list of possible public policy domains where MINDSPACE can be applied is virtually unlimited.

HOW MINDSPACE CAN BE APPLIED IN POLICY-MAKING The six Es: Explore, Enable, Encourage, Engage, Exemplify and Evaluate represent a framework within which MINDSPACE can be applied. Bringing the six

duce a pension scheme as opt-in or optout; deciding who will communicate the message; and so on. Applying MINDSPACE in public policy can help to turn preciously invisible influences into explicit choices, and policy-makers into good “choice architects”.

Givi Kupatadze is a PhD candidate at the Estonian Business School. His primary research interests are economic development and implications of behavioral economics for public policy. He is a visiting lecturer at Ilia State University and has successful working experience in various international organizations.

Source: MINDSPACE report

Messenger Incentives Norms Defaults

We are heavily influenced by who communicates information.

Our responses to incentives are shaped by predictable mental shortcuts such as strongly avoiding losses.

We are strongly influenced by what others do.

We ‘go with the flow’ of pre-set options.

Our attention is drawn to what is novel and seems relevant to Salience us.

Priming Our acts are often influenced by sub-conscious cues.

Affect Our emotional associations can powerfully shape our actions.

We seek to be consistent with our public promises and recipCommitments rocate acts.

Ego We act in ways that make us feel better about ourselves.

BUSINESS

GEORGIA TODAY JUNE 21 - 23, 2016

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Developing Gudauri: Govt and Constructors to Sign Memorandum Continued from page 1 On May 31st, Redco purchased 50 hectares of land in New Gudauri, where it plans to build a resort zone of the highest European standards worth USD 150 million. The development plan of New Gudauri has been prepared by the world famous Canadian mountain resort planning firm– Ecosign.

At the first stage, 26 buildings will be built over 10 hectares providing about 4,200 additional places for guests to stay in the resort. According to the General Development Plan, New Gudauri will have 2,3,4 and 5 star hotels, apartment-

This year saw the best touristic season in the history of Gudauri with 201,821 visitors, an increase of 17 percent on last year

hotels, town houses and villas. In additional, recreation and entertainment infrastructure will be constructed, including – ice rink, restaurants, entertainment centers, sport fields, shops, tennis courts, spa centers and a casino.

The resort will also have modern parking lots (above and underground), providing parking for more than 1,600 cars.

Redco has already obtained a preliminary agreement from Starwood Hotels and Resorts Worldwide, giving it the rights to build the famous Sheraton and Four Points by Sheraton Hotels in Gudauri.

The Master Plan created by the Government of Georgia, and the infrastructural projects that have been implemented, will support the development of the abovementioned projects. The government will begin the works for complete rehabilitation of irrigation systems in Gudauri and for the first time Gudauri will have sufficient water supply. In the summer of 2016, one more ski lift will be constructed. Furthermore, the general land-use plan will be developed in the near future, vital for the development of the resort. Gudauri is quite popular in the summer and as such the Slovenian company Alliance has built a 5000 meter long cycling trail for professional as well as amateur sportsmen.

Gudauri has been significantly developed over the last 5 years and the number of visitors has increased by 127 percent, the number of multi-passes sold has increased by 311 percent, the majority of which are purchased by foreign tourists.

This year saw the best touristic season in the history of Gudauri. The season 2015-16 has hosted 201,821 visitors, an increase of 17 percent compared with the previous season and a 63 percent

increase in the sale of multi-passes.

To date, Redco has already built three apart-hotels, and a number of restaurants and spa centers in New Gudauri. Moreover, construction of one more apart-

hotel will be finished before the season of 2016-17 and in 2017 Redco will open the 5-star Radisson Blu in Gudauri, having invested USD 15 million in the project.

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BUSINESS

GEORGIA TODAY

JUNE 21 - 23, 2016

Georgian Debt Capital Market Becoming More Attractive to International PASHA Bank Investors Sponsors Bond Congress PREPARED BY KATIE RUTH DAVIES

BY EKA KARSAULIDZE

F

or the first time the CIS, Baltic States and Caucasus Bond Congress took place in Georgia, the 13th such Congress, organized by Cbonds in partnership with Galt & Taggart. In the course of the two-day event, June 16-17, domestic bond mark development issues were discussed.

Participants of the Congress discussed such themes as economic development, the financial system and bond market of Georgia, the Eurobond market and macro-economic development and financial market prospects. The Congress also includes thematic sections

according to each country and their bond markets: Azerbaijan, Kyrgyzstan, Armenia, Russia, Ukraine, Kazakhstan and Belarus.

“Galt & Taggart plays an important role in the development of the debt capital market in Georgia,” said Archil Gachechiladze, Chairman of the Supervisory Board of Galt & Taggart. “Local companies which have strong corporate governance with the active support of Galt & Taggart have the opportunity to diversify their financing structure through corporate bonds from money recruiting.

Our company successfully attracted 114 million GEL denominated and USD 60 million denominated bonds to Georgian corporations and international financial institutions in 2014-2015,” he said, adding that recent events in the country have

led to the Georgian debt capital market becoming even more attractive to international investors.

The CIS, Baltic States and Caucasus Bond Congress by tradition takes place in different cities of Western and Eastern European countries. Gachechiladze said that the naming of Georgia as hostcountry once again proved its important role to the international community.

“We see great potential in the Georgian debt markets and will continue to support them. We are also deeply convinced that the international investors’ interest in the region, and in particular in Georgia, will increase in the future,” he added.

The Congress gathered 200 delegations from 14 countries, which included banks, the leading investment companies and infrastructure organizations.

O

n June 16-17th the XIII CIS, Baltic States and Caucasus Bond Congress was held in Tbilisi, Radisson Blu Iveria. The congress was sponsored by PASHA Bank – a regional financial institution that provides a full range of corporate and investment banking services to large and medium-sized enterprises in the region.

Held since 2004, the Congress is a major event for the region, which supports discussions on the development of local bond markets in Russia, CIS and Caucasus countries, as well as emerging Eurobond markets and other essential topics.

Among the speakers there were: Archil Mestvirishvili - Vice President at the National Bank of Georgia, Nikoloz Gagua

- Deputy Minister at Ministry of Economy of Georgia, Archil Gachechiladze - Chairman at Galt & Taggart, Ivan Uhlianytsia - Director of Investment Banking at PASHA Bank Azerbaijan, and Shahin Mammadov - CEO and Chairman of Board of Directors at PASHA Bank Georgia.

“We are happy that this year Tbilisi was chosen to host the Bond Congress and PASHA Bank had the opportunity to actively participate in the event,” said Shahin Mammadov. “PASHA Bank has significant experience in investment banking services in the region. Recently we have had successful cases of bond issuance in Georgia and we hope that this congress will serve the development of the finance sector in our region.”

The Bond Congress was attended by more than 150 representatives of local and international finance sectors. The event was organized by CBonds and was hosted by Galt & Taggart.

BUSINESS

GEORGIA TODAY JUNE 21 - 23, 2016

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Greater Central Asian Countries Discuss Region’s Key Issues in Georgia

BY EKA KARSAULIDZE

T

bilisi hosted the CAMCA (Central Asia-MongoliaCaucasus-Afghanistan) Regional Forum 2016, organized by the Rumsfeld Foundation in partnership with the Central Asia-Caucasus Institute at the Johns Hopkins University on June 17-19. Economic issues were top priority at the Forum.

The CAMCA Regional Forum is a nonpolitical and non-partisan entity established to promote region-wide discussions on means of advancing economic growth and development in Greater Central Asia (Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan). It promotes this goal by fostering dialogue and interaction among rising young leaders from various sectors in the 10 countries of the region, as well as with international leaders and stakeholders.

Prime Minister of Georgia, Giorgi Kvirikashvili, highlighted the most important economic achievements of Georgia throughout recent years. In particular, he noted the development of Anaklia Port in western Georgia, which is aimed at promoting the direction of transport-logistics, the construction of two tunnels in Georgia’s eastern and western parts and the West-East Highway across Georgia.

The PM talked about joint projects with neighboring countries such as the

Baku-Tbilisi-Kars railway project aiming to connect the countries with the European Union. He also named China as one of the most important economic partners, having a great number of pro-

We are in a country that has created an attractive environment for investment... which respects free political systems and free media, as well as having a great anti-corruption program." Donald Rumsfeld

“We are in a country that has created an attractive environment for investPM Kvirikashvili met with former US Secretary of Defense and ment, an environPresident of the Rumsfeld Foundation, Donald Rumsfeld ment which respects jects in Georgia, and pointed to the eco- free political systems and free media, as nomic analysis which predicts a 10 per- well as having a great anticorruption cent annual export increase from program,” Rumsfeld said. “If one is engaged in business and thinks where Georgia to China.

In the framework of the Forum, PM to put investment, he first asks what Kvirikashvili met with former US Sec- environment there already is. Georgia retary of Defense and President of the has huge potential in this regard.”

Georgia’s course of further developRumsfeld Foundation, Donald Rumsfeld.

ment was also discussed at the Presidential Palace, where the President of Georgia, Giorgi Margvelashvili, hosted Donald Rumsfeld and graduates of his Foundation. “The graduates of the Rumsfeld Foundation play a decisive role in the political, economic and social life of the country. They have made a great contribution to Georgia's orientation to the European family,” said President Margvelashvili.

The Forum gathered 150 delegates of international and regional leaders from 18 countries.

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BUSINESS

Photo by Ferretti Group

Ferretti Group Yachts to Enter Georgian Market

BY EKA KARSAULIDZE

U

GT Group’s daughter company Caucasus Yachts has signed a partnership agreement with the Italian Ferretti Group giving the Georgian company exclusive rights to supply premium quality yachts in the Caucasus region. Caucasus Yachts will also provide comprehensive management and technical services for the yachts.

“We hope that our work will help attract a new wave of tourists to Georgia and create new jobs in the naval field, which will give additional impetus to our country's economic growth acceleration,” said the President of UGT Group, Giorgi Chirakadze.

UGT Group mainly works in the direction of IT system integration, retail, distribution, training and certification. Its subsidiary company Caucasus Yachts is a naval industry leader in the Caucasus region. It operates in Georgia and the Caucasus, as well as in the international

arena, including the United States, Singapore, Italy and Turkey.

“We are pleased to announce the expansion of our activities in Eastern Europe and in particular, in Georgia, which is a country experiencing rapid economic growth,” said Stefano De Vivo, Chief Commercial Officer at Ferretti Group, according to Georgian Business and Political Insight.

“We appreciate the opportunity to work with a company such as Caucasus Yachts, which has a strong economic position.

Thanks to our collaboration, we will be able to take leading positions in the Caucasus region,” he added.

Ferretti Group is an Italian multinational shipbuilding company which specializes in the design, construction and sale of luxury motor yachts. Its products are sold under the brands Ferretti Yachts, Custom Line, Pershing, Itama, Riva, Mochi Craft and CRN. Its yachts are distinguished by its incomparable quality, impressive safety, exclusive designs and timeless charm. Ferretti Group is represented worldwide in more than 80 countries.

GEORGIA TODAY

JUNE 21 - 23, 2016

ABD Supports State’s Four-Point Reform Agenda for Georgia The ABD delegation with Georgian government representatives

BY EKA KARSAULIDZE

T

he Executive Director of the Asia Development Bank (ADB) announced its support of the Four-Point Reform Agenda at a meeting with the Prime Minister of Georgia, Giorgi Kvirikashvili, on June 13 during a three-day visit to Georgia. This was the first time such a high-profile ABD del-

egation had visited Georgia with the aim of conducting meetings with ministry representatives and top officials.

In addition to the Four-Point Reform Agenda, during the visit representatives of the Georgian Government and ADB discussed the development of infrastructure projects and education reforms. ADB representatives expressed their readiness to assist Georgia to strengthen its role as a transportcorridor,aswellastohelptoreform the system of professional education.

The ABD is a development partner

with the biggest portfolio in Georgia.

The Bank is not only supporting the country to develop its infrastructure projects, but also approved a three-year budget support program for Georgia, and has implemented programs for technical support.

The ABD delegation included seven executive and alternate directors, amongst whom were Zhongjing Wang, Matthew Fox, Gaudencio Hernandez, Jr., Philaslak Yukkasemwong, Mapa Pathirana, Michael Strauss and Sarafjon Sheraliev.

BUSINESS

GEORGIA TODAY JUNE 21 - 23, 2016

Estonia Allocates EUR 722,000 to Georgia

BY EKA KARSAULIDZE

T

he Ministry of Foreign Affairs of Estonia is to allocate EUR 2.8 million (6.8 million GEL) for around 40 new projects of development cooperation in Georgia, Moldova, Ukraine and Belarus, reported the Estonian Public Broadcaster. All the projects will take place in 2016-2018.

“Projects include those relating to cyber security, the development of female entrepreneurship, the development of e-health services, improving the creative economy, agriculture, digital market and digitalization, improving the ability to fight corruption, as well as various projects in the field of education and training,” stated Marina Kaljurand, Minister of Foreign Affairs of Estonia. “Estonia has much to offer the world in various fields.”

Estonia

16 of the 40 projects will be implemented in Ukraine, to a total cost of EUR 1.2 million (about 3 mln GEL). In Moldova 12 projects will be carried out, for which Ministry of Foreign Affairs of Estonia has allocated EUR 733,198 (1.7 million GEL) and for Belarus 239,739 EUR (587,360 GEL) will be allocated for five projects. Georgia will receive 721,964 EUR (1.7 million GEL) to implement ten projects.

The Estonian Public Broadcaster reported that 14 of the projects were approved in the field of education while nine projects have been approved in the field of entrepreneurship and six in the IT field. Four projects were approved in the health field, including e-health. Three projects relate to the development of civil society, two for agriculture and fisheries, and two for media development.

All projects are funded by the Ministry of Foreign Affairs of Estonia for the development of cooperation and humanitarian aid funds.

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BUSINESS

GEORGIA TODAY

JUNE 21 - 23, 2016

Georgia’s Government Starts Small Grants Program for Mountainous Regions

BY EKA KARSAULIDZE

T

he Mountain Regions Support Program, part of the larger state project ‘Produce in Georgia,’ aims to create more jobs in the mountainous zones and increase entrepreneurship skills in those regions. As such, the Government is to offer small grants from USD 2,300 (5,000 GEL) to USD 7,000 (15,000 GEL).

The Ministry of Economy and Sustainable Development of Georgia says that people from the mountainous areas can submit a business plan to the website www.qartuli.ge from June 27 to July 29 and, if

selected, they will receive funding for their projects.

“The project has two components,” said Deputy Economy Minister Ketevan Bochorishvili. “One involves financial support and the other gives beneficiaries the opportunity to improve their skills for the development of their business.” She also mentioned that Georgia has already seen a similar program successfully implemented.

“Such assistance programs are very much in demand for micro and small businesses,” states the Ministry of Economy. “This was one of the main reasons for starting the campaign. In addition, the program will support and improve the living conditions of local residents and so lead to a reduction in migration from the mountainous regions of Georgia.”

Yerevan-Batumi Route Begins Operations

BY EKA KARSAULIDZE

T

he South Caucasus Railway (SCR) launched its seasonal Yerevan-Batumi route on June 15, according to the SCR’s press office.

The travel time between Yerevan to Batumi is 15 hours 40 minutes, with the return trip lasting just 10 minutes longer. The route will remain open until October 1.

The railway press office stated that ticket prices have been reduced by up to 20 percent compared

10 Galaktion Street

to 2015, with tickets varying in price from USD 20 (42.5 GEL) to USD 53 (112 GEL).

The railway cars of the flagship Armenia train meet international technical, sanitary and safety standards. The train’s sleeper cars are equipped with free Wi-Fi. According to the SCR, the number of passengers using the train has increased by 395 percent from 8,600 to 34,000 thousand people since 2008.

The SCR is a 100 percent subsidiary of Russian Railways and the concessional manager of Armenian Railways under a 30-year agreement signed on February 13, 2008.

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

BUSINESS

GEORGIA TODAY JUNE 21 - 23, 2016

International Conference Highlights South Caucasus Archaeology Finds

International Experts Shine Spotlight on Georgia’s Food Industry

BY EKA KARSAULIDZE

A

t an event in the Georgian capital Tbilisi on June 15-16 policy makers, civil society organizations and other key players from across the Caucasus region and Europe came together to discuss the current state of the food industry, including the challenges associated with promoting a unified nutrition policy and supporting local

BY EKA KARSAULIDZE

G

eorgia’s National Museum hosted an international conference from 16-19 June focusing on early mining and metallurgy in the Cau-

casus.

The conference shed light on new geochemical studies of gold items found in Georgia, Azerbaijan and the Mesopotamian basin as well as salt mines from ancient settlements in Azerbaijan and ancient mining in Central Iran and Armenia.

The conference brought together 40 scientists from Georgia, Germany, USA, UK, France, Italy, Azerbaijan and Arme-

nia, with exhibition’s presented by Georgia’s Simon Janashia Museum that highlight new archaeological finds across the South Caucasus.

The exhibition is dedicated to the 95th anniversary of noted academic Otar Japaridze – one of Georgia’s leading archaeologists.

Visitors to the exhibition will have an opportunity to learn about the social and economic relations, religions and cultures of the ancient groups that lived in what is now modern-day Georgia.

The national museum also stated that artefacts and photos would highlight an expedition at the Dzedzvebi site as well as wooden waggons and precious jewellery from Ananuri, the site of a Bronze Age tomb.

The exhibition will last until December 16.

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food production.

Georgia is a country where agricultural development is key for the development of the national economy. Finding solutions aimed at modernizing its development was at the top of the agenda at the International Conference on Food Security and Nutrition, organized by British Charity Oxfam.

International and local experts presented research findings at the conference that highlighted new approaches to nutrition and food security policies as well as innovative approaches to agri-

cultural development in the South Caucasus.

The findings also noted that a lack of education and finance, coupled with a general sense of malaise from the industry, severely cripples the region’s attempts to realize its full potential.

European representatives also took the time to present international models on developing inclusive policies and programs for small-scale farmers, saying Georgia is in an advantageous position to capitalize on its organic farming traditions.

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BUSINESS

GEORGIA TODAY

JUNE 21 - 23, 2016

GDP Increased 2.6% in Q1, Reports GeoStat PREPARED BY KATIE RUTH DAVIES

T

he National Statistics Office of Georgia (GeoStat) announced a 2.6 percent growth in Georgia’s Gross Domestic Product (GDP) during the first quarter of 2016 (Q1).

GeoStat showed that the country’s nominal GDP stood at 7.351 bln GEL (USD 3.02 billion), and the country’s GDP deflator had increased by four percent.

In terms of GDP by activity, preliminary data showed the largest shares were

held by: Trade services (15.9 percent); Industry (15.7); Transport and communication services (11.6 percent); Agriculture, fishing, hunting and forestry (9.7 percent); Public administration (8.8% percent); Construction (7.8 percent); Health and social work (6.2 percent); and Real estate, rental and business activities – 6%.

The GeoStat data demonstrated real growth in the quar-

rying and mining sector (29 percent), construction (25.7 percent), hotels and restaurants (11.7 percent), real estate, renting and business activities (9.4 percent), financial Intermediation (8.4 percent) and education (2.7 percent).

A decrease of -3.1 percent occurred in the electricity, gas and water supply sector, -1.7 percent in community, social and personal service activities, and transport saw a drop of -1.1 percent.

G e o S t a t s ay t h e adjusted data will be published in November 2016.

Source: www.businessfirstmagazine.com.au

Contact: www.edelbrand.ge Phone: 599 461908

IFC Helps Emerging Markets Introduce Policies to Attract Investments PREPARED BY KATIE RUTH DAVIES

I

FC, a member of the World Bank Group, and Georgia’s Revenue Service are holding a two-day peer-to-peer learning conference on international trade in Batumi, with the aim of assisting countries in Europe and Central Asia to enhance cross-border trade and boost economic growth.

The conference will bring together around 70 participants from 17 countries, including customs officials, senior members of government, and private sector players.

The initiative forms part of the World Bank Group’s Trade and Competitiveness Global Practice, a joint practice of the World Bank and IFC, which helps countries accelerate private sector growth by creating simple, efficient, businessfriendly regulations, while ensuring public interests are protected.

BUSINESS

GEORGIA TODAY JUNE 21 - 23, 2016

Dechert OnPoint: An Overview of Georgia’s Immigration Regime

D

echert Georgia, through the contribution of partners Archil Giorgadze and Nicola Mariani, joined by senior associates Ruslan Akhalaia and Irakli Sokolovski, as well as Ana Kostava and Ana Kochiashvili, is partnering with Georgia Today on a regular section of the paper to provide updated information regarding significant legal changes and developments in Georgia. In particular, we will highlight significant issues which may impact businesses operating in Georgia.

temporary identity card; and (e) other cases as provided by Georgian legislation. In many cases, a foreign citizen who seeks to enter Georgia must first obtain a Georgian visa. The Ministry of Foreign Affairs of Georgia as well as Georgia’s diplomatic missions and consular offices abroad grant Georgian visas.

Only in exceptional cases defined by the Government of Georgia can a visa be issued at the Georgian state border.

International travelers from 144 countries are eligible to travel to Georgia without a visa if they meet the requirements for visa-free travel.

INTRODUCTION

RESIDENCE PERMITS

In 2014 Georgia introduced the Law on the Legal Status of Foreigners and Stateless Persons (the “Law”), thus establishing a new immigration regime for Georgia. This legislative change was a modification to the then-existing open visa policy and special emphasis was placed on effective border management notably due to the visa liberalization dialogue with the European Union (“EU”).

However, the new rules were unpopular with many members of society as they imposed significantly stricter regulations. Despite the fact that the Law has been amended since 2014 to simplify its initial regulations, allow electronic applications and increase the period of legal stay for foreigners and stateless persons who meet certain conditions, there remains much confusion about application of the Law. This edition of Dechert OnPoint brings light to the current immigration regime, focusing on basic aspects of visa and residence permit issues.

The following types of residence permits are issued by the LEPL Public Service Development Agency within the Ministry for Justice of Georgia (the “Agency”) to foreigners (foreigners): work residence permit; study residence permit; family reunification residence permit; former citizen residence permit; stateless person residence permit; special residence permit; permanent residence permit; investment residence permit; temporary residence permit; and short-term residence permit. Work, study, family reunification, former citizen and special residence permits may be issued for a maximum of six years. A stateless person residence permit may be issued for a three-year period. Permanent residence and investment residence permits are issued with the right to permanent residence. A short-term residence permit may be issued to a foreigner for a oneyear period provided that the person owns immovable property of a certain value. The validity of this residence permit is terminated if the foreigner’s right of ownership over the relevant property is terminated. The validity of a temporary residence permit and short-term residence permit may be extended with the same conditions as applied when the permit was issued.

Applications for a residence permit

LEGISLATIVE GROUNDS FOR ENTRY AND STAY IN GEORGIA The Law provides for the following grounds for entry and stay in Georgia: (a) a Georgian visa; (b) a Georgian residence permit; (c) a temporary residence card for a person having refugee or humanitarian status in Georgia; (d) a

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must be made at the Agency and at branches of the LEPL Public Service Hall. The process should take approximately 30 calendar days but the law also provides the option for an accelerated procedure with the possibility to obtain residence permit in ten calendar days.

Once a residence permit has been issued, it is mandatory to get a residence certificate, except for the cases specifically provided by the Law.

VISAS Depending on the purpose of one’s visit to Georgia, there are different categories of visas that apply. Under the Law, visas are divided into five categories depending on the purpose of the visit or stay in Georgia: (1) diplomatic visa; (2) special visa; (3) ordinary visa; (4) immigration visa; and (5) transit visa. Citizens of certain countries are eligible to apply for a Georgian visa through the E-VISA PORTAL depending on the purpose of travel.

The documentation required for the application differs depending on which category of visa (and status of residence) the applicant seeks. A single entry shortterm visa may be issued according to the length of stay requested on the visa application form, provided the stay is of no more than 30 days. A multiple entry short-term visa may be issued for a maximum 5-year validity period provided that the foreigner’s entry and stay in Georgia does not exceed 90 calendar days in any 180-day period. A long-term visa is issued with the right of multiple entry during an open-ended period, provided that each stay does not exceed 90 calendar days in any 180-day period.

Additionally, a stateless person holding

Journalists: Tony Hanmer, Tamar Svanidze, Zviad Adzinbaia, Beqa Kirtava, Meri Taliashvili, Eka Karsaulidze, Zaza Jgharkava, Maka Bibilashvili, Karen Tovmasyan, Dimitri Dolaberidze, Maka Lomadze, Tim Ogden, Ana Akhalaia, Robert Isaf, Joseph Larsen, Will Cathcart, Vazha Tavberidze, Nugzar B. Ruhadze

a Georgian residence permit or temporary residence permit of a refugee or person with humanitarian status may stay in Georgia for the entire period that their relevant documents remain valid.

A short-term multiple-entry visa is issued to foreigners who, under the procedures established by Georgian legislation, have visited Georgia at least once during the previous year and who meet other requirements for requesting a short-term multiple-entry visa. The condition of having visited Georgia during the previous year is not required for the issuance of diplomatic and special visas, or of a short-term multiple-entry electronic visa on the basis of a visa application submitted through the E-VISA PORTAL.

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stay in Georgia for 90 calendar days during any 180-day period without the requirement to obtain a visa or residence permit in Georgia.

CONCLUSION The present article makes clear that although the requirement to obtain a visa or residence permit now apply to more categories of people since the new approach was implemented in 2014, the Law has since been amended to allow foreigners and stateless persons to apply electronically for a Georgian visa and to stay legally in the country for longer periods of time; including without a visa or residence permit in certain cases. ***

VISA FREE REGIME Decree #255 of the Government of Georgia dated 5 June 2015 (“Decree #255”) provides that the citizens of 94 countries can enter, reside, work and study in Georgia for a maximum of 360 days without being required to obtain either a visa or a residence permit. Decree #255 also provides that the citizens of EU member states may enter Georgia with a travel document as well as an ID card that is issued by an EU member state and contains the person’s name, surname, date of birth and photo. Entering Georgia and staying for 360 days is also permitted for citizens who hold a United Nations (the “UN”) Laissez-Passer, a travel document issued by the UN or one of its specialized agencies.

Decree #256 of the Government of Georgia dated 5 June 2015 (“Decree #256”) lists 50 countries of which a valid visa and/or residence permit allows a foreigner or stateless person to enter and

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Note: This article does not constitute legal advice. You are responsible for consulting with your own professional legal advisors concerning specific circumstances for your business.

Dechert’s Tbilisi office combines local service and full corporate, tax and finance support with the global knowledge that comes with being part of a worldwide legal practice.

Dechert Georgia is the Tbilisi branch of Dechert LLP, a global specialist law firm that focuses on core transactional and litigation practices, providing world-class services to major corporations, financial institutions and private funds worldwide. With more than 900 Lawyers in our global practice groups working in 27 offices across Europe, the CIS, Asia, the Middle East and the United States, Dechert has the resources to deliver seamless, high quality legal services to clients worldwide.

For more information, please visit www. dechert.com or contact Nicola Mariani at nicola.mariani@dechert.com.

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